11
Involvement Without Commitment, 1921–1931

Often dismissed as an isolationist backwater, the era of the 1920s in fact defies simple explanation. It lacks an overarching theme and a dominant, Wilson-like figure. United States foreign policy derived from numerous complex and sometimes conflicting pressures, producing a bundle of seeming contradictions. The United States was without question the world's top economic power, but it lacked commensurate military power and was not always inclined or able to use its economic might effectively. Republican officials went far beyond their predecessors in terms of involvement in world problems. The United States assumed a level of leadership quite unprecedented in its history. Still in the absence of a compelling external threat and in light of Wilson's recent experience, the Republican leaders did not defy the nation's long-standing tradition against "entangling" alliances and did not embrace collective security. Wherever possible, they used the private sector to implement solutions developed in Washington. The Republicans might, perhaps should, have done more, especially in the economic realm, but it would have been difficult for them to do so. And there is no guarantee that more decisive action could have averted the economic and political disasters that lay ahead. The 1920s must therefore be considered on their own terms. Involvement without commitment seems the best way to sum up the U.S. approach to the world during that period. The nation vigorously promoted its interests while scrupulously guarding against entanglements. This approach brought remarkable short-term successes that concealed major long-term failures.¹

I

In a strange, almost surreal way, despite the massive bloodletting of 1914–18, the postwar world remained Eurocentric. To be sure, Western Europe was drastically weakened, but its potential challengers, the United States and Japan, were focused on regional hegemony, and Russia was devastated by war and revolution. Thus during the 1920s, European issues continued to dominate the agenda of world politics. Britain and France maintained leadership roles through traditional diplomacy and the newly formed League of Nations. In a supreme irony, despite the war and Wilsonian rhetoric of self-determination, through the League mandate system the area under imperial control actually increased during the postwar years.

The appearances of Eurocentricity concealed fundamental changes in the international system that left Europe much weaker and less stable. The continent had suffered incalculable destruction. The final casualty list from assorted war-related causes may have been as high as sixty million people, nearly half of them in Russia, with France, Italy, and Germany also suffering huge losses. The economic costs have been estimated as high as $260 billion. Manufacturing and agricultural production dropped sharply in all European nations. The financing of the war through borrowing left massive indebtedness, shifting the center of world financial power from London to New York, undermining the foundations of the world economy, and eventually provoking an economic and political crisis of the first magnitude. The psychological and emotional costs were equally high. The war challenged Europeans' faith in progress and certainty of their own superiority. In part also as a result of the war, mass public opinion assumed a greater role in the diplomatic process, and Europe in the postwar era was riven by deep-seated and volatile passions. Much of the public in the Western democracies recoiled against the horrible suffering of the Great War, producing various forms of escapism. Others, especially those dissatisfied with the results, seethed with anger and lusted for revenge. Among mass publics throughout Europe, ideologies of the extreme right and left gained numerous adherents.

War always leaves difficult problems, and this was especially true in postwar Europe. Despite substantial physical destruction and territorial losses, Germany remained potentially a great power. The Versailles Treaty hemmed in the loser with various restrictions and saddled it with substantial reparations, leaving great resentment and frustration. For many Germans, the essential goal was to restore the fatherland to its rightful place in Europe, exactly what France most feared and sought desperately to prevent. The greatest changes came in eastern and central Europe where the Austro-Hungarian empire gave way to a number of newly independent nations. However admirable their intentions, the peacemakers could not make these new nations ethnically homogeneous, thus building into them inherent conflicts and weaknesses, creating vulnerable borders, and inviting great power interference.2

In the colonial areas, the Great War accelerated the nationalist revolts that after a second world war would initiate the process of decolonization. The wartime need for people and resources put huge strains on colonial populations and economies, disrupting normal patterns of life and producing need for repayment of sacrifices in blood and treasure. Wilsonian and Leninist rhetoric of self-determination encouraged local nationalisms, and the obvious weakening of the European powers spurred thoughts of revolt. Throughout Asia and the Middle East, nationalist groups formed to demand political and economic concessions. The colonial powers' brutal repression of postwar revolts exposed as sham their talk of justice, fueling rage that further boosted nationalism. The empires remained intact during the 1920s, but growing unrest there distracted European leaders from addressing European problems and caused divisions among the powers themselves.³

Technology continued to shrink the world and change the way people lived and nations interacted with each other. Global application of cable, telephone, and radio dramatically improved communications, providing new means to bring people together. In March 1926, the first news story was transmitted from London to New York by trans-Atlantic telephone—"space rolled up like a cloud," one newspaper proclaimed.⁴ In the United States, especially, the automobile drastically altered popular lifestyles. By creating insatiable demands for oil and rubber, it also raised new economic and foreign policy concerns. Nothing struck the imagination of people worldwide like Charles Lindbergh's stunning nonstop flight from New York to Paris in 1927. The effect, the aviator himself observed, was "like a match lighting a bonfire." The wonders of modern communication quickly spread to the far corners of the globe news of the wonders of modern transportation, sparking wild celebrations and exuberant flights of rhetoric. An Indian periodical claimed that Lindbergh's triumph was "a matter of glory, not only for his countrymen, but the entire human race." The flight was widely viewed as a sign of progress, proving with what "proud contempt man can defy the adverse forces of nature." It was hailed for uniting "the hearts of all men everywhere." Less commented on in the exultation of the moment was the potential military application of what would soon come to be called air power.5

The only nation except Japan to benefit from the Great War, the United States emerged unquestionably the world's greatest economic power. The population increased by 30 percent between 1900 and 1920 to more than 106 million people. The United States was the world's largest agricultural and manufacturing producer and during the 1920s, remarkably, produced more industrial output than the next six powers combined. The war solidified the nation's position as a creditor. It was the world's leading financial power and had a large supply of gold. Its productivity, wealth, and standard of living were the envy of people across the globe.

The Republicans would be sharply criticized after World War II for unilaterally disarming the United States during the 1920s, but in truth they maintained a military establishment entirely adequate for the times. The overriding fact in determining national security policies was the absence of any serious threat to U.S. security. Europe was exhausted from war, Japan in a cooperative mood, and Soviet Russia preoccupied with internal development. In this strategic context, the United States was properly content to maintain a small regular army of about 140,000 men to be supplemented in war by the mobilization of a reserve of citizen soldiers. The officer corps remained at twice the prewar level; army appropriations even during the Great Depression were more than double what they had been before 1914. Army leaders worked significant qualitative improvements, including the beginnings of armored forces and an air corps. The United States came out of the war with the world's largest navy, and sea-power enthusiasts hoped to maintain naval supremacy, but such a goal made no sense in an era of peace and security. The Republicans initiated significant disarmament and settled for parity with Great Britain in capital ships, while developing heavy cruisers and aircraft carriers. Post–World War II internationalists (mainly Democrats) criticized them for not maintaining adequate military power. In reality, it was quite appropriate for the United States during these years to be economically powerful and only moderately strong militarily.⁶

Far more important than America's military strength during the 1920s was what scholar Joseph Nye would later label its "soft power," the global influence deriving from its economic might, technological superiority, and cultural sway.⁷ At the end of the war, the United States stood above the rest of the world, youthful, dynamic, and prosperous, the city on a hill Puritan leader John Winthrop had spoken of three hundred years earlier. Especially to war-weary Europeans seeking to make the transition to peace, America's values of optimism, pragmatism, and efficiency and its high standard of living appeared worthy of emulation. Long scorned by Europeans for its lack of high culture, the United States in the 1920s became a center for the global export of mass culture. Its artists and writers flooded Europe and became trendsetters for the decade. Its films took over European markets, establishing fashions, spreading the American way of life, and selling U.S. products. "Your movies and talkies have soaked the French mind in American life, methods, and manners . . . ," ambassador Jean Claudel observed, "bringing a new vision of power and a new tempo of life . . . . More and more we are following America." Such soft power naturally provoked resentment, especially among proud, aristocratic Europeans. But it also enabled the United States to pursue its foreign policy aims in Europe with minimal commitment.8

