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German intelligence.

8. No intelligence was obtained from aircraft reconnaissance during the last week. The following is considered to be the probable distribution of the principal German naval units:-

Scharnhorst at Brunsbuttel until the 8th February.

Gneisenau was at Wilhelmshaven on the 3rd February.

Lutzow (ex Deutschland), Admiral Scheer and Hipper were reported as having left Kiel on the 25th January for North Sea ports.

Prince Eugene, with the Blucher in company, is carrying out trials in the Baltic. It is reported they will stay there until the 25th February.

The cruisers Emden and Karlsruhe were reported to be in the Baltic on the 4th February.

The cruisers Nuremburg, Koln and Liepzig were reported to be in the North Sea area on the 4th February.

Protection of Seaborne Trade.

9. Four hundred and ten ships, including 13 Allied and 47 Neutral, have been convoyed during the week. Included in this number are three ocean convoys from Halifax, Sierra Leone and Gibraltar, comprising altogether 100 ships, which have arrived safely at United Kingdom ports.

Only one ship in an escorted convoy, the British S.S. Beaverburn, was lost. She was torpedoed 150 miles W.S.W. of the Scilly Islands outward bound, and shortly afterwards the escorting destroyer delivered a promising attack on the U-boat in question.

One homeward Norwegian convoy, consisting of 29 neutral ships with ore and cellulose, arrived without incident.

Shipping on the East Coast has been hampered by fog, but in spite of adverse weather conditions and attacks by enemy aircraft, nearly 200 ships have been convoyed up and down the coast from Orfordness to Methil without mishap. Thirty-two destroyers and 15 escort vessels have been employed on escort duties, in addition to one battleship, one cruiser and eight armed merchant cruisers for ocean escorts.

Of the 8.000 ships convoyed since the beginning of the war, only 16 British and 2 Neutrals have been lost.

Arming of "deep sea" British merchant ships is now 77 per cent, complete, and it is expected that all vessels of over 2,000 gross tons trading to the United Kingdom will be armed by the end of April 1940.

East Coast shipping situation.

10. A number of factors, mostly of recent date, have necessitated recon- sideration of arrangements for the safety of merchant shipping, both Allied and Neutral, on the East Coast of the United Kingdom. Briefly, these may be summarised as follows:

(a) The growing tendency for neutral vessels to take advantage of our

convoys.

(b) The fact that two neutral vessels were torpedoed off the Farne Islands while proceeding independently between Methil and the Tyne on the 25th January.

(c) The recent air attacks on East Coast shipping.

11. Within the last week the following revised arrangements have been brought into force :---

(a) Daily convoys between the Tyne and Southend as before but rather more frequently, that is on 21 days out of 25. It is intended to run convoys every day as soon as escorts become available. Escorts for these convoys to consist of two escort vessels or destroyers, and a covering force of one or more A.A. vessels and J-class destroyers to be in the vicinity of convoys during their daylight passage between Whitby and Cromer.

(b) Convoys have been reinstituted between Methil and the Tyne on the same frequency as between the Tyne and Southend. Escorts for these convoys will consist of four trawlers and two escort vessels or destroyers.

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