AMERICA HAS NEVER seen a richer exhibition than "The Splendor of Dresden: Five Centuries of Art Collecting," the loan show from the German Democratic Republic that will be on view all summer in the new East Building of the National Gallery of Art Militant, meticulous, the Dresden exhibition portrays the German mind.

Though there are Durers in it, this is not a show of pictures but of treasures less abstract. It overfeeds the eye. It gleams with diamonds, silver, steel, ivories and pearls. Historically informative, beautifully installed, the Dresden exhibition is a fairyland of luxuries, a near-excessive spectacle of princely quality, obsessional precision and orgiastic greed.

The Tut show was also splendid, but the objects in it numbered only 55. The East Germans sent us 700 - jewels without number, clocks, cups, bronzes, paintings, porcelains and guns.

Throughout the exhibition the craftsmanship is awesome. A tiny golden snuffbox has been inset with 77 different semiprecious stones, all of them from Saxony. Francesco di Giorgio's "Laocoon" is among the most important Renaissance bronzes known. There are paintings by Rembrandt, Holbein, Rubens and Vermeer. The sword of state of Saxony, worked in gold and silver, is as impressive as the one that Arthur pulled out of the rocks. Here are baubles worth a fortune, and amusing figurines, and Martin Luther's signet ring (he must have worn it on his thumb.)

Two jousting knights on horseback carry 15-foot long lances; their warhorses are blindfolded, it is easy to see why. A bare-breasted caryatid has been carved on rhino horn; her necklaces and bracelets are of silver set with diamonds, the drapery about her waist is spangled with gold stars. Dinglinger, the jeweler, worked together with his brothers on this object for eight years.

Saxony's electors did not stint on their outfits. There is a set of 20 buttons here, and badges, brooches, hat bands, belt buckles and shoe buckles, shoulder clasps, a sword - each encrusted with glinting rose-cut diamonds. There are 780 diamonds, many large as almonds, on the sword alone.

And it is not a typical. Augustus the Strong of Saxony owned nine such garnitures of jewels. Dazzling he must have been, strolling on parade.

The treasure vaults of Dresden, which have been reproduced here, were lined with baroque mirrors so that their precious objects gleamed ad infinitum. This exhibit, a display of incalculable wealth, goes on and on and on.

The human mind can drink in only so much grandeur. The average viewer, overawed, will wander through this treasury until his eye is full. Only then will he discover that the Dresden show informs.

It first of all explains how there came to be such things as museums, and not only art museums, but also those that show us nature and technology, stuffed elephants, rock crystals and the intricate machinery that took man to the moon. Today we tend to separate museums of esthetics, the National Gallery, for instance, and museums of technology, such as Air and Space.In Dresden on the Elbe where these collections were assembled, the two sorts once were one.

This exhibit includes booty from around the world - Turkish weapons captured at the seige of Vienna, emeralds as big as ice cubes brought from South America, Imari vases from Japan - but it is a German show. It could not have come from England, Italy or France. In it one detects that peculiarly German love of weaponry and uniform and military splendor that has often scared the world. It also makes apparent the German gift for technological precision that in recent years has given us Leica, Zeiss and Porsche.

"If one draws two lines on a map of Europe - one north to south, from Copenhagen to Rome, the other east to west, from Paris to Warsaw - they will intersect in the lowlands of Saxony," writes Joachim Menzhausen, the Dresden art historian who there directs the treasure gallery known as the Green Vaults.

Saxony for centuries has known both great prosperity and ruin. The King of Sweden fell there in 1632; the Prussian bombardment of 1760 destroyed 226 of Dresden's finest buildings; the armies of Napolean were overcome at Leipzig, and on Feb. 13, 1945, Allied fire bombs burned Dresden to the ground. In that sudden holocaust 135,000 died. Unfortunate in times of war, Saxony, at times of peace, has been extravagantly wealthy. Its princes, called electors (they were by birth entitled to vote for the Holy Roman emperor) once ruled most of Poland. Saxony's electors were among Europe's richest men.

Their fortune was constructed on two natural resources - metals (they mined silver first, and later copper, iron and tin) and strong, aggressive men. The electors sponsored factories; also they sold soldiers. Saxony produced the mercenary "Hessians" who fought beside the British in the Revolutionary War. Augustus the Strong of Saxony once traded 600 dragoons, on horseback, for a set of Chinese urns.

He was, the catalog informs us, "like a man possessed where porcelain was concerned." Eventually he owned 20,000 pieces. Until Boettger, the alchemist, whom Augustus had imprisoned (the alchemist had failed to turn lead into gold), came up with a recipe in 1710 in Meissen, the secrets of porcelain had been known only in the Orient.

These porcelains, swords, astrolabes and clocks are wonders of technology as well as works of art.

The Kunstkammer of Dresden, with whose splendid recreation the exhibition opens, was founded in 1560. A cabinet of wonders, and useful curiosities produced by man and nature, it is less a gallery than it is a workshop. What amazes are its tools.

