Arabic crisis
The US had still not fully resolved the dispute with Germany over RMS Lusitania. Indeed, the last note, of 21 July, that Wilson sent took the form of an ultimatum, to the effect that the US would regard any subsequent sinkings that harm American citizens as "deliberately unfriendly".[8]
Advised by Colonel House, on 22 August President Wilson issued a statement via his press office to the effect that the White House staff was speculating on what to do if the Arabic investigation indicated that there had been a deliberate German attack. If true, there was speculation that the US would sever relations with Germany, while if it was untrue, negotiations were possible. Severing relations was understood to likely lead to war.[9]
The attack was met with panic from German Chancellor Theobald von Bethmann Hollweg and the German Foreign Office under Gottlieb von Jagow. Senior staff at the Foreign Office wrote angrily: "The attacks on the SS Orduña and the Arabic prove that new incidents with America are possible at any time. [...] Both ships were torpedoed without previous warning while sailing *to* America. That the torpedo fired at the Orduna missed is only an accident." The fact that the ships were heading out from the UK undercut all of the German excuses about the Lusitania carrying munitions, and indicated that any submarine captain could cause war between Germany and the US at any time. The Chancellor and the Foreign Office agreed that cruiser rules with passenger ships was absolutely imperative.[10]
Bethmann Hollweg and Jagow adopted a two-fold course. On 24 and 25 August, Jagow told US Ambassador James W. Gerard about the secret June 6 orders to not attack large passenger liners, breaking the Kaiser's instruction to keep the orders secret. Bethmann Hollweg arranged an August 26 conference with the major political and military leaders. The Chancellor furiously proposed new orders that all passenger ships, not just large ones, must be attacked only under cruiser rules. The Germans should accept arbitration over the damage caused. And they should work with the Americans to press the British to adhere to the Declaration of London and loosen the blockade. He was supported by Army leader Erich von Falkenhayn who considered American involvement to be disastrous, likely leading to other neutral countries joining the Entente as well. Meanwhile, Grand Admiral Tirpitz and Head of the Admiralty Staff Gustav Bachmann, naval leaders deeply involved in the submarine war, were opposed to all of the Chancellor's proposals. They argued that Germany must not make any admission that the submarine war was illegal, that any restriction on submarines is equivalent to abandonment of the campaign, and that Britain adopting the Declaration is undesirable because it would remove the German excuse for submarine warfare. Falkenhayn countered that the last six months showed the submarine to be simply not an effective weapon, and in a fury the Chancellor declared that he would not leave "until His Majesty had ruled in his favor".
Finally, the next day, the Chancellor used a belated telegram from Ambassador to the US Johann Heinrich von Bernstorff on the situation in America to get his way.[11]
The Admiralty attempted a last stand. Bachmann refused to approve of the new direction. The Kaiser issued direct orders on a suspension of the submarine campaign and Bachmann was removed, to be replaced by Henning von Holtzendorff who was thought to be closer to the Chancellor. Tirpitz offered to resign his post as Naval Secretary and thus cause public outrage, but this was rejected, and instead his access to the Kaiser was strictly limited from this point on. Holtzendorff, taking over the Admiralty Staff, issued orders on 18 September that confined submarines to the North Sea, where they would only operate under cruiser rules. The first round of unrestricted submarine warfare was over.
Arabic pledge
Intrigue continued across the Atlantic. This had begun on August 23, with a meeting between Assistant Secretary Chandler Anderson (approved by US Secretary of State Robert Lansing) with Ambassador Bernstorff to explain informally that if Germany abandoned submarine warfare, Britain would be the only violator of American neutral rights. Anderson met Bernstorff at the Ritz Carlton Hotel in New York and reported to Lansing that Bernstorff had immediately recognized the advantage of making Britain responsible for illegal acts unless Britain ended its war zone. Bernstorff had in fact long opposed the submarine war.[12] Lansing continued to put pressure on Bernstorff. Soon, the decision arrived from Germany, and Bernstoff was given instructions:[13]
"I empower you to negotiate confidentially with Wilson or Lansing on the following basis:
After agreement on the above basis, I will answer the last Lusitania note, using your proposals. Wire notice of receipt."
Bernstorff acted on the proposal on 1 September, giving the Arabic pledge:[14]
