The Soviet leadership was clearly panicked by the German successes in July. Stalin issued the now famous Order No. 227 on July 28th. Also known as the "Not one step back!" order, it called for draconian disciplinary measures to prevent further retreats. Although this order was by western standards incredible, it did have a positive effect on the morale of the officers and men of the Red Army. There was a pervasive sense that if the Germans were not stopped now, they would never be stopped.
German advances continued, however, throughout August. In the Caucasus, the Maikop oil fields were captured on August 8th and by the 18th the Germans were fighting at the passes through the Caucasus Mountains. Troops from Army Group A climbed Mount Elbrus in the Caucasus on August 23rd. By the end of the month, the 1st Panzer Army had crossed the Terek River and was threatening Grozny.
In the area of Army Group B, the Luftwaffe began bombing Stalingrad in mid-August and this produced an enormous amount of damage to the city's buildings and infrastructure - something that would later hinder the advance of German army units into the city. On August 23rd, Army Group B had reached the Volga River and, by the end of August, the German 6th Army was fighting on the outskirts of Stalingrad on the Volga.
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