The submarine controversy with Germany and disputes with Great Britain over neutral trade convinced Wilson and many other Americans that the world was a jungle, a place where force was more powerful than reason and law, and that the United States, with its limited armed forces, was unable to protect its own security, to say nothing of its worldwide interests.
The administration's plan to strengthen the army was devised by Secretary Garrison and the General Staff. It provided for a 400,000-man reserve force, called the continental army, and for a modest increase in the regular army. In contrast, the plan for naval expansion proposed a five-year building program, aimed obviously at Great Britain and Japan, to give the United States a two-ocean fleet capable of challenging the former and overwhelming the latter. Wilson opened the campaign for these programs in New York on 4 November 1915. Opposition from antimilitarists, pacifists, labor organizations, and Socialists developed very quickly. To complicate matters further for Wilson, the House Military Affairs Committee adamantly opposed the plan for the continental army, mainly because it would replace the National Guard as the first line of defense.
Wilson set out upon a speaking tour in the Middle West in late January to stir up public support for his program. He returned to Washington to find congressional Democrats as stubbornly opposed as ever to the continental army. Wilson was not committed to any single plan to strengthen the land forces; hence, he scuttled the continental army plan and accepted the House committee's demand that the National Guard be greatly strengthened and brought under comprehensive federal control. Garrison's resignation on 10 February, in protest against Wilson's move, cleared the way for easy passage of the revised Army Reorganization Act, signed by Wilson on 3 June. Wilson's great personal achievement was passage of the Naval Appropriations Act, signed by him on 29 August 1916. It provided for the completion of the Navy Department's building program in three, rather than five, years. "Let us build a navy bigger than hers [Britain's], and do what we please," Wilson said to his confidant, Colonel Edward M. House.
The failure of Wilson and Lansing to coordinate their foreign policies during the early months of 1916 led to confusions and crises that nearly caused Wilson to lose control of foreign policy to Congress. Wilson sent Colonel House to Europe in early January 1916 to work out a plan for Anglo-American cooperation for peace. House went through the formalities of talking with French and German leaders, but he spent most of his time in London. His peace plan stipulated that Wilson should convoke a peace conference in the near future. If the Germans refused to attend, the United States would probably enter the war on the side of the Allies. If a peace conference met and Germany refused to accept a "reasonable" settlement, the United States would probably enter the war on the Allied side. Sir Edward Grey, the British foreign secretary, on 22 February 1916 initialed a memorandum that embodied the plan, but he stipulated that the British, in agreement with the French, should decide when the House-Grey Memorandum was to be implemented.
Meanwhile, Lansing had launched an initiative that threatened to wreck House's negotiations. On 18 January 1916 the secretary of state proposed to the Allies that they disarm their merchant ships in return for a pledge by Germany that submarines would sink merchantmen only after warning them and providing for the safety of their crews. As Grey said, the Allies were being asked to permit submarines to sink their entire merchant fleets. Protests from Grey and House in London caused Wilson and Lansing to reverse course at once. The secretary of state announced on 15 February 1916 that the administration would follow customary rules and require submarines to warn defensively armed merchant ships before attacking them.
The intimation that the United States might break relations or go to war with Germany over the safety of armed ships set off a panic among Democrats in Congress, who threatened to take control of foreign policy by approving resolutions warning Americans against traveling on any armed ships. Wilson responded with his usual boldness, and the Senate and House tabled the resolutions on 3 March and 7 March, respectively. Actually, the safety of armed ships never became an issue between the American and German governments.
When a submarine torpedoed the packet Sussex without warning in the English Channel with heavy loss of life on 24 March 1916, Wilson decided to use the incident to force the submarine issue to a clear resolution. He went before a joint session of Congress on 19 April and read the terms of an ultimatum he had just sent to Berlin: if the Germans did not at once abandon their ruthless submarine campaign, he would break diplomatic relations with the German government. The Germans did not yet have enough submarines to conduct a successful blockade; consequently they replied on 4 May that submarines would thereafter observe the rules of visit and search when they attacked merchant ships. Maintenance of this pledge would be contingent upon the success of the United States in forcing Great Britain to observe international law in matters of trade.
Relations with Germany were almost cordial following the so-called Sussex pledge, and Americans could turn undistracted attention to the forthcoming national conventions and presidential campaign. The Republicans nominated Associate Justice Charles Evans Hughes, former governor of New York. The Democrats of course renominated Wilson. Repeated demonstrations for peace rocked the Democratic convention hall, and the Democrats adopted a platform plank that hailed Wilson because he had preserved national honor and "kept us out of war."
In the campaign, Hughes appeared petty, legalistic, and quarrelsome. Wilson, in contrast, was never better as a campaigner. Highlighting the themes of progressivism and peace, he kept Hughes on the defensive. Bryan joined other Democrats in trumpeting the cry "He kept us out of war" through the Middle West, the Plains states, and the Far West. In the election on 7 November 1916, Wilson carried New Hampshire, Ohio, the South, and virtually all trans-Mississippi states for a narrow victory (277–254) in the electoral college. Wilson's increase in popular votes in 1916 of nearly 50 percent over his popular vote in 1912 was one of the great electoral achievements in American history.