American entry into World War I
The United States entered into World War I on 6 April 1917, more than two and a half years after the war began in Europe. Apart from an Anglophile element urging early support for the British and an anti-tsarist element sympathizing with Germany's war against Russia, American public opinion had generally reflected a desire to stay out of the war. Over time, especially after reports of German atrocities in Belgium in 1914 and after the sinking of the RMS Lusitania in a torpedo attack by a submarine of the Imperial German Navy off the southern coast of Ireland in May 1915, Americans increasingly came to see Imperial Germany as the aggressor in Europe.
While the country was at peace, American banks made huge loans to the Entente powers, which were used mainly to buy munitions, raw materials, and food from across the Atlantic in North America from the United States and Canada. Although president Woodrow Wilson made minimal preparations for a land war before 1917, he did authorize a shipbuilding program for the United States Navy. Wilson was narrowly re-elected in 1916 on an anti-war platform.
By 1917, with Belgium and northern France occupied by German troops, the Russian Empire experiencing turmoil and upheaval in the February Revolution overthrowing the tsar on the Eastern Front, and with the remaining Entente nations low on credit, the German empire appeared to have the upper hand in Europe. However, a British economic embargo and naval blockade were causing severe shortages of fuel and food in Germany. Berlin then decided to resume unrestricted submarine warfare. The aim was to break the trans-Atlantic supply chain to Britain from other nations to the West, although the German high command realized that sinking American-flagged ships would almost certainly bring the United States into the war.
Imperial Germany also made a secret offer to help Mexico regain territories of the Mexican Cession of 1849, lost seven decades before in the Mexican–American War of 1846–1848, in an encoded diplomatic secret telegram known as the Zimmermann Telegram intercepted by British intelligence. Publication in the media of that communique outraged Americans just as German submarines started sinking American merchant ships in the North Atlantic in their U-boat campaign. President Wilson then asked Congress for "a war to end all wars" that would "make the world safe for democracy", and Congress voted to declare war on Germany on April 6, 1917. US troops began to arrive in Europe later that year, and served in major combat operations on the Western Front under the command of general John J. Pershing, particularly during the final Hundred Days Offensive.
Main issues
Naval blockade
Britain used its large navy to prevent cargo vessels entering German ports, mainly by intercepting them in the North Sea between the coasts of Scotland and Norway. By the end of 1915, the Royal Navy had successfully interdicted and stopped the naval shipment of most war supplies and food to Germany. Neutral American merchant cargo ships that tried to trade with Germany were seized or turned back by the Royal Navy in outlying waters who viewed such trade as in direct conflict with the Allies' war efforts. The impact from the blockade became apparent very slowly because Germany and its allies controlled extensive farmlands and raw materials on the continent of Europe and could trade with land-bordering neutral countries like Sweden and the Netherlands who were not themselves blockaded by the British or French. However, because Germany and adjacent Central Powers ally Austria-Hungary had decimated their agricultural production by drafting and taking so many farmers and supplies of nitrate fertilisers into their armies, and the Allies were able to pressure neutral countries into reducing exports, the situation worsened, with the "turnip winter" of 1916–1917 an example of the emerging severe shortages in Central Europe. The situation at the start of 1917 was such that there was clear pressure on the German leadership to avoid a "war of exhaustion", while the softening of neutral trade reduced the importance to keep the neutral countries on side.Germany had considered a blockade from 1914. "England wants to starve us", said Grand Admiral Alfred von Tirpitz, the man who built the Imperial German Navy fleet after 1871 with the unification of Germany during the last few decades and who remained a key advisor to the German Emperor / Kaiser Wilhelm II. "We can play the same game. We can bottle her up and destroy every ship that endeavors to break the blockade". Admiral Tirpitz wanted to sink or scare off merchant and passenger ships en route to Britain. He and others in the Admiralty reasoned that since the island of Britain depended on imports of food, raw materials, and manufactured goods, preventing a substantial number of ships from supplying Britain would effectively undercut its long-term ability to maintain an army on the Western Front and potentially force Britain into speedy surrender. Such strategy would also give an essential, war winning role to the German Imperial Navy, who had been mostly passive in the war thus far due to being unable to challenge the powerful Royal Navy surface warship fleet.
While Germany had ample shipyard capacity to build hundreds of U-boats, they had only nine long-range U-boats at the start of the war in August 1914. Nevertheless, without consulting colleagues earlier superiors like Tirpitz, the outgoing head of the German Admiralty Hugo von Pohl, declared the beginning of the first round of unrestricted submarine warfare six months after the war began in February 1915. However, instead of ceasing shipping to Britain and blaming the British as the Germans anticipated, the United States demanded that Germany respect the earlier peace-time international agreements upon "freedom of the seas", which protected neutral American and other ships on the high seas from seizure or sinking by either belligerent. Furthermore, Americans insisted on strict accountability for the deaths of innocent American civilians, demanding an apology, compensation and suggesting that it is grounds for a declaration of war.
While the British Royal Navy frequently violated America's neutral rights by defining contraband very broadly in their naval blockade of Germany, German submarine warfare threatened American lives. Wilson's top advisor, legendary Colonel Edward M. House, commented that, "The British have gone as far as they possibly could in violating neutral rights, though they have done it in the most courteous way". Further, while the British justified their argument with an appeal to precedent, the Germans claimed that they should be allowed to use their new weapon to its best potential and so existing rules and norms need not apply. This is especially exemplified when German submarines torpedoed ships without warning, causing sailors and passengers to drown. Though in practice this was initially rare, since U-boats preferred to attack on the surface, this strategy was justified by claims that submarines were so vulnerable that they dared not surface near merchant ships that might be carrying guns and which were too small to rescue submarine crews. The Americans countered that if the new weapon cannot be used while protecting civilian lives, it should not be used at all.
