The political and later social revolution against Porfirio Díaz in Mexico signaled the onset of a tumultuous age. During the second decade of the twentieth century, great revolutions in Mexico, China, and Russia overturned established orders, the consequences of which paralleled those of the First World War. In each instance the effects challenged prevailing beliefs and institutions. In response, president Woodrow Wilson articulated an ambitious vision of a new world system, the workability of which entailed two stipulations: The Great Powers must cooperate in defense of stability and peace, and the United States should accept a larger role in international affairs than ever before. For Latin America, meanwhile, an assortment of significant changes altered traditional relations with the outside world. As a consequence of the Great War the United States displaced the European powers as the dominant economic presence. Seeking to consolidate the advantage in the 1920s, Republican administrations under presidents Warren Harding, Calvin Coolidge, and Herbert Hoover experimented with new stratagems in Latin America, anticipating a shift away from interventionist methods and toward the more subtle techniques of the Good Neighbor policy.
For fifty years after independence in the 1820s, Latin American countries failed to count for much in the international arena. Largely self-contained and self-absorbed, they experienced the disorganizing effects of political turmoil, economic stagnation, and complex diplomatic quarrels over boundaries and territories. Despite being the largest regional bloc of republican governments in the world, the complex legacies of the wars for independence and dependence on primary exports created paralyzing obstacles. These pervasive conditions were exacerbated by civil wars that pitted outward-looking liberals against conservatives who preferred the preservation of colonial institutions in the name of social stability. These visceral differences—often centered on whether or not to preserve the enormous power of the Catholic Church—provided fodder for U.S. observers to characterize Latin Americans as a race incapable of stable self-government.1
Such conditions became less pervasive during the latter third of the nineteenth century, following the establishment of more stable, oligarchical, and usually authoritarian regimes in many countries. During the 1870s and after, such governments endorsed an export-led model of economic development. Seeking trade and investment, government leaders opened their countries to foreign goods and capital and embraced the Europeans in a kind of a neocolonial economic relationship. Unlike the colonized regions of Asia and Africa, Latin America required no formal devices of imperial subjugation. Instead, an informal system came into existence, characterized by specialization of functions. Performing much like colonials, Latin Americans produced raw materials and agricultural commodities for the industrializing Europeans in return for capital and finished goods, thereby experiencing integration into the world market system.2
Among the largest countries, Argentina featured livestock and cereal products for export, especially wheat, maize, frozen and chilled beef, wool, hides, and linseed. Between 1875 and 1914, Argentine exports expanded impressively at an estimated rate of 5 percent per year. By 1914 the 7.8 million Argentines relied more heavily on overseas sales than any other group of Latin Americans and enjoyed the highest living standards. Their capital, Buenos Aires, stood out as a testimony. Affluent, cosmopolitan, and European in style and taste, the city symbolized Argentina as the embodiment of wealth, culture, and promise for the future.
Exports similarly served Brazil. A functioning monarchy until 1889–1890, then a republic after a virtually bloodless revolution, Brazil relied upon coffee as the mainstay of profit. In the years before the First World War, coffee often accounted for more than half of its overseas sales and made the economy vulnerable to cyclical tendencies within the world market. Periodic, often abrupt contractions in demand led to oversupply and low prices. In response, Brazilians experimented with “valorization” plans to restore higher prices by holding coffee off the market. Brazil, a nation of twenty-five million people in 1914, also sold tobacco and cotton in foreign markets and for a time experienced a rubber boom in the Amazon. Overall, the export trade affected different parts of this vast country unevenly, most of the benefits accruing to the coastal regions and the capital city, Rio de Janeiro.
Chile, inhabited by three million people in 1914, relied on copper exports. At the same time, the country avoided some of the dangers of monoculture—undue dependence on one product—by promoting the sale of wheat, wool, and nitrates. The last, especially important in balancing shifting demands for copper, counted heavily in trade with Europe and the United States. During the early twentieth century the proceeds from nitrate sales totaled around 14 percent of the gross national product and provided the central government in Santiago with more than 50 percent of its operating revenues.3
In Mexico too, a country of twelve million people in 1910, economic dependencies characterized the links with the outside world. During the so-called Porfiriato, the era dominated by president José de la Cruz Porfirio Díaz from 1876 to 1910, foreign investments centered on such crucial sectors as transportation, mining, and petroleum. Meanwhile, growth patterns typified Mexican overseas sales of silver, gold, rubber, hides, coffee, minerals, cattle, vegetables, and petroleum. The oil industry, controlled by British and U.S. companies, assumed special significance during the first decade of the twentieth century. In Mexico as elsewhere, bad effects occurred when declining demand within the world economy reduced export prices and income from exports.4
In the other countries of Central and South America, export economics typically featured monocultures. Colombia depended upon coffee, as did Venezuela until the petroleum boom beginning in the 1920s. In Central America and the Caribbean the pursuit of tropical agriculture produced bananas, coffee, sugar, and tobacco. Everywhere in Latin America the export trade rendered the participants susceptible to downward shifts in demand and price, underscoring unmistakably the risks of involvement in an unstable international economic environment.5
Financial relations, another form of dependency, also entailed a mixture of advantages and risks. In the view of many historians, “the era of high capitalism” before the First World War constituted “a golden age for foreign investment in Latin America.” Great Britain was the largest investor, followed by Germany and France. Until the 1890s, small-scale U.S. investments centered on railroads and mines in Mexico, sugar plantations in Cuba, and a few railroads and landed estates in Central America. During the early years of the twentieth century, U.S. investors also acquired a stake in Chilean and Peruvian mining. By 1914 some 87 percent of the direct, U.S. overseas investments were concentrated in Mexico, Cuba, Chile, and Peru. From around $300 million in 1897 the total increased to almost $1.6 billion in 1914, including direct investments of nearly $1.3 billion.
European investments, estimated at $7 billion in 1914, differed in some respects. More dispersed, they affected every country. In addition, a larger portion appeared in the construction of infrastructure, such as railways, ports, power companies, and utilities. Also, about a third went into government bonds. British investments of nearly $5 billion touched every country but had the greatest significance in Argentina, where they amounted to a third of the total foreign investments; in Brazil, they accounted for about a quarter; in Mexico, about a fifth. French and German investors favored the same three countries. These estimates suggest orders of magnitude and degrees of integration into the world system. The transfer of investment capital into regions without financial resources advanced the European interest in gaining access to Latin American markets and raw materials. The process also enabled Latin Americans to respond to overseas demands with the construction of necessary facilities—railroads, shipping services, and communication systems—without which Latin American producers could not have supplied the consumers. Consequently, more efficient, modern technologies came into existence in the export sectors, including mining, ranching, farming, and milling, and also complex networks of economic dependency. Throughout Latin America, foreign-owned mercantile houses were crucial in organizing the export and import trade, and foreign-owned banks provided the financial means.6
Some modern scholars—especially proponents of dependency theory—depict these arrangements as economically debilitating, more attuned to foreign needs than to Latin American interests, and actually a form of exploitation. Not all contemporaries would have agreed with this assessment. According to the historian William Glade, most members of the Latin American elites at the end of the nineteenth century exhibited enthusiasm for “the benefits of what they perceived to be modernization” through engagement with the world economy.7 This participation in the global economy as producers of primary goods, such as coffee, sugar, and bananas, clearly benefited those who controlled the levers of economic and political power. But as the historian E. Bradford Burns has argued, the economic policies favored by the elite negatively affected the lives of the vast majority of Latin Americans. In most instances, life was worse than it was at the close of the eighteenth century.8 The general appropriation of the ideas behind revolutionary leaders erected barriers to safeguard against the influence of foreign economic powers.
The role of foreign interests in Mexico assumed critical importance during the revolutionary era. According to one view, the integration of Mexico into the world economy contributed to political destabilization in 1910 by making the country more vulnerable to cyclical tendencies and economic downturns.9 The revolution, sometimes understood in present-day historiography more as a struggle among rival elites than as a popular uprising, successfully ousted the dictator, Porfirio Díaz, in 1911 and then assumed many implications. During the ensuing factional strife, foreign interests, economic and other, came under threat both from the ongoing violence and the processes of reconstruction. The constitution of 1917 specifically introduced new dangers by incorporating the principles of nationalization and expropriation, thereby providing Mexican leaders with new instruments of control over the resources of their nation.10
Based on a political call for legitimate elections and no boss rule, the revolt against Porfirio Díaz in 1910 mobilized a broad but unstable constituency, incapable subsequently of sustaining president Francisco I. Madero’s reformist regime. A series of uprisings culminated in a military takeover on February 19, 1913, in the course of which Madero was assassinated with the connivance of the U.S. ambassador Henry Lane Wilson. General Victoriano Huerta, the army chief of staff and a principal instigator, then sought to impose order by authoritarian means and provoked an insurrection among dissidents in the northern states. Led by Venustiano Carranza, the governor of Coahuila, the so-called Constitutionalists denounced Huerta as a usurper and demanded his removal from power.11
Shocked by such events, Woodrow Wilson, the new president of the United States, reacted with committed determination. A former university professor with a PhD in political science, Wilson had served as the president of Princeton University and also as a one-term, reform-minded governor in New Jersey. As a scholar and a devout Presbyterian—indeed, the son of a clergyman—Wilson preferred the high moral ground, prized the constraints of constitutional provision, and regarded Huerta’s seizure of power as illegitimate and unacceptable. Unlike the leaders of Great Britain and the other European powers, Wilson withheld diplomatic recognition from Huerta’s regime and tried to encourage mediation as the means to establish a legal government.12 He insisted Huerta stand aside. Huerta’s refusal led to a U.S. military intervention on April 21, 1914.
