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while Italy remains in the Azis a great strain is thrown upon British sea power and communications. We must therefore aim at achieving, and maintaining, the maximum possible dispersion of the British fleet by every means the most mortant of which is keeping Italy actively in the war.

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The entry of America into the war would bring some naval reinforcement to Britain but its extent would be dependent on the attitude of Japan. Our diplomacy must continue to be active in ensuring full Japanese co-operation.

14.

Thanks to the excellence of our military intelligence we are very exactly informed of the strength of the British air forces and or the productive capacity of the British and American aircraft industries, We enjoy at present a considerable superiority in numbers, new and improved types of aircraft are in production.. On the other hand British strength is growing and the passage of time is likely to reduce the present disparity But even if Britain attained parity of numbers the employment of British air forces in other theatres and for trade protection together with our favourable geographical position will give us effective superiority. If we were to embark on subsidiary campaigns elsewhere this situation might alter. Italy has a numerically strong air force but it has proved most disappointing to those unacquainted with the Italian character and has shown itself incapable of drawing off much of Britain's metropolitan air force.

15.

As regards the army, we now have 217 divisions available. These numbers, which now include 12 armoured and 6 motorised divisions, are being increased. It is the army which wins Germany's wars and we are ready to face any eventuality, including a campaign against Russia.

The morale of the German army is high as are its

Recollections of 1918 equipment and training of every kind. have been dispelled for ever by the three glorious campaigns of this war.

England has 25 to 30 divisions at home, including some armoured divisions. In addition there are reports of

From reports of training numerous local defence formations, and equipment we believe that England will not be in a position to send strong forces overseas for some months. Recent onerations in Libya show that the British army is a force to be reckoned with, although of course allowance must be made for the poor quality of the Italian opposition.

but 16. We have the initiative for some months to come, the longer a bid for victory is postponed the more difficult it will become.

II, COURSES OPEN TO GERMANY

17. Victory necessitates the defeat of the British Empire. England. This necessitates the defeat of the United Kingdom England can be defeated in two ways, invasion or starvation.

Invasion, if practicable and if successful, offers the most certain road for victory.

18.

Necessary for success are the reduction or dispersal of the British fleet, the reduction to practical impotence of the Royal Air Force and the defeat of the army in the United Kingdom.

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