3. Mine warfare. Aerial mines equipped with acoustic firing mechanism have brought good results. Harbor entrances, e.g., on the Tyne River, are frequently blocked. However, the enemy is now able to sweep acoustic mines. A new combined type of firing mechanism is ready for operational use. Further progress is expected. A report will be made shortly by the Mining and Barrage Experimental Command.

4. Views on the success of naval and air warfare. The following reports confirm the correctness of the view always held by the Commander in Chief, Navy, namely, that only that naval and air activity which is concentrated on cutting off supplies will definitely help to bring about the defeat of Britain, i.e., attacks on merchant ships at sea, on harbor installations and merchant ships in port, on new constructions in the shipyards, on warehouses, on transport facilities for distributing supplies, and on armament factories.

a. When at the German Embassy in Paris, Jacques Serre, former French consul at Newcastle, expressed his surprise that Newcastle has not yet been attacked, although the Vickers Armstrong shipyards there contain an aircraft carrier (to be completed in five to six months), two battleships (to be completed in five to six months), one light cruiser, six or seven destroyers, and three or four submarines under construction. Besides these, about sixty merchant vessels are being built in other shipyards on the Tyne River. Up to the time of his departure not a single bomb had hit Vickers Armstrong's large ammunition plant in the Newcastle urban area which employs 20,000 workers. He also pointed out the importance of the three large Tyne bridges linking Scotland and England.

b. The German Naval Attaché in Tokyo has reported that the British Attaché there stated that air warfare alone can never force Britain to give up, especially if it is continued as heretofore with bombs dropped at random on strategic and non-strategic targets alike. Experience has shown that such action merely serves to strengthen the people's will to resist.

5. The "Westwall" barrage was recently extended to the Shetlands. The last two mine fields were laid by minelayers without any escorts, one off the Shetlands on 7 March at a distance of 130 miles from the Norwegian coast, and one on 11 March 120 miles southwest of Egersund.

6. Defense of the coast of Norway by Army coastal artillery was ordered by the Führer after the British raid on Svolvaer. Even these guns will not be able to prevent the enemy's big ships from shooting up such batteries some day, especially during operation "Barbarossa". The presence of air forces along the coast will always remain the greatest deterrent. The Führer agrees with this view and states that the Commander in Chief, Luftwaffe, is providing air units composed of various types of planes for southern, central (Trondheim), and northern Norway (Bardufoss).

The defense of Narvik is the most important matter, and it is now being organized. A 30.5 cm. battery, a 21 cm. mortar, and torpedo batteries are being provided. A 28 cm. railroad battery is being used during the construction period.

The Commander in Chief, Navy, again points out the need to occupy Murmansk and Polyarnoye by land if possible also from the air, if operation "Barbarossa" takes place, as the British must be prevented from getting a foothold there.

7. We have information that American convoys, probably escorted by U.S. naval vessels, call at Iceland, where the escort duties are taken over by British naval vessels. The harbor installations at Reykjavik do not permit transshipment. Iceland is not included in the area designated by the U.S.A. as the Western Hemisphere. The Commander in Chief, Navy, suggests the following:

a. The closed area should be extended to include Iceland and the Denmark Strait (see attached map). However it must be established right from the beginning that in this closed area American ships will be treated in the same way as British and neutral ships in the original closed area, i.e., they can be attacked without warning. The matter is being discussed with the Foreign Office.

b. Germany should refuse to respect the Pan-American neutrality zone or should limit it to a distance of 300 miles from the coast. The Führer wonders whether we should extend recognition only to the three mile zone. This matter is to be discussed with the Foreign Office.

c. The present restrictions on the treatment of American ships should be lifted, i.e., they should be treated in the same way as all other neutral ships. That means they should be stopped for examination outside the closed area and brought in or sunk according to prize law.

d. The operations against Halifax should be permitted. Points under "c" and "d" are to be discussed with the Foreign Office.

e. The Commander in Chief, Navy, suggests that propaganda pertaining to the U.S.A. should now lay more emphasis on the extent to which that nation violates neutrality by legislation to render aid to Britain and by her entire conduct; for example it is possible that British naval vessels might be repaired in the U.S.A.

