Corvette HMS Gloxinia launched.

Corvette HMS Mallow commissioned.

GERMANY: Hitler orders a study into a possible invasion of Britain. OKW issues an order entitled: The War Against England. It begins "The Führer and Supreme Commander has decided that a landing in England is possible."

In the course of raids on north and west Germany on the night of 1-2nd July, bombs were dropped on (among other places) Kiel, but caused only slight material damage. Several civilians were killed. A total of 5 enemy aircraft were show down by flak artillery; besides these, 2 more enemy planes were brought down by German navy flak during the night attack on Kiel. Three of our own aircraft are missing.

Göring  gives instructions for intensifying the air blockade in response to Hitler's order. He specifies attention to attacks on shipping.

U-107 launched.

JAPAN: At a joint army-navy conference, President of the Privy Council Hara Yoshimichi questions the Japanese army's assumptions concerning the construction of bases in that region for eventual use against Britain and the United States. Would not the two Western powers react to the building itself rather than wait for further Japanese moves? Sugiyama disagreed. He did not feel that either nation would resort to strong measures... (201)(Will O'Neil)

U.S.A.: Congress passes the Export Control Act allowing the President to prohibit or curtail the exportation of military equipment, munitions, tools, and materials when he feels that it is "necessary in the interest of national defence."

Ferry Kalakala chosen for final ferry run at Tacoma Narrows.
Lake Washington Floating Bridge dedication ceremonies are held.

ATLANTIC OCEAN: German submarine U-47 sinks the 15,500-ton British transport SS Arandora Star about 192 nm (356 km) northwest of Belfast, County Antrim, Northern Ireland. The ship sailed from Liverpool on 1 July without escort or in convoy carrying 1,216 Italians and Germans who were being shipped from the U.K. to Canada, many of them Jewish refugees. A decision had been made by the British War Cabinet to export these internees/aliens to Canada and Australia; a total of 7,500 were to be selected and three ships were to sail by 24 June, if possible. This internment policy is a result of the hysterical fears of fifth column activity, which will relax in the coming months. The Arandora Star was the second ship to sail. At 0705 hours, one torpedo struck the ship below the waterline and she sank at 0740 hours. At 1100 hours a seaplane appeared and the lifeboats lit red flares.

After circling several times the plane made off and returned shortly afterwards when it dropped a message that help would be coming soon. At about 1430 hours, the RCN destroyer HMCS St. Laurent, approached and at once started to take on board survivors off the rafts, while the boats were making for the destroyer, which had also lowered its own motor-launch. Only 586 people of the 1,216 aboard were saved. (John Nicholas)

U-47 was a medium-range Type VIIB U-boat built by Germaniawerft, at Kiel. Commissioned on 17 Dec 38. U-47 conducted 10 patrols and quickly compiled a most impressive record of 31 ships sunk for a total of 193,808 tons and 8 ships damaged for a further 63,282 tons. Among the ship sunk by U-47 was HMS ROYAL OAK, which was sunk in daring raid on the fleet anchorage at Scapa Flow on 14 Oct 1939. Winston Churchill described this event as "an outstanding feat of arms". He was awarded the Knight's Cross with Oak Leaves on 20 Oct 40, the first in the Kriegsmarine. There is no certain fate for U-47. Previously, it was believed that HMS WOLVERINE DD, sank U-47 on 08 Mar 41 but this was actually U-A (the ex-Turkish submarine Batiray), which was damaged and returned to base. U-47 is listed a 'missing' effective 07 Mar 41 in the North Atlantic near the Rockall Banks in approximate position 60.00N, 019.00W. It is now thought that U-47 was hit by one of her own torpedoes launched in an attack against convoy OB 293 that circled back due to a steering malfunction. All of her 45 crewmembers were lost. GÜNTHER PRIEN was born in 1908, at Osterfeld, in Thüringen. He joined the navy in 1931 after service in the merchant marine. His first naval service was in the light cruiser KÖNIGSBERG. He transferred to the U-boat force in Oct 35 and saw service in U-26 during the Spanish Civil War. Prien was the first U-boat commander to win the Knight's Cross (18 Oct 39). He was often the first submarine to make contact with a convoy and took the dangerous task of vectoring in other boats. During the next 18 months Prien repeatedly demonstrated great skill and daring in convoy battles making him the fourth highest scoring U-boat ace of the war, ranking behind only Otto Kreschmer, Wolfgang Lüth, and Erich Topp. Prien was the only one of the top five German U-boat commanders to be killed during the war.

At 2352, the Athellaird, a straggler from Convoy OB-176, was hit by one torpedo from U-29 about 350 miles NW of Cape Finisterre. At 0210 three coup de grâce were fired of which two missed and the third sank the tanker. The master and 41 crewmembers were picked up by sloop HMS Sandwich and landed at Greenock.

At 1125, the unescorted Santa Margarita was stopped by U-29 and was sunk by gunfire at 1345 according to the prize rules because the ship was enroute under British charter with a Yugoslavian crew. Three of the 21 survivors that were picked up by the British merchantman King John were lost when this ship was sunk by the German raider Widder on 13 July.