Sir Edward Grey to Sir E. Goschen. (Telegraphic.) Foreign Office, July 30, 1914. Your telegram of 29th July. His Majesty's Government cannot for a moment entertain the Chancellor's proposal that they should bind themselves to neutrality on such terms. What he asks us in effect is to engage to stand by while French colonies are taken and France is beaten so long as Germany does not take French territory as distinct from the colonies. 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 unfavourable 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 only 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 succeed 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.