American attitudes toward the outside world were marked by turbulent crosscurrents during the 1920s. The patriotism drummed up for the Great Crusade produced powerful nativist and chauvinist sentiments that persisted well into the decade, leading to attacks on those branded "un-American" at home, suspicion of involvement abroad, and limits on immigration, especially of Orientals. Even among many of the elite who played an important role in the war and the peace negotiations, the experience reaffirmed old suspicions of Europe and convictions of U.S. superiority. "The more I learn to know the Old World, the stronger my love for America . . . ," Secretary of State Robert Lansing wrote from Paris in 1919. "The more I breathe the foulness of European intrigue, the sweeter and purer becomes the air of my native land."⁹ His young nephew Allen Dulles expressed similar views. "Notwithstanding all the pious utterances of European statesman, the policy of most of these governments over here is just as devious as it was a hundred years ago," the future CIA director wrote his father.¹⁰

At the same time and paradoxically, the war and Wilsonianism boosted popular interest in the outside world. The 1920s brought another explosion of missionary activity abroad, as large numbers of Americans departed for Asia, Africa, and Latin America to spread the Gospel and American values. The experience probably had more effect on developing their own worldliness than on serving the people they worked among. American volunteer groups set up schools and hospitals in areas as remote as Albania. Tourism skyrocketed in the 1920s, especially in Europe, where an estimated 251,000 travelers spent upwards of $300 million in 1929 alone. The flood of tourists helped to heal Europe's balance of payments problems; on occasion, Americans provoked such resentment abroad with their wealth and arrogant behavior that President Calvin Coolidge felt compelled to intervene.11

American universities gave growing attention to the study of world affairs. The number of international programs doubled between 1916 and 1921. Shortly after the war, Georgetown University, Johns Hopkins, and Tufts created separate schools of world politics. In 1921, a group of East Coast businessmen, bankers, lawyers, and academics, some closely connected to the government, organized the Council on Foreign Relations, a decidedly elitist group committed to promoting public interest in foreign policy issues and providing expert advice to government. With prominent names on its roster like statesmen Elihu Root and Henry Stimson and banker Thomas Lamont, the council held monthly black-tie dinners to discuss current issues and began publishing its signature journal, Foreign Affairs. It vigorously promoted internationalism and became a breeding ground for the "establishment" that would shape U.S. foreign policy through much of the twentieth century.¹²

African Americans, the most oppressed minority group in American society, also looked abroad. Leaders like Walter White, W.E.B. DuBois, and the singer Paul Robeson increasingly appreciated that the problems of people of color were international in scope and that global solutions might be necessary. White's association with the Pan-African Congress in 1921 revealed to him the international dimensions of issues of race and white supremacy, and the connections between racism and imperialism, white supremacy, and global capitalism. Some like Marcus Garvey sought foreign solutions to U.S. race problems by advocating a mass exodus of African Americans back to Africa. Others like DuBois pushed for considering the problems of people of color in their international dimension.¹³

Traditionally, after wars Americans have rebelled against strong presidential leadership, and this was especially true after World War I. McKinley, Roosevelt, and Wilson had significantly expanded the presidency, and Americans neither wanted nor got that sort of leader in the 1920s. Warren Harding was a weak and amiable nonentity, precisely what party stalwarts sought. Ultimately, he was the tragic victim of the corruption of the men around him. He came to despise his job. It's "hell," he told a friend. "There is no other word to describe it."14 A dour and flinty Vermonter, "Silent Cal" Coolidge reveled in presidential inactivity. Both came from provincial backgrounds and showed little interest in and much ignorance of the world. Harding had traveled extensively but apparently learned very little. Coolidge flaunted his provincialism, telling friends he did not need to go to Europe because he could learn what he needed at home. Elihu Root snarled that Coolidge did not have an international hair in his head; Coolidge admitted that his intellect was not a "gushing fountain."¹⁵ Their inattention and lack of boldness may have been especially costly in terms of addressing crucial global economic issues. The best that can be said about them is that they had the good sense to leave the conduct of foreign policy in the generally capable hands of their secretaries of state.

During the 1920s, the secretaries of state resumed the preeminent role in policymaking they had played before McKinley and Roosevelt. The New York lawyer and unsuccessful presidential candidate Charles Evans Hughes was one of the ablest ever to hold the post. An indefatigable worker, utterly devoted to the job, he filled the sizeable void left by Harding and Coolidge and was perhaps the last secretary to personally manage U.S. foreign policy. Hughes ably presided over a department with a budget of $2 million and a staff of six hundred people. He won the loyalty of his aides with his dedication and warm, outgoing personality. Blessed with a brilliant mind, he was also politically astute. Keenly aware of Wilson's fate, he shied away from grand schemes and bold initiatives, but through careful study and preparation steered seventy-one treaties through a contentious Senate. In perfect keeping with the times, he sought a "maximum of security with a minimum of commitment."¹⁶ His successor, Frank B. Kellogg, matched him only in dedication to and hours spent on the job. A Minnesota farm boy without formal education, Kellogg in best Horatio Alger fashion had become a prominent lawyer, Republican politician, and ambassador to Great Britain. Cautious to a fault, he was a classic workaholic who often became bogged down in minutiae and whose working habits produced the anxious, sometimes bad-tempered demeanor that earned him the nickname "Nervous Nellie." His major accomplishment, the Kellogg-Briand Pact outlawing war, won him a Nobel Peace Prize—and the derision of subsequent generations of internationalist pundits and historians.17

Developments in the diplomatic corps reflected the crosscurrents of the age. On the one side, the foreign service became increasingly professionalized, "a pretty good club," in the words of one of its members, of upper-class white males from the most prestigious prep schools and Ivy League universities who shared the same values, a taste for "old wines, proper English and Savile Row clothing," and a deep commitment to converting a traditionally amateur operation into a permanent profession. On the other side, the consuls and their business and congressional allies pushed for a higher status for the less effete, more "manly," and more typically American consular service to more effectively promote U.S. business abroad. After years of consular agitation, Congress forced the two services into an uneasy merger with the 1924 Rogers Act. Three years later, the apparent favoritism of the snobbish diplomats for themselves over the "hard-working" consuls provoked a backlash in Congress and the press that resuscitated the traditional American disdain for diplomacy and diplomats. One outraged critic insisted that the diplomats should be sent to consular posts "where they would do some real work." The result was a setback for professionalization of the foreign service and additional legislation to force closer integration with the consuls.¹⁸

The new world of the 1920s brought intrusions on the State Department's traditional domination of U.S. foreign policy. For his interference in this area as in others, Herbert Hoover was known as secretary of commerce and undersecretary of everything else. The Republican administrations eagerly farmed out key tasks to private experts such as industrialist Owen D. Young, Lamont, and Johns Hopkins economist Edwin Kemmerer. Private lobbying groups also exerted growing influence, especially the organized peace movement, which consisted of a variety of organizations—working sometimes together but often at cross-purposes—and exerted powerful pressure for disarmament and the outlawing of war.19

Flushed with its "victory" over Wilson and in full rebellion against three decades of executive domination, Congress was more assertive in foreign policy in the 1920s than at any time since the Gilded Age. It mattered not who was secretary of state, Senator Boies Penrose boasted, "Congress—especially the Senate—will blaze the way in connection with our foreign policies."²⁰ Penrose's rhetoric aside, of course, Congress was not well suited to "blaze the way." As an institution, it was too big and unwieldy to actually frame and implement policies. Most legislators were interested mainly in domestic issues. They were divided on the basis of party, and the two parties were sharply divided internally, limiting their ability to agree on anything. Congressional influence was mainly negative. Vivid memories of Wilson's humiliating defeat undoubtedly inhibited initiatives among executives not prone to activism in any event, leading Hughes and Kellogg to frame cautious policies and carefully cultivate congressional support for them. On numerous occasions, Congress played an obstructionist role.²¹

A power unto themselves in the Congress were the so-called Peace Progressives, a small but tightly unified and vocal bloc that exerted an influence far disproportionate to its numbers. Composed mainly of midwestern and western radicals, most of them Republicans, the Peace Progressives kept up a drumfire of criticism of U.S. foreign policy throughout the 1920s. Often wrongly dismissed as isolationists, they took a keen interest in foreign policy issues, articulated a global vision sharply opposed to that of mainstream Republicans, and ardently promoted the use of U.S. influence to build a better world. Foes of big business in domestic policy, they also objected to the overarching influence of business in foreign policy. They were staunchly anti-imperialist and anti-militarist. They denounced U.S. military intervention in the Caribbean and advocated support of nationalism in areas long dominated by outside powers. They urged recognition of the Soviet Union, not out of sympathy for Bolshevism but from the belief that engagement with Communism would help reform it. They worked closely with peace groups to push radical disarmament measures and the outlawing of war. Led by Senator William Borah, the so-called Lion of Idaho, a powerful figure of leonine countenance, stentorian voice, and indomitable will, they helped end the U.S. occupation of Nicaragua, cut off funds for naval construction, and avert war with Mexico.22

