From what I've read on the forums, morale actually does come into play and affects the performance of the crew under times of stress. How, I'm not really sure. Something about panicking under fire or just the opposite, a fanatical devotion to leadership of the boat.
Bill
PS, I had to evade some destroyers once by settling on the bottom of the ocean and pretending to be a clam shell. It worked, but there was one poor seaman recruit on his first patrol who must've soiled his pants - his morale was broken. Nothing a few days in port couldn't fix, tho.
