I. B. 122

                                                      SEPTEMBER 5, 1941.
Memorandum for the Chief of Staff: 
Subject: Brief Periodic Estimate of the World Situation. 

1. This estimate covers the period September 3-December 1, 1941.

2. In this period the dominating elements of the situation will be:

a. The preoccupation of Germany with the U. S. S. R.

b. The inability of Great Britain and her associates to take the strategic offensive.

In consequence a militarily decisive phase of the war will not be reached.

3. Axis:

a. Germany (see Tab A) will be immersed in the conflict with the U. S. S. R., either in terms of combat or of large-scale military reorganization. Victories over the U. S. S. R. may tend to raise her national morale; but on balance her morale should be lower, because of losses in Russia and because of the certainty of prolongation of the war. Economically she will continue strained but stable. Specifically:

(1) She will be unable to invade the British Isles.

(2) She will be unable to attack in the Middle East. (See Tab B).

(3) She is and will be able at will to occupy French Northwest Africa, but probably will not do so. (See Tab C).

(4) She probably will be in a position to intensify her warfare against shipping as compared with its present reduced level. (See Tab A).

(5) The policy of the United States, backed by growing armaments. particularly in terms of sea and air power, will be an increasing factor in her calculations.

b. Subsidiary European Members of the Axis.-Their subservience to Germany will increase and their influence in world affairs will continue to diminish. Italy

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in particular will garrison the Balkans and provide Axis communications with Libya. (For Spain, see Tab C.)

c. The Conquered and Occupied Countries of Europe may develop still greater unrest; but this element in the total situation will, for the time being, remain of little net influence on the general situation.

d. Japan (see Tab D), beset with uncertainties, may do nothing, may attack the Maritime Provinces, may seek to expand to the Southwest; it is even possible that she may withdraw from the Axis. Japan also has the capability of concentrating her newly augmented forces against China and seeking a decision there. No indication or likelihood of this is seen. In the general picture and excluding China, where she must continue to fight, her most likely, but by no means certain course is inaction.

4. Turkey, the most practicable land corridor between Europe and the Middle East, will find her position increasingly precarious, but in this period she probably will evade choice of definite alignment with either the Axis or the Anglo-Russian bloc .

5. Anti-Axis:

a. U. S. S. R. (see Tab E), with limited and decreasing ability to pass to the offensive, faced with the loss or dislocation of most of her war industry and with inadequate communications to the outside world, is destined to continued military reverses, while exacting a significant toll from the German armed forces. Her only hope is to bring about German over-extension and exhaustion. Destruction of her armed forces and overthrow of the Stalin regime within this period are possible but not yet probable. (See also TAB A for Russia vs. Germany and Tab D for Russia vs. Japan. )

b. Great Britain has a continued respite to perfect her home defenses, build up her air force, consolidate her Middle Eastern and Far Eastern positions, and to a limited degree improve the defense of the Atlantic sea lanes. She will have neither the ability nor the opportunity to take the strategic offensive, other than by limited air attacks on Germany's European position. She has the opportunity to launch a limited offensive against Libya. (See Tab B.)

6. Latin America is momentarily less concerned with the war, since its center of gravity has shifted to Eastern Europe. The Axis powers, on the whole, are losing ground before Democratic pressure, political, psychological and economic.

                                              SHERMAN MILES,
                                       Brigadier General, U. S. Army,
                                    Acting Assistant Chief of Staff, G-2
5 Enclosures: Tabs A to E Inclusive. 
   The President
   Secretary of War
   Secretary of State
   Assistant Secretary of War
   Coordinator of Information
   Chief of Staff
   Assistant Chief of Staff, W. P. D.
   Director of Naval Intelligence
   G. H. Q.
   Major General Embick. 
   Under Secretary of War 
1. Tab A-GERMANY-omitted 
2. Tab B-British situation in the Middle East-omitted 
3. Tab C-A German drive to the Southwest-omitted 
4. Tab. D. 


1. Lines of Action Open to Japan

Japan has the following alternatives:

a. Continue to withdraw her armed forces from the area south of the Great Wall with a view to attacking Siberia.

b. Make peace with Chiang Kai-shek.

c. Disregard American action and opinion and occupy Thailand.

d. Attack Burma and the Burma Road via Thailand.

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e. Take or isolate the Philippine Islands and Hongkong and attack Singapore.

f. Contain or isolate the Philippine Islands and Hongkong and seize the Netherlands East Indies.

g. Reorient their whole foreign policy by withdrawing from the Axis.

h. Seek a general settlement through American mediation.

i. Bide their time, wait for a better opportunity for the pursuance of any of the above lines off action, hoping that time will be in their favor.

j. On the basis of the neutrality pact with Russia as a "face saver", enter into an understanding with the United States and Great Britain in regard to territorial expansion and economic penetration in southeast Asia and the southwestern Pacific area.

2. Most Probable Action

Japan beset with uncertainties, will probably "buy" time by entering into negotiations with the United States. A cabinet upset in Japan, a not unlikely event, will change the whole picture. The present cabinet, however, will initiate no additional aggression on the part of Japan until all diplomatic means of relieving pressure have been explored and exhausted. This does not preclude independent action on the part of Japan's armies in the field.

