The Limits of Rearmament

A legend built on early success

Between 1935 and 1936, Nazi Germany broke the military limits of the Versailles settlement one step at a time.Each step was announced as a fait accompli.Each passed without a military response from the Western powers.From these early successes grew a durable legend: that Hitler possessed a rare strategic instinct, and that German rearmament was a carefully engineered machine ready for war.

The historical record supports a harder and less flattering reading.German rearmament was fast, but it was financed by deferred obligations, sustained by controls, and repeatedly warned against by the man who had designed its financing.Its most celebrated moments were gambles that depended on the hesitation of others.Readiness and the appearance of readiness were not the same thing.

I write about this period with my family’s history in mind.Rearmament was not a technical achievement standing apart from the regime’s purpose.It served a criminal state, and it prepared the war in which that state carried out its crimes.

The starting line

The Treaty of Versailles limited the German army to 100,000 men.Conscription was forbidden.Germany was not allowed an air force, its navy was restricted to vessels under 10,000 tons, and it was barred from maintaining a submarine fleet.^[1]

These limits were eroded before 1935.The Deutsches Historisches Museum notes that many weapons used in the rearmament drive were based on designs developed during the 1920s, illegally or abroad, in violation of the treaty’s prohibitions.^[6]

Open rearmament came quickly.On 9 March 1935, Hermann Göring announced the existence of a German air force.When no forceful protest followed, Germany reintroduced general conscription on 16 March 1935.The planned peacetime army was to have 36 divisions and 580,000 soldiers, and it was meant to be capable of war by 1939.^[2]

That date matters.The regime’s own planning placed full readiness years away, not in the immediate future.

Diplomacy did part of the work

Britain did not answer this violation with force.It sought instead to limit rearmament by agreement.On 18 June 1935, the Anglo-German Naval Agreement fixed German naval strength at 35 percent of the British fleet.London regarded it as a success for its policy of appeasement.^[3]

The agreement did not hold German naval expansion in check over time, and Germany declined a proposed air agreement later in 1935.^[3] What mattered most was the precedent: a treaty limit had been broken unilaterally, and the response was negotiation.

The Rhineland: a gamble, not a calculation

On 7 March 1936, about 30,000 German soldiers crossed the Rhine bridges into the demilitarized Rhineland.The move breached both the Versailles Treaty and the Locarno Pact of 1925.^[4]

The Deutsches Historisches Museum describes the occupation as extremely risky.A military counteraction by the Western powers would have forced the German troops to withdraw at once.France did not intervene because it lacked British support, and the international response remained largely verbal.^[4]

The result was an enormous gain in prestige for Hitler inside Germany.It also strengthened his belief that the European states would at least tolerate his expansionist policy.^[4]

This is the root of the genius myth. A gamble that succeeded because others hesitated was remembered as proof of foresight.But a result is not the same as a method.Had France moved, the same decision would be remembered as reckless.

Paying for an army without paying for it

Rearmament required money on a scale the ordinary budget could not openly supply.Hjalmar Schacht, reappointed president of the Reichsbank on 17 March 1933, devised the solution.

The International Military Tribunal at Nuremberg described it in detail.Five-year notes known as Mefo bills were guaranteed by the Reichsbank and backed, in effect, by nothing more than its position as a bank of issue.They were used to raise large sums for rearmament from the short-term money market.^[5]

Schacht also built a system of exchange controls and stockpiling.Its purpose was to keep Germany’s weak foreign exchange position from blocking the purchase abroad of raw materials needed for rearmament.^[5] The constraint was structural.Germany could build quickly only by borrowing against the future and rationing access to the outside world.