Though elegantly fashioned, and chased with gold and silver, they all were made for use. Augustus I collected tools for metalworking, woodworking, gardening and fishing, astronomy, ballistics, horsehoeing and surgery, pewter casting, music making, torturing and magic. He owned a crystal ball (so did Queen Elizabeth) which he frequently consulted. His extraordinary clocks could tell the aspects of the zodiac, the phases of the moon, the month, the day, the calender of the saints, and the "unequal hour" (the 60-minute hour was not standard in the Renaissance; instead the lengthy days of summer and the shorter days of winter were, as were all days and nights, divided into 12.) He collected pictures, too, but he cared less for their beauty than the information they contained. His veneer saw, drills, chisels, planes, threadcutter for screws, his 14-bladed multipurpose tool - a Renaissance Swiss Army Knife - are here on display. So, too, are his ostrich eggs, his specimens of minerals, and the intricate automata that moved about his table startling his guests.

The Germans then, as later, were masters of precision engineering. An insatiable affection for the tiny, the ingenious, for clockwork and machinery, unifies this show.

The Dresden exhibition is installed in 12 sections. Of all of these the Armory is perhaps the most impressive. The helmets, crossbows, flint-lock pistols, lances, daggers, swords, blend grandeur and destruction. The seeds of Hitler's rallies are in retrospect detected in these grand and gorgeous weapons. Saxony's rulers loved theatrical extravagance, jousting matches, fireworks, seven-hour operas, masquerades and parties. They also liked to kill.

"Around 2 o'clock," reports one 18th-century observer, "a beautiful ship came floating down the Elbe, representing the sun, drawn by four seahorses. In it was seated Diana, together with musicians who sang various arias. After they had finished they went on shore near the shooting blind. The game, some 300 heads, among them 20 large stags and 10 wild boars, was driven into the water. . . His Majesty the King, the Prince, and the Princess killed a great number in the water as well as on land, and whatever was not shot had to drown."

Among the weapons here are many that are etched, set with precious gems, damascened and gilded, or veneered with stag horn. These swords are more than swords. Concealed in their handles are gears and springs and levers. There is a rapier here whose clockwork pommel tells the time. One dagger on display is so cunningly contrived that at the touching of a button its one blade becomes three. A rapier that is dated 1575 has a parrying dagger hidden in its grip. As if that were not sufficient, the handle also holds a concealed steel spring. The blade, already long, at the touching of a lever lengthens by 10 inches. It is a lethal toy.

A hundred other objects equally ingenious are included in the show. Those superb views of Dresden that introduced the show were painted, by Bellotto, with a camera obscura. Here are silver cups on wheels, chests with hidden drawers, locks with complex keys. The white and baggy outfit of one tiny dancing dwarf is a huge misshapen pearl. The treasury of Dresden, known as the Green Vault, had stone walls eight feet thick. And it had but one entrance, concealed in the walls of the royal living room.

Science and high art, technology and craftmanship, once were thought the same. That is no longer so. One can see the taste of Dresden transform itself and shift as one wanders, awed, through this lavish show. The pleasure in the practical that one finds in the Kunstkammer is eventually replaced by a desire for prestige. The 17th-century's indulgence in extravagant display and baroque decoration gradually gives way to a more austere neoclassical restraint. The Dresden show begins with tools, but it ends with paintings. The masterworks on view, the glistening Vermeer, Rembrandt's squalling baby, the Ruisdael, the Heyda, remind us once again of the enormous value that our time lends to pictures. Today that Rembrandt is more valuable than any goblet set with gems.

Washington's art musuems, the National Gallery among them, rigorously edit the history of art. They own no suits of armor, no pleasing jewelled pendants. They have taught us to look down at the decorative arts. They stress pictures above all.

The Dresden exhibition battles such austerity. One reason it succeeds is that its installation, imaginative, informative, is itself a work of art. The challenge was enormous - mounts 700 objects, with 700 labels, reproduce the Kunstkammer, the Armory, and make it all make sense. Gaillard F. Ravenel and his staff have somehow pulled it off. They designed not just the cases, the pedestals, the lighting, the Kunstkammer's oak floors, the huge tent of the Armory, the Green Vault's mirrored walls; but because the special exhibition spaces of I.M. Pei's new building have no internal walls, they designed the rooms as well. And the whole thing is dismountable, for the Dresden show will travel to New York and San Francisco. Their exhibition works. The show explains itself. And one can see the art.

This gigantic exhibition might have been a vulgar clutter, exhausting, overwhelming. Instead it is a lesson. How long will art and science be separate, divorced? What art should we preserve? One explores the Dresden show wondering not only at how much has been saved, but at how much has been lost.

Our fire bombs destroyed all of Dresden's Saxon Gothic sculptures, many palaces and churches, and 242 pictures. Martin Luther's Protestants were comparably destructive. Elector Frederich the Wise 500 years ago collected 117 reliquaries, many of them jewelled. So holy were the saintly relics they contained that 1,443 years in purgatory could have been avoided through their pious study. It was on the very door of that collection that on Oct. 31, 1517, Luther nailed up his 95 theses against the Church's indulgences. In the iconoclasm that ensued Frederich's paintings were dispersed, his relics were destroyed. Used tools, of course, were thrown away, steel armor rusted. In times of war or trouble huge amounts of silver were melted down or looted. In 1530, Dresden's vaults contained a hoard of silver worth 128,393 Guldengroschen, then a mighty fortune. The Reformation followed. Of that mighty treasure not a single piece remains.

IBM, the Robert Wood Johnson Jr. Charitable Trust and both National Endowments helped pay for "The Splendor of Dresden: Five Centuries of Art Collecting," which will remain on view in Washington through Sept.