8. The Commander in Chief, Navy, calls attention to the need to secure Northwest Africa with the assistance of the French, in order to paralyze British and U.S. control over the eastern Atlantic from there. The Commander in Chief, Navy, considers that it would be most dangerous if the U.S.A. should later gain a foothold on the coast of West Africa; this would be the best opportunity for the U.S.A. to intervene effectively. Therefore it is necessary to make an agreement with the French. See Annex 1 for the advantages and disadvantages of such a step.

The Führer states that at present there is no possibility of negotiating with France, since she is harboring new hopes as a result of Italy's weakness. Spain's refusal to cooperate also complicates matters; she is playing an underhanded game due to the dissension caused by Suñer. The Commander in Chief, Navy, suggests that the French problem be clarified after the completion of operation "Barbarossa". The Führer agrees. In the autumn he also wishes to force a decision in the Spanish question. It will become more and more difficult to occupy Gibraltar, however, because of British countermeasures.

9. Italy.

a. The conference with Admiral Riccardi in Merano is reported on. The following points were discussed:

(1) The position of the Chief of the Naval Liaison Staff in Rome.

(2) The war situation in the Mediterranean. Offensive use of Italian naval forces. Use of mines in the Mediterranean, with special reference to the need for closing the Strait of Sicily. Escorts for transports to Libya.

(3) Increase in the freedom of action of the Italian Navy through the occupation of Greece.

(4) Italy's attitude toward France. Preparations for the occupation of Corsica. Matters dealing with Corsica are discussed, of which the Foreign Minister has also been informed through the report from Rintelen. The Commander in Chief, Navy, particularly emphasized here that an agreement between the two governments is necessary before such action is taken.

The Chief of the OKW, declares that examination has shown that the Italians admit having 600,000 tons of fuel oil still, hence more than we have ourselves. They claim that they used 35,000 tons for the Genoa Operation. It is being investigated whether we can return the oil that has been used for convoy escort duties. The Commander in Chief, Navy, asks whether the 600,000 tons actually exist or whether the Italians gave this figure merely because it was the one that had been quoted to the Duce. This would explain the high consumption figures, which may have been given in order to reduce the high total. It is not known whether this is the case.

c. On the basis of a German report and an offer to deliver German mines, submitted to the Italian Admiralty at the beginning of February, the Italians have ordered mine material for protective barrages off Tripoli. The material has already been sent. Personnel to give tactical and technical advice has also been sent and is already there.

700 explosive floats, 650 cutting floats, 590 UMA, and 560 EMC mines have been delivered.

It is expected that mine laying will begin within the next few days.

d. The question of using German S-boats in the Mediterranean, as requested by General Rommel, has been examined by the Seekriegsleitung on a previous occasion. In view of the tasks anticipated in connection with operation "Barbarossa", S-boats cannot be transferred until this operation has been completed. Until that time Italian motor boats will have to suffice for the tasks in the Mediterranean.

e. In order to enable the Navy to carry out its tasks in the Mediterranean, it is particularly important to take Malta.

In British hands this base represents a strong threat to our troop transports to Africa and later for the supply transports. Besides, it is an undesirable supply base for the shipping plying between the western and eastern Mediterranean.

If Malta were in German or Italian hands, the convoy traffic between Italy and Africa would be considerably simplified and Italian naval forces now used only as escorts would be freed for operational purposes. Better patrol of the Strait of Sicily and new mine fields would inflict considerable harm on British shipping and on British naval supremacy in the Mediterranean.

In the opinion of the Luftwaffe, it appears possible to capture Malta by airborne troops; the Navy is in favor of this as soon as possible.

The Führer states that more recent reports from the Commander in Chief, Luftwaffe, reveal that the difficulties are greater than anticipated, as the terrain is badly cut up by small walls, making it very difficult for airborne troops to function. Further investigations are being made.

10. Preparations for operation "Marita".

a. Materiel.

(1) The coastal batteries intended for use in Rumania and Bulgaria have been sent. The 17 cm. battery installed at Varna was reported provisionally ready for action at the beginning of March; it will be entirely ready on about 20 March. The heavy battery of two 24 cm guns near Burgas is not yet ready for action because of damage to the crane, but it should be ready by the end of March. The 17 cm. battery for Rumania is ready for action; the heavy 28 cm. Tirpitz battery will be ready by the end of March.

