This chapter connects fraudulent conveyance principles to the practices that judges adopted during the reorganization of the Atchison, Topeka and Santa Fe and the other great railroads that failed in the second half of the nineteenth century. The benchmarks judges put in place during this era established the ground rules for bargaining among investors for the next several decades. Judges did not try to shape the outcome of the negotiations. Instead they ensured that deals were only struck honestly and in good faith. There had to be a process that gave everyone a fair opportunity to participate.

Over the first year of the war, Britain moved from a position of financial power over the United States to a position of increasing economic dependency. Responsibility for managing this shift fell first to Chancellor David Lloyd George, who showed little interest in the Treasury's operations during the war, and then to Reginald McKenna, who became increasingly seized of the problem. American Colonel Edward House moved to try to mediate the war, taking a trip to Europe. Finding that it was still far too early to mediate the conflict, House set his sights much lower. He looked merely to convince the powers that, when it came time to end the war, the United States should serve as the necessary neutral clearing-house through which the negotiations would be completed. At the same time, British intelligence organization MI1(b) worked to solve the American diplomatic codebooks, succeeding not long after House returned to the United States.

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.

A sense of crisis emerged amidst growing anxieties over the Allied financial, shipping, and food situations. The British faced hard economic choices for the coming year, but the Cabinet remained divided and paralyzed. Lord Lansdowne finally put to paper the worries that had filled a number of ministers all year: the 'Lansdowne Memorandum' called for a consideration of a negotiated peace, finding a number of supporters within the Cabinet and sparking vigorous debate. Lloyd George rejected Lansdowne's position, determined to force the adoption of industrial conscription and to increase British spending in the United States. Lloyd George rejected the reality of Britain's increasingly fragile economic position even amidst a serious financial crisis. Plotting with Conservative leader Andrew Bonar Law and with Edward Carson, Lloyd George sought to eject Asquith and his supporters from the levers of power, but Asquith outmanoeuvred him, holding his government together with a series of compromises and isolating Lloyd George within the Cabinet. Lloyd George responded by launching a desperate gambit to remove Asquith's control over the war. When the dust settled, Lloyd George was on Downing Street.