The dramatically skewed nature of much of the damage, such that it was people and places that suffered terribly while factories and goods were relatively spared, contributed to an unexpectedly speedy recovery after 1945 of core economic sectors. Engineering industries flourished during the war. The UK, the USSR, France, Italy and Germany (as well as Japan and the USA) all emerged with a larger stock of machine tools than they started with. In Italy only the aeronautic and shipbuilding industries suffered serious damage. Engineering firms situated in the North, and thus out of reach of the heaviest fighting during the Italian campaign, did rather well (as they had in World War One), their wartime output and investment more than compensating for any harm they suffered. As for the machine tool industry in what became West Germany, it lost just 6.5 percent of its equipment through war damage.
In some countries, of course, there was no war damage. Ireland, Spain, Portugal, Switzerland and Sweden all remained neutral throughout the conflict. This does not mean that they were not affected by it. On the contrary, most of the European neutrals were intimately engaged, albeit indirectly, in the Nazi war effort. Germany depended heavily on Franco’s Spain for its wartime supply of manganese. Tungsten reached Germany from Portugal’s colonies, via Lisbon. Forty percent of Germany’s wartime requirements in iron ore were met from Sweden (delivered to German ports in Swedish ships). And all this was paid for in gold, much of it stolen from Germany’s victims and channeled through Switzerland.
The Swiss did more than act as money-launderer and conduit for German payments, in itself a substantial contribution to Hitler’s war. In 1941-42 60 percent of Switzerland’s munitions industry, 50 percent of its optical industry and 40 percent of its engineering output was producing for Germany, remunerated in gold. The Bührle-Oerlikon small arms firm was still selling rapid-fire guns to the Wehrmacht in April 1945. All told, the German Reichsbank deposited the gold equivalent of 1,638,000,000 Swiss francs in Switzerland during the Second World War. And it was Swiss authorities before the outbreak of the conflict who asked that German passports indicate whether their holders were Jewish, the better to restrict unwanted arrivals.
The Swiss authorities, in their defence, had good reason to keep the Nazis friendly. Although the Wehrmacht high command postponed its June 1940 plans for an invasion of Switzerland, it never abandoned them; the experience of Belgium and the Netherlands was a grim reminder of the fate awaiting vulnerable neutral states that got in Hitler’s way. For similar reasons the Swedes also extended their cooperation to Berlin, on whom they were historically dependent for coal. Selling iron ore to Germany was something Sweden had been doing for many years—even before the war half of German iron-ore imports came across the Baltic, and three-quarters of all Swedish iron-ore exports went to Germany. In any case, Swedish neutrality had long been slanted toward Germany out of fear of Russian ambitions. Co-operation with the Nazis—allowing the transit of 14,700 Wehrmacht troops at the start of Operation Barbarossa, as well as German soldiers on leave from Norway passing through on their way home, deferring the draft for Swedish iron mine workers so as to ensure regular deliveries to Germany—was thus not a departure from habit.
After the war the Swiss (though not the Swedes) were initially the object of resentful international suspicion as accomplices to Germany’s war effort; in the Washington Accords of May 1946 they were constrained to offer a ‘voluntary’ contribution of 250 million Swiss francs to European reconstruction, as a final settlement of all claims relating to Reichsbank transactions through Swiss banks. But by that time Switzerland was already rehabilitated as a prosperous island of fiscal rectitude: its banks highly profitable, its farms and engineering industries set to supply food and machinery to needy European markets.
Before the war neither Switzerland nor Sweden had been especially prosperous—indeed they contained significant regions of rural poverty. But the lead they secured in the course of the war has proved lasting: both are now at the top of the European league and have been there steadily for four decades. Elsewhere the path to recovery was a little steeper. But even in Eastern Europe the economic infrastructure at least was repaired with remarkable speed. Despite the worst efforts of the retreating Wehrmacht and the advancing Red Army, the bridges, roads, railways and cities of Hungary, Poland and Yugoslavia were rebuilt. By 1947, transportation networks and rolling stock in central Europe had been brought up to or surpassed their pre-war levels. In Czechoslovakia, Bulgaria, Albania and Romania, where there was less war-related destruction, this process took less time than in Yugoslavia or Poland. But even the Polish economy recovered quite rapidly—in part because the western territories newly seized from Germany were actually more fertile and better supplied with industrial towns and factories.
In western Europe, too, material damage was repaired with remarkable speed—quickest, on the whole in Belgium, somewhat slower in France, Italy and Norway, slowest in the Netherlands, where the worst harm (to farms, dykes, roads, canals and people) had all come in the last months of the war. The Belgians benefited from Antwerp’s privileged status as the only major European port more or less intact at the end of the war, and from the high concentration of Allied troops in their country, pumping a steady flow of hard cash into an economy that had long specialized in coal, cement and semi-finished metals, all vital for reconstruction work.
Norway, by contrast, was considerably worse off. Half the nation’s vital fishing and merchant fleet was lost in the war. Thanks to deliberate German destruction in the course of the Wehrmacht’s retreat, Norway’s industrial output in 1945 was just 57 per cent that of its 1938 level, with nearly a fifth of the country’s capital stock gone. In later years the contrast with Sweden was not lost on embittered Norwegians. But even Norway was able to restore most of its rail and road network by the end of 1946; and in the course of the following year, as in the rest of western and most of eastern Europe, fuel shortages and inadequate communications were no longer an impediment to economic recovery.
To contemporary observers, however, it was Germany’s capacity to recover which seemed the most remarkable of all. This was a tribute to the efforts of the local population who worked with a striking singularity of purpose to rebuild their shattered country. The day Hitler died, 10 percent of German railways were operational and the country was at a literal standstill. A year later, in June 1946, 93 percent of all German rail tracks had been re-opened and 800 bridges had been rebuilt. In May 1945 German coal production was barely one-tenth that of 1939; a year later it had quintupled in output. In April 1945 it seemed to Saul K. Padover, an observer with the advancing US Army in western Germany, that it would surely take the flattened city of Aachen 20 years to rebuild. But within a few weeks he was already recording the re-opening of the city’s tyre and textile factories and the beginnings of economic life.
One reason for the speed of Germany’s initial recovery was that once the workers’ houses had been rebuilt, and the transport networks put back in place, industry was more than ready to deliver the goods. At the Volkswagen works 91 percent of the machinery had survived wartime bombing and post-war looting, and by 1948 the factory was equipped to produce one in every two cars made in western Germany. Ford of Germany was largely undamaged. Thanks to wartime investment, one-third of German industrial equipment was less than five years old in 1945, compared to just 9 percent in 1939. And the industries in which wartime Germany had invested most heavily—optics, chemicals, light engineering, vehicles, non-ferrous metals—were precisely those which would lay the foundations for the boom of the Fifties. By early 1947 the chief impediment to a German recovery was no longer war damage, but rather raw material and other shortages—and, above all, uncertainty over the country’s political future.