out the damage being done to German world prestige and German army repu-
tation by Nazi tactics, and this argument has had telling effect.
 
          The Conservative group is not in favor of embarking on such a costly 
venture as the invasion of Britain. They feel that even if this ven-
ture proved successful, it would greatly weaken Germany at a time when 
America grows progressively stronger. However, even the Conservatives
will risk an invasion if unable to negotiate a satisfactory peace. They 
do not any longer believe in the possibility of a German dictated peace, 
but hope for American intervention in arriving at a negotiated peace. 
They consider that even with America's help, Great Britain would be un-
able to successfully invade Europe since the German army reserve in men 
and equipment is sufficient toenable Germany to carry on for a long 
time independently of supplies obtained in Russia. The Army claims to 
have a reserve of armament, munitions, and equipment sufficient to last 
years, and stored all over Europe, particularly in France, Austria, and 
Czechoslavakia.
 
          The liquidation of the Nazi party is held by the Conservatives to 
be a primary essential to a successful peace move, but they realize that 
it could be effected only by a coup which would be accompanied by ser-
ious internal disorders and bloodshed. The Conservatives hesitate to take
such a step while major military operations are still under way, since 
the success of these operations would then be prejudiced. If there was 
some assurance that the British would meet them half way, and not seek 
dismemberment and eternal ruination of Germany, the coup might be
attempted.
 
     A discussion was recently held in Munster under the leadership 
of Colonel Schmidt and Major Gerken of the Sixth Army Staff, with respect to 
possible peace terms. In general these terms might be broadly outlined 
as follows:
 
          1. The British Empire would be left intact.
 
            2. The Germans would be given a free hand in Russia to occupy up to 
                 the Ural Mountains for twenty-five years.
 
            3.  A free occupation of the protectorates of Poland and Czechoslavakia.
 
            4. Germany would free Holland, Belgium, and Norway, but would retain 
                Luxemburg, and Alsace Loraine.
 
 
             5. France would be freed, but with the condition that the Germans have unlimited
                 freedom of enterprise and movement of German Nationals in 
                 French Colonies.
 
             6. Croatia, some Greek Islands, and part of Greece near Albania to go to Italy.
 
             7. Germany would claim no colonies, but would want large concessions in East Indies
          products for which she now has contracts with the Dutch.