Meanwhile, secretary of state William Jennings Bryan, a Democrat from Nebraska and a three-time failure as a presidential candidate, launched his own initiatives. Though lacking experience in foreign affairs, Bryan had high ambitions, some of them a bit unconventional. As a peace advocate, he urged the negotiation of “cooling off” treaties with every country in the world. These conciliation agreements required a nonpartisan investigation into the causes of a dispute before a resort to war. Latin American governments consented, except Mexico, still unrecognized under Huerta, and Colombia, still aggrieved over Panama. Bryan also envisioned a reduction of Latin American financial dependence on European bankers. He reasoned that cheap loans from the U.S. government would permit “our country” to acquire “such an increased influence . . . that we could prevent revolutions, promote education, and advance stable and just governments.”13 Bryan’s projects stirred some interest within the administration but Wilson, unpersuaded, preferred to rely on conventional means and private bankers.
Another pressing concern for the new administration was the practice of unilateral intervention by the United States in Latin America. A variety of critics denounced the exercise of an international police power. Some lam-basted Roosevelt’s corollary as a hegemonic pretension, an inversion of the Monroe Doctrine’s original intent to safeguard the Western Hemisphere against outside intervention. Others wanted to apply a multilateral definition so that joint measures with other nations could, if necessary, provide the means of safeguarding peace and order. A leader among them, professor Hiram Bingham of Yale University, the discoverer of the Inca ruins at Machu Picchu in Peru, described the Monroe Doctrine as “an obsolete shibboleth.” For him, it typified paternalistic condescension toward Latin Americans. As a better approach, he proposed some kind of collective action. In the event of trouble, the United States should call together “a family gathering” among the Western Hemisphere nations and “see what if anything needs to be done.”14
Such advocacy won support from Progressive era reformers and radicals, including leaders in the peace movement, the labor unions, the churches, the universities, and the guild of international lawyers. For many, the development of a collective security system ranked high as a guarantee of national sovereignty. Similarly, Woodrow Wilson, a committed reformer with messianic instincts, favored exalted purposes among nations, seeking to advance mutual interests. Sometimes described as “a liberal-capitalist internationalist,” Wilson aspired to the creation of a world system based on a League of Nations to defend representative democracy and economic capitalism. Presuming universal applicability, Wilson intended to serve humankind by extending U.S. values and models throughout the world.15
Sometimes flawed by arrogance and delusion, Wilson’s emerging vision of international order drew inspiration from experiences with Latin America. On March 11, 1913, his first statement on foreign affairs set forth basic principles and expectations, central among them his belief in international harmony achieved through mutual respect for rights and obligations. To such ends, he invited “the friendship and . . . the confidence of our sister republics” and “the most cordial understanding and cooperation” in relations with them. With General Huerta presumably in mind, Wilson also insisted upon the rule of law. Accordingly, he opposed “those who seek to seize the power of government to advance their own personal interests or ambition” and favored “those who act in the interest of peace and honor, who protect private rights, and respect the restraint of constitutional provision.”
In Mexico, Wilson’s positions resulted in confusion and contradiction. On October 10, 1913, Huerta dashed the U.S. hope for mediation by dissolving the Chamber of Deputies and declaring himself a candidate for the presidency. On the following day, Sir Lionel Carden, the new British minister, presented his credentials in Mexico City. His arrival impressed U.S. leaders as a deliberate British affront; to them, Huerta now appeared as both an illicit tyrant and a creature of British imperialism.
Wilson discussed this issue on October 27, 1913, in his celebrated address before the Southern Commercial Congress at Mobile, Alabama. Stating his concern over European economic domination in Latin America, he warned that foreign concessions and special privileges threatened self-determination; Mexico, in his view, already had fallen victim. Nevertheless, Wilson promised “emancipation” if Latin Americans would assist in the promotion of “true constitutional liberty” throughout the world. As a pledge of good faith, he affirmed, the United States “never again” would seek “one additional foot of territory by conquest.”
Sometimes regarded as a promise of nonintervention, the Mobile address actually anticipated broader involvement in Latin American affairs. In what verged on a declaration of economic war, Wilson wanted Latin American support in rolling back European presences. Colonel Edward M. House, a trusted friend and adviser, understood the intent. For him, Wilson’s speech established “a new interpretation of the Monroe Doctrine”: For almost a century the United States had tried “to keep Europe from securing political control of any state in the Western Hemisphere”; now, the Wilson administration had taken a position that it is “just as reprehensible to permit foreign states to secure financial control of those weak unfortunate republics.” Similarly, John Lind, a special diplomatic emissary to Mexico, expressed his belief that Huerta’s continuation in power would make the country “a European annex, industrially, financially, politically.”
Mounting suspicions had the effect of producing a chill in U.S. relations with Great Britain. Although British leaders disparaged Wilson’s claim as a consequence of bewildered hypocrisy, historian Friedrich Katz credits the president with a correct understanding of British aims. As Katz shows, the British government consistently opposed revolutionary factions and supported counterrevolutionary groups. Such position, in his view, accurately reflected British concerns for economic stakes and petroleum interests.16
The Wilson administration, meanwhile, adopted other ambitious plans. To advance various forms of political and economic integration, the leaders focused attention on Argentina, Brazil, and Chile. As the most populous and influential nations in South America, the so-called ABC countries also contained prospective customers. Close relations already existed in dealings with Brazil. As a matter of conscious design, Brazilians had forged an “unwritten alliance” with the United States early in the twentieth century through the policies of foreign minister José María da Silva Paranhos, also known as the Baron de Rio Branco, who wanted to enlist the United States as a trading partner and a counterweight against Argentina. For the United States, Brazil’s diplomatic status also ranked high. Before Wilson, only Brazil had qualified for an ambassadorial appointment; the other South American republics received ministers, a designation of lesser rank. Seeking more cordial ties during the summer of 1914, the Wilson administration established diplomatic parity by exchanging ambassadors also with Argentina and Chile.17
Troubled by trade deficits in South America, the Wilson administration also promoted commercial expansion. The Panama Canal, scheduled for completion soon, amplified high expectations. U.S. leaders intended to take advantage by renovating the merchant marine and developing regular steamship routes to South America. The Federal Reserve Act of December 1913 rectified another shortcoming by authorizing national banks of the United States to establish branches in foreign countries. The establishment in Latin America of such facilities would free U.S. commerce from dependencies on British banking institutions.18 But then new difficulties with Mexico produced an obstruction.
An incident at Tampico, a Mexican port city on the Gulf of Mexico, set the trouble in motion. On April 9, 1914, General Huerta’s troops arrested some U.S. sailors who had wandered into a restricted zone. In response, U.S. admiral Henry T. Mayo requested a formal apology. So did Woodrow Wilson. At the same time, another problem impended. The Ypiranga, a German commercial vessel carrying weapons for Huerta, soon would arrive at Veracruz, the principal eastern port. Abjuring diplomacy, Wilson obtained authorization from the Congress to force a showdown. On April 21, 1914, he seized Veracuz by sending in U.S. Marines. In this way, he intended to block the arms shipment, cut off customs revenues to Huerta, and avoid damaging the petroleum installations around Tampico. He erred by anticipating only light resistance: The Veracruz defenders lost over two hundred soldiers, and war threatened. Not only Huerta but also his enemies, the Constitutionalists, condemned the invasion as an unacceptable violation of Mexican sovereignty.
At the very least, the episode revealed limitations in Wilson’s understanding of harmony among nations. Paradoxically, he conceived of the intervention as a defense of Mexican self-determination against an illegitimate tyranny backed by British imperialists, but in so doing he underestimated Mexican nationalist reactions. Fortunately, his courtship of Argentina, Brazil, and Chile paid off when their mediation offer enabled him to avoid an unwanted conflict. An international conference at Niagara Falls, Canada, facilitated face-saving devices, achieved cosmetic effects, and provided a way out of war. In Mexico, meanwhile, general Álvaro Obregón’s Constitutionalist Army advanced on Mexico City during the summer of 1914 and forced General Huerta into exile.19
The leaders in the Wilson administration rejoiced that multilateral measures had assisted in keeping the peace. Colonel House indulged in high praise, comparing the actions of the ABC countries with the efforts of friends and neighbors who in times of crisis banded together to fight house fires. Similarly, Robert Lansing, the Counselor of the State Department, called for efforts to build on that achievement. In a June 1914 memorandum, “The Present Nature and Extent of the Monroe Doctrine and Its Need for Restatement,” he presented a case against unilateral intervention by the United States and in favor of multilateral approaches to advance “fraternal responsibility” with Latin Americans.
