With the Asquithian Liberals ejected from office, Lloyd George's new government remained in denial over the severity of Britain's economic problem in the United States. Bonar Law's new responsibilities as Chancellor alerted him to the seriousness of the crisis, but he took no meaningful action. German and American moves for peace came soon after Lloyd George's ascent to power, but the new government simply sought to manoeuvre around them. British intelligence continued to serve Lloyd George poorly, sending him decrypts that again misled Lloyd George into believing that Germany and the United States were secretly collaborating. British intelligence also decrypted the infamous Zimmermann Telegram, but decided not to share it with the government. Arthur Balfour, the new Foreign Secretary, remained extremely anxious about Britain's economic position. He used a British intelligence officer in the United States, William Wiseman, to quietly keep alive the prospect of American mediation with House. House sought new negotiations between Germany and Britain via Wiseman and the German Ambassador. Germany announced a declaration of unrestricted submarine warfare, ending House's negotiations.

Wilson broke off diplomatic relations with Germany but began new peace efforts via Austria-Hungary. The new Austro-Hungarian Emperor Karl shared Wilson's desperation to open general peace negotiations. With the British down to their final tranche of American assets and yet refusing to cut their American spending, the Allies steadily grew more vulnerable to US pressure. Wilson pursued peace possibilities with Austria-Hungary, beginning indirect negotiations with the British leadership, who thought that an Austro-Hungarian separate peace might be on offer. These indirect negotiations led Lloyd George to make a reckless confession to the US Ambassador to London, Walter Page: Lloyd George confessed that he had secretly been reading Page's instructions from Washington. Page magnanimously kept this confession a secret. At the same time, British intelligence manouevred to make the best use of the Zimmermann Telegram. When Wilson received it, it had a dramatic effect on his diplomacy. Before, Wilson had consistently moved speedily and creatively to promote negotiations between London and Vienna. Afterward, he took a very hard line towards the Austro-Hungarians and broke off these peace negotiations despite large Austro-Hungarian concessions. Soon thereafter, the United States joined the First World War and provided massive financing to the Allies.

Chapter 4 chronicles how Walter Hines Page, a diplomatic novice when President Woodrow Wilson tapped him to head Embassy London, proved one of the pivotal actors in World War I. While Wilson - and most of his cabinet - strove to maintain American neutrality in this conflict, Page, virtually from the moment hostilities erupted, strained every nerve and sinew to bring Washington into the war on the side of the Allies, especially Britain. The White House and State Department were unresponsive to Page's entreaties for many months - indeed, he was frequently threatened with cashiering - but his relentless cannonade of cables, letters, and other forms of trans-Atlantic arm-twisting bore fruit when Wilson accepted the logic of the ambassador's main argument: that German domination of the Continent would pose an unacceptable menace to the Western Hemisphere. Wilson's famous proclamation to Congress that "the world must be made safe for democracy" was a virtual paraphrase of Page's correspondence. Many interwar American historians, among them Harry Elmer Barnes and C. Harley Grattan, considered U.S. entry into the so-called "Great War" a calamity and blamed Page for nudging America off the tightrope of neautrality. I argue that this charge - oft-belittled in the post-World War II period - was in fact largely correct, but that Page's insubordination was heroic rather than nefarious.