With the outbreak of a general war in Europe in early August 1914, the great majority of Americans gave thanks for the Atlantic Ocean. Wilson and his advisers acted quickly to establish formal neutrality and to meet the rude shocks caused by the total disorganization of world markets and trade. In addition, Wilson, on 17 August 1914, appealed to his "fellow countrymen" to be "impartial in thought as well as in action."
Wilson then turned his attention to British encroachments against neutral trade with Germany and Austria-Hungary (the Central Powers). He first tried to persuade the British to adhere to the Declaration of London of 1909, which purported to codify existing international law and was extremely protective of neutral commerce. But the British were determined to use their overwhelming sea power to cut Germany off from life-giving supplies, and Wilson had no recourse but to fall back upon ambiguous international law to protect American trading rights. This he did in a note to the British Foreign Office on 26 December 1914.
The European theater of war was in delicate balance by the end of 1914. The British controlled the seas, and the French and British armies had repelled a German advance toward Paris. German armies in the east were on the move in Poland, but they were still far from their main eastern enemy, Russia. In these circumstances of stalemate, American neutrality seemed secure.
The announcement by the German government on 4 February 1915 that it would thereafter use its small submarine fleet to sink all Allied ships within a broad war zone without warning posed a grave threat to American neutrality, since the Germans also said that, because submarine commanders would sometimes find it impossible to discriminate between enemy and neutral ships, neutral ships would not be safe from torpedoes. Wilson, on 10 February, sent a conventional warning to Berlin to the effect that the United States would hold Germany to a "strict accountability" for the destruction of American ships and lives on the high seas. What that warning meant in practical terms, no one, including the leaders in Washington, knew. For example, when a submarine sank a British passenger ship without warning off the coast of Africa on 28 March 1915 and caused the death of one American, Wilson decided not to act or even to protest. However, it was impossible to do nothing when a submarine sank the great British liner Lusitania without warning on 7 May 1915, causing the death of more than 1,200 noncombatants, including 128 Americans.
Wilson was in a dilemma worse than the one occasioned by his occupation of Veracruz. It was obvious that the American people wanted him to defend their right to travel in safety upon the seas; it was also obvious that a majority of Americans and of the members of Congress did not want to go to war to vindicate this right. Moreover, the cabinet and Wilson's advisers in the State Department were about evenly divided over a wise and proper response to the sinking of the Lusitania . Secretary of State Bryan pleaded with Wilson to acquiesce in the submarine blockade by warning Americans not to travel on Allied ships. Robert Lansing, then second in command of the State Department, pressed Wilson to send a peremptory demand to Germany for an apology, a disavowal, and a promise that submarines in the future would obey international law—that is, commanders would have to warn ships and permit passengers and crews to escape before the ships were sunk.
Wilson, taking high humanitarian ground, addressed two appeals to the German government to abandon the entire submarine campaign, at least against unarmed and unresisting liners and merchantmen. When the German government refused, Wilson, on 21 July, sent a third note, which admitted that it was possible to conduct a submarine campaign in substantial accordance with international law. But the note ended with the warning that the United States government would hereafter regard ruthless attacks on merchant ships and liners, when they affected American citizens, as "deliberately unfriendly"—that is, as an act of war.
Wilson desperately wanted to avoid war. At the very time that he was writing the Lusitania notes, he sent two moving appeals to the German government to join him in a campaign to establish real freedom of the seas—that is, to force the British to observe international law. Wilson also planned to rally the other neutrals to win the same objective. But the civilian leaders in Berlin were engaged in a desperate struggle with military and naval leaders over submarine policy and could not return a positive response to Wilson's overtures. Had they done so, the outcome of the war might well have been very different.
Bryan resigned as secretary of state on 8 June rather than continue a correspondence that he said might eventuate in hostilities with Germany. Wilson, somewhat reluctantly, appointed Lansing to succeed Bryan. Wilson continued to maintain close personal control over important foreign policies, but it was hard to do this with Lansing in command at the State Department because the new secretary, bent on war with Germany, tried at critical points to thwart or undermine Wilson's diplomacy. Lansing was also, by Wilson's standards, legalistic and reactionary.
The crisis with Germany came to a sudden head when the commander who had sent the Lusitania to the bottom sank another large British liner, the Arabic , without warning on 19 August 1915, with forty-four casualties, including two Americans. Wilson did not resort to public correspondence, but he made it clear to the German government that he would break diplomatic relations if it did not disavow the sinking of the Arabic and promise that submarines would thereafter warn unarmed passenger ships and provide for the safety of their passengers and crews before sinking them. Kaiser Wilhelm II finally hardened his courage and, on 30 August 1915, ordered his naval commanders to cease the submarine campaign against all passenger ships. Under instructions from his superiors, the German ambassador in Washington, Count Johann Heinrich von Bernstorff, informed Lansing on 1 September, "Liners will not be sunk by our submarines without warning and without safety of the lives of noncombatants, provided that the liners do not try to escape or offer resistance."
Americans hailed the so-called Arabic pledge as a great triumph for their president. Actually, what Wilson had done was to narrow the submarine dispute to the sole issue of the safety of unarmed passenger ships. Submarines were still free to prowl the seas and sink merchantmen without warning. The kaiser called all submarines back to their bases temporarily, in order to avoid any further incidents. But the Germans had not renounced the important aspects of the underseas campaign—the war against merchant shipping—and Wilson had in effect withdrawn his demand that they do so.