Wilson had stated his peace terms--of course, only in general principles; the Allies had stated theirs in detail. Except for an article in a New York evening newspaper, inspired by Bernstorff but bearing no mark of authority, the German terms had not even been suggested. On the day following his Senate speech, according to Bernstorff, the President volunteered to issue a call for an immediate peace conference if only the Germans would state their terms. But they did not state them until the 29th, when a note for the President's private information detailed a program which was as obviously unacceptable to the allied powers as the Allies' terms were to the Germans. In any case this program had only an academic interest, for along with it came a formal notice that unrestricted submarine war would begin on Feb. 1. The German Government had deliberately broken its promises of Sept. 1, 1915, and May 5, 1916. Moreover, that Government, which for months past had been sending the President private assurances of its hearty approval of his efforts toward peace, had by its intrusion and its refusal to deal openly wrecked those efforts when at last he had brought them to a head. There was only one thing to do, and the President did it. On Feb. 3 he announced to Congress the rupture of diplomatic relations with Germany. But breaking of relations did not mean war. The President told Congress that if the threat against American lives and property conveyed by the resumption of submarine war were followed by overt acts of actual injury to Americans he would come before Congress once more and ask for authority to take the necessary steps to protect American interests. But for the moment he seems to have felt that only a warning was necessary; that the Germans, if convinced that America meant business, would reconsider their decision. And he added, "I take it for granted that all neutral Governments will take the same course." Logically they should have done so, since the proclamation of submarine war was virtually a declaration of war on all neutrals; but the European neutrals did not dare to run the risk even if they had been so minded. The submarines set to work and more ships were sunk, some of them ships with American passengers. The nation began to demand war to end an impossible situation. For the moment the President's aspirations were more moderate, and he asked Congress in the closing days of his first term for authority to arm American merchant ships for defense against submarines. The bill readily passed the House and commanded the support of seven-eighths of the Senate; but a dozen pacifists, pro-Germans and professional obstructionists, whom the President denounced as "a little group of willful men," filibustered it to death in the Senate in the last hours of the session. Almost the first act of the President after his inauguration, however, was the preparation to arm the ships by Executive authority. _Rural Credits_