(2) The Rumanians have requested us to let them have 2,000 explosive floats for the mine fields that are to be laid. They have been dispatched from our own stocks along with the requested gear for sweeping British aerial mines.

(3) Examination of the two 600 ton submarines being constructed in Rumania has shown that the boats will be launched at the end of May, will be completed at the end of November, and will be ready for action in March 1942. Delivery of the parts ordered in Germany will cause no great difficulties.

(4) Transport of small German submarines overland to Rumania would take four and one half to five months. Hence the Seekriegsleitung has decided to give up the idea, especially as the boats cannot well be spared from home waters.

(5) Despite difficulties caused by the state of the German superhighways due to damage from frost, the transport of two Bulgarian motor boats that have been built in Holland has been ordered.

(1) The Naval Mission to Rumania ((Konteradmiral Fleischer and staff) has taken up its duties.

(2) The barrage expert from the Seekriegsleitung who was requested by Rumania has been in Rumania to advise the Rumanian Navy how to lay the mine fields. At his advice the necessary material has been sent and the German specialists required for technical matters are on their way.

(3) The Naval Liaison Staff, Bulgaria, has taken up its duties in Sofia.

(4) The Admiral, Greece, left on 8 March. The Admiral, Southeast, will leave about 22 March.

(5) An attempt is to be made to obtain the active cooperation of the available Rumanian and Bulgarian naval forces in the war; for this purpose, besides the operational guidance to be given by the Admiral, Southeast, and the liaison staffs, it is intended to intersperse German naval officers and German technical personnel among the crews, as far as the personnel situation permits. About 400 men in all will be required. This personnel must be taken from ships undergoing repairs.

(6) The Commander in Chief, Navy, requests confirmation of the intention to occupy all Greece, even if a peaceful settlement is reached. The Führer assures him that complete occupation is the first requisite for any settlement.

(1) Plans for naval operations must be coordinated. The operational areas must be defined.

(2) The question of who is to control the naval forces involved must be settled.

(3) Measures to be taken against islands, such as Lemmos, and anchorages in western and southern Greece, particularly measures designed to prevent ships from leaving, must be arranged. The harbors and coastal shipping on the west coast must be organized.

(4) Agreements on communications and recognition signal procedure, etc., must be reached.

(5) An Italian liaison officer must be appointed to the staff of the Admiral, Southeast.

11. Operation "Attila." The units which the Navy is to provide, i.e., a special group of fifty officers and noncommissioned officers and two battery crews for the 11th Air Corps [XI. Fliegerkorps], and a special group of twenty men and the Naval Stock Troop Detachment for Army Group D, have been organized so that they can arrive at the points of departure within 72 hours, or in some cases 48 hours.

12. Japan. Japan must take steps to capture Singapore as soon as possible, since the opportunity is more favorable that it will ever be again: The entire British Fleet is tied down; the U.S.A. is not prepared to wage war on Japan; the U.S. Fleet is inferior to the Japanese Fleet. Japan is preparing this move, to be sure, but according to all the statements made by Japanese officers she will not carry it out until Germany invades Britain. Hence Germany must make every effort to get Japan to attack at once. If Japan holds Singapore, all other Far Eastern questions in connection with the U.S.A. and Britain will be solved, including Guam, the Philippines, Borneo, and the Dutch East Indies.

Japan wants to avoid war with the U.S.A. if possible, and she could do this if she would take Singapore by a decisive attack as soon as possible.

According to a statement made by Admiral Nomura, Minister Matsuoka has grave misgivings with regard to Russia and will raise questions mainly on this point.

The Commander in Chief, Navy, recommends, in a personal discussion with the Führer, that Matsuoka should be informed of plans regarding Russia.

13. General Questions.

a. The manpower situation and problems connected with raw materials are discussed. (See Annexes 4 and 5.)

b. Result of "a": The monthly output of submarines will still remain approximately at 18 during the second quarter, but after that will drop to 15, whereas if the demands for workers, etc, were met, it would rise to 20 by the end of 1941 and 24 in 1942. (See Annex 6.)

