"From the material point of view such a proposal is unacceptable, for France, without further territory in Europe being taken from her, could be so crushed as to lose her position as a great power, and become subordinate to German policy.
"Altogether apart from that, it would be a disgrace for us to make this bargain with Germany at the expense of France, a disgrace from which the good name of this country would never recover.
"The chancellor also in effect asks us to bargain away whatever obligation or interest we have as regards the neutrality of Belgium. We could not entertain that bargain either.
"Having said so much it is unnecessary to examine whether the prospect of a future general neutrality agreement between England and Germany offered positive advantages sufficient to compensate us for tying our hands now. We must preserve our full freedom to act as circumstances may seem to us to require in any such unfavorable and regrettable development of the present crisis as the chancellor contemplates.
"You should speak to the chancellor in the above sense, and add most earnestly that the one way of maintaining the good relations between England and Germany is that they should continue to work together to preserve the peace of Europe; if we succeeded in this object, the mutual relations of Germany and England will, I believe, be ipso facto improved and strengthened. For that object his majesty's Government will work in that way with all sincerity and good will.
"And I will say this: If the peace of Europe can be preserved, and the present crisis safely passed, my own endeavor will be to promote some arrangement to which Germany could be a party, by which she could be assured that no aggressive or hostile policy would be pursued against her or her Allies by France, Russia, and ourselves, jointly or separately. I have desired this and worked for it, as far as I could, through the last Balkan crisis, and, Germany having a corresponding object, our relations sensibly improved. The idea has hitherto been too Utopian to form the subject of definite proposals, but if this present crisis, so much more acute than any that Europe has gone through for generations, be safely passed, I am hopeful that the relief and reaction which will follow may make possible some more definite rapprochement between the powers than has been possible hitherto."
Grey telegraphed Ambassador Buchanan at St. Petersburg:
"German Ambassador [Prince Lichnowsky] informs me that German Government would endeavor to influence Austria, after taking Belgrade and Serbian territory in region of frontier, to promise not to advance further, while powers endeavored to arrange that Serbia should give satisfaction sufficient to pacify Austria. Territory occupied would of course be evacuated when Austria was satisfied. I suggested this yesterday as a possible relief to the situation, and, if it can be obtained, I would earnestly hope that it might be agreed to suspend further military preparations on all sides.
"Russian Ambassador [Count Benckendorff] has told me of condition laid down by M. Sazonof [Russian Minister for Foreign Affairs], as quoted in your telegram of July 30, and fears it cannot be modified; but if Austrian advance were stopped after occupation of Belgrade, I think Russian Minister for Foreign Affairs' formula might be changed to read that the powers would examine how Serbia could fully satisfy Austria without impairing Serbian sovereign rights or independence.
"If Austria, having occupied Belgrade and neighboring Serbian territory declares herself ready, in the interest of European peace, to cease her advance and to discuss how a complete settlement can be arrived at, I hope that Russia would also consent to discussion and suspension of further military preparations, provided that other powers did the same.