The Naval Military and Air situation up to 12 noon on 4th January 1940 as reported to the War Cabinet:
No naval events of outstanding importance have occurred during the week under review, and losses of merchant ships due to enemy action have again been small. The second Canadian troop convoy arrived safely in the Clyde on 30 December.
2. During the afternoon of 28th December, H.M.S. Barham was torpedoed by a submarine in a position north-west of the Hebrides. Four men were killed and one wounded. The ship was able to proceed to Liverpool under her own steam, where she arrived on the 30th and is now undergoing repairs. A hunt for the submarine by escorting destroyers failed to locate her.
3. H.M.S. Coventry (A.A. Cruiser) was attacked in Sullem Voe by two dive bombing aircraft at 10:20 am on 1 January. No-hit was obtained, but one bomb fell near enough to put one of the ships dynamos out of action temporarily. Fighters of the Fleet Air Arm went up from Hatstone to intercept, but it is believed that the enemy aircraft got away.
4. The work of laying mines in the British are prohibited area off the east coast, published on the 23rd December, these being proceeded with. Maps showing the declared minor areas are attached to this resume. The northern entrance to the channel formed by the newly declared East Coast minefield lies just north of Aberdeen, and, it is probable that this area will be subject to increased German mining. Peterhead is now being used as a base for local antisubmarine and minesweeping forces.
5. An unknown tanker, similar in appearance to the German tanker Altmark, was sighted in a position approximately 820 miles south east of Bermuda, steering in the north eastwards at high speed, on the afternoon of 28th December. The Altmark is believed to have on board 300 prisoners captured by the Admiral Graf Spee. French armed merchant cruisers and submarines continue to look out for her to the north-eastward of this position.
6. The action with the Admiral Graf Spee has brought in to prominence the neutrality zone declared by the American Republics at a distance of 300 to 600 miles around their coasts to act as a cushion against belligerent action. The United States has the only Navy in a position to keep a lookout over a wide area, and on the Atlantic seaboard has about 30 warships in addition to 40 destroyers, specially commissioned, and 90 coastguard vessels. It is also reported that the 19 squadrons of 12 aircraft each are being employed. In the Pacific the air strength has also been increased.
29. Throughout the period under review, extremely cold weather conditions have prevailed on the Western front. Only a few local attacks have been attempted by the Germans and patrolling has not been as active as in previous weeks. Work on defences has also been held up by the extreme cold.
Royal Air Force Operations
43. During the past week bomber squadrons have continued to stand by awaiting suitable opportunities to carry out attacks against units of the German Fleet. In addition bomber units have made a number of routine reconnaissance’s over a specified areas of the North Sea, with the object of attacking any enemy warships observed.
48. Although there has been an unusual absence of any activity during the week, it has been necessary to dispatch over 100 fighter patrols. Various special missions, such as escort for Channel leave boats and taller protection patrols, and the necessity for despatching patrols immediately to investigate doubtful plots account for the number involved.
23 plots were recorded during the week, of these only one has been confirmed as an enemy raid. This was a single aircraft off Calais on 29 December. It was intercepted by an aircraft of No. 615 Squadron, based in France. After a short combat the enemy appeared to be hit, but was lost in a steep dive into the clouds.
55. The most important news of the week is a major Finnnish success at Suomussalmi. Further details of the fighting around Tolvajarvi and Aglajarvi, just before Christmas, show that the Soviet troops suffered an even severer defeat than was originally believed. There has been heavy fighting on the Karelian Isthmus, where a mass Soviet attacks have been beaten off with heavy casualties. The fighting, both there and in the Far North, seems now to be held up by appalling weather conditions.
See TNA CAB/66/4/38