Much like Bryan earlier, Lansing also worried about European encroachments in the Western Hemisphere by means of loans and investments. Specifically, he warned against the “European acquisition of political control through the agency of financial control over an American republic.” Similarly concerned, Colonel House addressed this same issue during a European visit in July 1914. In conversations with British, French, and German leaders, House inquired whether they would join with the United States in an agreement to reduce the costs of international borrowing. In his private diary, however, House expressed misgivings, accusing the Europeans of subverting weak, debt-ridden Latin American states through demands for “concessions” and “usurious interest.” He wanted to find a better way—but his timing was all wrong. During the summer of 1914 the Great Powers of Europe embarked upon world war.20
The consequences of the Great War extended into all inhabited regions. In the Western Hemisphere the initial impact injured Latin American economies by obstructing the flow of capital and goods. In response, the United States assumed a larger role as the prime purchaser of raw materials and the main supplier of finished products. During the three years from July 1, 1914, to June 30, 1917, trade between the United States and Latin America increased by more than 100 percent. In contrast, ambitious U.S. political initiatives accomplished much less. For the Wilson administration, the war occasioned both opportunities and rebuffs.
Remaining neutral until the spring of 1917, the United States responded to the war by attempting to insulate the Western Hemisphere against it. As part of this endeavor, it also courted Latin American governments, seeking more intimate political and economic ties. The opening of the Panama Canal in August 1914 served as a powerful symbol. This grand event, knitting the Western Hemisphere more closely together, reduced the distance from Colón on the Atlantic to Balboa on the Pacific from 10,500 nautical miles, the distance around South America, to 45 nautical miles, the actual length of the new passage. The Western Hemisphere had become a smaller place.21
The prospect of commercial opportunity encouraged a variety of promotional activities sponsored by leaders in the Wilson administration. On September 10, 1914, a Latin American Trade Conference assembled in Washington, DC, at the behest of secretary of state William Jennings Bryan and secretary of commerce William C. Redfield. Delegates representing the U.S. Chamber of Commerce, the Southern Commercial Congress, and the National Foreign Trade Council enthusiastically called for improved transportation and banking facilities and also for more effective sales techniques, conforming more closely to Latin American tastes and preferences. Elsewhere across the United States the prospect of commercial expansion into Latin America stimulated similar growing interest among local chambers of commerce, boards of trade, and business associations. Even President Wilson became a booster. In his annual message to the Congress on December 8, 1914, he urged the United States “as never before, to serve itself and to serve mankind; ready with its resources, its forces of production, and its means of distribution.”
Wilson also experimented with peacekeeping devices. Inspired mainly by Colonel House, these efforts eventuated in a proposed Pan American treaty that among other things called for a regional collective security system, featuring compulsory arbitration, and a multilateral definition of the Monroe Doctrine. House initiated the discussions late in November 1914 by urging Wilson to pay “greater attention” to issues in foreign affairs. Specifically, he wanted the president to devise “a constructive international policy” demonstrating “that friendship, justice, and kindliness were more potent than the mailed fist.” House criticized the legacies of unilateral intervention. By “wielding the ‘big stick’ and dominating the two Continents,” he averred, the United States had “lost the friendship and commerce of South and Central America and the European countries had profited by it.” A better approach could have more desirable consequences by bringing “North and South America together in a closer union” and “welding together . . . the two western continents.”
Three weeks later, in December 1914, House again raised the issue, this time exhorting Wilson “to play a great and beneficent part in the European tragedy.” Declaring that “there was one thing [Wilson] could do at once,” establish a “model” for peace based on “a policy that would weld the western hemisphere together,” he sketched out a draft proposal for collective security arrangements to guarantee territorial integrity, political independence, and republican forms of government. Much impressed, Wilson authorized House to engage the ambassadors of Argentina, Brazil, and Chile in conversations.
The ensuing discussions elicited favorable responses from Rómulo S. Naón of Argentina and Domicio da Gama of Brazil but not from Eduardo Súarez Mújica, the Chilean ambassador. For him, the implementation of such arrangements suggested the possibility of embarrassment over Tacna and Arica, the nitrate-rich provinces taken from Peru in the War of the Pacific. According to the Treaty of Ancón in 1884, a plebiscite should decide the question of ownership of these regions, but none ever had taken place. Chileans also described the proposed commitment in defense of republican institutions as a limitation on national sovereignty and possibly an invitation for U.S. intervention. Undeterred, House pressed on, including in later drafts other requirements for arbitration of territorial and boundary disputes and endorsing Bryan’s “cooling off” formula.22
Meanwhile, a new civil war was ravaging Mexico. After defeating Huerta the victorious Constitutionalist coalition dissolved into feuding factions, pitting Carranza and his ally Obregón against Francisco (Pancho) Villa and Emiliano Zapata. Wilson again sought peace through reconciliation but without much positive effect. House espoused joint action with the ABC countries as the best means of solution. He also rejoiced when Secretary of State Bryan resigned his position in June 1915 as a protest over the handling of the Lusitania crisis. In House’s view, Bryan was a fool and a bungler who had obstructed the pursuit of wise and workable policies, whereas his successor, Robert Lansing, the former State Department counselor, shared some of House’s convictions and appeared more manageable. Lansing too believed that Germans were “utterly hostile to all nations with democratic institutions” and were hatching plots in Mexico, Haiti, Santo Domingo, and “probably in other Latin American republics.” As a counter, he favored “a Pan American doctrine” and the maintenance of “friendly relations with Mexico.” In his view, the latter required the diplomatic recognition of Carranza, now regarded as “the stronger.”
Beginning in August 1915, Secretary of State Lansing orchestrated moves in conjunction with six countries. Together with representatives from Argentina, Brazil, Chile, Bolivia, Guatemala, and Uruguay, Lansing exhorted the contending Mexican factions to settle their differences. In response, Villa and Zapata took conciliatory positions, supposedly ready for a compromise. But Carranza, an intransigent, would not bend; he insisted that only his government possessed the attributes of sovereignty. Ultimately, Lansing and the other diplomats arrived at the same conclusion. On October 9, 1915, they extended diplomatic recognition on a de facto basis, accepting the existence of Carranza’s regime as stable and functioning.
Wilson construed the decision as a triumph for his adherence to high principle. For him, Mexico’s right to self-determination had survived the test; in a report to the Congress on December 7, 1915, he claimed, “Her fortunes are in her own hands.” He also applauded the good effects of his Pan American policy, choosing to interpret the outcome as a vindication of international cooperation, “a full and honorable association as of partners.” To build on this achievement, he publicly endorsed the proposed Pan American Treaty on January 6, 1916, at the Second Pan American Scientific Conference in Washington, DC. By such means, he asserted, the nations of the Western Hemisphere could uphold “the principles of absolute political equality among the states” and “the solid, eternal foundations of justice and humanity.”23
This pledge notwithstanding, Wilson’s policies in the Western Hemisphere never really achieved much coherence. Instead, they manifested inconsistencies and contradictions, as subsequent interventions in Caribbean countries confirmed. In a phrase, Wilson had extreme difficulty reconciling his presumed commitment to self-determination with other U.S. interests in upholding peace, order, and security. In 1915, political turmoil caused violence and disorder in Haiti. Similarly in 1916, instabilities threatened the Dominican Republic. In each instance, the Wilson administration responded by sending in military forces. U.S. leaders justified such measures on grounds of wartime exigency, claiming that threats of German subversion and defense of the Panama Canal required them. In each instance, derogatory racial stereotypes and cultural assumptions provided additional incentives by disparaging the alleged inability of the inhabitants, especially those of African descent, to govern themselves. Once the marines had moved in, U.S. occupation authorities managed government functions and finances. In response, Dominican and Haitian resistance movements precipitated hard-fought guerrilla struggles. Called the “banana wars” by the historian Lester D. Langley, they featured small-scale but brutal violence in which native contingents waged something like “wars of national liberation” against the soldiers of the United States.24
Meanwhile, the Wilson administration launched other kinds of programs to win over Latin Americans. On May 24, 1915, the first Pan American Financial Conference assembled in Washington, DC, featuring delegates in attendance from eighteen Latin American countries. The main organizer, secretary of the treasury William Gibbs McAdoo, intended to focus on trade and finance. Specifically, he called for consideration of the principal economic problems emanating from the Great War. McAdoo anticipated that the United States would have to step in, replacing the Europeans as the main supplier of goods and capital. To coordinate the pursuit of practical solutions, the conference brought into existence a body known as the International High Commission. It consisted of finance ministers and other specialists from each country who in future years would meet periodically to issue recommendations and advisements—most of which, as things turned out, eluded implementation.