3. Japan-Combat

Japan has an active army of about 2,000,000 including an air force of 55,000 and a trained and partially trained reserve of 3,500,000 men.

The active forces are deployed over a wide area from Karafuto and Manchoukuo in the north to the Southern French Indo-China-Thailand border in the south. The estimated number of active divisions or their equivalent is 68, plus 15 depot divisions in Japan Proper. Japan has recently mobilized approximately 500,000 reserves which have been utilized as replacements and in forming new units included in the above estimate.

Japan has been withdrawing a considerable number of her troops from China and despatching them to Indo-China and Manchuria. Some of these have been replaced by Manchurian and Wang Ching-wei's puppet troops. Since the outbreak of the Russo-German war, the forces in Manchoukuo have been increased from 8 to 19 divisions with auxiliary troops including 4 tank regiments and 4 cavalry brigades, totalling about 500,000 officers and men. The Japanese army is well trained and an efficient fighting force. Officers are well qualified to perform their various duties in peace and war. The staff has functioned well during difficult tactical operations in China. The enlisted men, although somewhat lacking in initiative, are well trained, experienced in combat, well disciplined, courageous and aggressive to the point of recklessness. The Japanese have been consistently successful in China from a tactical point of view and only combat with a modern army can determine Japan's relative efficiency compared to modern occidental armies. Japan's army is physically hardy and psychologically inspired by loyalty to the Emperor, devotion to duty and a fanatical patriotism which make it a dangerous foe on the Asian continent or nearby islands.

The Japanese Army and Navy air forces have made rapid progress since 1937. Personnel strength of Army and Navy air forces is 55,000 officers and men and the two services have a combined plane strength of approximately 3,743 combat planes. The Army squadrons number 114 and the Navy has 124 squadrons. Plane design has lagged, but lack of formidable opposition has left them undisputed air superiority. Four years of continuous air operations have increased the efficiency of Japanese aviation in no small degree. Recent acquisition of German planes and technical advisors has contributed to Japanese air proficiency.

The Japanese Army is the best equipped army in Asia. Its equipment, however, is inferior to that of any of the modern European armies. The shortage of raw materials and production capacity will limit the number of new divisions which can be organized, even though Japan's partially trained manpower is ample for her anticipated needs. Personal equipment appears to be sufficient and in good condition but there is a shortage of organizational equipment such as tanks, and other mechanized equipment, antiaircraft weapons and modern artillery.

Japan has a navy consisting of approximately 180,000 men and officers exclusive of about 20,000 in the naval air corps. Naval strength comprises over a million tons already built and nearly 500,000 tons building. The navy is divided into two main divisions: the Combined Fleet and the Japanese Naval Forces in China. The latter consists of the North Central and South China Fleets. The Combined Fleet is based in home waters.

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The Japanese naval personnel is well trained-a training equal to that of the British and American navies. The Japanese navy is modern, well balanced, and ready for prompt service. It is relatively strong in aircraft carriers and tenders; it would be a formidable opponent to the navy of any power or those of any combination of powers attempting offensive operations in the western Pacific area.

Japan, because of her geographic location blocks all sea approaches, north of Haiphong, to the southeastern coast of Asia; flanks all routes from the east to the eastern and northeastern coast of the mainland; and is in a remarkably strong strategical position for defense against any distant naval power. Furthermore her geographic position is such that her navy, on the strategical defensive, could from time to time successfully assume the tactical offensive.

4. Japan-Political

The political cauldron of Japan has been boiling furiously since Matsuoka was relieved as Foreign Minister. During the time that Matsuoka was Foreign Minister and under the leadership of Premier Prince Konoye, Japan set up its own version of totalitarianism last fall called the "new national structure". Political parties were disbanded and the Imperial Rule Assistance Association, designed to unite all the people in assistance to the Throne, was hastily whipped into shape. The Association was not a political organization like those controlling Italy, Germany, and Russia because of the Japanese theory of the Emperor as the supreme head of the state to whom all Japanese yield obedience and service. The vaguely stated aims of the Association were too diffused to meet with general approval, as conditions are at present, it is clear that the "new structure", movement-so far as its basic purpose was concerned-has entirely miscarried. In its major tests, provided by the efforts to regiment industry and "reform" the Diet, it merely stirred up severe controversies. The original hope that the Imperial Rule Assistance Association could "unify all phases" of Japan's national life has long since disappeared.

While the outward totalitarian structure has weakened, the domination exercised by the army clique for nearly a decade continues. Practically every phase of life in Japan has been placed under governmental control.

The whole political machinery is geared to preparation for expansion into the maritime provinces of Siberia, for further expansion in southeast Asia and the southwestern Pacific and to the solution of the China "Incident." Without their previous enthusiasm and behind uncertain leadership, the Japanese are continuing in the path to what they believe is their "divinely appointed destiny" without being too sure as to where that "destiny" will take them. As a matter of fact, there are indications that the people of Japan are becoming more and more alarmed and apprehensive; they fear that the present course will take them into a major war. There is increasing dissatisfaction with the secretive nature of governmental policy. If Japan goes to war with a major power, her people will enter it desperately rather than confidently.

