-2-                             
 
 
A twofold manoeuvre
 
 
(v)    A proclamation on these lines will constitute a manoeuvre having
two main objectives:
 
 
(a) Strengthening the hand of the American isolationists and      
creating a division of opinion in Britain.                                                  
 
 
(b) The pacification of Europe and the enlisting of the support                                   
of non-Axis countries. It is intended by next Spring to               
hold the Eastern front with the maximum namber of non-German
troops, including French, Swiss and Swedish. In this way    
it is believed that two thirds of the German Army could be 
liberated from the East for a campaign against Britain if
necessary.
 
 
(vi) The Turkish President, it is claimed, has given Papen a promise
of his support for this scheme.                                                       
 
 
(vii) At Germany's request Japan refrained from declaring war recently.
Germany attaches great importance to the U.S.A. still being neutral when
the proclamation is launched,                                                         
 
 
(viii) In the event of Moscow holding out through the winter, it is 
realised that this scheme will be less convincing; it is nevertheless
believed at present that Hitler intends to put it through at all cost.
 
 
Morale                                                                                                              
 
 
(ix)    Morale in Germany was decidedly low before Hitler's recent speech.                                        
Hitler was forced to make the speech because of the internal situation,
although he was unwilling to leave the Eastern front. Some disturbances
between the regular Army and S.S. troops were provoked by officers who                                          
believed that the moment for the overthrow of the regime had come. These
were carefully and quickly hushed up.
 
 
(x) Hitler's speech acted as a great stimulant; for instance, an 
increase in the daily output of the informant's firm was recorded 
immediately after the speech and for the following ten days, owing to 
the improved morale.
 
 
(xi)But morale has now again lowered. The fall of Moscow is regarded 
as the crucial test of Nazi promises. The victories in the South do not 
evoke much enthusiasm.
 
 
(xii) The horror and the cruelty of the Russian campaign are now being
fully realised and are having a bad effect.
 
 
Goering
 
 
(xiii) Goering is not very active these days and is suffering from
angina pectoris.                                                                                                 
 
 
The Russian war                                                                       
 
 
(xiv) From military circles in Berlin the informant claims to have
heard:
 
 
(a) Leeb has sent a pessimistic report indicating that the fall
of Leningrad is unachievable.                                          
 
 
(b) Hitler has recently had a disagreement with Brauchitsch, who
has protested against the unnecessarily large sacrifices being made in                                               
front, of Moscow.