II

The business of America is business, Calvin Coolidge famously proclaimed, and indeed, in the absence of any compelling strategic threat, economic issues assumed primacy in the 1920s. Many business and political leaders recognized the growing interdependence of the world economy; some appreciated that America's new creditor status opened promising opportunities and imposed urgent responsibilities.²³ Americans voraciously devoured the world's resources. The United States consumed 60 percent of the world output of eight critical raw materials and 40 percent of ten others; by 1922, it used 70 percent of the world's rubber supply.²⁴ Industrialists and government officials naturally worried about the nation's growing dependence on foreign sources for vital raw materials such as rubber, silk, nitrates, and especially oil to fuel the burgeoning automobile business and keep the navy afloat. The United States still relied on foreign trade for a smaller share of its gross domestic product than any other major economic power, and the more nationalist business leaders believed that the economy would grow even if Germany and France were in recession. Many businessmen and political leaders continued to view overseas trade and investments as important to American prosperity, however. They also believed that the spread of liberal capitalism would help promote a stable and prosperous world order by improving living standards in other countries and eliminating the conditions that bred revolution. Some business leaders fervently believed that the expansion of American corporate culture could help modernize "backward" areas, thereby promoting prosperity and order as well as lining their own pockets with profits. Without international trade, the high priest of American capitalism, Herbert Hoover, warned, "not a single automobile would run; not a dynamo would turn; not a telephone, telegraph, or radio would operate." Commerce was "the life blood of modern civilization."²⁵

More than at any time in the past, business and government worked hand in hand through informal cooperative arrangements to promote the general interest, often in ways that "blurred the lines between public and private sector operations."26 Recognizing the importance of markets and investments, Congress passed in 1918 the Webb-Pomerene Act and in 1919 the Edge Act exempting exporters and bankers respectively from antitrust provisions and permitting them to combine to engage in foreign trade and lending, giving them more resources and limiting their risks. Hoover's Commerce Department energetically searched out and furnished to eager businessmen information about opportunities for foreign trade and investment. Consuls and diplomats vigorously promoted the Open Door policy to ensure equal access for American exporters, investors, and exploiters of foreign raw materials. Where expedient, the U.S. government also sanctioned exclusive arrangements between American and foreign businessmen to share markets and raw materials. Even in the crucial new areas of cable and radio operations in America's hemispheric area of influence, under the watchful eye of the State Department, U.S. and British businessmen worked out cooperative deals to avoid wasteful and costly competition.²⁷ In an age where any sort of political commitment was anathema, government also relied on unofficial agents, often businessmen, economists, or bankers, to negotiate or implement agreements with other nations or serve as financial consultants to other governments.²⁸

The results, at least in terms of numbers, were impressive. After the recession of 1919–21, the U.S. economy boomed. Trade flourished; exports jumped from $3.8 billion in 1922 to $5.1 billion in 1929, and finished manufactured products expanded to 50 percent of total exports by the end of the decade. Automobile exports represented 10 percent of the total and assumed an increasingly critical place in the overall economy. Other major items included cash registers, typewriters, sewing machines, agricultural equipment, tires, and petroleum products. By 1929, the United States was the world's leading exporter, with Western Europe, Canada, and Japan the major recipients of its products. Despite the high rates imposed in the Fordney-McCumber tariff of 1922, imports also increased, from $3.1 billion in 1922 to $4.4 billion in 1929, oil and rubber being among the key items.²⁹

Those who had traditionally looked to European and especially British bankers for capital after World War I of necessity turned to the United States. Investments in the form of loans rose to more than $15 billion by the end of the decade, most of them long-term loans to debtor nations. Private U.S. lenders poured huge sums of money into Latin America and Japan. American loans played a crucial role in stabilizing the warshattered German economy. They helped create a favorable balance of trade and permitted other nations to buy U.S. products.30

Even more significant was the vast expansion of direct investments resulting in the construction of American factories abroad. Such investments rose to $4 billion in the 1920s, the first great age of the multinational corporations. These institutions would assume growing importance in the world economy and play crucial political roles in nations across the world. American businessmen were drawn overseas by proximity to markets, avoidance of high tariffs, and cheap labor. They often cut favorable deals with friendly local governments. The practice was most extensive in Europe, where investment more than doubled in the 1920s and more than 1,300 firms were established. Corporations such as Ford and General Motors dominated the automobile industry in Europe and Canada. Firms like General Electric and International Telephone and Telegraph took over utilities and communications services across the world; by 1930, GE had invested $500 million in eleven Latin American countries alone. International Business Machines and Remington Rand dominated the production and sales of office equipment. Oil companies built refineries and expanded marketing operations across the world. The notorious United Fruit Company bought up plantations and controlled railroad and port facilities throughout Central America and the Caribbean. Wealthier than most of the so-called banana republics in which it operated, it also wielded enormous political power.³¹ By 1930, U.S. direct investment exceeded that of France, Holland, and Germany combined.

American multinational corporations also exploited crucial raw materials. Lured by the prospect of riches "beyond the dreams of avarice," the Guggenheim family, with government support, negotiated a highly favorable arrangement giving it control of the extraction of Chilean nitrate.³² The government in its quest for independent supplies of desperately needed rubber also encouraged industrialist Harvey Firestone to lease Liberian lands on which rubber trees could be grown. It further supported Firestone by arranging a quasi-official loan that required U.S. "advisers," in the mode of the Central American republics, to assume responsibility for Liberian finances.33 Alarmed by the prospects of an oil shortage, Americans, often with government backing, mounted a global drive for the precious commodity. The State Department pressed for an open door in the Middle East and declaimed against British and French deals dividing Mesopotamia. Eventually, with State Department backing, U.S. oilmen cut themselves in on the "Red Line Agreement," sharing with European firms the bountiful new resources discovered in Iraq. The government also supported oilmen's efforts to regain control of confiscated oil fields in Mexico and the Soviet Union or at least secure reasonable compensation. Additionally, Americans took full advantage of the cruel and venal dictator Gen. Juan Vicente Gómez's generosity with his country's natural resources to exploit the vast oil deposits discovered in Venezuela in the 1920s. The frenzy continued until the location of new oil fields in Texas turned the anticipated shortage into a glut.³⁴

The rampant economic expansion of the 1920s brought unprecedented U.S. involvement in the world and fueled a short-term prosperity, but it did not always serve the broader national interests. Despite talk about economic interdependence and the value of foreign trade, the domestic market remained most important to the economy, and domestic priorities generally took precedence over foreign policy objectives. Throughout the decade, for example, the desire to maintain low taxes at home posed an insurmountable barrier to forgiving Allied war debts and reducing German reparations. Manufacturers' insistence on continued high tariffs to protect against an anticipated flood of European imports skewed the balance of trade in favor of the United States, making it difficult for other nations to buy its products. Loans made up some of the difference, but only as long as American bankers were able and willing to float them. Postwar U.S. economic policies thus provided no better than a rickety foundation for long-term international and domestic prosperity.³⁵

Although Americans generally agreed on the goals of foreign economic policy, they often sharply disagreed on methods. Within the U.S. government, the Commerce and State departments fought bitterly for influence. The business community was itself sharply divided, not only by rivalries among competing firms in the same industries but also between businesses that operated in the domestic and international markets and between producers and exporters. The result was a mishmash of sometimes contradictory policies rather than a coherent, closely integrated foreign economic policy.

