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Why did the United States shift from neutrality to involvement in World War I?
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The United States shifted from neutrality to involvement in World War I primarily due to economic interests and security concerns. Aggressive German U-boat activities threatened American trade and financial investments in Europe, risking economic collapse. Additionally, Germany's resumption of unrestricted submarine warfare and the Zimmerman Telegram, which proposed a German-Mexican alliance against the U.S., heightened tensions. These factors, along with the Allies' financial dependence on U.S. loans, compelled the U.S. to join the war.
Business interests played a large part in the Wilson Administration's change of policy regarding World War I. The increasingly aggressive activity of German U-boats in the Atlantic severely disrupted America's trade with Europe, trade that was worth millions of dollars. Business interests, especially those of big business, put increasing pressure on the government to get involved in the War. They believed it was necessary to protect the American economy.
The United States had a lot of money tied up in the European economy. Banks and other financial institutions had loaned European businesses considerable sums of money and were understandably worried that a long War would seriously impair their ability to get their money back. A mass default on American loans would have had a catastrophic effect on the US banking system. The banking system was the foundation of the American economy; it was essential to protect it from collapse.
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The United States had a lot of money tied up in the European economy. Banks and other financial institutions had loaned European businesses considerable sums of money and were understandably worried that a long War would seriously impair their ability to get their money back. A mass default on American loans would have had a catastrophic effect on the US banking system. The banking system was the foundation of the American economy; it was essential to protect it from collapse.
None of this is to say that there weren't other factors at work in ending the United States's position of neutrality. There can be no doubt that President Wilson genuinely believed that America's entry into the War really would make the world safe for democracy. But ultimately, economic factors were more important drivers behind the Administration's dramatic change of policy.
There were a few reasons for this move. The first was Germany's decision to resume unrestricted submarine warfare against the Allies. The United States was nearly pushed into war with Germany in 1915 with the sinking of the Lusitania. After some tense messages, Germany agreed to back off and only attack belligerent ships. The Germans knew that they had to starve Britain into submission in order to end the war quickly, so they resumed sinking all merchant vessels around Britain in early 1917. This, more than anything, pushed the United States into the war against the Central Powers.
Another event that led to U.S. belligerency was the Zimmerman note. British intelligence uncovered a secret communication between Germany and Mexico in which Germany promised to help Mexico get back lands lost during the Mexican-American War if Mexico would distract the United States with another war. This angered many in the West in particular. Though it is doubtful how the plan would have unfolded given Mexican instability at the time, it further proved to the United States that Germany could not be trusted.
The final event was that the war was going rather poorly for the Allies. The United States had loaned the Allies a great deal of money, and if they lost the war, it was doubtful whether or not this money would be repaid. In the aftermath of the war, as people grew bitter over what its long-term goals were, some people claimed that the U.S. only went to war in order to protect its investment. While this view is cynical, the fact that millions of dollars in loans were involved did not hurt the cause of the U.S. entering the war.