From February 1915, despite the United States warning Germany about the misuse of submarines, several incidents occurred where neutral ships were attacked or Americans killed. After the Thrasher incident, the German Imperial Embassy warned US citizens against boarding vessels to Britain, which would have to face German attack. Then on May 7, Germany torpedoed the British ocean liner RMS Lusitania, sinking her. This act of aggression caused the loss of 1,199 civilian lives, including 128 US citizens. The sinking of a large, unarmed passenger ship, combined with the previous stories of atrocities in Belgium, shocked Americans and turned public opinion hostile to Germany, although not yet to the point of war. Wilson issued a warning to Germany affirming it would face "strict accountability" if it killed more American citizens. Berlin acquiesced, ordering its submarines to avoid passenger ships.
By January 1917, however, Field Marshal Paul von Hindenburg and General Erich Ludendorff decided that an unrestricted submarine blockade was the only way to achieve a decisive victory. They demanded that Kaiser Wilhelm order unrestricted submarine warfare be resumed. Germany knew this decision meant war with the United States, but they gambled that they could win before the United States' potential strength could be mobilized. However, they overestimated how many ships they could sink and thus the extent Britain would be weakened. Finally, they did not foresee that convoys could and would be used to defeat their efforts. They believed that the United States was so weak militarily that it could not be a factor on the Western Front for more than a year and that submarines would stop the transport of troops anyway. The civilian government in Berlin objected, but the Kaiser sided with his military.
The second round of unrestricted submarine warfare was communicated to the Americans on January 31, 1917. The State Department had some indications that the campaign would come, but Wilson declared to his cabinet that the announcement had come as a complete surprise. The announcement was especially galling due to Wilson's "peace without victory" speech nine days earlier, as well as ongoing discussions on US opposition to British use of armed merchant ships. The Germans started targeting American vessels the very next day.
Business considerations
The beginning of war in Europe coincided with the end of the recession of 1913–1914 in the US. Exports to belligerent nations rose rapidly over the first four years of the War from $824.8 million in 1913 to $2.25 billion in 1917. Loans from American financial institutions to the Allied nations in Europe also increased dramatically over the same period. Economic activity towards the end of this period boomed as government resources aided the production of the private sector. Between 1914 and 1917, industrial production increased 32% and GNP increased by almost 20%. The improvements to industrial production in the United States outlasted the war. The capital build-up that had allowed US companies to supply belligerents and the US Army resulted in a greater long-run rate of production even after the war had ended in 1918.The J.P. Morgan Bank offered assistance in the wartime financing of Britain and France from the earliest stages of the conflict through the US's entrance in 1917. J.P. Morgan's New York office, was designated as the primary financial agent to the British government starting in 1914 after successful lobbying by the British ambassador, Sir Cecil Spring Rice. The same bank would later take a similar role in France. J.P. Morgan & Co. became the primary issuer of loans to the French government, providing the capital of US investors, operating from their French affiliate Morgan, Harjes. Relations between Morgan and the French government became tense as the war raged on with no end in sight however. France's ability to borrow from other sources diminished, leading to greater lending rates and a depressing of the value of the franc. After the war ended, J.P. Morgan & Co. continued to aid the French government financially through monetary stabilization and debt relief.
Because the United States was still a declared neutral state, the financial dealings of United States banks in Europe caused a great deal of contention between Wall Street and the US government. Secretary of State William Jennings Bryan strictly opposed financial support of warring nations and wanted to ban loans to the belligerents in August 1914. He told President Wilson that "refusal to loan to any belligerent would naturally tend to hasten a conclusion of the war." Wilson at first agreed, but then reversed himself when France argued that if it was legal to buy US goods then it was legal to take out credits on the purchase.
J.P. Morgan issued loans to France including one in March 1915 and, following negotiations with the Anglo-French Financial Commission, another joint loan to Britain and France in October 1915, the latter amounting to US$500,000,000. Although the stance of the US government was that stopping such financial assistance could hasten the end of the war and therefore save lives, little was done to insure adherence to the ban on loans, in part due to pressure from Allied governments and US business interests.
The US steel industry had faced difficulties and declining profits during the recession of 1913–1914. As war began in Europe, however, the increased demand for tools of war began a period of heightened productivity that alleviated many US industrial companies from the low-growth environment of the recession. Bethlehem Steel took particular advantage of the increased demand for armaments abroad. Prior to US entrance into the war, these companies benefited from unrestricted commerce with sovereign customers abroad. After President Wilson issued his declaration of war, the companies were subjected to price controls created by the US Trade Commission in order to ensure that the US armed forces would have access to the necessary armaments.
By the end of the war in 1918, Bethlehem Steel had produced 65,000 pounds of forged military products and 70 million pounds of armor plate, 1.1 billion pounds of steel for shells, and 20.1 million rounds of artillery ammunition for Britain and France. Bethlehem Steel took advantage of the domestic armaments market and produced 60% of the US weaponry and 40% of the artillery shells used in the war. Even with price controls and a lower profit margin on manufactured goods, the profits resulting from wartime sales expanded the company into the third largest manufacturing company in the country. Bethlehem Steel became the primary arms supplier for the United States and other allied powers again in 1939.