For leaders in the Wilson administration, commercial statistics bolstered high spirits. Between August 1914 and August 1915, U.S. exports totaled $3 billion, at that time the largest amount ever in a single year. Indeed, the United States surpassed Great Britain as the world leader. In South America, U.S. exports rose from $38.7 million during the first six months of 1914 to $60.6 billion during the first six months of 1915, while South American sales in the United States expanded from $105.5 to $153 million. Although these figures marked an undesirable deficit in the balance of payments, they failed to dissipate the optimism over long-term expectations: The National City Bank of New York created branches in Montevideo, Buenos Aires, Rio de Janeiro, Santos, São Paulo, and Havana; the Caribbean and Southern Steamship Company initiated regular voyages from the United States to Argentina and Brazil; and President Wilson accepted a commitment to build a modern merchant marine, fully capable of carrying increased trade.
Though encouraged by such gains in Latin America, U.S. leaders still worried about resumed European competition after the war. They expected that Great Britain and France especially would not submit readily to a permanently weakened economic position in the New World. Indeed, British and French behavior at the Paris Economic Conference in June 1916 intensified such concerns, when the Allies established plans to punish their enemies, mainly the Germans, through the adoption of a mercantilist, state-directed system. The main features included a variety of restrictive devices such as trade preferences, state subsidies, government protection of foreign markets, pooling agreements, and cooperative purchases of raw materials. In 1915 the Central Powers had devised their own Mitteleuropa plan, intended to promote economic consolidation through the exclusion of the British, the French, and the Russians. To officials in the Wilson administration, all this portended ill, and they anticipated the possibility of drastic measures. Secretary of State Lansing, for example, reasoned that “the best way to fight combination is by combination.” He wanted “some definite plan to meet the proposed measures of the allies” in conjunction with Latin Americans. Similarly, Henry P. Fletcher, then U.S. ambassador to Chile and later to Mexico, advised collective arrangements with the ABC countries to hold “our market position in South America.” Somewhat fantastically, he also suggested the establishment of “an American Economic League for mutual protection.”25
Meanwhile, mounting political difficulties destroyed the negotiations over Wilson’s proposed Pan American treaty. At first, Chilean opposition accounted for delays. Later, the U.S. punitive expedition into Mexico in 1916 ruined the plan completely by calling Woodrow Wilson’s good faith into question. Pancho Villa precipitated the crisis on March 9, 1916, by attacking the border town of Columbus, New Mexico, probably in an effort to demonstrate Carranza’s incapacity to safeguard the international frontier. In response, the Wilson administration sent in military forces commanded by general John J. Pershing. By insisting upon a right of “hot pursuit,” the president created an impasse. Carranza for his own political reasons could not sanction Pershing’s presence and wanted him out of Mexico as soon as possible; Wilson insisted upon guarantees against future border violations. Subsequent armed clashes between Mexican and U.S. troops in the northern towns of Parral and Carrizal caused more trouble, even a likelihood of war. Argentina’s offer of mediation presented the Wilson administration with a dilemma bearing directly on the president’s credibility in the rest of Latin America. Robert Lansing understood the issue and dreaded the prospect of a full-scale intervention in Mexico. Any such action would have “a very bad effect on our Pan-American program”; indeed, “all Latin America” would regard it as “extremely distasteful.” Yet border security also had importance, especially in 1916, a presidential election year. Even suggestions of weakness along the border could demolish Wilson as a viable candidate.26
Thus constrained by political imperatives, U.S. leaders spurned the Argentine offer and kept the punitive expedition in Mexico; at the same time, they sought direct negotiations. In this way, the Wilson administration retained a free hand but simultaneously wrecked the Pan American pact. During the summer and fall of 1916, while the United States maintained the pressure by refusing to withdraw and insisting upon Carranza’s responsibility for border defense, a joint Mexican-American commission sought solutions. The United States also tried to broaden the scope by including discussions of foreign property rights in Mexico, an issue that assumed ever greater importance during the latter part of 1916 during the proceedings of the Mexican Constitutional Convention.
This assembly promulgated the Mexican constitution of 1917 on February 5 and sanctioned the inclusion of radical provisions. From the U.S. viewpoint, article 27 was an object of special concern: It allowed for the expropriation of privately owned property and for the nationalization of mineral resources. To Mexican leaders, these claims affirmed the prerogatives of national sovereignty and permitted no complaint from other countries through the agencies of international diplomacy. Among outraged U.S. critics, such expressions of hyperinflated nationalism aroused fears over the sanctity of foreign property rights in Mexico; U.S. property holders demanded protection from their government. Unable to reconcile competing interests, Wilson simply withdrew the punitive force on February 5, 1917—coincidentally the same day the constitution took effect. Soon afterward, the United States became a participant in the First World War.27
In 1917–1918 the Wilson administration entered the First World War, cultivated cordial connections with Latin Americans, and envisioned an independent role in shaping the postwar world. As a safeguard against subsequent European competition, U.S. leaders still advocated Pan American solidarity but elicited centrifugal tendencies. Notably, Mexico and Argentina espoused Pan Hispanic alternatives, calling for Latin American unity against the United States, while Brazil remained the centerpiece of Wilson’s policy in South America.
The German resumption of unrestricted submarine warfare on February 1, 1917, precipitated the U.S. entry into the war. Seeking a quick decision through decisive boldness, German leaders revoked the Sussex pledge of May 1916, making Allied merchant ships and passenger liners once again the objects of attack and endangering neutral vessels in the war zone around the British Isles. For the Germans, loans from private U.S. banks to the Allies already had created an informal alliance, but they gambled on a British collapse before U.S. participation could make much difference. Hoping to force a reconsideration by the Germans, Wilson severed diplomatic relations on February 3, 1917.
The German U-boat offensive compelled Latin American governments to decide whether to follow the U.S. lead. The first reactions predictably affirmed support from Cuba, Panama, Haiti, Nicaragua, and Brazil. Chile, in contrast, wanted no trouble with any of the belligerents; Mexico remained aloof; and Argentina pursued an independent course. Under president Hipólito Yrigoyen, the Argentines endorsed a call for ending the war through neutral mediation. The Wilson administration responded with suspicions of German intrigue in each country.
Though probably inflated, U.S. apprehensions over German activities in Latin America had some basis in fact. In the summer of 1915, German agents supported general Victoriano Huerta’s unsuccessful bid to regain power in Mexico. Though frustrated by U.S. Department of Justice agents who arrested the deposed dictator as he moved toward the border, the scheme implied a German interest in diverting the United States from Europe by provoking trouble with Mexico. For similar reasons, Francisco Villa’s raid on Columbus, New Mexico, encouraged unproven but much discussed allegations of German incitement. For Germany, foreign minister Arthur Zimmermann’s clandestine courtship of Carranza’s government resulted in a disaster. The details appear most fully and accurately in Friedrich Katz’s The Secret War in Mexico. In broad outline, Zimmermann sent coded messages to Heinrich von Eckhardt, the German minister in Mexico City, on January 15, 1917, informing him of plans to resume unrestricted submarine warfare. Zimmermann also proposed the possibility of an alliance with Carranza. Under its terms the two countries would make war and peace together, and Mexico as a reward would recover its lost provinces of Texas, New Mexico, and Arizona. The plan went awry when British intelligence intercepted the transmissions and then, after appropriate deceptions, turned the information over to the United States. When published in the newspapers on March 1, 1917, the Zimmermann telegram appeared proof positive of German duplicity. Meanwhile, the German refusal to rescind the U-boat decision moved Wilson closer to war. Convinced that only his vision of harmony among nations contained the mechanism of peace for the future, Wilson paradoxically asked the Congress for a declaration of war on April 2, 1917, believing that only by taking part in the war could he later have a voice in establishing peace.
The U.S. entry into the conflict elicited sympathetic but diverse responses in Latin America. Most governments applauded the U.S. defense of neutral rights but otherwise reacted according to their own interests. Within two weeks, ten countries affirmed neutrality: Argentina, Chile, Colombia, Costa Rica, Mexico, Paraguay, Peru, El Salvador, Uruguay, and Venezuela. Seven others broke relations: Bolivia, Brazil, the Dominican Republic, Ecuador, Guatemala, Haiti, and Honduras. Two declared war: Cuba and Panama. Later in 1917, Brazil, Costa Rica, Guatemala, Haiti, Honduras, and Nicaragua also followed with war declarations. These countries went along with the United States in part because of expected rewards. Cut off from European markets and capital, Brazil supported the United States with a war declaration in October 1917 after a series of torpedo attacks on Brazilian ships; its actual participation consisted of naval deployments in the South Atlantic. The others played no part at all. As neutrals, Mexico and Argentina caused worry by urging mediation to stop the fighting. Such efforts failed but encouraged U.S. leaders to look for other signs of pro-German sympathies. In Mexico the already-suspect Carranza produced more irritation by upholding antiforeign provisions in the constitution of 1917. In Argentina, Yrigoyen similarly aroused mistrust because of his allegedly pro-German nationalism. Nicknamed “El Peludo” after “a hairy kind of subterranean armadillo,” also secretive and reclusive, Yrigoyen pugnaciously pursued his own course, independent of the United States.28
While preparing for war, the Wilson administration also got ready for peace. To establish a planning agency, early in September 1917 the president created the Inquiry. Consisting of experts, mainly professors and journalists, the members formulated peace terms based upon their understanding of history, geography, economics, and ethnography. In regard to Latin America the recommendations typically incorporated hegemonic and paternalistic assumptions. One report, for example, assigned to the United States “a dominating influence in peace discussions so far as the Americas and Mexico are concerned.” The reason was obvious: a simple acknowledgment of the U.S. “historical position” and “special relation to all the nations of the western hemisphere.”29
After the fighting the planners expected a resumption of “economic warfare.” Consequently, the Wilson administration perceived the British mission to South America in the spring of 1918 as an alarming portent. Headed by Maurice de Bunsen, a special ambassador, the delegates had instructions to promote British commerce and goodwill for the future. U.S. observers viewed such initiatives as dangers. To counter them, Colonel House called for international commitments in support of free trade, nonaggression, and representative democracy. In other words, he wanted to adopt a set of rules favorable to the United States.
