I'm not talking about German Nationalism, but German Supremacism. Keep in mind the linked text was written in 1915, so while Chesterton was certainly biased, being on the opposite side of WWI, he was going by and responding to what was happening then. The relevant quote:

The nature of Pan-Germanism may be allegorised and abbreviated somewhat thus:

The horse asserts that all other creatures are morally bound to sacrifice their interests to his, on the specific ground that he possesses all noble and necessary qualities, and is an end in himself. It is pointed out in answer that when climbing a tree the horse is less graceful than the cat; that lovers and poets seldom urge the horse to make a noise all night like the nightingale; that when submerged for some long time under water, he is less happy than the haddock; and that when he is cut open pearls are less often found in him than in an oyster. He is not content to answer (though, being a muddle-headed horse, he does use this answer also) that having an undivided hoof is more than pearls or oceans or all ascension or song. He reflects for a few years on the subject of cats; and at last discovers in the cat "the characteristic equine quality of caudality, or a tail"; so that cats are horses, and wave on every tree-top the tail which is the equine banner. Nightingales are found to have legs, which explains their power of song. Haddocks are vertebrates; and therefore are sea-horses. And though the oyster outwardly presents dissimilarities which seem to divide him from the horse, he is by the all-filling nature-might of the same horse-moving energy sustained.

Now this horse is intellectually the wrong horse. It is not perhaps going too far to say that this horse is a donkey. For it is obviously within even the intellectual resources of a haddock to answer, "But if a haddock is a horse, why should I yield to you any more than you to me? Why should that singing horse commonly called the nightingale, or that climbing horse hitherto known as the cat, fall down and worship you because of your horsehood? If all our native faculties are the accomplishments of a horse--why then you are only another horse without any accomplishments." When thus gently reasoned with, the horse flings up his heels, kicks the cat, crushes the oyster, eats the haddock and pursues the nightingale, and that is how the war began.

This apologue is not in the least more fantastic than the facts of the Teutonic claim. The Germans do really say that Englishmen are only Sea-Germans, as our haddocks were only sea-horses. They do really say that the nightingales of Tuscany or the pearls of Hellas must somehow be German birds or German jewels. They do maintain that the Italian Renaissance was really the German Renaissance, pure Germans having Italian names when they were painters, as cockneys sometimes have when they are hair-dressers. They suggest that Jesus and the great Jews were Teutonic. One Teutonist I read actually explained the fresh energy of the French Revolution and the stale privileges of its German enemies by saying that the Germanic soul awoke in France and attacked the Latin influence in Germany. On the advantages of this method I need not dwell: if you are annoyed at Jack Johnson knocking out an English prize-fighter, you have only to say that it was the whiteness of the black man that won and the blackness of the white man that was beaten. But about the Italian Renaissance they are less general and will go into detail. They will discover (in their researches into 'istry, as Mr. Gandish said) that Michael Angelo's surname was Buonarotti; and they will point out that the word "roth" is very like the word "rot." Which, in one sense, is true enough. Most Englishmen will be content to say it is all rot and pass on. It is all of a piece with the preposterous Prussian history, which talks, for instance, about the "perfect religious tolerance of the Goths"; which is like talking about the legal impartiality of chicken-pox. He will decline to believe that the Jews were Germans; though he may perhaps have met some Germans who were Jews. But deeper than any such practical reply, lies the deep inconsistency of the parable. It is simply this; that if Teutonism be used for comprehension it cannot be used for conquest. If all intelligent peoples are Germans, then Prussians are only the least intelligent Germans. If the men of Flanders are as German as the men of Frankfort, we can only say that in saving Belgium we are helping the Germans who are in the right against the Germans who are in the wrong. Thus in Alsace the conquerors are forced into the comic posture of annexing the people for being German and then persecuting them for being French. The French Teutons who built Rheims must surrender it to the South German Teutons who have partly built Cologne; and these in turn surrender Cologne to the North German Teutons, who never built anything, except the wooden Aunt Sally of old Hindenburg. Every Teuton must fall on his face before an inferior Teuton; until they all find, in the foul marshes towards the Baltic, the very lowest of all possible Teutons, and worship him--and find he is a Slav. So much for Pan-Germanism.

The idea that Germans carried a sense of supremacy stronger than that of other peoples seems very doubtful to me. My impression is the various units that became Germany weren't particularly nationalistic until the Napoleonic wars and occupations which left behind a sense of vulnerability to the West, and also Napoleon's own kind of modernized bureaucratic government. This lead to intensified sense of "German-ness" and a zeal for "catching up" which helped inspire the German style research university (which gave the world modern industrial chemistry and modern physics, as well as some very bad philosophy).

The mid-19c was another rude shock as technology accelerated colonialism. Steamboats that could ply the rivers of Africa set off a scramble among the main colonizing nations, giving them the raw materials for a huge acceleration of economic strength.

Bismark's consolidation made turned a somewhat medieval patchwork into a nation and left the world in no doubt of its strength. Wilhelm III was a reckless spirit who did much to put Germany on course to its first great disaster.

Antisemitism was strongest in Austria not coincidentally Hitler's home. Lately, I've read from a couple of sources that Jews were about 1% of the population of Germany, but Austria had to deal with a lot of ethnicities that they once dominated.

It was 14 years from the end of WWI to Hitler's becoming Chancellor, a period of shame and humiliation, and recent and continued encounters with socialism and Communism. The atmosphere seemed to breed only extreme parties. In the interim years, Hitler's propaganda conflated Jews and Communists, and he opportunistically took advantage of a sort of sense of moral superiority which often wells up among beaten people.

Hitler, like Mussolini (whose nation also was playing "catch up" in terms of modern national forms) was able with new technology to stage mass spectacles and nationwide radio events which with his talents whipped Germany into a kind of hysterical paranoia about the rest of the world and "will" to reverse the situation.

When it comes to "gaming democracy" Weimar democracy was very peculiar. Once Hitler had a kind of figurehead power (very insecure for the first months), he could control events with his private armies, the SA and SS, whose numbers dwarfed the official army severely limited in number by the Versailles Treaty. Whether or not the Nazis set the Reichstad fire, it gave them the excuse to raise the level of paranoia and declare a state of emergency during which the Socialist and communist parties were crushed -- mostly I believe not by the regular government, but by the SA and SS.

Hitler used his private armies, a force to anarchic to be precisely controlled to destroy order in Germany. Soon after, he decapitated the SA's leadership in the "night of the long knives". Had he not, the regular army would have seen Hitler as connected with them. It was his way of declaring to the General Staff "You don't have to worry about this band of thugs pushing you out of power, you are just what I want".

Much of the persecution of Jews was extra-legal until Krystallnacht, which occurred in 11/38, four years after the night of the long knives.

An incredible amount of system gaming that we'll probably not see the like of again. Hitler started off with millions in extra-governmental forces and up-front declared intentions such that when he was placed in power, the people looked around and, as his grip tightened, were apt to say the nation elected this guy, so this is the course the nation has set itself on (even if I personally can't condone it).

There is a wide general belief that somebody could gain power talking nice and democratically with a hidden agenda, and once in that seat, the reins of government would be his -- it is the myth of the Reader's Digest version of The Road to Serfdom, which turned Hayek's reasonable arguments and fears and concerns into a paranoid fantasy (see http://whatwasthecoldwar.blogspot.com/2010/07/illustrated-comic-book-in-fact-road-to.html) for an illustrated even more condensed summary.