Secretary of State informs me that immediately on receipt of Prince Lichnowsky's telegram recording his last conversation with you he asked Austro-Hungarian Government whether they would be willing to accept mediation on basis of occupation by Austrian troops of Belgrade or some other point and issue their conditions from there. He has up till now received no reply, but he fears Russian mobilisation against Austria will have increased difficulties, as Austria-Hungary, who has as yet only mobilised against Servia, will probably find it necessary also against Russia. Secretary of State says if you can succeed in getting Russia to agree to above basis for an arrangement and in persuading her in the meantime to take no steps which might be regarded as an act of aggression against Austria he still sees some chance that European peace may be preserved. He begged me to impress on you difficulty of Germany's position in view of Russian mobilisation and military measures which he hears are being taken in France. Beyond recall of officers on leave--a measure which had been officially taken after, and not before, visit of French Ambassador yesterday--Imperial Government had done nothing special in way of military preparations. Something, however, would have soon to be done, for it might be too late, and when they mobilised they would have to mobilise on three sides. He regretted this, as he knew France did not desire war, but it would be a military necessity. His Excellency added that telegram received from Prince Lichnowsky last night contains matter which he had heard with regret, but not exactly with surprise, and at all events he thoroughly appreciated frankness and loyalty with which you had spoken. He also told me that this telegram had only reached Berlin very late last night; had it been received earlier Chancellor would, of course, not have spoken to me in way he had done. No. 101. _Sir Edward Grey to Sir E. Goschen_. (Telegraphic.) _Foreign Office, July_ 30, 1914. Your telegram of 29th July.[188] 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.