In September, 1940, Japan concluded a Tripartite Pact of Co-operation with Germany and Italy which by implication requires Japan to attack the United States (or any other power except Russia, not involved in the European War at that time) should it attack either of the Axis partners. Although Foreign Minister Toyoda, Matsuoka's successor, has said that there is no change in the foreign policy of Japan, and that Japan will adhere to the Axis Alliance, there are indications that Toyoda's sincerity in making such a statement is entirely different from that of Matsuoka. In other words, the advantages and value of the Tripartite Agreement are at present being very seriously questioned. But Germany, through her representatives in Japan, is doing everything within her power to keep Japan "in line." Thus Japan is most anxious to confer with the United States, "looking toward a peaceful settlement of all outstanding issues between the two countries," which means recognizing Japan's territorial and economic gains in Eastern Asia. The chief obstacle is that even if a conference were convened by the two governments, there could be no guarantee of the results of such a conference unless the Japanese Army and Navy were directly represented. Although a request for such representation would be unprecedented G-2 is of the opinion that unless such representation is obtained, a conference at this time would be without lasting results.

Japan has boundless ambition in East Asia, but she finds herself in a poor strategic position to take advantage of the opportunities the present time affords. Japanese leaders are aware of the perils of further military commitments before the stalemate in China is broken. One of the factions in Japan favors making

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a final effort to persuade Chiang Kai-shek to conclude a peace as soon as possible; another faction favors fighting the issue to a conclusion. The stalemate is about as far from decision as it has been.

In the maelstrom of Japanese indecision, one thing stands out clearly-that is, that the Japanese do not want the United States to become involved in the war, but they want the United States to stay out of the war primarily to enable Japan to retain a free hand in advancing the Co-Prosperity Sphere in Asia.

Another fact which is almost as clear is that Admiral Toyoda is a stop-gap Foreign Minister, appointed temporarily with the idea of making a more permanent appointment when Japanese policy could be more coherent and concrete.

5. Japan-Economic

Because of the ever-increasing stringency of the embargo placed on Japan by the United States, Great Britain and the Netherlands East Indies, the economic situation in Japan is slowly but surely becoming worse. The Japanese have always lacked war materials, adequate foreign exchange and sufficient foreign trade; the embargo has served to increase the deficiencies in these categories. These deficiencies are serious but are not likely to become dangerous before December 1, 1941. The fact that Japan is also encumbered with financial problems connected with the "incident" in China prevents any curative steps being taken.

The technical assistance which the Germans have been giving to Japan over a period of six months is no longer as welcome as it was before Germany's attack on Russia. That attack has precluded the possibilities of Japan's receiving machinery and implements of war from Germany. As a matter of fact, the Japanese are beginning to question whether the Tripartite Agreement has not brought far greater economic disadvantages than advantage to Japan in carrying out her plans for a "Co-Prosperity Sphere" in Asia. The Pro-Axis leaders are finding great difficulty in justifying the alliance with Germany.

The "Co-Prosperity Sphere" is anything but prosperous. Because of the difficulties of labor shortage, lack of sufficient transportation facilities and lack of cooperation among the people who have been brought into the "sphere" by force or persuasion, the "sphere" is about to fall apart.

The action of the Netherlands East Indies in joining with the United States and Great Britain in embargoing goods to Japan was undoubtedly a severe blow, both economically and in prestige. The economic competition going on behind the scenes in Thailand, between Japan on the one hand, and Great Britain and China on the other, will be increasingly significant. Recent information, however, indicates that Japanese banking interests are asking for a new loan of 25,000,000 Bahts from Thailand bankers, (supplementing a loan of $3,750,000 actually made to Japan early in August in order to pay for commodities purchased by Japan in Thailand). The influence of the Chinese, the traditional financiers of Siam, cannot be overlooked here.

The processes of economic warfare are so slow that, even if the status quo ante were to be established in China by way of settlement of the Sino-Japanese conflict, Japanese economic predominance in the East Asiatic area would still be so firmly established that several months would have to pass before the effects of the economic embargo would in itself influence Japanese action in the Far East.

The effects of the embargo will compel Japan to strive to obtain more assistance in East Asia as well as to try to persuade Great Britain, the United States and the Netherlands East Indies through threats and promises to soften the impact their embargo has caused. Japan obviously does not want to go to war with the United States to achieve her economic objectives, but at the same time she feels that the achievement of these objectives is an essential part of her foreign policy.

The fact remains that Japan lacks essential raw materials to support either her manufacturing industries or a major war effort. To procure them she must have foreign exchange; in order to obtain foreign exchange, she must have foreign trade, which, at present, is seriously curtailed. The stoppage of trade is reducing Japan's raw materials drastically-raw materials which are vital to the organic well-being of Japan and to her ability to wage war successfully. No other country even approaches the United States in importance to Japan's economic welfare, both as a source of raw materials and as a market for the exports of Japan. Thus through the advantage the United States has gained through the embargo, Japan finds herself in a very poor bargaining position.

5. Tab E-U. S. S. R.-Omitted.

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