Please give the following message to the Prime Minister [3] for
his most secret and personal information:

With reference to my telegram Circular Z105. [4] We have recently
reviewed the situation which might arise if the French resistance
were to collapse and we were compelled to fight on without diem.

You will appreciate the vital importance of maintaining absolute
secrecy on this subject. Moreover, at this stage any review as a
whole of the situation can only be provisional.

2. The review is framed on the basis that we continue to fight
with or without United States assistance, but we estimate that
without the full economic and financial assistance of the whole
American Continent our chances of defeating Germany would be
remote.

3. In the situation envisaged the first problem would be to ensure
the security of the United Kingdom against a concentrated German
attack. This attack might take the following forms-
a. Breaking the public morale by unrestricted air attack;

b. Starvation of the country by attacks on shipping and ports;

c. Occupation by invasion.

4. We must expect severe air bombardment, considerable dislocation
of industry and communications and heavy casualties. The chances
of Germany achieving success depend mainly on our ability to
maintain in being our air force, their sources of supply, and the
fleet and its bases. It will be of extreme importance to obtain
quantities of aircraft and destroyers from America and to keep our
sea routes open.

5. We estimate that we would be able to maintain a proportion of
our sea borne trade but we would have to restrict imports even
more drastically than at present and we should probably have to
depend mainly upon west coast ports. Some measure of evacuation of
women and children to the Empire and to the United States of
America would be necessary.

6. Provided we can prevent the enemy gaining a high degree of air
superiority, we think we should be able to prevent large scale
invasion of the United Kingdom. Our shortage of destroyers,
however, causes us grave anxiety. We consider the enemy would
attempt invasion, assisted by large scale air home raids.

There is no shortage of manpower but a threat to certain items of
important equipment. [5]

7. We should endeavour to hold our position overseas but French
collapse might mean the loss of control in the Western
Mediterranean though we should continue to control the Western
approach to the Mediterranean. We intend to hold Egypt and to this
end we will retain a Capital ship fleet based at Alexandria as
long as possible. This fleet will also exercise a stabilising
influence on Turkey and the Middle East.

8. In the unlikely event of Japan, in spite of the restraining
influence of the U.S.A., taking the opportunity to alter the
status quo, we should be faced with a naval situation in which,
without the assistance of France, we should not have sufficient
forces to meet the combined German and Italian invasion in
European Waters and the Japanese fleet in the Far East. In the
circumstances envisaged it is most unlikely that we could send
adequate reinforcements to the Far East. We would therefore have
to rely on the U.S.A. to safeguard our interests there.

9. Our ability still to defeat Germany and Italy would depend
mainly on our being able to control at the source Europe's
essential overseas supplies, though it would still be necessary to
retain certain key strategical positions from which we could
exercise virtually a blockade of Europe.

Despite immediate gains from conquest, Germany would still be very
short of food, natural fibres, tin, rubber, nickel and cobalt.

Above all, she would still have insufficient oil.

Given full Pan/American cooperation, we should control all
deficiency commodities at the source and by die winter of 1940/41
many European industrial areas, including parts of Germany, would
experience widespread shortages; a large part of the industrial
plant of Europe would then be at a standstill. By the same period
the shortage of oil would force Germany to weaken her military
control in Europe. By the summer of 1941 it would be difficult for
Germany to maintain her military forces.

Air attacks on Germany's oil centres would contribute to her
defeat and reduce her air offensive, but until additional
resources from the Dominions and America could be made available
in Great Britain, these attacks would be on a limited and probably
diminishing scale.

By this economic pressure, by a combination of air attack on
economic objectives in Germany and its resultant effect on German
morale and by creating a widespread revolt in her conquered
territories it would still be possible for the ultimate defeat of
Germany to be achieved by the British Empire, provided the U.K.

could withstand the form of attack outlined in para. 3 above,
which we believe it could, and that we have full economic and
financial support of the Americas.

10. We are examining separately the more direct consequences of
possible French withdrawal from the war and the steps which might
be taken to deal with the various aspects of such a situation, and
we hope to telegraph to you further as to this very shortly.

We also hope to telegraph to you a more detailed review of the
economic factors involved, which is in preparation. [6]