For all the bold talk about business-government cooperation in foreign economic policy, the objectives of the two often conflicted. This was especially true in foreign lending, where efforts to ensure that private loans served the broader national interest often ran afoul of bureaucratic rivalry and business imperatives. Hoover believed that government should exercise some supervision over private loans to ensure their soundness, increase the possibility that they would actually contribute to economic development, and prevent them from being used in ways that threatened U.S. interests, by expanding armaments, for example. He encountered often bitter opposition from the State Department and bankers. Hughes sought to use loans for broader political purposes—to secure concessions from Mexico in oil negotiations, push Caribbean governments in desired directions, or promote China's economic development and territorial integrity. For obvious reasons, bankers sought mainly profit. As a result, government exercised loose supervision of loans but lacked real enforcement power. The result was at best mixed. Bankers refused loans to China urged by the State Department because they were deemed too risky, while skirting government restrictions and subsidizing Japanese imperialism in Manchuria. In the Caribbean, the loans the State Department encouraged to help achieve its political ends turned out to be unsound economically. Some loans were discouraged for frivolous reasons—rejection of loans to a Czech brewery in the era of Prohibition, for example—while others helped underwrite German rearmament. Businessmen squabbled among themselves on lending policy, exporters bitterly complaining that bankers were financing purchases by their foreign competitors. The result was a "sort of twilight zone" between government responsibility and laissez-faire that never really worked but was never really addressed or corrected.36

Rather than promoting modernization and stability in developing countries, the multinational corporations came to play complex and often destabilizing roles. In Cuba, for example, a General Electric subsidiary, American and Foreign Power Company (AFP), updated equipment and management methods, improved service, paid higher than local wages, and created incentives, including sponsoring athletic teams, to promote employee loyalty. It also developed close ties with local elites and intruded in Cuban politics, supporting leaders like the brutal Gerardo Machado who in turn protected it from regulation. The high rates charged by the U.S. utilities giant and its efforts to impose American corporate values provoked a Cuban backlash. Many management positions were given to North Americans, and Cuban workers were displaced. AFP's policies stirred up Cuban resistance in the form of strikes and consumer boycotts that took on the added dimension of nationalist opposition to outside oppression. Ironically, Cubans adapted some of the values of American corporate culture to their own ends, significantly shaping their own society and its ties with the United States.37

III

Economic expansion was inextricably linked with the achievement of major U.S. foreign policy goals during the 1920s. Republican policymakers were not ignorant of or indifferent to the outside world. On the contrary, the Great War highlighted for them in the most gruesome way the importance of events abroad to their nation's prosperity and security. Peace and order were vital for American commercial expansion, which in turn was important for prosperity. American trade, on the other hand, might help promote economic growth in other parts of the world, thus easing the discontents that spawned revolution. Anything but isolationist in their dealing with crucial postwar problems, Republican leaders involved the United States to an unprecedented extent in reconstructing postwar Europe and promoting stability in East Asia, even assuming the sort of leadership role the United States had not previously considered. The key, of course, was to do this without political entanglements. The Republicans thus relied heavily on economic measures to achieve their goals. They often used private bankers and businessmen as their instruments.

The League of Nations remained strictly taboo. After the debacle of 1919–20, few U.S. officials were bold—or foolish—enough to advocate League membership. Harding artfully straddled the issue during the 1920 campaign, but upon taking office he categorically resolved it: "A world super-government is contrary to everything we cherish and can have no sanction by our Republic," he proclaimed in his inaugural address.³⁸ Lingering opposition to the League in the Senate and lack of public interest deterred Harding from pursuing his vague alternative proposal for an "association of nations." For a time, in a remarkable act of undiplomatic rudeness, the United States refused even to answer correspondence from the League, placing it in the State Department's dead letter file. Recognizing the political liability that Wilson's handiwork had become, his Democratic Party spurned the League in its 1924 platform.39

Although deemed a political albatross, the League issue would not die easily. During the 1920s, almost despite itself, the United States drew closer to the organization its president had once championed. Wilsonians continued to press for full membership. Peace advocates such as Frederick J. Libby of the National Council for the Prevention of War and James T. Shotwell of the Carnegie Endowment for Peace lobbied relentlessly and effectively for some kind of U.S. association with the world organization. Once the League was a going concern, the United States had little choice but to deal with it. From the early 1920s, diplomats began to correspond with League officials; U.S. representatives met unofficially with League commissions dealing with economic and social questions. The Republicans in time assigned some of their best people to Geneva, where they sat in on meetings concerning arms limitations and European reconstruction. From 1925 on, the United States had official representation. Obviously such limited involvement was not the equivalent of full membership, and the League's prestige and influence probably suffered accordingly. Yet to go this far represented a significant departure for a nation whose cardinal principle for 150 years had been avoiding Europe's "broils."⁴⁰

Abstention from the World Court, the product of executive timidity and dilatoriness and Senate obstructionism, exposed the less savory side of Republican "internationalism." From the turn of the century, Republicans such as Root and William Howard Taft had promoted the expansion of international law. Harding, Coolidge, Hughes, and Kellogg all favored membership in the World Court. But the executive branch did not assign the issue high priority. Aware that mere discussion of joining the Court would raise the specter of League membership (which was not required), the politically sensitive Coolidge was prepared to "let it set."⁴¹ While voting for U.S. membership in 1926, a still hyper-suspicious Senate loaded down its approval with conditions (some of them even drafted by American John Bassett Moore, a sitting judge on the Court), the most obnoxious of which would have prevented the Court from giving advisory opinions on matters in which the United States claimed an interest. Such unilateralism—all too typical of America's approach to the world—obviously met strong opposition from other members. The eighty-four-year-old Root eventually helped redraft the Court protocol to meet Senate objections. In 1929, Hoover submitted it to the Senate. Bogged down in the Great Depression, however, he did not push it, and when it finally came up for consideration in 1935 it failed by seven votes. The United States never joined the World Court, a blunt reminder of the limits of Republican internationalism.42

By contrast, the United States assumed unprecedented and indispensable leadership in promoting international arms limitations. Reduction of armaments was an integral part of the Republicans' broader diplomatic and economic strategy. It would reduce government expenditures, permit a lowering of taxes, and promote the sort of peaceful and stable environment in which international trade and investment could flourish. After some initial hesitation, Harding and Hughes in 1921 jumped on an already speeding bandwagon. At a conference in Washington, the secretary of state pulled off a diplomatic tour de force, the first major international agreement on arms reduction ever negotiated.

By the time Harding took office, pressures for disarmament had mounted. Two years after the armistice, the United States, Great Britain, and Japan were planning major expansions of their already sizeable navies. In December, Peace Progressive and former Irreconcilable senator Borah proposed that the three nations reduce their navies by 50 percent over five years. The Borah Resolution struck a responsive chord among war-weary peoples in the United States and across the world. Arms reduction could permit much-needed tax relief and head off a looming arms race. Many commentators believed that the European arms race had been a major cause of the Great War, and disarmament could ease the threat of another devastating conflict. For some Americans, Borah perhaps included, U.S. leadership in arms reduction could compensate for refusal to join the League. Disarmament was a cause behind which virtually every individual and group could rally. The indefatigable Libby mounted a huge lobbying campaign. He was joined by other organizations in the burgeoning postwar peace movement, churches, and newly empowered women's groups such as the League of Women Voters and the Women's International League for Peace and Freedom. With this sort of popular backing, the Borah Resolution passed Congress easily in July 1921—ironically, as part of that year's Naval Appropriations Act.⁴³

The great powers responded quickly. With characteristic vagueness, Harding had already endorsed arms reduction. Although Hughes was reluctant to appear to be following Congress's lead, he found the popular pressures irresistible and the need to address rising tensions in East Asia compelling. He thus issued an invitation for a conference to meet in Washington. Caught between popular pressures for disarmament and demands from his admirals to maintain Britain's traditional dominance of the seas, Prime Minister David Lloyd George found Hughes's proposal a convenient way out. He recognized, moreover, that the war-depleted British treasury could not match that of the United States in a long-term competition. The Foreign Office worried about the budding rivalry in East Asia. The Anglo-Japanese Alliance of 1902, long an irritant for the United States, was up for renewal. Lloyd George thus saw a chance to accommodate Washington and shed dangerous treaty obligations without alienating an important ally. The British therefore proposed a conference with a broader agenda to include all nations with interests in East Asia. The United States quickly assented.