The Mexican constitution of 1917 remained a source of ongoing difficulty. On June 6, 1918, addressing a group of visiting Mexican journalists, President Wilson ill-advisedly told them of his “sincere friendship” for their country, and compounded the error by recalling the provisions of the failed Pan American treaty. According to him, the proposed agreement had placed a laudable emphasis on multilateral endeavors so that “if any one of us . . . violates the political independence or the territorial integrity of any of the others, all the others will jump on her.” Mexican critics immediately spotted the inconsistency, and newspaper editorials in Mexico City attacked U.S. opposition to article 27 of the new constitution. On April 2, 1918, the State Department had filed an official protest, warning against the infringement of U.S. property rights. Mexican officials regarded the act as a threat of intervention and devised an ideological defense under the terms of the so-called Carranza Doctrine. Consistent with the national requirements of the Mexican Revolution, Carranza depicted article 27 as an affirmation of Mexican sovereignty, taking precedence over foreign conceptions of property rights. He also invoked nonintervention as an absolute principle and exhorted the rest of Latin America to join with him in repudiating the Monroe Doctrine.
These responses unsettled U.S. officials. The ambassador to Mexico, Henry P. Fletcher, warned of dire consequences. In his alarmist view, Carranza wanted to eliminate “the financial, economic, and political influence of the United States in Mexico” and “to isolate the United States and destroy its influence in this hemisphere.” Fletcher warned, “Under the shibboleth of this Carranza Doctrine,” Mexico would “enforce Article 27 . . . and justify its disregard of the elemental principles of justice and fair dealings in treatment of foreigners.”30 Big trouble was brewing. However overblown, Fletcher’s perceptions expressed the fears of oil men and politicians who opposed the Mexican constitution and were spoiling for a showdown at the end of the First World War.
At the Paris Peace Conference, Woodrow Wilson assumed the statesman’s role. In pursuit of peace, he called for a purge to rid the European system of autocracy, imperialism, and militarism: that is, those practices he regarded as causes of the war in the first place. According to his plan the Central Powers, perceived as the aggressors, unquestionably required an array of changes to bring about reform and rehabilitation. But the same held true for the Allies. Wilson had never identified very closely with Allied war aims and opposed the division of the spoils among the victors, as envisioned by the so-called secret treaties. He preferred “a peace among equals.” His Fourteen Points statement of January 8, 1918, established his principal goals. Appropriately described by some historians as a “liberal-capitalist internationalist,” Wilson regarded representative democracy, free trade, and international cooperation as essential parts of a durable peace settlement. Other points centered on specific territorial issues, emphasizing the right of national self-determination. The fourteenth point, his most cherished, called for the creation of a League of Nations.31
Wilson’s plan for world peace incorporated devices with which he had already experimented in Latin America. The proposal for defense of national self-determination through collective security drew upon many of the same assumptions as the Pan American treaty. Latin American critics immediately identified discrepancies. They described Wilson’s hegemonic practices in the Western Hemisphere as contradictions of high-blown principles. How could the Monroe Doctrine coexist with the Fourteen Points? Was not the exercise of a self-proclaimed hemispheric police power by the United States inconsistent with conceptions of self-determination and international responsibility?
Latin American issues possessed only peripheral importance at the Paris conference. Dominated by European concerns, the peacemaking centered on the consequences of the Great War, the collapse of the Russian, Turkish, and Austro-Hungarian Empires, and the threat of Communist revolution emanating from the newly created Union of Soviet Socialist Republics. But Latin Americans wanted to play a part and eleven nations sent delegations: Bolivia, Brazil, Cuba, Ecuador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Peru, and Uruguay. Mexico contributed an unofficial envoy, Alberto J. Pani, who lobbied against the influence of the big oil companies and the possibility of intervention in his country.
The official proceedings began on January 12, 1919. As various committees and commissions exercised authority over routine matters by conducting investigations, assembling information, and devising recommendations, competition for seats produced high levels of rivalry among the smaller states. The big decisions came about in other ways. Wielding primary authority at first, the Supreme Council, or the Council of Ten, comprised the heads of state and the foreign ministers of the five Great Powers: Great Britain, France, Italy, Japan, and the United States. Later, the Council of Four functioned as the power center, featuring prime minister David Lloyd George of Great Britain, premier Georges Clemenceau of France, premier Vittorio Orlando of Italy, and president Woodrow Wilson of the United States. The top priority for the Europeans was the restoration of stable and functioning political and economic systems in their domains. For them, the threat posed by the Russian Bolshevik Revolution required immediate attention as did the definition of German peace terms, the disposition of German colonies, the settlement of territorial issues in Central and Eastern Europe, and the arrangement of continental security. For Wilson, in contrast, the creation of the League of Nations became the first obligation, transcending all others. Upon completion of the League of Nations covenant, he presented the provisions to the assembled delegates on February 14, 1919, exclaiming, “A living thing is born.” For Latin Americans, Great-Power dominance over the proceedings caused mistrust and bitterness. Although most favored a League of Nations as a means of keeping the United States under control in their part of the world, they disliked the insignificance of the roles assigned to them. Their principal concerns, mainly trade issues and border disputes, figured only tangentially in the peacemaking process, and then usually as diversions.
Such was the case with the Monroe Doctrine. At the peace conference, the leaders of the United States insisted upon formal international recognition of what for them had become a hallowed creed. Consequently, under authority of article 21, the peace treaty endorsed the doctrine by upholding “the validity of international engagements, such as treaties of arbitration or regional understandings . . . for securing the maintenance of peace.” Alberto J. Pani, the unofficial Mexican observer, sounded warnings, cautioning that such a stipulation might serve the United States as a justification for military intervention in Mexico. For the same reason, Carranza, an international outsider, repudiated the Monroe Doctrine altogether, calling it a “species of tutelage” unacceptable to Latin Americans.
After the war, during the year 1919, difficulties with Mexico provoked growing criticism in the United States. Ambassador Henry P. Fletcher played a leading role by complaining repeatedly of mistreatment of foreigners and came close to advocating the transformation of Mexico into a U.S. protectorate something like Cuba. In his words, he wanted to issue a “call upon the recognized Government of Mexico to perform its duties as a government” or else “accept disinterested assistance from the United States.” This hard-line position obtained support from such powerful interest groups as the Oil Producers Association and the National Association for the Protection of American Rights in Mexico and from many Republicans. Senator Albert Bacon Fall of New Mexico, a border-state politician with long-standing interests in Mexican affairs, abominated Carranza’s regime and regarded Wilson’s policies toward it as contemptible. To force a change, he proposed measures that included the withdrawal of diplomatic recognition from Carranza, the encouragement of a military revolt against him, and the installation of a new government more friendly to the United States. On August 8, 1919, Fall instigated a Senate investigation into Mexican affairs by means of which he intended to weaken both Wilson and Carranza.
Wilson’s foreign policies were in deep trouble after the Paris conference. For reasons of politics and principle, Republicans in the Senate spurned collective security by rejecting the provisions of the Versailles treaty and the responsibilities of the League of Nations. Wilson responded by undertaking an exhausting speaking tour to mobilize public support, in the course of which he suffered a personal catastrophe. On September 25, 1919, he collapsed after a speech in Pueblo, Colorado, and then experienced the effects of a cerebral thrombosis. The illness deprived his pro-League supporters of leadership at a critical time and may have made him more intransigent. He ruled out a compromise with his opponents when votes in the Senate went against him and thereby doomed the larger endeavor: The defeat of the treaty also meant rejection of the League.
