They could have an army, however they had to drastically reduce the size of it. Along with other things like like the amount of money germany had to pay back after the first World war all lead to the eventual outcome that was WW2.
Of course, this is just coming off of the top of my head as it has been a while since I read/researched into it!
If you are even a little more informed than I am, I simply had no interest in the subject of the first or second world war until recently that I started to investigate and I ended up liking the history a lot.