The U.S. invitation to confer in Washington came as a "bolt from the sky" to Tokyo. Japanese leaders feared that the United States and Britain might be ganging up on them. Moderates seized the opportunity to promote cooperation with the West without sacrificing vital interests in Manchuria. Facing serious economic and political problems at home and dangerously overextended abroad, the government sought to contain its own military leaders and break out of the diplomatic isolation in which Japan found itself after World War I. Wasting no time, the wary but willing conferees agreed to meet in Washington in late 1921.44

Hughes handled the conference with consummate skill. He prepared with the utmost care, mastering the technicalities of complex weapons systems without getting bogged down in detail. He kept U.S. naval officers on board without letting them take control. Avoiding Wilson's mistakes, he made Massachusetts senator Henry Cabot Lodge part of the solution, thus preventing him from again becoming the problem. He developed a full-fledged plan for sizeable reductions in the tonnage of battleships, the ultimate weapon of the era, and kept his proposals secret until the conference opened. On November 11, 1921, Armistice Day, the delegates attended a moving ceremony at Arlington National Cemetery. The following day, in what journalist William Allen White called "the most intensely dramatic moment I have ever witnessed," Hughes unveiled his plan in what became known as his "bombshell speech" before a stunned audience at Washington's Constitution Hall. Addressing a packed house including prime ministers, admirals, the entire U.S. Congress, and some four hundred journalists from across the world, he insisted that competition in armaments "must stop!" He proceeded to call for the scrapping of sixty-six ships, including four British super-dreadnoughts authorized but not yet under construction and a Japanese battleship, the Mutsu, built in part with collections from schoolchildren. "Hughes sank in thirty-five minutes more ships than all of the admirals of the world have sunk in a cycle of centuries," an admiring journalist wrote. Caught completely off guard, a British admiral "turned several colors of the rainbow and behaved as if he were sitting on hot coals." The crowd rose to its feet in a "tornado of cheering."45

After nearly three months of arduous negotiations, the conferees in early 1922 reached a series of agreements dealing not only with arms limitation but also with some of the delicate political issues that had prompted the arms race. Hughes negotiated with Tokyo a separate agreement giving the United States cable rights on the Japanese island-mandate of Yap and an agreement with Britain and Japan ending their alliance. A Four-Power Treaty replaced the alliance and committed the parties to respect each other's possessions in the Pacific and consult in case of conflict among themselves or external threat from some other nation. Although later denounced as toothless and essentially meaningless, the agreement significantly eased tensions in the Pacific and facilitated major reductions in armaments.⁴⁶

Following the broad outlines sketched by Hughes at the opening of the conference, a Five-Power Treaty dealt with capital ships. "For the first time in recorded history," historian Warren Cohen has written, "the Great Powers voluntarily surrendered their freedom to arm as they pleased."⁴⁷ The treaty established a ratio of 5:5:3 in battleship tonnage for the United States, Britain, and Japan; France and Italy accepted 1.67. It eliminated thirty U.S. ships built or under construction, twenty-two British, and fifteen Japanese. Britain accepted equality with the United States, no small concession. Japan grudgingly agreed to a position of inferiority, in part because it was permitted to keep the symbolically powerful Mutsu and also because of a vital clause in which the United States and Britain agreed to maintain the status quo in fortifications and bases in the Pacific and East Asia. In contrast to the United States and Britain, Japan only had to "defend" one ocean. Most important, its leadership recognized it could not win an arms race with the United States. Hughes negotiated effectively in part because Herbert Yardley, a talented U.S. cryptologist, broke Japan's diplomatic code and could reveal before each day's meeting the position its delegates would take and how far they could be pushed.48

A third agreement, the Nine-Power Treaty, attempted to stabilize great-power competition in China. The signatories refused to address the obnoxious unequal treaties, especially on tariff autonomy and extraterritoriality, another crushing blow to Chinese seeking to regain their nation's sovereignty. On Manchuria, Hughes reverted to Theodore Roosevelt's pragmatic approach and indeed used veteran diplomat and TR confidant Root to work behind the scenes with Japan. The Nine-Power Treaty thus resembled the Root-Takahira (1908) and Lansing-Ishii (1917) agreements, an ambiguous compromise implicitly recognizing Japan's special interests in Manchuria. Rather than pressing Japanese delegates on the still-sensitive issue of Shandong, Hughes encouraged private discussions with China, even holding the last meeting in his home. Japan voluntarily agreed to return the former German leasehold to China while retaining some railroad concessions, and did so later in the year. The Nine-Power Treaty itself was notably and unsurprisingly non-substantive, once again calling on the signatories not to interfere in China's internal affairs or to seek exclusive concessions and to respect China's sovereignty and territorial integrity. It sought to freeze the status quo rather than alleviate the inequities under which China suffered.⁴⁹

The Washington agreements were much criticized after World War II. The United States alone adhered to the naval arms limitations, it was argued, leaving itself vulnerable to Japanese attack. The agreements lacked enforcement provisions and were therefore essentially worthless. Such arguments reflect ex post facto and ahistorical reasoning. The Senate would never have accepted the sort of enforcement clauses critics later insisted were necessary. As it was, a leery Senate microscopically examined the treaties for hidden commitments and approved the Four-Power Treaty by only four votes over the necessary two-thirds. To be sure, the treaties were not without serious deficiencies. Russia and Germany were left out. The naval arms limitations did not go beyond capital ships, freeing nations to move in other directions. China would not forget yet another affront at the hands of the imperial powers. This said, the Washington treaties stabilized a dangerous arms race and dramatically eased great-power tensions. The United States gave up only ships and bases Congress would likely not have funded. By conceding Japan its long-sought due as a major power, they established a basis for cooperation in the Pacific and initiated a Japanese-American rapprochement. Most important, this first example of arms limitation eased the enormous burden of arms on people throughout the world, helping make possible recovery from a devastating war. In all, it was an enormously significant event, making clear the new role of the United States in the world.50 The United States took the initiative in calling the conference and hosted it in Washington. Its secretary of state spearheaded the negotiations and achieved most of his nation's major objectives.

In European reconstruction, as in disarmament, the United States played a key role, although in this area it was not as eager or decisive in taking the lead. Republican leaders were not indifferent to Europe's postwar plight, as has often been charged. They recognized all too clearly the extent to which the war had shattered the European economic order; they were keenly aware of the importance of a stable, prosperous Europe to America's economic and political well-being. They also perceived that their nation's altered economic status required a more active role in resolving European problems, a harsh reality underscored by the recession of 1919–21. Some, like Hoover, even believed that the United States should employ its vast economic power and influence to save the world from "misery and disaster worse than the dark ages."⁵¹ Here, however, formidable domestic political constraints blocked the way. As a consequence, Republican administrations relied on economic rather than political methods, and on unofficial and private emissaries to negotiate and implement solutions.

The problems were monumental. The war had wreaked massive physical and emotional destruction across the Continent, stoking the enmities that had provoked conflict in the first place. Angry at their defeat and the victor's peace imposed on them, Germans were not disposed to cooperate. Disappointed with Anglo-American refusals to provide firm security guarantees against a German resurgence, France sought to use economic pressure to keep Germany at heel. Overshadowing everything else, and standing as insuperable obstacles to reconstruction, were the $33 billion in reparations Germany was required to pay the Allies and the $27 billion in war debts owed by the Allies, $10 billion to the United States. Viewing reparations as a means to keep Germany weak and under control, France demanded full payment. Germany adamantly retorted that the amount of reparations imposed on it far exceeded its ability to pay. The British linked the debts owed them with those they owed the United States, building a united European front on this issue. The Allies naturally claimed that since such debts had been incurred in a common cause—the United States had paid mainly in dollars, they in blood—they should be scaled back or canceled altogether. They linked war debts and reparations, insisting that they could not grant relief to Germany without relief themselves.52

It would take another devastating world war to demonstrate that economic generosity could be the height of political realism, and Americans in the 1920s could hardly be expected to see this. To be sure, some international businessmen and bankers and diplomats such as Alanson Houghton, former Corning Glass magnate and Harding's ambassador to Germany, perceived in terms of war debts and reparations that expediency would be the better part of wisdom. But most U.S. officials agreed with Harding that the dilemma for the United States was "how to assert a helpful influence abroad without sacrificing anything of importance to our people."⁵³ American leaders were intent on protecting the domestic market from a surge of postwar European imports. Congress enacted high tariffs in the early 1920s and maintained them throughout the decade, making it difficult for Europeans to sell in the United States. United States officials also refused to take any step that required higher taxes. Republican leaders generally sympathized with the need to adjust German reparations schedules and recognized that war debts posed a huge obstacle to European recovery. But they also perceived that the solutions put forth by the Europeans would require high taxes at home. They believed that the war debts gave them some leverage in pushing Europeans toward the sort of settlements they viewed as necessary for proper reconstruction. They publicly denied a link between reparations and war debts. Congress underscored the political delicacy of the war debts issue in 1922 by creating a World War Foreign Debts Commission and setting a standard of 4.25 percent interest to be paid over twenty-five years. Because of timid leadership, conflicts within the executive branch over what to do, and congressional constraints, the Harding administration refused to jump into the fray in 1921–22, closely guarding its freedom of action and permitting the situation in Europe to deteriorate dangerously.54

