When has such an encirclement occurred in the relevant time period, with the communication and navigation problems of the time?
Arguably at the historical Jutland. It took me a long time to grasp how well Jellicoe handled the hand that was dealt to him. Jellicoe crossed Scheer's T twice and ultimately interposed his forces between the High Seas Fleet and its bases. Every option he left Scheer with at nightfall May 31st was a nightmare scenario for any early 20th century fleet. The ~50 British destroyers that intercepted the High Seas Fleet did far less than expected of them, something so painfully obvious the Royal Navy began training much more intensely for night actions. Moltke and Seydlitz should have been sunk when they blundered into the Grand Fleet too, and Royal Navy submarines were ideally positioned to sink retreating German units off Horn Reef at dawn - if they had been told to try.
Beatty might well escape any trap, no matter well laid, and if he does so, Jellicoe will piece it together afterwards, realize the danger, and never again would the HSF have the same opportunity . So the stakes would be high, one shot. Still, proposal is a plan intended to transform the situation to Germany's favor, so it's worth considering.
The basic plan as I picture it would be for the HSF to deploy in a diamond shaped formation with the wedge sailing towards the BC base at Rosyth. The spacing between the groups has to be enough that the British BC force could pass by in pursuit heading south without its scouting line detecting the flanking force, so we're talking at least 40nm and maybe even 60nm between the lead group and the flanking forces, depending on visibility conditions. The trailing force, sailing north, will have a closing rate with Hipper of up to 44kt, (18kt for the battleships, 26kt for the battlecruisers). So the distance between the trailing force and Hipper is at least 100nm, maybe 120nm. That is to say, Hipper has to be subject to pursuit for long enough and far enough that the flanking forces moving inwards at 21kt can close the trap from their initial positions. Hipper therefore must use his superior speed to the 5th BS to stay out of range of the 5th BS, but not break contact with it either, so that Beatty will continue to charge with his BC's, and 5th BS trailing.
Disposition assuming the Jutland OOB I picture something as follows:
Scouting Group (Hipper, 5 BC, 2 CL, 20% of TB)
Flank Group West (Scheer, 4 x Konig, 2 x Helgoland, 4 CL, 35% of TB)
Flank Group East (Schmidt, (4 x Kaiser, 2 x Helgoland, 4CL, 35% of TB)
Trailing Force (Mauve, 4 x Nassau, 5 x Deutchland, 5 x Braunschweig, 1CL, 10% of TB)
Zeppelin Force: 9 ships.
Six Zeppelins are in a line, maintaining station maybe about 70nm in front of Hipper, spaced about 40nm apart, so a scouting sweep of about 280nm.
One Zeppelin is on station ahead of Flanking Group West, within flag signal range of the flagship.
One Zeppelin is on station 10nm ahead of Flanking Group East, within flag signal range of the flaghip
One Zeppelin is on station 10nm ahead of Hipper's Scouting Group, also within flag signal range of the flagship.
Tasks -
Zeppelin Scouting Line: Make contact with Beatty's force. Then, track it with two Zeppelins while the other four move north of the British BC's seeking the Grand Fleet, never getting more than 100nm from Hipper. (The Germans do not care where the Grand Fleet is beyond 100nm of the German BC's or either flanking force).
Hipper - make contact with Beatty using the accompanying Zeppelin and the scouting line, then draw him at 25kt towards Mauve's trailing force.
Schmidt and Scheer - Allow Beatty to pass between moving southeast such that there is no contact, then after Beatty has passed south, sail inwards and towards Mauve at 20/21kt. The accompanying Zeppelins are tasked to coordinate. Commit the torpedo boats to mass attacks on the BC force only after Beatty has contacted Mauve and is attempting to fleet north.
Mauve: Sail northwest at 18kt to reinforce Hipper. Prevent Beatty from breaking through to escape south.
I'm not saying it would work, but it's a plan....
If the Germans have battlecruisers and the British do not, the situation should allow for not only the German battlecruisers, but also their most modern Konigs, Kaisers and Bayerns, to become a bit more adventurous in their operations, including raids into the Western Approaches. Jellicoe would presumably have to alter his overall strategic plan for the Grand Fleet away from a North Sea blockade to convoy escorts in the Western approaches. The Germans should also be able to gain political leverage in Norway as the naval balance of power changes, allowing for more imports from that quarter, in particular more fish, (which historically the British worked successfully to prevent the Norwegians selling to the Germans).
I wonder what the past century of wargames have said about Scheer's options.
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