The Treaty of Versailles placed no restrictions on Germany regarding pistol barrel length. The only treaty restrictions on pistols was the prohibition of the export of military calibre pistols and other military small arms and the limiting of newly manufactured military pistols to a level comensurate with the needs of the one hundred thousand man army.
The reason we see so many shortened LP08's and P04's is that the Weimar government and Reichswehr had to deal with what they had. One of the Weimar governments most successful programs to circumvent the limit on the size of the army was to raise an enormous national police force. These police served extensively as border security in the East and were, in fact, a paramilitary force. The long barrel pistols were seen as cumbersome and obsolete in the new era and were cut down to standard pistol length.
Despite the cut-downs many long barrels were retained in service and saw use even in the second war.
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