When war broke out in 1914, the British Navy was the largest and most powerful in the world, and the German High Seas Fleet stood little chance against it. It was, however, at sea that Britain was the most vulnerable—as an island, the British had to import nearly everything they used, and the majority of their supplies came across the Atlantic from the US. A successful campaign against British merchant shipping, therefore, would choke off Britain’s vital supplies and starve her into submission. But with the German fleet unable to stand in an open fight with the Royal Navy, the Germans could see no good way to successfully attack British shipping.
Their answer came from an unexpected source.
The first successful practical submarines, called “Holland boats”, had been built in the United States just a few years before. Although the submarine was viewed largely as a novelty, useful perhaps for scouting or coastal defense, the German Fleet built 29 of them, called Undersea-Boats or U-boats.

An American "Holland Boat"
When the war began in 1914, the British Royal Navy began imposing a naval blockade on all German ports, effectively bottling up the German Fleet. The only ships capable of slipping past the blockade were the U-boats, and the Germans sent ten of them on patrol in the North Sea, hoping to at least harass and annoy the Royal Navy. Instead, even the German admirals were stunned when the little U-boats sank nine British warships within two months—with the U-9 alone sinking three British cruisers in a single hour.
When it was apparent that the war would be a long one, therefore, the U-boats were turned loose against British merchant shipping.
The rules of international law that covered the treatment of civilian ships in wartime were called the “Cruiser Laws”. Under the Cruiser Laws, belligerents were entitled to stop the flow of war materials (which, in addition to obvious things like guns and ammunition, also included things like food, cloth or fuel) by intercepting civilian merchant ships, firing a warning shot to stop them, then boarding the ship. If a search found war materials aboard, the belligerents were to allow the crew and passengers time to board their lifeboats and abandon the ship, before it was then seized or sunk.
The great tactical advantage of the submarine, of course, was its ability to attack, unseen and unsuspected, from underwater by torpedo, by surprise—exactly what the Cruiser Laws prohibited in regards to merchant shipping. Nevertheless, in the initial stages of the war, the German U-boats did their best to follow the Cruiser Laws, surfacing next to merchant vessels and allowing the crew to their lifeboats before sinking the ship with the submarine’s deck gun. Two actions by the British, however, made this impossible. First, the British Admiralty issued instructions to merchant ships to attempt to sink surfaced U-boats by ramming them. Secondly, the British began arming some merchant ships (called Q-Ships) with hidden deck guns, which could be used to surprise a surfaced U-boat and sink it.
In addition, the Admiralty instructed British-registered ships to protect themselves by flying flags from neutral countries—including the United States, and also began illegally transporting war materials aboard passenger ships.
In response, in 1915 the Germans decided on a policy of “unrestricted submarine warfare”; they declared the seas around England to be a war zone, and announced that any ship suspected of delivering war materials to British ports—including ships sailing under a neutral flag—would be torpedoed without warning by submerged U-boats. By April 1915, German U-boats were sinking an average of two ships per day in British waters.

German U-boats in port
While torpedoing merchant ships without warning would later be considered routine by both sides in the Second World War, in 1915 it provoked outrage from many neutral nations, including the United States, particularly when several passengers from neutral countries were killed in the attacks. The most severe blow came on May 7, 1915, when the U-20 torpedoed the British passenger liner Lusitania off the coast of Ireland, killing 1200 people, 128 of which were Americans. The Germans pointed out that the Lusitania was registered with the Royal Navy as an auxiliary cruiser and that she was carrying a load of military ammunition, but President Wilson issued severe diplomatic warnings. Fearful of provoking the US into entering the war on the side of the Entente, Germany halted its unrestricted submarine warfare, and ordered its U-boat commanders not to sink any civilian ships without stopping them first. At the same time, the Germans began deploying an ingenious mine-laying submarine, which was able to launch a dozen floating mines, tethered to the sea floor, from special tubes.
The British in turn began laying their own naval minefields to stop the U-boats, including a wide belt of mines across the English Channel that became known as the Dover Barrage.
In 1914 and 1915, German U-boats were invulnerable to surface ships as long as they remained submerged (although they were forced to surface periodically to recharge their electric batteries, and tried to carry out this operation at night). By mid-1916, however, the Royal Navy had developed means of its own to attack the submerged submarines. Underwater microphones, called “hydrophones”, allowed shipboard operators to track U-boats by the sound of their propellers, while the newly-developed depth charge, an explosive that was rigged to detonate at a predetermined depth beneath the surface, could crush the sub’s hull and sink it. In March 1916, a British Q-Ship successfully sank the U-68 using a depth charge, and two more subs were sunk (and two others damaged) by the end of 1916.
By this time, the British naval blockade was becoming a serious threat to Germany, by cutting off imported food and supplies. In May 1916, the German Fleet made an attempt to run the blockade, and met the Royal Navy in the Battle of Jutland. Although Jutland was a tactical victory for the Germans (due largely to the inadequate armor on the British cruisers), it demonstrated once more to the Kaiser that his navy could not stand a prolonged campaign with the British. The German fleet never left port again. Instead, desperate to find some way to lift the strangling British blockade, the German navy proposed resuming unrestricted submarine warfare against merchant shipping, and in 1917, with the land war going against him, the Kaiser—though he knew that it would probably provoke the United States to enter the war—agreed.
Militarily, the renewed submarine campaign was hugely successful. The 105 operational German U-boats sank one out of every four ships entering British waters—a rate of loss that would bring Britain to her knees in a short time. Politically, however, the submarine campaign was a disaster. As expected, the United States entered the war in April 1917. The Germans had calculated, however, that a successful U-boat campaign would cripple Britain into submission before the US would be able to train and transport enough troops to make any significant difference in the war.
They had not counted on Allied countermeasures. The British and Americans worked out a plan that hampered the effectiveness of the U-boats, by organizing large groups of merchant ships into convoys and escorting these with British and American destroyers armed with depth charges. Many convoys were also equipped with balloons or airplanes, launched from early aircraft carriers, which could scout the area for surfaced submarines. Allied shipping losses from U-boats dropped sharply, while 1918 cost Germany more submarines sunk than any other year.
The Bitish naval blockade, meanwhile, was steadily choking Germany into submission. The loss of industial raw materials crippled German war production, while the loss of imported food led first to rationing, and then to actual starvation in Germany. The blockade was a significant factor in Germany’s decision to surrender in November 1918.
During the war, Germany had lost a total of 178 U-boats, and 179 remained at the end of the war, to be surrendered to the Allies.
Some related diaries for further reading:
World War One: Life and Death in the Trenches
http://www.dailykos.com/...
U-505: The Only Captured WW2 German Submarine in the United States:
http://www.dailykos.com/...