f diplomatic relations with us.

"As I have more than once explained in my reports, no solution
of the _Lusitania_ question, agreeable to the Americans, could be
found, so long as we were not prepared to admit the responsibility
of the Imperial Government for the disaster, or its obligation
to make reparation, and so long as our views on the principles
of submarine warfare differed from those held by the American
Government.

"By dint of drawing out the negotiations as long as possible, and
by the employment of all my persuasive powers, I succeeded in tiding
over the moment of _acute_ tension. Then came the incident of the
_Arabic_. My laboriously constructed diplomatic edifice came tumbling
about my ears, and things looked blacker than ever. The American
Government regarded the _Arabic_ incident most seriously, believing
as they did that it was typical of the whole German policy _vis-a-vis_
America. They argued that either the whole affair had been prearranged
as a manifestation of our intention to have our own way in the
matter of submarine warfare, or else it was a blunder which could
be dealt with in the ordinary course of diplomacy. Negotiation
became possible when your Excellency notified this Government that
satisfaction would be given in the event of the submarine commander
being proved to have acted contrary to his instructions. Further
negotiations followed on this basis, and it was finally agreed
that we should admit the exceptional nature of the _Arabic_ case,
without yielding our ground on the main points. Such agreement would
have been impossible had President Wilson adhered to his previous
position, but he wished to have done with the whole business, and
could only do so by throwing dust in the eyes of the American public.
He hoped by these means to get rid of the _Lusitania_ incident
unostentatiously, and told me, through one of his personal friends,
'to let it drift.' The idea at the back of his mind is that it
shall be left to an international tribunal sitting after the war,
to decide whether we shall pay compensation or not.

"The only really important question as regards the settlement of
the _Arabic_ case, is whether it is worth while for us to risk a
rupture of relations with the United States, for the sake of this
affair. I still persist in my opinion, that it would infallibly
have led us into a new war."

(4) CIPHER

"Washington, 1st November, 1915.

"Your Excellency's last wire on