Since the 1870s, most of the major countries in Europe had been gearing for war with each other. Preparations had been subtle. The independent German kingdoms united in the 1870s and had quickly become the largest power on the continent. France meanwhile was arming heavily in case its centuries-old rival Germany chose to attack. Russia also feared the growing German threat and sought to ally itself with Great Britain, France, and even Germany itself for protection. The British, for their part, tried hard to remain out of the conflict, but found that having the world's most powerful navy made that impossible. Rebellious provinces within the Austro-Hungarian Empire made central Europe extremely unstable, and the leaders of the Ottoman Empire in the Near East sought to expand their power. Historians have generally noted that the European powers had managed to avoid war for so long, that when it did erupt in the autumn of 1914, it quickly escalated into the most deadly war the world had seen. On one side were the Germans, Austro-Hungarians, and the Ottoman Turks united as the Central powers, while Great Britain, France, and Russia fought together as the Entente powers on the other.

Although most Americans felt more inclined to side with England and the Entente Allies, very few wanted the United States to enter the Great War. The U.S. had a strong precedent of distancing itself from European political entanglements, and had no desire to alter that tradition. Not only were the American people united in this sentiment, but Congress and the President as well. In a public appeal, Wilson announced that the United States "must be neutral in fact as well as in name" and "impartial in thought as well as in action."

Americans continued to conduct business as always. As a neutral nation, America and its merchants initially traded goods such as food, clothing, medicines, equipment, and even arms to both sides in the war. American ports were open to all powers so long as they were used for non-military purposes. At first, both belligerent powers agreed not to interfere with neutral shipping lines. It is true that both powers often seized American merchant ships, but this provided few serious problems since both sides paid for the cargo they seized.

But actions taken by the Germans during the early course of the war quickly caused many Americans to look more favorably on the Entente powers in both thought and action. Soon, it seemed to the Germans that the United States traded more with England and France than with Germany. More importantly, the Germans were having trouble receiving any goods from the U.S. and other nations, as the British Navy had placed an impenetrable blockade around the European continent. Suffering from a severe lack of supplies and food, Germany consequently began a great submarine campaign in February of 1915. Submarine, or U-boat, technology had only recently been perfected, and Germany had produced a large fleet of the new vessels prior to the outbreak of war.

As submarine technology was so new, regular naval ships had no method of defense. The German U-boat campaign was therefore so effective that even Germany was astonished by its success. Furthermore, Germany announced that it could no longer guarantee the safety of neutral ships. Wilson realized that this new campaign escalated the war to a new level, and he therefore began to push for mediation and settlement. He extended his services as arbiter to both sides and all nations involved. In 1915, he sent his trusted friend and advisor Col. Edward House to England, France, and Germany to propose a peace settlement. Neither side was willing to listen, however, because each thought it had the upper hand and would ultimately win the war. At the same time, Wilson also notified Germany that serious consequences would result if American lives were lost from illegal German submarine warfare.

The situation become more tense in May of 1915 when Americans learned that the British ocean liner Lusitania had been destroyed by a German submarine. Over 120 Americans, including women and children, were among the nearly 1,200 casualties. Despite their outrage, however, the American people, Congress, and Wilson still wished to remain out of the conflict. Wilson declared that the U.S. would not retaliate, as peace was in the world's best interest. Instead, he dispatched a series of communiqués to Germany, appealing to their sense of morality to end their attacks on nonbelligerent shipping. William Jennings Bryan believed the communiqués were too aggressive. Fearing war with Germany, he chose to resign his position as Secretary of State rather than sign Wilson's note.

The Germans understood the request, but only partially respected it. Within months another British liner, the Arabic, was sunk by a U-boat torpedo. Wilson again demanded the Germans to scale down the submarine attacks, and again the German government gave only a half-hearted acknowledgment. Then, in early 1916, Germany announced that it would begin attacking all merchant ships without warning in the waters around Europe, including neutral merchants. Wilson notified Berlin that this policy was illegal according to the international rules of war and were therefore unacceptable. Germany responded only with the destruction of the steamer Sussex in March. At this point, Wilson threatened to end all diplomatic relations with Germany, an act that would surely bring the United States into war against Germany. To prevent this–the German Emperor knew he could not defeat the combined strength of the Entente powers and the United States–Germany agreed to respect certain shipping lines. War had been averted, but only for a time.

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