As before, the Führer states that he intends to concentrate the greatest efforts on enlarging the Luftwaffe and Kriegsmarine after operation "Barbarossa" has been completed.

c. Fire on the BREMEN. An investigation is in progress. It is not yet certain whether the fire was caused by sabotage or by a short circuit due to old material.

The Führer orders investigation to be made as to whether the crane installations on the EUROPA, the POSTDAM, and the GNEISENAU could be strengthened to permit the loading of heavy tanks.

d. Dock facilities for the BISMARCK and the TIRPITZ are: In Bremerhaven, the Kaiser dock; in Kiel, the floating dock; in Hamburg, the Blohm and Voss dock, but only if the ships are greatly lightened.

e. Readiness of ships: The BISMARCK will be ready for operational use about the middle of May. The TIRPITZ should be ready for transfer to Trondheim by the middle of May. She will be able to continue combat training there, and by her presence will discourage British raids on Norway.

f. Displacement.

(1)	BISMARCK	RICHELIEU	Ship "H"
Washington:	42,343 tons	38,500 tons	56,500 tons
Fully loaded:	49,947 tons	46,453 tons	67,500 tons

(2) American battleships: From 1937 to February 1940 the keels of six ships of 35,000 tons were laid. Each has nine 40.6 cm. guns. The speed is 27 knots.

In 1940 the keels of two ships of 45,000 tons were laid. In 1941 the keels of two ships of 45,000 tons were laid. Each of the four has nine 40.6 cm. guns. The speed is 33 knots.

The beam of both classes is 32.9 meters. The locks of the Panama Canal are 33.5 meters wide. Our locks, ready in 1946-1947, will be 41.5 meters wide.

Annex 1

France offers the following possibilities for exploitation:

a. The military power that still remains, primarily the fleet and the forces in Africa, might be used.
b. The African area with its strategic and economic potentialities is important.

I. If France should resume the struggle against Germany on her own initiative it would be impossible to prevent the remaining fleet from escaping from Toulon. Also the part of the fleet at present in the British sphere would be active within a short time. This would have a detrimental effect on the conduct of the war in the Mediterranean; Italy would be entirely on the defensive; the employment of French forces to carry out escort duties and anti-submarine measures would render it more difficult to disrupt British supply lines. (However, it would be very difficult to reactivate the fleet for any length of time without the industrial facilities offered by continental France.) Italy's position in Tripoli would become untenable; she would be caught between British and French forces, since the enemy fleets would possess naval supremacy. Every bridgehead in Africa would be lost, so that Africa could not be attacked. This would be particularly grave if it later developed that Germany would have to gain her future colonies by military conquest. At a later date a strong center of power might be created in North Africa with American assistance. Germany would have to feed continental France as well as herself if she wished to benefit from the French industry, as then all imports from Africa would cease. Deliveries of oils, ores, and rubber from French colonies to Germany herself, which are being increased at present, would be stopped.

All anti-Axis forces in the world would be given fresh encouragement both politically and propagandistically. France would be missing when it comes to rebuilding Europe.

II. Our aim must be more than merely to prevent this situation from arising; we must win France over to full political action against Britain and we must fully exploit the economy of the African area. The collaboration of France in military tasks and the use of her fleet would also be desirable if France is willing to do this without too great concessions on the part of Germany with regard to the future peace treaty. Thus we must strive to secure the French colonial empire against an Anglo-American attack and against De Gaulle, and to exploit the Franco-African area and its bases for German naval, air, and military forces. We should then have to following possibilities:

a. The Air Force based in Morocco could eliminate Gibraltar to a great extent, with all that this implies for British supply lines and the strategic situation in the western Mediterranean. This would make it easier to restore the situation in Libya.

b. Sierra Leone could be captured, thus eliminating Freetown. It would not be at all impossible to attack Gambia and Nigeria. This would relieve the Italians in East Africa, and threaten the Egyptian Sudan. If the situation demanded it, our colonial empire could be acquired through military conquest.

c. Economically, North and Central Africa are of very great importance in a long war against the Anglo-Americans. If we control the Mediterranean and have the use of the French, Italian, and German fleets, it would be possible to exploit Africa economically even during the actual course of the war.

d. All cooperative pro-Axis forces would be encouraged; it would be a great political success with far-reaching effects. For all practical purposes Europe would be united against the Anglo-Americans. It is hardly necessary to mention that it might be of the greatest importance if French forces, particularly the fleet, could be induced to go beyond the tasks of defending French interests and to attack British positions, British supply lines, etc.