The crisis in Mexican affairs took place during a showdown early in December 1919. Using his investigation as a forum, Senator Fall introduced a resolution calling for a break in diplomatic relations with Mexico. From his sickbed in the White House, President Wilson managed to frustrate the plan by stating his absolute opposition to it. He then moved to rebuild his shattered administration by naming a new secretary of state. Robert Lansing resigned early in 1920 after losing the president’s confidence, presumably for insubordination; Wilson regarded him as a usurper of presidential prerogatives because of differences over the peace treaty and Mexico. His successor, Bainbridge Colby, a New York lawyer and former Progressive party member, had no diplomatic experience but nevertheless creditably served out the remainder of the term. Among other things, he tried to improve relations with Latin America, mainly by opposing the practice of U.S. intervention. For that reason, he has been characterized as a precursor of the Good Neighbor policy, the less direct, more accommodating approach favored by president Franklin D. Roosevelt in the 1930s. Though probably exaggerated, this view correctly underscores Colby’s more discerning appreciation of Latin American affairs. Notably, he questioned the wisdom of sustaining Caribbean protectorates and undertook a goodwill tour of South America in 1920. His voyage was a symbolic gesture signifying the ailing president’s ongoing but unfulfilled efforts in the Western Hemisphere. Overall, Wilson’s emphasis on Pan American political initiatives had failed.32
Warren G. Harding’s election to the presidency in 1920 restored the Republicans to power after an eight-year absence and initiated a set of alternative approaches in foreign affairs. Republicans embraced a more “independent,” or “limited,” version of internationalism than Wilson’s. For them, the former president’s conception of collective security implied unacceptable risks. They too favored peace, order, and liberal capitalism but employed more restricted forms of international engagement. Specifically, they rejected prior military commitments in defense of other countries. Instead, they sought to keep the peace through political accommodations and the application of international law. Employing the former at the Washington conference in 1921–1922, they tried to freeze the status quo among the Great Powers in China and to keep naval arms competition under control. Using the latter in 1928, they endorsed the Kellogg-Briand Pact to outlaw war as an instrument of national policy.
Under President Harding’s unobtrusive and maladroit style of leadership, secretary of state Charles Evans Hughes assumed a primary role. An accomplished jurist and a seasoned politician—former Supreme Court justice and New York governor—Hughes had failed in his run for the presidency in 1916. As secretary of state, his background in international law disposed him to favor juridical processes, such as arbitration, and the sanctity of treaties. His successor under president Calvin Coolidge, Frank B. Kellogg, a small-town lawyer and former senator from Rochester, Minnesota, was less cosmopolitan and more temperamental. He reacted with special vehemence to allegations of Bolshevik infiltration in Mexico and Nicaragua.33
Secretary of commerce Herbert C. Hoover also ranked among the influential policy makers of the 1920s. A wealthy and famous mining engineer and humanitarian, he symbolized Republican ideas of individual integrity and responsibility. As commerce secretary, he assigned special importance to economic foreign policies. By coordinating endeavors in the public and private sectors, Hoover worked for a close association of government and business interests in promoting investment and trade.34 His efforts sometimes trespassed on the secretary of state’s domain, where, under the Rogers Act of 1924, a new professionalism had boosted salaries, emphasized merit, and combined the functions of the diplomatic and consular corps into the U.S. Foreign Service.
During the 1920s, Republican administrations enjoyed advantageous international circumstances, many of which benefited U.S. interests in Latin America. For one thing, wartime fears of renewed economic competition from Great Britain never materialized; instead, the British decline in trade and finance opened up new opportunities for the United States. For another, the German defeat eliminated all danger of European intrusions into the Western Hemisphere and removed a principal justification for U.S. intervention under the Roosevelt corollary. At the end of the war the United States possessed greater power and influence than ever before. It was no longer a debtor nation but as a consequence of wartime loans, a creditor nation to which other countries owed large outstanding balances. Moreover, it led the world in trade and industrial production. As the historian Melvyn P. Leffler explains, these changes meant that “economic considerations” had become primary “in the shaping of American foreign policy,” in part because of “the absence of strategic apprehensions.” Ironically, the Monroe Doctrine remained “the cornerstone” of U.S. policy in the Western Hemisphere but, in the absence of a European threat, had ever less use as “a viable guide to action.”35
In the postwar period, U.S. trade and investment expanded at British expense. High demand for U.S. machine products, automobiles, farm implements, typewriters, and cash registers created incentives for aggressive selling. In South America, U.S. imports accounted for growing market shares, from 16.2 percent in 1913 to 25.9 percent in 1918 to 26.8 percent in 1927. In Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, and Uruguay, U.S. sales increased impressively. In Mexico, Central America, and the Caribbean, they dominated the market by accounting for 53.2 percent of imports in 1913, 75 percent in 1918, and 62.9 percent in 1927. In contrast, British imports were either stable or in decline, holding smaller parts of the market. Similar patterns appeared with investments. From 1914 through 1919 the total of U.S. foreign investments rose from $3.5 to $6.4 billion, and growth continued in the 1920s. Specifically in Latin America, U.S. investments expanded from $1,641.4 billion in 1914 to $5,369.7 billion in 1929, whereas British investments barely increased at all. As the economic historian Rosemary Thorp explains, such stagnation resulted from a variety of circumstances, notably British indifference, North American vigor, and U.S. government support for trade and investment.
Thorp illustrates the theme with various examples. Between 1924 and 1928, Latin America absorbed 24 percent of the new U.S. capital issues for foreign accounts and 44 percent of new direct foreign investment. The biggest amounts went into minerals, oil, public utilities, and industrial development in the largest countries. During the 1920s, Chile attracted more U.S. investment in mining than did any other country. By 1926, U.S. national banks were operating more than sixty branches in Latin America, often by contentious means. At one point, U.S. financial houses in Colombia had twenty-nine representatives in competition with one another to peddle loans. Intense rivalry sometimes became unscrupulous when lenders used bribery and sought favors, for example, by paying commissions and retainers to the relatives of government officials.
In a standard work, the historian Victor Bulmer-Thomas depicts the U.S. role as “a mixed blessing for Latin America.” To be sure, U.S. investments compensated for “the shrinking capital surplus available from traditional European markets,” but “the new borrowing was only achieved at a price.” As Bulmer-Thomas notes, “In the smaller republics the new lending was intertwined with U.S. foreign-policy objectives, and many countries found themselves obliged to submit to U.S. control of the customs house or even national railways to ensure prompt debt payment.” Nevertheless, the money poured in. In the larger countries “the new lending reached such epidemic proportions that it became known as ‘the dance of the millions.’” Consequently, neither the lenders nor the recipients made much effort “to ensure that the funds were invested productively in projects that could guarantee repayment in foreign exchange.” In Bulmer-Thomas’s view, “the scale of corruption in a few cases reached pharaonic proportions.”36
Latin American governments welcomed foreign investments and also put up with the economic advisers who came along. One of them, Edwin W. Kemmerer, a Princeton economist known as “the money doctor in the Andes,” showed up in Colombia, Chile, Ecuador, Bolivia, and Peru. Working independently of the U.S. government but with its consent, Kemmerer presented himself as a scientific expert. Through the application of precise methods, he sought to produce modernization in South America by creating financial environments more conducive to foreign investment. When a compatibility of interest developed among Latin American elites, private U.S. bankers, and Republican political leaders, the ensuing approach to economic growth resembled what the historian Michael J. Hogan has characterized in another setting as “corporatist.” Kemmerer specifically encouraged the reform of monetary institutions and the establishment of central banks patterned on the U.S. Federal Reserve system. When necessary, he also facilitated the negotiation of foreign loans.37 But to qualify for them, Latin American governments usually had to accept outside supervision. In 1922, U.S. bankers oversaw a Bolivian arrangement in which customs revenues went into payments on a $33 million loan. Similarly, in Peru U.S. officials watched over the customs houses and the central bank. As Thorp remarks, such “typical” examples suggest at the least an “obtrusive” interest in financial control.38
The most pressing political issues included the legacies of intervention in the Dominican Republic, Haiti, and Nicaragua. The unintended consequences of such acts aroused dismay among Republicans. The establishment of protectorates in those countries had presumed a purpose of upholding peace and order; instead, the ensuing U.S. military occupations had provoked nationalist resistance and guerrilla war. Republican leaders worried about cost ineffectiveness and public relations: Why encourage Latin American nationalists with interventionist practices when no Europeans posed a threat to U.S. interests? During the 1920 presidential campaign, Republicans subjected Democrats to strong criticism for taking over Haiti and the Dominican Republic during the war, and they urged military withdrawal.39
Once in power, Republican administrations succeeded in removing military forces from the Dominican Republic in 1924 but encountered difficulties elsewhere. In Nicaragua a small U.S. Marine legation guard had served since 1911, and for the most part the ruling Nicaraguan elites had not objected. Indeed, they saw the U.S. presence as a way for them to keep their hold on power. In the proposed Bryan-Chamorro Treaty of 1914, for example, Nicaraguan leaders had offered an option on a canal route in return for cash payments and also had indicated their readiness to accept something like the Platt amendment allowing for intervention. Opponents in the U.S. Senate blocked the treaty, and the revised version that passed in 1916 omitted mention of intervention.
For Republicans, military extrication posed a problem. In August 1925 the Coolidge administration removed the marines from Nicaragua and then sent them back in January 1927, following the outbreak of a civil war. This elite struggle over power and patronage pitted Conservatives against Liberals and took on international implications when Mexican president Plutarco Elías Calles supported the Liberals with money and arms. In response, secretary of state Frank B. Kellogg and ambassador to Mexico James F. Sheffield issued overwrought warnings of war unless Mexico stopped exporting revolution to Nicaragua. According to Kellogg, Calles intended his Nicaraguan meddling to advance a Bolshevik conspiracy in the Western Hemisphere.
