As Reichswehrminister he worked closely with Chef der Heeresleitung Hans von Seeckt in setting up the Reichswehr and turning it into a modern army.

Gessler and conservative elements considered the Saxon and Thuringian governments suspect due to their reliance on the Communist Party for a parliamentary majority.

At the same time, Gessler sought to avoid confrontation with the ultraconservative Bavarian government, who established a quasi-dictatorship in the latter months of the year and were known to be plotting a putsch against Berlin.

The KPD were in fact planning a national uprising, and as preparation entered into coalition government in both Saxony and Thuringia alongside the SPD.

Nonetheless, Chancellor Gustav Stresemann and the cabinet were swayed to Gessler's side and approved action; the state was occupied by the Wehrmacht on 22 October.

Gessler encouraged their departure, stating that their continued presence further incited the Bavarians to action; a "negotiated solution" could only be reached with them out of the picture.

The SPD parliamentary group voted to withdraw from cabinet, and the rump minority government fell less than a month later, ending Stresemann's tenure as Chancellor.

[2][3] After the accusation of financial anomalies in his ministry associated with the secret re-armament of the Reichswehr (also known as the Phoebus scandal) Gessler was forced to resign in January 1928.

[2] From 1928 to 1933, he was president of the Volksbund Deutsche Kriegsgräberfürsorge (German War Graves Commission) and of the Bund für die Erneuerung des Reiches.

[2] After the Machtergreifung of the Nazis in 1933, he retired from politics, in part due to ill health, and at first lived in seclusion at Lindenberg im Allgäu.