The possibility of guaranteeing the French retention of at least part of their colonial empire as an inducement for collaboration should be investigated.

Annex 2

The question of the possibility of transporting small German submarines, Type II, overland or by waterways to the Black Sea has been settled in the main in accord with the Ministry of Transportation and the German-American Petroleum Company.

Conditions are different from those in the last war. During the World War submarines of Type U BI, weighing only 125 tons, constructed in Germany, were transported by rail in completed, fully equipped pressure hull sections to Belgium and Pola, where they were assembled. In the case of the next type, the U BII submarine of about 250 tons, parts had to be transported separately. Construction of the pressure hull and installation of interior equipment had to be carried out in Pola.

At present no small submarines are under construction; hence we must fall back on completed boats. However, the separate parts of the modern pressure hulls are welded instead of being riveted together as in the case of the World War boats; it would hardly be possible to take a part and then reassemble welded boats without damaging some parts. Hence the complete submarines must be transported if possible, or at any rate the pressure hulls must be left intact.

The diameter of the pressure hull measures 4 meters and it is about 27 to 30 meters long. This rules out transport by rail.

The only remaining possibilities are the superhighways and river transport, which were utilized in the case of tankers for the Danube.

Submarines which can be considered are submarines of the Types U "1" to "6" and U "7" to "24".

The determining factor is the weight that can be carried on the superhighways; this is 145 tons. Kuhlemeyer trucks must be used on the superhighways. The weight permitted would probably allow us to transport the whole boat of the smaller type after detaching the engines and all easily removable parts. A difficulty arises from the fact that the whole weight must rest on two points. These points are not strong enough and would have to be specially reinforced.

In the case of the large type probably only the pressure hull could be carried as a unit; that is, parts of the outer hull would also have to be removed.

For road transport, it is suggested that the boat should be laid on its side, because the underpasses on the superhighways are not sufficiently high for the submarine standing on its keel. However, even in this case the conning tower would have to be cut off, or the width would be too great. With reference to the height, this is determined by the underpasses on the superhighways, not by the river bridges.

Transfer to the superhighways is possible only at one point, near Uebigau below Dresden; the tankers were also transferred to the superhighways at this point. For the same reason the boats must be launched on the Danube at Ingolstadt. Their draught will not permit them to proceed either up the Elbe or down the Danube under their own power, so that the river transport will have to be carried out on special pontoons. Owing to the sharp contours of the submarines, transfer to the Kuhlemeyer trucks constitutes the main difficulty; another is the launching on account of the depth of the water. The simplest solution seems to be to transport the boats with pontoons attached on the Kuhlemeyer trucks. It is best to have the boats proceed to Hamburg, where all parts over the regulation weight can be removed. After the reinforcements have been built in, the boats are to be laid on their side on specially built pontoons and firmly attached so that they are ready for transport on the Kuhlemeyer trucks.

No further difficulties are anticipated during the transport on the Elbe. The voyage on pontoons down the Danube might possibly require waiting periods on the upper Danube up to a fortnight because of great fluctuations in the height of the water.

On the basis of past experience the German-American Petroleum Company estimates that transport will take about nine weeks. This does not include the possible fortnight's delay that may occur on the upper Danube. Preparation of the boats in Germany by detaching the engines and all easily removable parts, and reassembly of the boats in Rumania will require at least nine to twelve weeks. The larger boats will take a little longer because the bow and stern will presumably have to be taken off and the torpedo tubes completely removed. The entire length of time required is estimated tentatively at four and a half to five months. This presupposes that the preparation of the boats for transport, the construction of the pontoons, and the reassembly of the boats is carried out by efficient shipyards, and also that other urgent work is postponed in favor of this project.

In view of the length of time required for the transport, which would prevent the boats from being ready for action in the Black Sea in time for operation "Barbarossa", the Seekriegsleitung has decided to give up the idea.