In a show of resolution, the Coolidge administration dispatched two thousand troops to Nicaragua and also a diplomatic emissary, Henry L. Stimson. This Republican stalwart, who had served President Taft as secretary of war, persuaded Conservative and Liberal leaders to accept a truce, followed by an election. But he failed to win over Augusto C. Sandino, the head of a recalcitrant faction. A Nicaraguan, Sandino had experienced anti-U.S. nationalism while living as an exile in Mexico. As an anti-imperialist, he wanted to rid his nation of the Yankees. According to historian Thomas M. Leonard, his intransigence was “symptomatic” of a growing nationalist response against the United States. Sandino’s resistance to the U.S. occupation was informed by his understanding of history: The American freebooter and white supremacist, William Walker, had invaded Nicaragua and declared himself president in the late 1850s. The U.S. president Franklin Pierce extended diplomatic recognition to the sham government. Walker immediately legalized slavery (illegal in Nicaragua since 1824) and declared English as the official language. Sandino feared and fought against an “avalanche of Walker’s descendants” in the form of U.S. soldiers acting as “hired thugs of Wall Street bankers.”40
Sandino’s Nicaraguan struggle lasted six years. His army, no more than a thousand soldiers, employed guerrilla tactics to frustrate and outmaneuver government forces and U.S. Marines. In the United States, meanwhile, opposition to the Nicaraguan intervention encouraged president Herbert Hoover to end it. Early in 1931, the administration developed a strategy for removing the troops after sponsoring still another presidential election. When the marines withdrew on January 2, 1932, the State Department proclaimed an end to “the special relationship” with Nicaragua. A year later on February 2, 1933, a Nicaraguan truce ended the Sandinista revolt with promises of amnesty and reform. Sandino himself later was assassinated on February 21, 1934, probably the work of Anastasio Somoza, an emerging strongman whose family would dominate the country for two generations.41
Related issues caused trouble with Mexico over the constitution of 1917, regarded by U.S. critics as a dangerously radical precedent. Among other things, it called for land and labor reform and placed limits on foreign property rights. By endorsing expropriation and nationalization supposedly on behalf of the public good, article 27 overturned the more traditional conceptions of property rights favored by the United States. Carranza’s intractability posed problems for the Wilson administration until his death by assassination during a military uprising in the spring of 1920. His elected successor, general Álvaro Obregón, sought normal relations but encountered stiff demands as the price. The Harding administration wanted guarantees in defense of foreign property rights—in effect, the abandonment of article 27. When Obregón declined, the United States withheld diplomatic recognition.
For Mexican revolutionary leaders, the consequences deepened an already difficult dilemma. Though resentful of economic dependencies on the United States, they needed money to reconstruct their shattered country after a violent decade, but without diplomatic recognition their government could not qualify for loans. When the Harding administration insisted upon a treaty to nullify article 27, a diplomatic standoff developed.
The big oil companies with properties at risk were well served by the U.S. policy of nonrecognition but other economic interest groups—exporters seeking sales in Mexican markets, U.S. bondholders hoping to collect on previous debts—obtained few benefits. In many ways, diplomatic recognition could advance their interests more effectively. Thomas W. Lamont, a high-level financier with J. P. Morgan and Company and an associate of the International Committee of Bankers on Mexico, previously had negotiated with Mexican officials a new schedule for repaying old debts. On the basis of that experience, he persuaded Harding and Hughes that they could place some trust in Obregón’s good faith without risking too much. Subsequently, during the summer of 1923, they sought a negotiated compromise at the so-called Bucareli Conference, named for the location of the Mexican Foreign Ministry at No. 85 Avenida Bucareli in Mexico City. As a consequence of these proceedings, U.S. officials abandoned the demand for a treaty in defense of foreign property rights and accepted instead a ruling by the Mexican Supreme Court. Called “the doctrine of positive acts,” this ruling assured foreigners that they would not experience retroactive enforcement of article 27—that is, the loss of their property—if they had engaged in “positive acts” to develop their holdings before the constitution took effect on February 5, 1917. In addition, a claims convention provided reassurance for foreigners seeking compensation for injuries and losses suffered during the era of revolution. As a seal on the agreement, on August 31, 1923, three weeks after Harding’s sudden death, the Coolidge administration extended diplomatic recognition to Obregón’s government, seeking thereby to inaugurate a period of more normal relations.42
Despite such hopes, new difficulties arose under Obregón’s successor, president Plutarco Elías Calles. When he took office in 1924, Calles broke with Obregón’s policy and rejected “the doctrine of positive acts.” Instead, he threatened to enforce article 27 retroactively by placing a fifty-year limit on foreign ownership of petroleum lands, followed by nationalization proceedings. For Kellogg and Sheffield, such behavior smacked of Bolshevism. Kellogg wanted to put Mexico on trial before the world. When Thomas Lamont once again stepped in, urging a less belligerent stance, President Coolidge picked a new ambassador, a friend from college days. Dwight Morrow, another financier connected with J. P. Morgan, was a good choice. Indeed, by means of skill and discretion, he moved Calles along toward more moderate views. Specifically, he emphasized the dangers of intransigence, suggesting the likelihood of bad effects and the loss of future loans. When at last Calles came around, he accepted “the doctrine of positive acts” as assurance against outright nationalization.43
For Latin Americans the U.S. practice of intervention remained a pressing issue during the 1920s. Unlike their northern neighbor, they joined the League of Nations—in part to devise multilateral constraints against the United States—and also exerted pressure in other ways. At the Sixth International Conference of American States at Havana in 1928, for example, Latin American delegates introduced a resolution calling for adherence to the principle of nonintervention and declaring that “no state has a right to intervene in the internal affairs of another” for any reason.44 On this occasion the United States succeeded in blocking any action but could not abolish the idea. Nonintervention retained strong appeal for Latin Americans. Somewhat embarrassed by the circumstance, U.S. leaders in the 1920s preferred the use of economic incentives rather than force as the best means of influencing Latin American behavior, but still they regarded intervention as a right authorized by international law. Whenever necessary, they would use it in defense of U.S. citizens and property.
In 1928, undersecretary of state J. Reuben Clark addressed the issue by establishing important distinctions that overturned the rationale for Theodore Roosevelt’s corollary to the Monroe Doctrine. In a State Department memorandum, Clark defended the practice of U.S. intervention in Latin America as legitimate when sanctioned by international law as a means of safeguarding the well-being of U.S. citizens and their property, but he found no similar justification in the Monroe Doctrine. As he described its original meaning, the terms established a prohibition on European intervention in the New World but not a rationale for U.S. intervention. The publication of the Clark memorandum in 1930 marked a shift toward greater subtlety.45 During the Great Depression, the United States gave up direct interventionist practices in the Western Hemisphere by embracing the policy of the Good Neighbor.
1. James Sanders, The Vanguard of the Atlantic World: Creating Modernity, Nation, and Democracy in Nineteenth-Century Latin America (Chapel Hill: Duke University Press, 2014).
2. Victor Bulmer-Thomas, The Economic History of Latin America since Independence (New York: Cambridge University Press, 1994), chaps. 1–3; William Glade, “Latin America and the International Economy, 1870–1914,” in The Cambridge History of Latin America, vol. 4, c. 1870–1930, ed. Leslie Bethell (New York: Cambridge University Press, 1986), chap. 1.
3. Glade, “Latin America,” 10–16; Bill Albert, South America and the First World War: The Impact of the War on Brazil, Argentina, Peru, and Chile (New York: Cambridge University Press, 1988), chap. 1.
4. Friedrich Katz, “Mexico: Restored Republic and Porfiriato, 1867–1910,” in The Cambridge History of Latin America, vol. 5, c. 1870–1930, ed. Leslie Bethell (New York: Cambridge University Press, 1986); Glade, “Latin America,” 16–17.
5. Bulmer-Thomas, Economic History, chap. 3.
6. Glade, “Latin America,” 39–41; Bulmer-Thomas, Economic History, 161.
7. Ronald H. Chilcote and Joel C. Edelstein, eds., Latin America: Capitalist and Socialist Perspectives of Development and Underdevelopment (Boulder, CO: Westview Press, 1986), provides an introduction to dependency theory; Glade, “Latin America,” 47.
8. E. Bradford Burns, The Poverty of Progress: Latin America in the Nineteenth Century (Berkeley: University of California Press, 1980).
9. John Mason Hart, Revolutionary Mexico: The Coming and Process of the Mexican Revolution (Berkeley: University of California Press, 1987), chaps. 6–7.
10. Notable works include Hart, Revolutionary Mexico; Ramón Eduardo Ruíz, The Great Rebellion: Mexico, 1905–1924 (New York: W. W. Norton, 1980); Friedrich Katz, The Secret War in Mexico: Europe, the United States, and the Mexican Revolution (Chicago: University of Chicago Press, 1981); and Alan Knight, The Mexican Revolution, 2 vols. (New York: Cambridge University Press, 1986).
