puppet Government.
 
     8. Germany would not back Japan in any conquest of the Dutch East 
                Indies.
 
     The Naval Attache's informant states that the Conservative group
would like to send, preferably to Istanbul, one of their principals, to 
meet a person having the confidence of the President of the United States, 
in order to discuss peace terms, and obtain the latter's views as to a 
just peace.
 
II. Possibilities of invasion of England.
 
     The Brauchitsch (Conservative) group have no enthusiasm for in-
vasion, but will ultimately try it unless some kind of favorable nego-
tiated peace can be arranged.
 
          The German general staff admits they are seven weeks behind schedule 
in the Russian cmmpaign, and they are disappointed with the slow progress 
and the heavy losses they have suffered. This may result in postponing 
any contemplated plans for invasion of England for six months or longer. 
The staff realizes that such an invasion would entail the sacrifice of 
huge quantities of men and material and would leave Germany so weakened 
as to make it impossible to carry out further military operations.
 
          The General Staff, while not very confident of accomplishing a suc-
cessful invasion of Britain, has nevertheless made detailed preparation 
for such a venture. More than 3,000 Heinkel 111's with several thousand 
towing gliders with specially trained pilots are being held in reserve. 
There are also many Junkers transports of which 500 are now in daily opera-
tion bringing back seriously wounded from the Russian front.
 
          The High Command realizes invasion of Britain must be done chiefly 
from the air, especially since motor speed boats, of which much was ex-
pected, have proved worthless in rough weather. If an invasion is attempted 
80% of the troop carrying and other activity will be in the air, and the 
Germans will throw in everything they have. For this reason, an invasion 
attempt is held highly improbable, until three months or more after de-
struction of Russian first line forces and the establishment of a front 
line east of Moscow and Kiev.
 
     Hitler wanted to undertake an invasion of England soon after the end 
of the Greek campaign, but the high command was unwilling to embark on 
such a venture with the potential threat of Russia at their backs and 
their dependence on that country for supplies.
 
III. German Morale.
 
     The heavy bombing by the British during the last two months has 
had a decided effect upon the German civilian morale, especially at Munster,