The state of the Rumanian submarine service is as follows: The Rumanians possess a 650 ton submarine, DELFINUL, which was built between 1927 and 1931 in an Italian shipyard in Fiume, but the Rumanian Navy did not take it over until 1936. However, only 12 Whitehead torpedoes that are ready to fire are available for the boat; besides these, the Rumanian Navy has 20 Whitehead torpedoes for its motor boats. No further British torpedoes can be obtained. These torpedoes leave a bubble track which in the present state of anti-submarine defense renders it very difficult or even impossible to wage submarine warfare by day. On account of the greater length of the German torpedoes it will not be easy to convert to them; at any rate it would put the boat out of action for several months.

One torpedo-carrying submarine and one mine-laying submarine, each of 600 tons, are being built according to German plans in Galatz. The Naval Industrial Experimental Station at the Hague is superintending the construction. The boats can be launched at the end of May or the beginning of June, and will be completed by the end of November 1941. They were to have been armed with British Whitehead torpedoes, which are no longer obtainable. The Industrial Experimental Station has made structural changes to permit the use of German torpedoes, although not with splashless discharge. At present an investigation is being made to see whether it is possible to make the necessary changes in the torpedo tubes without encroaching on the construction of tubes for German submarines.

The mine-laying submarine was to have used British mines, which are also unobtainable. It is probably not feasible to convert to the use of German mines. The development of a suitable new type of German mine would take about two years. As the mine-laying submarine has two bow and two stern tubes and can carry eight torpedoes, it appears more practical to complete the boat purely as a torpedo-carrying submarine and to substitute fuel tanks for the mine shafts, in order to increase the short range of at least that one boat. Both boats will require a trial period of at least three months with German crews, so that they cannot be ready for operations until the end of February 1942 at the earliest.

Annex 3

It is assumed that Japan will remain loyal to the Tripartite Pact. Only the nationalist organizations and the younger officers corps are urging Japan to take advantage of the present favorable situation to attack Hong Kong and Singapore. The question as to whether this would suit German interests can be answered in the affirmative only if Japan has definite prospects of success, which is by no means certain due to many factors: Internal political conflict, the war with China, economic weakness, lack of airplane gasoline and of oil, considerable strengthening of British garrisons in Malacca, and supply of American bombers to Malacca and the Dutch East Indies. Aside from this, there are at present no indications that authoritative Japanese circles are considering taking offensive action in the near future, unless the defeat of Britain by means of a German Invasion is definitely assured. The following points are of interest in this connection:

a. The Japanese Naval Attaché and his staff are constantly inquiring as to the date of the invasion, so that Japan can then act in East Asia.

b. The same question and inference were discussed in great detail in the conversation between Admiral Nomura and Admiral Groos.

c. Japanese authorities have repeatedly stated that Japan is in a position to wage only a six months blitzkrieg. It is obvious that, given the present ratio of forces, six months would certainly bring some success but could not end the war in the Far East. Then the combined economic warfare of the Anglo-American powers might cause serious reverses. (According to a study made by Wenneker, the war economy situation permits a war lasting from one to one and a half years.)

d. Admiral Nomura says that Japan really does not wish to make war on the U.S.A., and that her Ambassador in Washington has therefore been given the task of improving relations. The Japanese actually fear an American attack.

e. In his speech delivered on battleship BISMARCK, the Admiral places great hopes on cooperation in the decisive struggle that will extend over the next ten to twenty years. Thus Japan has a different conception of time in attaining her objectives. The Seekriegsleitung believes therefore that assistance rendered by Germany by delivering engines, releasing patents, transmitting information gained from war experience, etc., a matter which is at present being debated, would have no decisive influence on Japanese plans in the near future, although the contrary is often claimed. Any accommodation in this direction would thus be only of a political nature, as any such aid could not become fully effective until the war in Europe is decided. In view of a warning report from Tokyo from a reliable agent of the Air Attaché, the Seekriegsleitung is not convinced at all that valuable information is not being passed on to the U.S. and Britain in order to gain other advantages. There are many pro-British and pro-American Japanese. Not every Japanese is a friend of the Axis.

At the suggestion of the Ambassador in Tokyo, the Attachés of the various branches of the armed forces, in collaboration with the political and economics experts, have made an investigation of the possibilities and the effects of the entry of Japan into the final struggle with Great Britain for the purpose of insuring her own "Lebensraum".

