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At the end of World War I, the forces of the German Empire had mostly disintegrated, the men making their way home individually or in small groups. Many of them joined the Freikorps (free corps), a collection of volunteer quasi-military units that were involved in revolution and border clashes between 1918 and 1923.
The newly-formed Weimar Republic did need a military though, and on 6 March 1919 a decree established the Vorläufige Reichswehr ("Provisional National Defense Force"), consisting of a Vorläufige Reichsheer (Provisional National Army) and a Vorläufige Reichsmarine (Provisional National Navy). About 400,000 men served in the Reichsheer.
On 30 September, the army was reorganized as the Übergangsheer ("Transitional Army"). This lasted until 1 January 1921, when the Reichswehr was officially established according to the limitations imposed by the Treaty of Versailles.
Limited by treaty to a total of 100,000 men, the Reichswehr was composed of the Reichsheer , an army consisting of two group commands, seven infantry divisions, and three cavalry divisions, and the Reichsmarine, a navy limited to a handful of ships.
Despite the limitations on its size, their analysis of the loss of WW I, research and development, secret testing abroad (in cooperation with the Soviet Union) and planning for "better times" went on. During this time, many of the future leaders of the Wehrmacht, for instance, Heinz Guderian, first formulated the ideas that they were to use so effectively a few years later.
The Reichswehr was never a friend of democracy but stayed loyal to the democratic German government. This was done by emphasizing the apolitical character of the Reichswehr. This gave democracy the chance to develop without intervention from the military leadership, but reduced also the likelihood of military resistance against Adolf Hitler. The biggest influence of the development of the Reichswehr had Hans von Seeckt (1866-1936), during 1920-1926 as "Chef der Heeresleitung" ("chief of army leadership").
The reduction of the peace strength of the German army from 780,000 (1913) to 100,000 actually enhanced the quality of the Reichswehr: Only the best of the best soldiers would be permitted to stay in the army. The limitation to size also forced Reichswehr to look into new methods of waging war, modernize, and adopt swift, mobile doctrines of defense championed by von Seeckt and Guderian, that would later lead to the blitzkrieg.
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