The Battle of Britain Five Months That Changed History, May—October 1940 by James Holland (z-lib.org).epub

years. The army, too, was to expand yet further with large numbers of new
guns and panzers and the production of new explosives.
These plans were the stuff of make-believe, however. To start with, the
Germans did not have the industrial capacity or raw materials to build so
many aircraft or ships. Entire dockyards and naval bases, for example,
would need to be built before they could even begin. Even if built, they
would never have the fuel needed to operate such a gigantic air force or
fleet.
And nor did they have the cash. The existing rearmament programme
had already pushed Germany to her economic limits. Indeed, by the end of
1938, Germany was facing a massive cash squeeze and something of an
economic crisis. The German market had briefly rallied after Munich in the
belief that long-term peace had been assured. The announcement of even
greater rearmament, however, ensured that confidence fell. When the
Reichsbank tried to raise another vast loan, it was unable to find the
necessary investment. There was a further problem. So much energy had
been spent on rearmament that foreign exports were massively down. There
was little foreign exchange coming into the country and what there was had
already been spent. Financially, Germany was in trouble by the beginning
of 1939.
In May that year, Generalmajor Thomas presented a clear analysis of
the balance of forces between Germany and the Western powers. Thomas
was against any premature war against Britain and France but nonetheless
his figures were alarming. In 1939, Germany was spending 23 per cent of
its national income on rearmament, whereas France was spending 17 per
cent, Britain 12 per cent and the USA just 2 per cent. On top of that, Britain
could count on the entire Empire for raw materials as well as on the USA
thanks to the 1938 trade agreement between the two countries. Since Britain
had a similar-sized economy to Germany’s, there was clearly scope for
Britain to expand her rearmament. As for the USA, it was a country that
with its vast industrial power could be in a league of its own should it so
choose.
Thomas had hoped his analysis would deter Germany from war, but
actually it did quite the opposite. Germany had a head start over Britain,
America and even France, particularly with its air force – and in the 1930s
it was air power that was feared above all. It was also ahead of the Soviet
Union, whose military capabilities had been greatly affected by Stalin’s