The report coincides to a great extent with our views on the Japanese situation.

Japanese military potentialities were evaluated more favorably than we had done.

It would be expedient to refer to the preparations now being made for operation "Barbarossa" when Foreign Minister Matsuoka pays a visit.

Annex 4

The Navy's armament tasks have increased very considerably since the middle of last year as a result of the war situation. Despite all the restrictions and economy measures that have been imposed, demands in all fields have continued to rise steeply. In the main, they are due to the following causes: Submarine construction has been continued and increased; the production of torpedoes has been increased; repairs on the growing submarine fleet and on the surface vessels of the nucleus fleet and its auxiliaries have been augmented; heavy demands have been made on facilities for new construction and repairs in occupied territories for the tasks of coastal defense and the patrolling of sea areas from Kirkenes down to the Spanish frontier; the demands for anti-aircraft ammunition, and also heavy and medium ammunition, have risen.

On the other hand, the measures recently taken in respect to priority grading and allocation of workers and raw materials have not succeeded in easing the execution of the Navy's armament program. On the whole, the constantly increasing difficulties seriously affect the orderly completion of the submarine program and other urgent naval construction, and they threaten to cause delays in all fields which cannot be tolerated.

I. Manpower.

A. The allocation of workers in January augmented personnel once again, to be sure, but this merely sufficed to take care of the increased requirements already planned for, and has not in the least reduced the shortage that has existed since the outbreak of the war.

Compare the attached graph (Appendix 1) showing the development of the personnel situation at thirty five of the most important shipyards.

Summary of increased labor requirements in total naval production as of 1 February 1941

	Shipyards	Other armament concerns	Total
Shortage on 1 February 1941: Further requirements up to 31 May 1941: Further requirements up to 30 September 1941:	8,500 10,500 9,000	8,000 12,000 9,500	16,500 22,500 18,500
	28,000	29,500	57,500

B. In response to a request from the Commander in Chief, Navy, that no workers should be withdrawn from the most important naval concerns and yards, the Führer issued an order on 20 December granting particular protection to special concerns, "in the first place to shipyards and air force concerns".

But as a result of the extension of the designation of special concerns to cover the entire production of "SS" and "S" priority, the effectiveness of the order was considerably lessened. The following were excepted:

1. Volunteers serving over a long period.
2. Men on labor leave; they are to return to their units on 31 March.

C. The loss of long-term volunteers represents for naval production a monthly reduction of about 500 Of the best workers. According to both the Army High Command, General War Office and the Bureau of Naval Administration, the field units urgently need these volunteers, beginning with men born in 1916, as noncommissioned officer material. SS troops (SS-"Verfügungstruppen") and police divisions (not regular police) are treated in the same way as the field units. The OKW, War Economy Division has already submitted a request that the drafting of long-term volunteers from special concerns should be kept within reasonable limits, and be completely stopped in the case of SS and police divisions.

It is urgently necessary for naval production that this request be granted.

D. On the Führer's orders, 22,200 men on labor leave are to have this leave extended beyond 31 March, but the Führer expressly stipulated that this should be almost entirely for the benefit of tank production.

Note for the Commander in Chief, Navy: The Minister for Armament and Munitions subsequently places 1,720 of these men on labor leave at the disposal of naval production; to what extent this was done with the consent of the Führer is not known.

The violation of the priority regulations through preferred treatment for buna production and mineral oil production above all other tasks must also have a damaging effect on allocations of workers for naval production.

E. The remaining naval production manpower requirements are as follows:

Shortage on 1 February: Withdrawal on 1 April of men on labor leave Increased requirements up to 31 May Increased requirements up to 30 September

16,500 10,000 22,500 18.500

On the other hand, all economy measures constantly being urged with extreme emphasis by all official quarters cannot bring about a really decisive improvement in the difficult situation or even approximately cover the shortage. Such measures are: Making adjustments within the concerns themselves, training men for different types of work and instructing new workers, checking through factories for dispensable workers, employing foreign workers, using prisoners of war, using occupied territories for war production, and finally the renewed drive further to limit, suspend, or shift civilian production and to transfer the workers thereby released.

