n the good faith of the English
officers of the _Arabic_, who have given evidence on oath that the
_Arabic_ had no intention of ramming. The action of the submarine
was therefore contrary to orders, and the Imperial Government both
disapproves of it and regrets it. A communication to this effect
has been made to the officer in question. Under these circumstances
my Government is prepared to give compensation for the lives of
American subjects drowned, to their great regret, in the _Arabic_.
I am empowered to discuss with you the amount of this compensation."

The above explanation finally resolved the second crisis. The German
naval authorities naturally complained of my action, as the
"disapproval" stuck in their throats, and I was once more taken
to task--a matter which weighed little with me. For I felt that
my interpretation of the instructions from the Foreign Office was
the only one which could have saved us from war, and that now the
road was open for the final settlement of the _Lusitania_ incident
and the discussion of the great question of "the freedom of the
seas." The outlook for us was most promising. Opinion in America
as a result of the solution of the _Arabic_ question was once more
favorable to us. A leading American paper, the _New York Sun_,
said at this time in its leading article:

"The successful issue of the conversations with Germany over the
submarine campaign cannot fail to be of benefit to an nations,
as a proof of the possibilities of diplomacy as against war. It
has been a personal triumph for both the participants, President
Wilson and Count Bernstorff."

The position of both men has been much strengthened thereby, and
what they have already achieved is no doubt only a presage of still
greater results in the future.

The following four reports to the Foreign Office deal with the
settlement of the _Arabic_ case:

(1) CIPHER

"Cedarhurst, October 6th, 1915.

"The settlement of the _Arabic_ case reported to your Excellency
in my wire, has caused great satisfaction in all circles here. Of
course a few avowedly Anglophile papers, such as the _New York
Herald_ and the _New York Tribune_, reveal the cloven hoof, and
are clearly disappointed that a rupture of diplomatic relations
between America and Germany has been averted; for the rest, at
no time since the outbreak of war have we had such a good Press
as at this moment.

"History alone will be in a position to say whether t