I. The position at the start in 1933 (for the period 1933-38) was as follows: Lack of any kind of basis for production as a consequence of the destruction of the armament industry following the Treaty of Versailles.
Consequence: no capacity for production, no motor vehicles, no mechanical equipment, no offices for construction, no experience.
Thus, the first stage for rearmament: the restoration of a basis for production, and equipment and reconversion of factories.
II. Basic initial factors to procure armaments:
(a) Branches of the Armed Forces, in Issuing orders to firms through their ordnance offices as purchasing agents, were handicapped by budget means and their incorporation in the budget year.
Consequence: Subsidizing of firms for lack of long term orders and through the impossibility of calculation.
(b) War Economy Office in the OKW as the central organizer and representative of the producer firms through War Economy (later Armament) Inspectorates as intermediary offices in the military area, to serve the branches of the Armed Forces as executive. Duties of the organization, which was run by a military staff:
(1) To gain information about and recommend firms to the military branches.
(2) To adjust the orders of the military branches to the capacity.
(3) To provide for the allotment of raw materials, machinery, and manpower.