demoralize, morale, morals

[1: Cobuild] VERB. 
If something demoralizes someone, it makes them lose so much confidence in what they are doing that they want to give up.

• Clearly, one of the objectives is to demoralize the enemy troops in any way they can.
• demoralized (ADJ): The ship's crew were now exhausted and utterly demoralized.

[2: Am-Heritage] 

1. To undermine the confidence or morale of; dishearten: 

• an inconsistent policy that demoralized the staff.
  

2. To put into disorder; confuse.

3. To debase the morals of; corrupt

[3: Collins Essential]
to deprive (someone) of confidence or enthusiasm: 

• she had been demoralized and had just given up.
  

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Theaurus-WordNet 3.0: demoralize

1. corrupt morally or by intemperance or sensuality; 

• "debauch the young people with wine and women"; 
• "Socrates was accused of corrupting young men"; 
• "Do school counselors subvert young children?"; 
• "corrupt the morals"
  
• (Syn) corrupt, debase, debauch, demoralise, deprave, misdirect, pervert, profane, vitiate, subvert
  

2. lower someone's spirits; make downhearted; 

• "These news depressed her"; 
• "The bad state of her child's health demoralizes her"
  
• (Syn) depress, dismay, dispirit, cast down, deject, demoralise, get down
  

3. confuse or put into disorder; 

• "the boss's behavior demoralized everyone in the office"
  

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cf. morale:

[N-UNCOUNT : oft with poss] Morale is the amount of confidence and cheerfulness that a group of people have:   Many pilots are suffering from low morale.

cf. moral: 

1. [N-PLURAL] Morals are principles and beliefs concerning right and wrong behaviour: Western ideas and morals.  They have no morals.

6. [N-COUNT : usu the N in sing] The moral of a story or event is what you learn from it about how you should or should not behave:  I think the moral of the story is let the buyer beware.   = message.