So I was talking to a friend about American interventionism, and he mentioned that one of the primary causes for the US's involvement in the war was out of fear the British, French and Russians would default on their debts if they lost the war. Was the sinking of the Lusitania used as a pretext, like the explosion of the Maine in the Spanish American war, to justify their other reasons?
I knew there was a significant amount of trade between the Allies and the US for materials, but not enough to justify joining such a horrible war.
I should also mention my friend is a diehard Marxist so I'm wondering if this is just an attempt to throw shade at the Military Industrial Complex
I'll use an earlier answer I wrote touching on this subject. I would honestly say no, even though Entente war debts were a concern to the US government. It's worth noting that Britain and France were not allowed to float war bonds on the US market until 1915, and when they did so they were purchased by private investors: there was no government-to-government lending involving the US government prior to the US declaration of war in April 1917. While the sums raised were substantial ($500 million in 1915, $1.5 billion in 1916, with the bank JP Morgan acting as a private agent), these were smaller than the $4 billion lent to Entente powers by the US in 1917-1918.
On top of this, the US government prior to the entry of the country into the war was actually rather cold towards Britain and France's efforts to obtain loans for their war effort. Wilson campaigned in the November 1916 election on a platform of neutrality, while his Republican opponent Charles Evans Hughes was in favor of greater mobilization and preparedness for entry into the conflict. Incidentally, that was an extremely hard-fought campaign that was won by very narrow margins: Wilson received 277 Electoral College Votes, and reached this by winning a number of states by extremely small numbers, such as winning California by a little over three thousand votes.
In any case, with this election as a backdrop, Britain and France were attempting to raise some $1.5 billion in new loans in the US for the 1917 campaign season. JP Morgan sought some assurance from the US government and the Federal Reserve Board that this issuance would be approved, but instead Wilson drafted a statement delivered by the governor of the Federal Reserve Board warning Americans against buying these loans. On November 27, the Fed took an extra step of warning its member banks against purchasing additional British or French securities. This in fact caused a run on the British pound (offset by emergency purchases by the British Treasury and JP Morgan to prop it up), which in turn caused Britain to suspend support of French purchases. Indeed, far from the US entering the war to support British and French loans, the US government was actively endangering the ability of Britain and France to finance their war effort in November 1916.
The War Committee of the British Cabinet in fact interpreted this as a move on Wilson's part to force the Entente to the peace table, and Wilson was actually fine with this interpretation of events. German Chancellor Bethman-Hollweg issued a demand on December 12 for peace negotiations, and Wilson followed this on December 18 with the "Peace Note", declaring all sides to state their war aims as a first step towards a negotiated settlement. This had an effect on Wall Street as investments related to the armaments industry plunged. In the event, the Central Powers rejected Wilson's offer of a peace mediation, and the Entente was able to take the diplomatic high ground on January 10 by calling for the evacuation of Serbia and Belgium, self determination in the Hapsburg and Ottoman Empires, and the return of Alsace-Lorraine to France as peace terms. Meanwhile, Britain was attempting to continue to finance its war effort through selling its US assets, and drawing down on its gold reserves, but it had to pursue the prospect of attempting to float new loans in the US in January 1917 as it could cover perhaps only six weeks' worth of the war effort through these means.
So what happened? Basically, Germany massively miscalculated the hand it had been given. The German High Command did not seriously believe Wilson could stop the war, and sought to win it militarily. A major part of the strategy pursued here was to resume unrestricted submarine warfare against commerce to the Entente powers. Unrestricted submarine warfare in the area around Great Britain and Ireland had been German policy from February 4, 1915 to August 27, 1915 - it was in this period that RMS Lusitania was sunk on May 7, 1915, and the international outcry over that event was a major motivating factor in Germany backpedaling that policy.
By late 1916, the German military considered the risks of resuming unrestricted submarine warfare (US entry into the war) to be less than the gains (starving Britain and cutting off armaments supplies from the US). Bethman-Hollwegg and the German foreign ministry opposed this, but were overruled by Generals Hindenburg and Ludendorff, who were effectively in charge of the war effort. Orders were sent to U-Boats to take positions around the British Isles, and on January 31, the German ambassador in Washington, DC formally notified Secretary of State Robert Lansing that Unrestricted Submarine Warfare was resuming. The US severed diplomatic relations with Germany on February 3. US publication of the Zimmerman Telegram (diplomatic communications with Mexico offering them Texas, New Mexico and Arizona should that country ally with Germany against the US in event of war) received confirmation of authenticity by the German Foreign Minister himself on March 3 and again on March 29, and this ultimately pushed the US to finally declare war on April 6.