II. Raw Materials.

A. Although the allocations of raw materials in the second half of 1940 were on the whole sufficient, and the work outstanding from the first half of the year could be covered to a considerable extent, in the first quarter of 1941 they were inadequate for the increasing requirements. Up to this point it had been possible by careful control to carry out the most urgent tasks of submarine construction and to avoid crippling production which is of vital importance to the outcome of the war.

B. The allocations for the second quarter that have just been made by the OKW are considerably below requirements. This is especially true in the case of steel, which will cover only 74 per cent of the amount demanded. (See Appendix 2.)

This applies also to copper, aluminum, lead, tin, antimony, and nickel, of which from 70 to 80 per cent of the required amount has been allocated; the situation is particularly difficult in the case of chrome, molybdenum, and tungsten. By very stringent restrictions and eliminations it has been possible to cut down the rubber requirements.

The cuts in allocations for "S" priority products are particularly drastic, and only 45 to 48 per cent of the requirements are covered.

The armament program cannot be completed as planned with these allocations and it will not be possible to avoid making sharp cuts in even the urgent priorities.

C. In the figures given below no allowance has been made for requirements to cover the new demands for ammunition, especially ammunition for anti-aircraft guns. This will amount to about 18,200 tons per month in the case of steel, all of which will be needed as early as the second quarter of 1941.

	Last quarter 1940		1st quarter 1941		2nd quarter 1941
	Demand in tons per month	Allocation in tons per month	Demand in tons per month	Allocation in tons per month	Demand in tons per month	Allocation in tons per month	Percent
Iron & Steel Copper Aluminum	155,000 4,900 4,668	155,000 4,800 4,500	180,000 6,120 4,880	155,000 5,200 4,500	228,000 6,964 4,924	170,000 5,500 4,000	74% 79% 81%

III. Construction Plans.

In addition to difficulties in production there are also very great difficulties in executing construction plans. The 1,380,000,000 reichsmarks for construction announced for the second fiscal year of the war was already a sharply reduced figure; now it has been reduced further by the Commissioner General for Construction to a total of 1,100,000,000 reichsmarks, which includes reserves for new construction projects. Instead of construction amounting to 283,000,000 reichsmarks which had been announced as urgent and of special priority, the Navy has been allocated merely 155,000,000 reichsmarks for construction in the new "O" priority grade. This affects especially the harbor construction plans and the particularly urgent housing program for the naval towns, which have had to be restricted and postponed time and again since the outbreak of war.

These projects are again being delayed through insufficient provision of labor and through difficulties in obtaining building materials and transport facilities.

Appendix 1 to Annex 4

Appendix 2 to Annex 4

Annex 5

This will be adjusted within the Air Force as follows:

a. 4,000 to 5,000 Air Force men on labor leave will not return to field duty for the present.

b. 17,000 Army men are to go on labor leave; in return the Air Force will do as follows:

(1) On 31 March 1941 the Air Force will make available to the Army 1,500 men from anti-aircraft units.

(2) On 1 May 1941 the Air Force will waive claim to 15,500 new recruits in favor of the Army.

Similar procedure in the case of the Navy is completely out of the question owing to the personnel situation and to the greatly increased tasks of vital importance to the outcome of the war which the naval authorities now have to carry out; this obvious, one-sided neglect of the Navy alone increases the psychological and actual harm that has already been referred to.

Annex 6

A monthly average of 10 submarines was produced during the first quarter of 1941.

Production for the first quarter can no longer be increased through allocation of additional workers.

During the second quarter an average of 18 submarines will be produced with the personnel available at present.

Even if more workers were made available, the number of submarines constructed during the second quarter could not be increased, because the period required for the construction of each boat cannot be shortened to any great extent, and any additional submarine started would not be completed in less than about a year.

The lack of workers in the shipyards is making itself felt in the case of boats that have been started recently, because naturally the workers available are put to work first on the boats in a more advanced state of construction. Hence the effects of the shortage of labor will make themselves felt towards the end of the year. It must be expected that the number of boats will drop to about 15 per month during the course of the year. If, on the other hand, the number of workers required can be supplied, the number of boats will rise to 20 per month by the end of the year and up to 24 next year.