While Europe wallowed in torpor, conflict, and indecision, the United States gradually assumed leadership. Cooperating with private bankers on both sides of the Atlantic, British and U.S. officials worked out a debt settlement providing for payment over sixty-two years at a sliding scale of 3 to 3.5 percent interest. Some British leaders naturally complained, as Chancellor of the Exchequer Stanley Baldwin put it, that a tightfisted United States deserved a "replica of the golden calf." But most also conceded that such a settlement was essential for broader European recovery. Business and political leaders on both sides also recognized, as one American banker put it, that if the two countries could work together "the rest of the world would have a combination to whom they would have to pay attention." Congress acquiesced in a settlement more generous than it had mandated. The British passed on their savings to their debtors. The agreement set a precedent for further Anglo-American cooperation and facilitated subsequent settlement of the reparations problem.⁵⁵

Hughes allowed the recalcitrant French and Germans to approach the brink of disaster before interceding. While rejecting U.S. efforts to reach a debt settlement, France continued to demand reparations from Germany. When Germany refused to pay, France and Belgium in January 1923 marched into the Ruhr, seized the coal mines, and extended the area of occupation. The Germans responded with passive resistance, putting huge strain on an already shaky French economy. The Ruhr occupation caused a deepening economic and political crisis in Germany—the mark fell to the lowest point ever reached by any currency to that time—raising the threat of a right-wing coup or, even worse in American eyes, a "Red Republic." The cost of the occupation drove the value of the franc down by more than 40 percent, making France amenable to U.S. pressure. Sovereignty was "dear to the hearts of the French people," banker Lamont shrewdly observed, "but the Franc was much dearer."⁵⁶

With Europe on the verge of a major crisis, Hughes finally acted. The Ruhr occupation alarmed Americans as nothing to this point, even Senator Borah insisting that "bold and determined" action was required to avert "utter economic chaos."57 Previously, Hughes had proposed that the reparations problem be turned over to a committee of experts to devise a workable and equitable solution. He now revived the proposal and applied intense pressure. With Hughes's backing, Lamont withheld a desperately needed loan until France agreed to liquidate the occupation and refer the issue to an independent commission. After nearly a year of crisis and with Europe on the verge of chaos, the two countries accepted Hughes's proposal.

The United States played a central role in resolving the tangle. The administration named Chicago banker Charles G. Dawes and Owen D. Young, a General Electric executive with close ties to the J. P. Morgan banking firm, to head its group of experts, closely monitored their work, and stepped in on occasion to mediate disputes. It was no easy task. A settlement had to be hard enough on Germany to satisfy Allied and particularly French concerns while soft enough to be acceptable to Berlin. The fast-talking and indefatigable Dawes—an "astounding human dynamo," one colleague called him—also had close connections to France from his wartime service in Paris and helped bring the French along.⁵⁸ Young devised a flexible and ingenious plan, ironically one that would bear Dawes's name, that became a means not only to solve the intractable reparations problem but also to promote German recovery. The plan scaled back the reparations figure and started with small payments that increased as the German economy improved. By requiring recipients to buy German products, it also helped kick-start German recovery. Germany was provided a loan of $200 million and required to undertake reforms U.S. businessmen considered essential. Responsibility for payment was assigned to an American, S. Parker Gilbert, who in the process gained substantial influence over German finances. Hoover exulted in the "disinterested statesmanship" carried out by private American citizens and labeled the Dawes Plan a "peace mission without parallel in international history."⁵⁹ Hughes strong-armed the Germans and still-recalcitrant French to go along. "Here is the American policy," he flatly informed French premier Raymond Poincaré. "If you turn this down, America is through."⁶⁰ The deal was settled at a conference in London in the summer of 1924. Despite the reservations of some bankers, the American portion of the loan was snapped up in minutes. "How magnificent!" Lamont crowed.⁶¹

The United States also used its economic power to further the success of the October 1925 Locarno Conference, a political complement to the Dawes Plan. Recognizing that the reintegration of Germany into Europe through the reparations deal left France at a strategic and economic disadvantage, the United States sought to ease French security concerns. When negotiations for a European security pact stalled in the spring of 1925, Houghton, newly appointed U.S. ambassador to Great Britain, stepped in. Increasingly alarmed with the political instability in Germany and the Coolidge administration's timidity in addressing European issues, the ambassador, boldly acting on his own, issued during a May 1925 speech in London what came to be called the "peace ultimatum." If the Europeans did not move decisively, he warned, the United States might hold back further loans—American bankers were not interested in "speculative advances." Coolidge in time publicly backed his ambassador's position. Houghton played an important role in preliminary discussions leading to the conference. United States involvement thus abetted, if it did not determine, the agreements subsequently reached at Locarno. France, Belgium, and Germany consented to respect the boundaries drawn at Versailles, keep the Rhineland demilitarized, and refrain from attacking each other. Britain and Italy signed as guarantors. Germany also agreed to arbitrate with the new states of Eastern Europe its eastern boundaries. Locarno seemed to resolve major issues left over from Versailles and ease French security concerns at least a bit, providing some hope for European recovery and stability.62

The United States also secured war debt settlements with the Allies, but not without provoking ill will across the Atlantic. The ever cautious Coolidge administration walked a very fine line between its genuine concern for European recovery and fear of a taxpayer revolt. Continuing to skirt the terms set down by Congress in 1922, it established the principle of settling on the basis of a nation's capacity to pay and concluded a series of agreements more generous than that with the British. Seeking to woo Italian American voters and lure Italy from a united front with France, the administration negotiated with Benito Mussolini's government an especially generous settlement, a low interest rate canceling more than 75 percent of the debt.

France was a different matter altogether. Several members of the French parliament at one point proposed that the United States be given French Indochina in exchange for the debts, an ironic suggestion in terms of later history but a nonstarter on both sides. The French insisted more adamantly than other Allies that their enormous sacrifices of blood and treasure entitled them to full cancellation. Economic and political chaos in France made it difficult even to initiate negotiations. A U.S. embargo on loans ultimately had the intended effect of forcing France to the bargaining table. French negotiators agreed to a settlement that would have canceled 52.8 percent of the debt. But French war veterans marched in protest, and angry citizens attacked American tourists—after they had completed their purchases, humorist Will Rogers sarcastically observed. Determined to stabilize the French economy without outside help and "to free ourselves of the yoke of Anglo-Saxon finance," Poincaré's government refused an American loan and began quietly paying off the debts without ratifying the agreement. More than any other issue, war debts poisoned U.S. postwar relations with the Allies. Proud Europeans deeply resented their new and humiliating dependence on the United States; even some Italians complained that the United States was trying to "enslave a whole continent." Viewing the debt settlements as generous, Americans took umbrage at French labeling of Uncle Sam as "Uncle Shylock."63

Despite these recriminations, the Republicans appeared to have accomplished much by 1926. The United States for the first time took the lead in addressing Europe's problems. It used its considerable economic leverage to settle the reparations issue, arrange debt agreements, and push the Europeans to stabilize their currencies on the basis of the gold standard. The policies seemed to have immediate, positive results. Near rock bottom just months before, the French and German economies rebounded. European production exceeded prewar levels. Exports increased sharply. As recovery continued, Americans reasoned, it would be easier to liquidate the debts. The reintegration of Germany into the European economy and the return of prosperity would provide a solid basis for prosperity, stability, and peace. All this had been accomplished, the Republicans could congratulate themselves, without political commitments or sacrifices on the part of the U.S. taxpayer.