11. Mark T. Gilderhus, “Carranza and the Decision to Revolt, 1913: A Problem in Historical Interpretation,” Americas 33 (October 1976): 298–310; Kenneth J. Grieb, The United States and Huerta (Lincoln: University of Nebraska Press, 1969), chap. 4; Michael C. Meyer, Huerta: A Political Portrait (Lincoln: University of Nebraska Press, 1972), chaps. 4–5; Douglas W. Richmond, Venustiano Carranza’s Nationalist Struggle, 1893–1920 (Lincoln: University of Nebraska Press, 1983), chap. 3.
12. Mark T. Gilderhus, Diplomacy and Revolution: U.S.-Mexican Relations under Wilson and Carranza (Tucson: University of Arizona Press, 1977), 3.
13. Mark T. Gilderhus, Pan American Visions: Woodrow Wilson in the Western Hemisphere, 1913–1921 (Tucson: University of Arizona Press, 1986), 14–16.
14. Thomas L. Karnes, “Hiram Bingham and His Obsolete Shibboleth,” Diplomatic History 3 (Winter 1979): 39–57.
15. N. Gordon Levin, Jr., Woodrow Wilson and World Politics: America’s Response to War and Revolution (New York: Oxford University Press, 1968), chap. 1.
16. Gilderhus, Pan American Visions, 7–19; Katz, Secret War, chap. 5.
17. Gilderhus, Pan American Visions, 28–29; Albert, South America and the First World War, chap. 1; E. Bradford Burns, The Unwritten Alliance: Rio-Branco and Brazilian American Relations (New York: Columbia University Press, 1966); Joseph Smith, Unequal Giants: Diplomatic Relations between the United States and Brazil, 1889–1930 (Pittsburgh: University of Pittsburgh Press, 1991), chaps. 2–3.
18. Gilderhus, Pan American Visions, 20, 28–29; Burton I. Kaufman, Expansion and Efficiency: Foreign Trade Organization in the Wilson Administration, 1913–1921 (Westport, CT: Greenwood Press, 1974), chaps. 1–2; Jeffrey J. Safford, Wilsonian Maritime Diplomacy, 1913–1921 (New Brunswick, NJ: Rutgers University Press, 1978), chaps. 1–2.
19. Gilderhus, Diplomacy and Revolution, chap 1; Hart, Revolutionary Mexico, chaps. 8–9; Robert E. Quirk, An Affair of Honor: Woodrow Wilson and the Occupation of Vera Cruz (New York: McGraw-Hill, 1964).
20. Gilderhus, Pan American Visions, 33–45.
21. Albert, South America and the First World War, chap. 2.
22. Gilderhus, Pan American Visions, 44–52; William F. Sater, Chile and the United States: Empires in Conflict (Athens: University of Georgia Press, 1990), 75.
23. Gilderhus, Pan American Visions, 64, 67–70; Gilderhus, Diplomacy and Revolution, chap. 2.
24. Bruce J. Calder, The Impact of Intervention: The Dominican Republic during the U.S. Occupation of 1916–1924 (Austin: University of Texas Press, 1984); Hans Schmidt, The United States Occupation of Haiti, 1915–1934 (New Brunswick, NJ: Rutgers University Press, 1971); Frederick S. Calhoun, Uses of Force and Wilsonian Foreign Policy (Kent, OH: Kent State University Press, 1993), chap 4; Brenda Gayle Plummer, Haiti and the United States: The Psychological Moment (Athens: University of Georgia Press, 1992), chaps. 5–6; Plummer, Haiti and the Great Powers, 1902–1915 (Baton Rouge: Louisiana State University Press, 1988); G. Pope Atkins and Larman C. Wilson, The Dominican Republic and the United States: From Imperialism to Transnationalism (Athens: University of Georgia Press, 1998), chap. 2; Lester D. Langley, The Banana Wars: An Inner History of American Empire, 1900–1934 (Lexington: University Press of Kentucky, 1983).
25. Gilderhus, Pan American Visions, 61, 70–74, 77–80; Kaufman, Expansion and Efficiency, 165–75; Carl Parrini, Heir to Empire: United States Economic Diplomacy, 1916–1923 (Pittsburgh: University of Pittsburgh Press, 1969), chap. 2.
26. Gilderhus, Diplomacy and Revolution, chap. 3; Linda B. Hall and Don M. Coerver, Revolution on the Border: The United States and Mexico, 1910–1920 (Albuquerque: University of New Mexico Press, 1988), chap. 5.
27. Gilderhus, Diplomacy and Revolution, chap. 3.
28. Ernest R. May, The World War and American Isolation, 1914–1917 (Cambridge, MA: Harvard University Press, 1959); Gilderhus, Pan American Visions, chap. 3; Katz, Secret War, chaps. 9–10.
29. Lawrence E. Gelfand, The Inquiry: American Preparations for Peace, 1917–1919 (New Haven: Yale University Press, 1963).
30. Gilderhus, Pan American Visions, 113, 125–27; Gilderhus, Diplomacy and Revolution, 96.
31. Levin, Wilson and World Politics, chaps. 5–7.
32. Gilderhus, Pan American Visions, 142–56; Gilderhus, Diplomacy and Revolution, chap. 6; Dimitri D. Lazo, “Lansing, Wilson, and the Jenkins Incident,” Diplomatic History 22 (Spring 1998): 177–98; Daniel M. Smith, Aftermath of War: Bainbridge Colby and Wilsonian Diplomacy, 1920–1921 (Philadelphia: American Philosophical Society, 1970), 10–31.
33. Joan Hoff Wilson, American Business and Foreign Policy, 1920–1933 (Lexington: University Press of Kentucky, 1971); L. Ethan Ellis, Republican Foreign Policy, 1921–1933 (New Brunswick, NJ: Rutgers University Press, 1968); Warren I. Cohen, Empire without Tears: America’s Foreign Relations, 1921–1933 (Philadelphia: Temple University Press, 1987), esp. chap. 1.
34. Eugene P. Trani and David L. Wilson, The Presidency of Warren G. Harding (Lawrence: Regents Press of Kansas, 1977), chap. 5; Joan Hoff Wilson, Herbert Hoover: Forgotten Progressive (Boston: Little, Brown, 1975), chap. 4.
35. Melvyn P. Leffler, “Expansionist Impulses and Domestic Constraints, 1921–32,” in Economics and World Power: An Assessment of American Diplomacy since 1789, ed. William H. Becker and Samuel F. Wells, Jr. (New York: Columbia University Press, 1984), 225–26, 242.
36. Rosemary Thorp, “Latin America and the International Economy from the First World War to the World Depression,” in The Cambridge History of Latin America, vol. 4, c. 1870–1930, ed. Leslie Bethell (New York: Cambridge University Press, 1986), 59–66; Bulmer-Thomas, Economic History, 160–61.
37. Paul W. Drake, The Money Doctor in the Andes: The Kemmerer Missions, 1923–1933 (Durham, NC: Duke University Press, 1989); Drake, ed., Money Doctors, Foreign Debts, and Economic Reforms in Latin America from the 1890s to the Present (Wilmington, DE: Scholarly Resources, 1994), chaps. 5; Michael J. Hogan, “Corporatism,” in Explaining the History of American Foreign Relations, edited by Michael J. Hogan and Thomas G. Paterson (New York: Cambridge University Press, 1991), chap. 16.
38. Thorp, “Latin America,” 72–73.
39. Thomas M. Leonard, Central America and the United States: The Search for Stability (Athens: University of Georgia Press, 1991), chap. 5; Plummer, Haiti and the United States, chap. 6; Atkins and Wilson, Dominican Republic, chap. 2.
40. Quoted in Donald C. Hodges, The Intellectual Foundations of the Nicaraguan Revolution (Austin: University of Texas Press, 1986).
41. Calder, Impact of Intervention, chaps. 8–9; Leonard, Central America, 70–71, 88, 91, 99–100; Neil Macaulay, The Sandino Affair (Chicago: Quadrangle Books, 1971); Paul H. Boeker, ed., Henry L. Stimson’s American Policy in Nicaragua: The Lasting Legacy (New York: Markus Wiener, 1991).
42. Trani and Wilson, Presidency of Warren G. Harding, chap. 5; Robert Freeman Smith, The United States and Revolutionary Nationalism in Mexico, 1916–1932 (Chicago: University of Chicago Press, 1972), chaps. 6–8; Linda B. Hall, Oil, Banks, and Politics: The United States and Postrevolutionary Mexico, 1917–1924 (Austin: University of Texas Press, 1995), esp. chaps. 5–7; Lorenzo Meyer, Mexico and the United States in the Oil Controversy, 1917–1942, trans. Muriel Vasconcellos (Austin: University of Texas Press, 1977), chaps. 4–5.
43. Smith, The United States and Revolutionary Nationalism, chap. 9.
44. Walter LaFeber, The American Age: United States Foreign Policy at Home and Abroad Since 1970 (New York: W. W. Norton, 1989), 341; Samuel Flagg Bemis, The Latin-American Policy of the United States: An Historical Interpretation (1943; reprinted, New York: W. W. Norton, 1967), 251.
45. Frank W. Fox, J. Reuben Clark: The Public Years (Provo, UT: Brigham Young University Press, 1980), 514–21.