@ jmacatty
Steve
I agree with lots of what you say, however I read that Britain was much more concerned about the possibility that the Germans would build Capital ships, which is why they signed the '35 treaty. The same source noted that the British pretty much allowed the Germans to build lots of U-boats in that treaty, as they believed the threat was minimal, as they felt they could contain the U-boats by patrolling the Baltic exits (or whatever they are called). My thought was that perhaps a large British Capital program (or programme as you Brits prefer), would convince Hitler of the folly of trying to keep up, and instead, the Germans pursue a "U-boats all the way" policy. Remember, this is the policy Doenitz advocated all the time, it was Raeder who convinced Hitler to adopt the Z-Plan. Perhaps a large RN, convinces even him that attempting to compete is folly.