Such assessments turned out to be premature, of course. Republican successes contained fundamental flaws.⁶⁴ Americans exaggerated their own role in European recovery and underestimated the additional sacrifices they had imposed on already burdened Europeans. They failed to see the limitations of their policies and the need for continued adjustments or to appreciate the full extent of the war's impact on Europe or the real depth of resentments it stirred. They did not see that the Dawes Plan had advantaged Germany at France's expense and that Locarno was at best an imperfect palliative. The economic arrangements relied too heavily on U.S. loans, whose continued availability in turn depended on an unreliable source. It seems obvious in retrospect that a truly successful American policy would have required lower tariffs, cancellation of war debts, and a more restrictive policy on loans. This was by no means obvious at the time, however, and if it had been it would still have been politically very difficult to obtain.

The United States played a much less significant role in addressing the vast problems of postwar reconstruction and nation-building in Eastern and Central Europe. Wilson had helped create the newly independent states there, of course, and his rhetoric and the vital wartime assistance provided by the American Relief Administration raised expectations on both sides that could not be met. Americans hoped that the new states would follow a democratic model and become outlets for their investment capital and markets for their products. Eastern Europeans looked upon the United States mainly as "the nation with money" and hoped for protection and assistance without interference.65 In reality, U.S. relations with Eastern Europe turned out to be a peripheral concern to each.⁶⁶ The United States saw even less reason to get politically involved there than in Western Europe. It scrupulously avoided the numerous, complex, and volatile issues that divided peoples and governments against each other. Trade and investment developed to only modest proportions. Czechoslovakia's relatively democratic government and stable economy made it a good risk, and it attracted $85 million in U.S. investments, second only to Germany in the region. Ford, General Motors, IBM, and National Cash Register found major markets for their products.⁶⁷ In contrast, the peoples who made up Yugoslavia were wary of foreign economic penetration, long a source of oppression, and their numerous, arcane rules governing trade—"the granite wall of stupid Serb unreason," one U.S. minister contemptuously labeled them—and their chaotic political and economic situation discouraged investors. The United States did negotiate with Yugoslavia a war debts settlement second only to its arrangement with Italy in terms of generosity. United States banks provided modest loans. Socony built an oil refinery in Croatia, Alcoa opened mines, and American Telephone and Telegraph and International Telephone and Telegraph developed communications networks. But the most that can be concluded is that the United States played a role in the Yugoslavian economy.68

Poland was a special case and demonstrates quite clearly the limitations of U.S. policies in the 1920s. A large and vocal bloc of Polish American voters and Poland's extremely important and vulnerable geographical position between the jaws of what State Department official William Castle called the "nutcracker" of Russia and Germany made it an issue Americans could not ignore. Yet even as a problem, Poland was not taken that seriously. "Warsaw is so damned far away," the journalist Walter Lippmann observed.⁶⁹ Poland's hopes for U.S. security guarantees against its larger neighbors and for generous U.S. loans were not realized. The Harding and Coolidge administrations carefully avoided entanglement in its ongoing and potentially explosive border dispute with Germany. They hoped through expanded loans, investment, and trade to encourage in Poland a stability that in turn would help stabilize Eastern Europe. Yet while keeping a close eye on events, they relied on the private sector to develop and implement programs. With the "covert backing" of the Coolidge administration, Edwin Kemmerer, who had served as a "money doctor" for Central American nations, drew up an economic reform plan for Poland including the gold standard, a balanced budget, and stabilization loans. Subsequently, U.S. bankers granted Poland a credit of $20 million and a loan of $72 million. The Chicago banker Charles Dewey went to Warsaw as financial adviser. The results were meager. Dewey's performance made palpably clear the shortcomings of unofficial "experts." He knew little of Poland and less of international finance. Employing, in his own words, the booster "methods of the President of the Kiwanis Club," he waxed enthusiastic about Poland and developed a series of grandiose and totally unrealizable schemes for economic development, provoking his colleagues to dismiss him as "Pan Deweski." Poles, like other Eastern Europeans, looked suspiciously on foreign capital; Americans hesitated to invest in a nation seemingly so backward and vulnerable. In any event, the loans that were supposed to represent a beginning marked the end as U.S. capital shifted after 1927 to domestic markets and then dried up during the depression.⁷⁰

In dealing with Bolshevik Russia, the Republicans initiated a debate that would be repeated many times over in the twentieth century with mixed and inconclusive results: Is it better to try to change an obnoxious government by isolating it politically or "engaging" it economically? With Russia in the 1920s, the United States tried both. Drawing on precedents set with Huerta's Mexico, Wilson in 1917 had refused to recognize the revolutionary government. When Lenin took Russia out of the war in 1918, a policy of expediency hardened into dogma. The Bolshevik government had taken power by force, U.S. officials insisted, and did not represent the Russian people. It had refused to carry out its international obligations, especially the repayment of debts incurred by predecessor regimes. It was committed to overthrowing other governments. Americans hoped that non-recognition and the Allied military interventions would topple the hated Bolshevik government or cause it to collapse under its own weight.71

The regime did not collapse, of course—if anything, the Allied interventions helped solidify its hold on power—but the Republicans did not deviate from the position Wilson had staked out. Because it emphatically rejected their most fundamental tenets such as religion and private property, Communism was anathema to many Americans—"the most hideous and monstrous thing that the human mind has ever conceived," Robert Lansing averred, a "murderous tyranny," according to Hoover.⁷² Antipathy to Communism remained a potent force throughout the 1920s. It was regularly fed by such bedrock institutions as the Roman Catholic Church, labor unions, and patriotic organizations such as the Daughters of the American Revolution. Russia's clumsy and generally ineffectual efforts to subvert other governments through the Communist International, or Comintern, reinforced American fears. A State Department already fervently anti-Communist closely monitored Comintern activities through its listening post in Riga, Latvia. The Comintern succeeded only in remote and insignificant Outer Mongolia, but its subversive activities in Europe and especially Latin America aroused exaggerated U.S. fears and provided a continued reason for non-recognition. Even in 1931, when the United States was the only major power still withholding recognition and the Japanese takeover of Manchuria suddenly brought a convergence of Soviet and American interests, the Hoover administration refused to reconsider the policy.⁷³

While seeking to isolate Russia through non-recognition, the United States also engaged it economically. Lenin and his successor, Joseph Stalin, recognized their desperate need for Western capital and technology and assumed that the United States, to meet its pressing needs for foreign markets, would provide it. Americans hoped that exposing the Russian people and perhaps even some of its leaders to the wonders of capitalism would persuade them to reject Communism. The result, ironically, was to assist in the preservation of the despised Soviet state.

Americans responded with characteristic generosity to a devastating Russian famine in 1921–22. The Communist regime hesitated to ask for outside assistance, but the need was desperate, and it hoped that famine relief might somehow lead to recognition and trade. Working through the American Relief Administration (ARA), a private agency with close ties to Washington, Hoover with typical energy organized a massive emergency relief program. In the war years, food had been openly used as a political weapon; Hoover this time explicitly disavowed political activities. Nevertheless, with the Soviet regime seemingly on the ropes, he hoped that this most vivid display of the contrast between the bounty of capitalism and the deprivation of Communism would cause Russians to reject a system imposed on them. For most of the nearly four hundred ARA workers in what they called Bololand (for Bolshevik), the only goal was to feed the hungry, especially the children. Encountering horrific conditions of hunger, disease, and death, even stories of cannibalism, they employed eighteen thousand Russians and established seventeen thousand relief stations from the Ukraine to Siberia. During its two years in operation, ARA, working with other non-governmental organizations such as the American Red Cross, provided more than half a million tons of food, clothing, and medicine at a cost of some $50 million in U.S. funds and an additional $11 million provided through Soviet shipments of gold to the United States. The ARA may have saved as many as ten million people from starvation. It earned the gratitude of many Russians, and shouts of "Arah" were often heard as its trucks went by. Disappointed that the relief effort did not lead to recognition, the Soviet government in time attacked ARA for dumping surplus food and for espionage and counterrevolutionary activities. In fact, as the government must have recognized but could not admit, America's efforts to undermine its authority through goodwill helped it survive a most critical period in its history.74

Despite the absence of formal trade ties, American businesses, sometimes with Washington's blessings, also cut numerous deals that helped promote economic development in Stalin's Russia. Lenin and Stalin recognized their desperate need for U.S. capital, technology, and equipment and sought to limit the control of foreign capitalists by granting short-term concessions. For the Republican administrations, such contacts presented a dilemma. They did not want to help a hated regime. On the other hand, they were deeply committed to the expansion of American trade and investments and reluctant to interfere with the operations of private business. Like GE's Young, they could also rationalize that U.S. aid might give the Communists "the very gun with which they will shoot themselves."75