On 3 May 1935, Schacht told Hitler in a memorandum that carrying out the armament programme with speed and in quantity was the central problem of German policy, and that everything else should be subordinated to it.^[5] There is no doubt about his role.The Tribunal called him a central figure in Germany’s rearmament.^[5]

The warning from inside

What followed is revealing.By April 1936, Göring had been appointed coordinator for raw materials and foreign exchange.On 16 October 1936, he was appointed Plenipotentiary for the Four-Year Plan, with the task of putting the entire economy in a state of readiness for war within four years.^[5]

Hitler’s secret memorandum of August 1936 set out that goal: the economy and the army were to be ready for war within four years.Under Göring, private industry was forced to adapt, and the state intervened directly in production.Rearmament created jobs and high profits, but it also restricted the production of consumer goods.^[6]

Schacht opposed the plan.He argued on financial grounds for cutting back the programme, criticized much of the planned expansion of synthetic production as uneconomical, and urged tighter government credit and caution with foreign exchange reserves.He left the Ministry of Economics in November 1937.^[5]

On 31 March 1938, he ended the practice of financing armaments with short-term notes guaranteed by the Reichsbank.On 7 January 1939, he submitted to Hitler a report signed by the directors of the Reichsbank.It urged a drastic curtailment of armament spending and a balanced budget as the only way to prevent inflation.On 19 January 1939, Hitler dismissed him.^[5]

None of this makes Schacht a dissenter in any moral sense.He built the financing that made rapid rearmament possible.But his warnings show that the system’s own architect believed it could not continue indefinitely on the same terms.

Readiness on paper

In November 1937, Hitler set out his intentions to his military and foreign policy leadership.The record of that meeting, known as the Hossbach memorandum, presents 1943 to 1945 as the latest period for aggressive expansion, not a fixed date for completing rearmament.He argued that further delay would weaken Germany’s relative position.

The memorandum also records scenarios for earlier action if France were distracted by internal conflict or war with another power.Hitler explicitly contemplated exploiting such an opportunity as early as 1938.His claims about armaments and relative strength were part of an argument for expansion, not an independent assessment of military readiness.

The distinction matters.The memorandum does not establish that war in September 1939 violated a fixed plan to wait until the 1940s.Rearmament targets, actual operational capability, and the political decision to wage war must be assessed separately.^[7]

What the 1940 victory does and does not prove

The defeat of France in 1940 is often treated as the final proof of the system.But the campaign itself undermines the simple story.The Allies had more tanks in aggregate.Germany’s advantage lay in concentration, coordination, command methods, and the vulnerability of the Allied deployment.^[8]

Even the advance was constrained.The British official history records the fuel and repair support the advancing formations required, as well as friction and disagreement among German commanders.^[9] Behind the armored spearheads, much of the German army still depended on horses.The German Federal Archives describes the image of a fully motorized Wehrmacht as a legend, noting that industry could not produce enough vehicles and that fuel imposed further limits.^[10]

A short, successful campaign can conceal a long list of shortages.That is precisely what happened in 1940.

The lesson

The myth of genius explains outcomes by pointing to one man’s vision.The record points elsewhere: to deferred financing, controlled trade, unilateral treaty violations that went unanswered, and military timetables that were still incomplete when war began.

Organizations, too, can confuse momentum with readiness.Speed can be bought by borrowing against the future, and early successes can hide the cost.The honest question is never only how fast a system grows.It is what that growth depends on, who is warning about it, and what it is for.

Sources

1. United States Holocaust Memorial Museum, Holocaust Encyclopedia: Treaty of Versailles.
2. Deutsches Historisches Museum, LeMO: Wehrpflicht 1935 (German).
3. Deutsches Historisches Museum, LeMO: Das deutsch-britische Flottenabkommen (German).
4. Deutsches Historisches Museum, LeMO: Der Einmarsch ins Rheinland 1936 (German).
5. International Military Tribunal, Nuremberg, via the Avalon Project at Yale Law School: Judgment: Schacht.
6. Deutsches Historisches Museum, LeMO: Der Vierjahresplan (German).
7. The Avalon Project at Yale Law School: The Hossbach Memorandum, 5 November 1937.
8. National Army Museum: Defeat in the West, 1940.
9. L. F. Ellis, The War in France and Flanders 1939–1940, British official history: The Planning and Conduct of the German Campaign.
10. German Federal Archives: Horses in the Wehrmacht and Waffen-SS (German).