File No. 763.72119/10493

The Ambassador in Great Britain ( Page ) to the Secretary of State

[Telegram]

7363. My 7355, October 6. Conversations with members of the Government and especially with intelligence officers who know best [Page 228] what is going on in Germany reveal the following facts and opinions:

The German peace inquiry is regarded as the beginning of the end but the end is hardly expected soon. The prevailing idea is that the Army General Staff which has all the real authority in Germany realize the impossibility of a military victory and think it wise to yield before the American Army fights and with the hope of saving the dynasty and its surpassingly autocratic power. Von Kühlmann and the financial and manufacturing interests wish to save Germany’s economic opportunity after the war, and peace movement will be made chiefly with reference to this. In consideration for giving up Belgium and the French provinces the Germans will demand free access to the markets and credit in Allied countries. The European Allies will not make such an agreement. They realize that artificial and merely punitive commercial measures cannot be permanent but since German commercial methods were distinctly war measures they will be reluctant to agree to a general commercial peace as a condition of ending the war. Every nation will probably reserve its freedom to act in this matter as best suits its interests. Great Britain, France, Italy, and Russia do not wish to open a free door for commercial exploitation again and the case of each differs in degree and kind from every other. Their aim is not mainly punitive but rather defensive.

The German Army can yet hold out long before a complete defeat and the feeling here is that it will so hold out and prolong preliminary peace efforts, directed chiefly to preserving German economic opportunity. The European Allies will not consent to a peace conference before hopeful German terms are specifically and authentically stated.

Another subject that engages British thought is Germany’s southeastern ambitions. The British are resolved not to permit a German yielding in the west to cause them to forget or neglect the Berlin-to-Bagdad German scheme. The Germans obviously wish to put off the western allies by yielding western local interests.

Still another point of increasing importance in all peace thought is the submarine. If Germany be left free to manufacture submarines she may in a short time again attack British and American commerce. No complete antidote to the submarine is expected. It will probably have to be met only by the present methods of defense and attack, and a very large submarine fleet could be built in a few years at small cost and could again play havoc with ocean commerce and possibly even carry war to America. Peace conditions must cover this subject.

Since the war began about 40 per cent of German submarines commissioned have been captured or destroyed but the percentage [Page 229] of the German losses in the early stages of the war was larger than now and the Germans are believed to have nearly 200 under [construction?]. Abundant convoys carrying depth charges are the best defenses yet tried but these cannot prevent a considerable toll on commerce.

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The British thought of peace conditions therefore includes not only Belgium, Alsace-Lorraine, Servia, and Poland, but also the future of the submarines, the Berlin-Bagdad scheme, and the intricate question of commercial and financial relations to Germany after the war.

The British military feeling is a feeling of complete confidence in a probably slow but an absolutely sure victory, but an early peace, though possible, is not expected. A long and devious peace effort by Germany is looked for, directed towards dividing the Allies and towards insuring German economic post-war opportunity by which the Germans plan to prepare for another and more successful attack on democracy.

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