The German peace proposal of 1916 was a set of terms first discussed with Pope Benedict in December 1916, and later supplied to and published by the US President, Woodrow Wilson – who, in an attempt to broker a settlement, had asked both sides to state the terms under which they would be prepared to make peace. It was rejected because it ran contrary to the stated war aims of Britain and France, which in essence could only be attained by the military defeat of Germany.

The German proposal called for peace on the basis of the status quo ante: a return to pre-war frontiers, which would have left the provinces of Alsace and Lorraine – humiliatingly taken from France after the Franco-Prussian War in 1871 – in German hands; the recovery of these provinces was a core French war aim. They would also have forced the Allied powers to return German colonies that had been seized in 1914-15; there was even a hint that the extent of Germany's overseas empire would be expanded under such an agreement.

In addition, the peace would have left a pro-German government in Belgium, a significant concern for Britain since its longstanding strategy was to ensure that no significant hostile power controlled the Channel ports which were a possible jumping-off point for an invasion of England. Finally, the proposals included demands for compensation paid to Germany, including compensation to be paid by France in return for German evacuation of territories conquered in 1914, but no clear provision for any reparations to be paid by the Germans. This was unacceptable to the French, since a large chunk of their territory had been occupied and significant economic assets stripped to feed the German war machine.

Looking in more detail at the proposals, the proposals included calls for

Restitution of the part of upper Alsace occupied by the French.

The obtaining of a frontier that would protect Germany and Poland against Russia, strategically and economically.

The restitution of our colonies in the form of an understanding which would assure to Germany such colonial possessions as are adapted to her population and the importance of her economic interests.

The return of French territory occupied by Germany, under reservations concerning the establishment of strategic and economic boundaries, as well as financial compensation.

The restoration of Belgium under certain guarantees assuring Germany's safety...

An economic and financial adjustment on the basis of an interchange of the territory conquered by both sides which is to be returned on the conclusion of peace.

Indemnification of German undertakings and private persons who have been injured by the war.

So, while we can look back now and see that acceptance of the peace proposals would have saved the several million lives lost when the war dragged on into 1917 and 1918, we can also appreciate the political and moral difficulties that the Allied governments would have faced in attempting to "sell" acceptance to their peoples even if they had decided to seek peace - the millions who had died up to the end of 1916 would in effect have died for nothing.

Source

Arthur S. Link, Wilson: Campaigns for Progressivism and Peace, 1916-1917 vol.5