3. Report in Cipher
"Washington, 7th December, 1915.
"The action that Congress will take with regard to the Lusitania question is of primary importance for us. It is my opinion that President Wilson, when he asked for the recall of our two attachés, had the thought in the back of his mind that Congress would let the Lusitania question rest for a time, because relations with Germany are already sufficiently strained and only the rabid pro-English want war. One cannot, however, count on anything now, because the anti-German ring are seeking to terrorize all who do not agree with them. The senators and members of Congress from the west are certainly more difficult to influence, as their constituents have only a slight economic interest in the cause of our enemies. It is also probable that the senators from the south will all stand by us, because they are very much embittered against England on account of the cotton question. Nevertheless, we must, as I have already pointed out by telegram, be fully prepared for further negotiations on the subject of the Lusitania. If we refuse to give way at all, the breaking of diplomatic relations, followed by war, is inevitable. In my opinion it is out of the question to find a formula that will satisfy public opinion on both sides. It may, however, be possible to find a formula that will skim over the points of contention, as was done in the Arabic case. In spite of all the outcry over here there is no doubt that the American Government and the greater part of public opinion would be only too delighted if we could find a graceful way of settling the Lusitania question without a conflict. What is required in the first place is:
"1. A. declaration on our side that the attack on the Lusitania should be regarded as an act of reprisal and, therefore, not within the scope of existing international law.
"2. The payment of an indemnity, which in my opinion could be made without committing ourselves on the question of responsibility.
"President Wilson had hoped that the whole question could be shelved until after the end of the war. Now the war still drags on, and Mr. Wilson is afraid of radical intervention on the part of Congress. Over here it is quite impossible to prophesy. The unexpected is the only thing that consistently recurs. No one can say what Congress will do. Meanwhile, it is my duty to describe the situation as I see it to-day. Whether the Lusitania question is of sufficient practical importance to allow it to bring upon us the breaking-off of diplomatic relations and war with the United States I must leave it to the exalted judgment of your Excellency to decide."
The American Government had established a basis for the negotiations with regard to the Lusitania and "the Freedom of the Seas" which was in our favor when, on the 21st October, they sent a very circumstantial Note to London in which they demonstrated that the English blockade was a breach of international law and definitely stated that this blockade was neither effective, legal nor defensible. Further, that the United States could not, therefore, submit to an infringement of her rights as a neutral through measures which were admittedly reprisals, and, consequently, contrary to international law. That she could not with equanimity allow her rights to be subordinated to the plea that the peculiar geographical position of the enemies of Great Britain justified measures contrary to international law.
The conclusion of the Note read as follows:
"It is of the highest importance to neutrals not only of the present day, but of the future, that the principles of international right be maintained unimpaired.