The Zimmermann Telegram was intercepted and decoded by the British cryptographers of Room 40. The revelation of its contents in the American press on March 1 caused public outrage that contributed to the United States' declaration of war against Germany on April 1.
Zimmermann's message was:
On the first of February, we intend to begin unrestricted submarine warfare. In spite of this, it is our intention to endeavor to keep the United States of America neutral.
In the event of this not succeeding, we propose an alliance on the following basis with Mexico: That we shall make war together and make peace together. We shall give generous financial support, and an understanding on our part that Mexico is to reconquer the lost territory in New Mexico, Texas, and Arizona. The details of settlement are left to you.
You are instructed to inform the President [of Mexico] of the above in the greatest confidence as soon as it is certain that there will be an outbreak of war with the United States and suggest that the President, on his own initiative, invite Japan to immediate adherence with this plan; at the same time, offer to mediate between Japan and ourselves.
Please call to the attention of the President that the ruthless employment of our submarines now offers the prospect of compelling England to make peace in a few months.
Carranza formally declined Zimmermann's proposals on April 14, by which time the U.S. had declared war on Germany.
The Telegram was transmitted by radio and also across two telegraph routes under the cover of diplomatic messages by two neutral governments, Sweden and the United States. Germany lacked direct telegraphic access to the Western hemisphere because the British had cut the German cables in the Atlantic and shut down German stations in neutral countries. This forced Germany to use British and American cables instead despite the risk of interception. The Zimmermann messages passed over cables that touched on British soil, and as a result were intercepted there by British intelligence. President Woodrow Wilson had granted the German diplomats the privilege of sending their messages under the cover of U.S. diplomatic traffic in hopes that this would enable Germany to remain in touch with the United States and further Wilson's aims of ending the war. The message passing through this way was sent from Berlin to the German ambassador in Washington, Johann von Bernstorff, for re-transmission to von Eckardt in Mexico. What was a privilege provided to further peace actually brought war.
The Telegram was intercepted as soon as it was sent. The codebreakers in Room 40 at the Admiralty received a copy and decrypted enough to get the gist of it. The German Foreign Office encrypted the Telegram with cipher 0075, which Room 40 had partly broken.
The British government wanted to use the incriminating Telegram. It provided a splendid opportunity to draw the United States into World War I on the Allied side. Anti-German feeling in the United States was particularly strong at that moment, due to the German policy of "unrestricted" submarine warfare.
But the British had two problems. They had to explain to the Americans how they got the ciphertext of the Telegram, without telling the Americans about the British intelligence operation monitoring neutral diplomatic traffic, and they had to have a public explanation of how they had the Telegram's deciphered text without revealing to Germany that they had broken German codes.
The British solved the first problem by also getting the ciphertext of the Telegram from the telegraph office in Mexico. The British guessed that the German Embassy in Washington would relay the message by commercial telegraph. So the Mexican telegraph office would have the ciphertext. "Mr. H.", a British agent in Mexico, bribed an employee of the commercial telegraph company for a copy of the message. (Sir Thomas Hohler, then British ambassador in Mexico, claims to have been Mr. H in his autobiography.) This ciphertext could be passed to the Americans without embarrassment.
The retransmission was enciphered using cipher 13040, which Britain had captured a copy of in Mesopotamia. So by mid-February the British had the complete text.
The second problem was solved by a cover story: that the Telegram's deciphered text had been stolen in Mexico. (The U.S. was informed of the deciphering, but backed up the cover story.) The German government refused to consider a possible code break, and instead sent von Eckardt on a witch-hunt for a traitor in the embassy in Mexico.
On February 19, "Blinker" Hall, the head of Room 40, showed the Telegram to the secretary of the U.S. Embassy in Britain, Edward Bell. Bell was at first incredulous, thinking it was a forgery, then enraged. On February 20 Hall informally sent a copy to U.S. ambassador Walter Page. On February 23, Page met with Foreign Minister Balfour, and was given the ciphertext, the message in German, and the English translation. Then Page reported the story to President Wilson, including details to be verified from telegraph company files in the U.S.
At first, the Telegram was widely believed to be a forgery by British intelligence. This belief, which was not restricted to pacifist and pro-German lobbies, was promoted by German and Mexican diplomats, and by some American papers, especially the Hearst press empire. However, on March 29 1917, Arthur Zimmermann himself admitted that the Telegram was genuine.
On February 1, Germany had resumed "unrestricted" submarine warfare, which caused many civilian deaths, including American passengers on British ships. This caused widespread anti-German sentiment. The Telegram greatly increased this feeling. Besides the highly provocative anti-U.S. proposal to Mexico, the Telegram also mentioned "ruthless employment of our submarines."
The telegram was not the only reason for the U.S. entry into the war. Previously, German U-boats had sunk US ships or ships which carried many US citizens, of which the most well known was the RMS Lusitania, torpedoed off the coast of Ireland in May 1915. US ships sunk, less well known, were the SS Housatonic in Feb 1917 in the Bay of Biscay, and the SS California off the Irish coast. It was perceived as especially perfidious that the Telegram was sent to the German embassy in Washington via the U.S. embassy in Berlin and the U.S.-operated cable from Denmark. Once the American public believed the Telegram to be real, it was all but inevitable that the U.S. would join the Great War.