In the Winter of 1914 with the Western Front completely stalemated in trench warfare, Expectations that the war would be over and troops home by Christmas had proved false. And on Christmas Day at places along the Western Front, German and Allied troops sang Christmas songs, heard the songs of their enemies and ventured across no man's land to visit and exchange friendship and gifts. It shocked the military commands, and the German, French and British commands issued orders against any further mingling with enemy soldiers.
Germany had failed in the objectives it had set for itself as it went to war, but it had been the most successful militarily. A withdrawal to its borders would have done much to have inspired a negotiated settlement of the war. But this was not to be. Germany would like to have made a separate peace with Russia. But, as compensation for its costs in going to war, Germany wanted its settlement with Russia to include gains it had made in the east at Russia's expense, and the Russians were not about to agree. Nicholas II, meanwhile, did not want to admit to his subjects that the war had been a mistake. To admit failure, cut his losses and negotiate a settlement with Germany was to him unthinkable. With enemy troops on Russian territory he was determined to keep his recent vow to fight until the invader was driven back. Nicholas still expected benefits from the war. He had seen nothing of the conditions at the front. His contact with his armies to this time had been on parade grounds, where he had been impressed by their splendid appearance.
As for the war between Germany and France, King Wilhelm's chancellor, Bethmann-Hollweg, preferred a negotiated settlement, and Wilhelm was depressed and also wished for peace. Some German strategists preferred a separate peace with France, splitting France from the British, but the French were determined to drive the Germans from their soil, and Bethmann-Hollweg, under pressure from people around him and public opinion, was unwilling to negotiate a withdrawal of German troops from France and Belgium. The German public, press and military high command were opposed to what they called a rotten peace -- a compromise settlement. They believed that German superiority would prevail. Believing that the war had been forced upon them, the German public favored war until the fatherland won a peace that offered it lasting protection against its enemies and a peace that justified the nearly 300,000 German soldiers that had already been killed.
What if Wilhelm and the Generals had listened to Hollweg on the folly of fighting a never ending quagmire bleeding Germany dry and sued for a negotiated peace in 1914 with no annexation or indemnities and a return to the status quo? Or how about in the winter of 1916 with casualties already a million for Germany, half a million Britons dead and 650,000 French could there have been a peace offer? However once Russia was knocked out of the war and Germany swallowed up a third of the country it seemed very unlikely such a deal would ever transpire again.