that we cannot afford to have any
difficulties over the old U-boat question. As regards the question
of armed merchant vessels, I hope to arrive at a _modus vivendi_.
But we must be careful not to act hastily and carelessly, so as
not to create conflict before President has taken further steps.
Remarkable as this may sound to German ears, Wilson is regarded here
very generally as pro-German. His Note was traced to our influence,
and Gerard's speech strengthened this impression. This speech is in
accordance with instructions which Mr. Gerard is receiving. Our
present enemies have gone literally raving mad, and leave no stone
unturned in order to put obstacles in Wilson's way. This explains
the attacks against the President, as also the scurrilous attempt
engineered by the Republicans to charge the Administration with
Stock Exchange speculations. Without any justification, of course,
my name also was mentioned in this regard. The German Embassy, as
is well known, is held responsible for everything by our enemies
in this country."

At the same time as the above telegram, I wrote the following report
describing the prevailing political attitude in Washington:

CIPHER REPORT

"Washington, 14th January, 1917.

"Ever since the Presidential election the political situation here
has not changed. Apart from the question of ending the world-war,
the public mind has not been constantly or earnestly concerned
with any matter.

"Congress has dealt with the customary Budget proposals, and the
fruitless negotiations about the Mexican question drag slowly on.

"Meanwhile, the attitude towards ourselves, which after the _Sussex_
incident took a decided turn for the good, has slowly improved.
This change in the public temper can be observed on all sides. It
is true that it is only very slightly noticeable, if at all, in
the Press, and our most rabid opponents are driven, owing to the
general improvement in German-Americans' relations, to ever more
violent attacks against us. Since President Wilson dispatched his
Peace Note, our enemies' fury knows no bounds. Without exaggeration,
it can be said that this note voices the spirit of almost the whole
American people.

"Only Wall Street and the anti-German ring, as also their friends
in the press, are dissatisfied and are endeavoring to put obstacles
in the President's way. In these circles, which are always under
English influence, the belief has taken root, that Mr. Wilson ha