In 1906, Virginia filed suit against West Virginia in the United States Supreme Court concerning a judicial determination of the amount of money which Virginia should rightfully receive from West Virginia as partial assumption of the state debt accumulated while West Virginia was still a part of Virginia. Eight additional separate actions were filed against West Virginia by Virginia which finally resulted in an investigation of the financial status of each area, the debts incurred and the suggestion of a conference between the two states. West Virginia originally evaded such a conference but, later, appointed a commission to represent the state. More deliberation and delay occurred until 1915 when the indebtedness of the State of West Virginia to the State of Virginia was declared by the United States Supreme Court as $12,393,292.50. Finally, after continuous postponement and more court judgments, in 1919 a special session of the West Virginia state legislature passed a law which provided for the payment of the sum due Virginia. Over a million dollars was paid during 1919, and, by issuing twenty-year bonds, the balance of the debt with interest was paid by 1939.

In 1908, the first municipality in the United States to adopt the City Manager form of government was Staunton. After this form of government had been successfully employed, many additional cities in Virginia and in the other states proceeded to adopt the City Manager Plan of local government.

On March 4, 1913, Thomas Woodrow Wilson, a native of Staunton, was inaugurated as the twenty-eighth President of the United States. He was the eighth Virginia-born individual to attain this high office, although he had left the state for a college teaching position and later a gubernatorial post. From his experiences as a professor of history and as the governor of New Jersey, he had formulated a personal brand of political philosophy which he entitled "The New Freedom." He believed that government leaders should act through the people as well as for the people. During his first administration, he signed the famous Federal Reserve Bank Act, authored by U. S. Senator Robert Owen, a native Virginian, and Carter Glass, a U. S. Representative at that time from Lynchburg. Although he was re-elected President in 1916 as a peace candidate, Wilson soon had to wage an intensive war against Germany as conditions warranted such action. He stated his idealism in his famous words "to make the World safe for Democracy" and "a War to end all Wars." His famous "Fourteen Points" Speech before Congress concerning the war aims of the Allied Powers was constantly referred to during the Armistice negotiations and is still quoted in international conferences. His personal visit to the peace conference at Versailles Palace near Paris, France—the first personal visit of a President of the United States to such a conference—was history-making in itself. He will always be remembered for his idea of "A League of Nations," the forerunner of the United Nations, a project for international peace which is believed to have caused or, at least, to have hastened his death due to his strenuous speaking tour on behalf of the League.

In 1914, the General Assembly voted for a state-wide law providing for the prohibition of liquor. This law went into effect on November 1, 1916. At the federal level, the Eighteenth Amendment to the Constitution of the United States which prohibited the "manufacture, sale or transportation of intoxicating liquors" throughout the United States and its territories was submitted to the states by Congress on December 18, 1917. Virginia was the second state to ratify it.

During World War I, the state contributed 91,623 men to the armed forces, many of whom participated in the Somme, St. Mihiel and Meuse-Argonne Forest campaigns. Most of the Virginia troops fought with the 80th Infantry Division of the American Expeditionary Forces. This division was called the Blue Ridge Division because the Blue Ridge Mountains are located in the home states of the men from Virginia, West Virginia and Pennsylvania who made up this division. Noted for their bravery, this division was the only division to enter the front lines three times during the offensive and the only one to advance a maximum distance of twenty-two miles against the enemy between the first offensive and the Armistice. Many members of the 29th Infantry Division were Virginians who served in France, particularly during the Meuse-Argonne Forest campaigns. Thirty-six Virginians received the Distinguished Service Medal of the United States Army, the French Legion of Honor or the Croix de Guerre.

On the home-front, World War I caused a tremendous increase in business and, in some instances, prompted the construction of war camps in various parts of the state. Camp Lee, near Petersburg, was used as an infantry training base for 50,000 soldiers; Camp Stuart at Newport News was used chiefly as an embarkation point and Camp Humphreys, near Alexandria, was used as a training center for engineers. Langley Field, near Hampton, was used as training grounds for pilots; the Hampton Roads area was utilized for construction of numerous United States ships and as naval and military bases.

The present city of Hopewell actually owes its city status and growth to World War I and the construction of a huge munitions plant on Hopewell Farm by the E. I. DuPont de Nemours Company. As a matter of fact, the manufacture of fertilizer from nitrogen in the air still accounts for the great industrial activity at Hopewell at the present time. During World War I also, the famous Tredegar Iron Works in Richmond manufactured projectiles, explosives, shrapnel shells and other war materials of necessity.

Among prominent Virginians who played a major role during World War I was Admiral David Watson Taylor. Admiral Taylor was chief of the Naval Bureau of Construction and Repair (1914-1922) at Washington. He had responsibility for the design and construction of naval aircraft and he developed a type of flying boat during World War I. His contributions were later acknowledged by the establishment of the David Taylor Model Basin, a naval activity at Carteret, Maryland, near the Virginia border.

Health, too, was a critical problem on the home front during the war. For example, a dreadful influenza epidemic occurred followed by a severe fuel shortage due to a railroad strike. This condition caused many "flu" patients to develop pneumonia and to die. In Richmond alone, approximately eight hundred people succumbed during this epidemic period.

As a reminder of the sacrifices of Virginians during World War I, at William Byrd Park in Richmond, is a 240-foot tower constructed of pink brick. It is called the Carillon Tower and was erected in 1932 as a memorial to the war dead.