DMA said:
Yes, I'm aware of all that. Nevertheless, the Germans, under the strains of WWII, instead of during a period of 5 years of peace (which I'm advocating), were able to build over 1 000 U-Boats without additional slipways, docks, resources etc. They simply built what was needed more or less overnight (as per their sub bases in France & Norway etc as well as at home). Now if they could build about 60 U-Boats, between 1935-39, whilst also constructing ships like Bismarck, Tirpitz, etc, there's no way you can tell me they can't, if those ships were cancelled, build 250 extra U-Boats in their place.
DMA, I have thought long and hard about this. Like your Middle East idea I think it is worth exploring in detail, but I still think you are wrong:
1. The Nazi economy, the Nazis planned for war inl 1944, the infrastructure was still being built up to 1942, this is what allows much faster weapons building from that date. I assume this applies to u-boat slipways
2. Type VIII vs Type VIIIB. The former sailed 1936, the latter 1938, I cannot see 300 of the latter being ready by 1940 come what may. Whilst the former had many problems. This, and Tony Williams electroboat reference brings us to the eternal dilemma of military technology - many tried and tested models, or a few of the more advanced. There is no right answer, simply swinging to extremes however will just bring different problems - see the Tiger tank for one extreme, the Sherman perhaps for the other.
3. Training. This is a brand new arm, there will not be the chance to train so many crews at once
4. Total resource. The two battleships weight only half as much as 250 boats. It is less the weight of steel, of which Germany produced circa 20 million tons a year than the fittings, particularly the engine, which would have taken up considerable engineering resources.
I will look to find more figures on all of this.
To conclude I think that the Germans could have had a bigger u-boat fleet by 1940, but not at the level you suggest without a substantial cutback somewhere other than big ships.