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industrial capacity.
          Stalin said they had dispersed a good many of their 
larger factories and were moving many machine tools 
eastward to escape the bombing attacks.
          Stalin repeatedly stated that he did not underrate 
the German Army. He stated that their organization was 
of the very best and that he believed that they had large 
reserves of food, men, supplies and fuel. He thinks that 
we may be under estimating Germany's oil supplies, and he 
bases this on the fact that under the two-year agreement 
they had with Germany, the Germans asked for less fuel 
than the agreement provided for during the year 1940-41. 
He thought one weakness the British had was underrating 
their enemy; he did not propose to do this. He, therefore, 
thinks that so far as men, supplies, food and fuel are 
concerned, the German Army is capable of taking part in a 
winter campaign in Russia. He thinks, however, that it 
would be difficult for the Germans to operate offensively 
much after the first of September, when the heavy rains 
will begin, and after October 1st the ground would be so 
bad that they would have to go on the defensive. He ex-
pressed great confidence that the line during the winter 
months would be in front of Moscow, Kiev and Leningrad -
probably not more than l00 kilometres away from where it 
is now. He thinks that one of the great advantages the 
Russian Army has at the moment is that the Germans "are
tired" and have no stomach for an offensive.  He realizes
that Germany can still in all at the Russian front, but
these divisions probably cannot get there before the hard
weather sets in.