The main reason for morale as the decisive factor is the anomaly of Germany suing for peace when it actually occupied about 3 times the tt (in Europe at least) that it started the war with.
Standard A&A mechanics can only deal with loss of tt = defeat, and this war didn’t turn out that way.
Lets say everyone starts on 30 morale. Drop to 10, and you start to get mutinies in your armed forces. Drop to 0 and a full scale revolution occurs (see my red and white thread below).
Possible factors:
Each year of the war -2 (for nations actually at war only)
Every 10 casualties suffered (any units) -1
Every time your capital is bombed -1
(Hence the main use for bombing, rather than material damage. The enemy will have to start stationing fighters to defend the capital)
Every time a homeland tt is captured (not contested) by the enemy -1
If your capital is captured -5 (if you’re still in the game)
Homeland tt shelled by enemy shipping (bombarded) -1
Probably forgotten one or two, and of course some positive factors can be applied (e.g. knock an enemy power out of the game +2). But the general trend should always be down; “winning” powers will not finish with +30 moral - they will just have managed to stay in positive morale while pushing their opponents into revolution.
Overall the system is, I think, easier to keep track of than calculating thresholds as per LHPTR.