In fact, because of Soviet restrictions and controls, especially limits on profits, American capitalists generally fared poorly in Russia. International Harvester lost over $41 million during the period of its concession. W. Averell Harriman, son of the railroad magnate and a future ambassador to the Soviet Union, ran an unprofitable manganese operation in the Caucasus. A major exception was the legendary Armand Hammer. In the richest of ironies, Lenin himself converted the eccentric physician and son of a Russian immigrant into an "entrepreneur who milked capital for his future businesses from the communist state." Hammer ran concessions in asbestos production and pencil manufacturing. The Soviets permitted him to take away his profits by buying and taking home priceless Russian works of art.⁷⁶

Stalin relied heavily on American technical expertise in his First Five-Year Plan, adopted in 1928. More than two thousand U.S. engineers helped build automobile and tractor plants, construct steel mills, and develop mining operations. General Electric constructed a massive dam on the Dnieper. Arch-capitalist Henry Ford provided a foundation for the Russian automobile industry by building a huge automobile plant in Novgorod and selling the Russians two thousand vehicles. Despite various impediments, trade expanded significantly. The United States provided about 25 percent of total Soviet imports, including such important items as cotton, tractors, and industrial and agricultural equipment. Overall, the import of American expertise, investment capital, and equipment helped to stabilize economic and thereby political conditions in the Soviet Union during a critical period.⁷⁷

In East Asia, the Republicans pursued similar goals with much the same methods and fewer results. Hughes hoped to create through the Washington treaties a firm basis for stability in the region. The agreements on naval armaments and the Pacific islands had eased Japanese-American tensions, and the reaffirmation of the Open Door principles appeared to establish great-power agreement in respect of Chinese sovereignty. "We are seeking to establish a Pax Americana maintained not by arms but by mutual respect and good will and the tranquilizing process of reason," the secretary proclaimed in 1923.78 Typical of the era, dollars were to abet "the tranquilizing process of reason." American officials hoped that trade and loans would promote peace in an often turbulent area.

Timely and generous U.S. aid for the victims of a horrible 1923 earthquake in Japan helped build on the spirit of Japanese-American cooperation evinced at the Washington Conference. The disaster killed as many as two hundred thousand Japanese, left as many as two million homeless, and threatened countless others with starvation and disease. Americans provided $11.6 million in relief, and the Asiatic Fleet and the U.S. Army in the Philippines helped deliver and distribute emergency aid. Americans naturally hoped that their generosity would improve relations with Japan, often strained in the twentieth century. While some Tokyo officials sought to obscure the extent and importance of foreign aid, many Japanese responded in kind. The Americans have behaved "like the Americans of old," a Tokyo newspaper gratefully exclaimed. "They have been efficient, sentimental and generous in giving and forgetful of everything else in their zeal to help helpless sufferers."⁷⁹

Gratitude is fleeting in international relations as in ordinary life, of course, and the goodwill earned by earthquake relief was more than destroyed by new and restrictive congressional immigration legislation the following year. The product of decades of agitation among old-stock Americans against the flood of "new" immigrants from Eastern and Southern Europe, West Coast hostility toward Orientals, and the especially virulent racism of the 1920s, the legislation created quotas sharply limiting the number of European immigrants. It took specific aim at the Japanese. Partly as the result of a well-intended but extremely unfortunate diplomatic gaffe, an amendment excluded Japanese immigrants altogether. Recognizing the seriousness of the exclusion proposal, U.S. officials encouraged the Japanese to protest. Tokyo dutifully warned of "grave consequences" should the amendment pass. Ironically, leaders of the exclusionist bloc in Congress used the alleged Japanese "threat" to secure overwhelming support for their amendment. Hughes properly lamented that in a few minutes Congress had "spoiled the work of years and done a lasting injury." The legislation unilaterally abrogated Roosevelt's Gentleman's Agreement of 1907. It provoked an outburst of anti-Americanism in Japan. Protestors organized boycotts and tore down the flag at the U.S. embassy. One militant committed suicide. The misguided legislation shook Japan's policy of cooperation with the West to its foundation, giving ammunition to those who preferred a unilateral approach and encouraging a shift toward expansion on the East Asian mainland.80

Private economic diplomacy, a major instrument of Republican policy, also failed to promote U.S. goals in East Asia. In most cases, the bankers who were supposed to be the agents of Hughes's policy behaved like bankers rather than the diplomats Washington wanted them to be. The State Department hoped to use loans to promote economic development in China, thereby helping to protect its sovereignty as well as expand U.S. trade. But the major banking houses already had millions of dollars of unpaid Chinese loans on their books. Troubled by China's weakness and internal divisions, they naturally hesitated to put more money at risk. In contrast, State Department efforts to limit loans that Japan might use to expand its influence in Manchuria, Mongolia, and North China generally failed. On one occasion, when the Japanese protested, the State Department withdrew its objections. Bankers like Lamont found Japanese-controlled areas more stable, therefore a better risk, and devised means to "launder" funds to get around State Department objections. American loans played a significant role in Japan's quiet expansion on the Asian mainland in the 1920s.⁸¹

The major challenge to Hughes' design for peace and order in East Asia was Chinese nationalism. After the fall of Yüan Shih-k'ai's government in 1916, China descended into chaos and civil war. A nominal government at Peking controlled little of the country; local warlords prevailed, fighting among themselves, in most regions. The one thing the various factions agreed upon was hatred of the foreigner. In the mid-1920s, Sun Yat-sen's Kuomintang Party sought to establish itself as the leader of China. It gained vital support from the Soviet Union, which sacrificed some of its concessions under the unequal treaties and provided military and political assistance. Using nationalism to rally the people to its banner, the Kuomintang set off a period of nationalist agitation. A May 1925 incident in Shanghai led to an explosion of anti-imperialism across the country with attacks on foreign interests and demands for the removal of foreign military forces and ending the unequal treaties. A year later, when the Kuomintang under its new leader Chiang Kai-shek mounted its Northern Expedition and occupied Nanking, there were further attacks on foreigners and foreign property. Six foreigners were killed, including one American. A youthful Pearl Buck, later to be the interpreter of China to millions of Americans, escaped by hiding in a hut. "You Americans have drunk our blood for years and become rich," one protestor screamed.82 British and U.S. gunboats eventually quelled the violence, but there was talk of war.

The United States at first responded hesitantly to these events. China was far away and by no means an area of major concern. Events there were impossibly confusing. The Coolidge administration initially followed the advice of diplomats who argued that concessions would only produce more demands and insisted that "order" must be restored before negotiations could begin. Americans were slow to comprehend the dynamic force of Chinese nationalism and the legitimacy of its demands. They feared Communist influence in the Kuomintang. They took a firmer position in response to the outburst at Nanking, joining the British and Japanese in demanding apologies, reparations, and punishment for the perpetrators.⁸³

United States policy gradually shifted toward accommodation. In 1927, Chiang turned on his Communist allies, eliminating those who did not flee, moved on Beijing, and in a classic maneuver to play the barbarians against each other openly sought U.S. support. American officials had little faith in Chiang, whom they considered at best a warlord, at worst a militarist and potential dictator. They had no illusions that his group actually controlled the country. They were confounded by the turmoil. On the other hand, Kellogg began to develop a vague sense of the strength of Chinese nationalism and to conclude that the unequal treaties were outdated. Gunboat diplomacy was out of fashion in the 1920s; there was little inclination to uphold the treaties by force. "It is impossible to make war on four hundred million people," Kellogg wisely observed, "and in my judgment you cannot longer parcel out China in concessions or by spheres of commercial influence by armed force." Hoping to win over the Chinese, the United States was the first power to extend tariff autonomy to China, hedging its bets by doing so on a most-favored-nation basis, which delayed actual implementation until 1933.84 With the confusion and violence, no one considered terminating extraterritoriality. Under Kellogg, the United States broke with the powers, becoming the first nation to abandon even part of the unequal treaties.

IV

The Republicans significantly altered the means, if not the ends, of U.S. Latin American policies in the 1920s, shifting away from the gunboat diplomacy and military interventionism that had marked the previous twenty years. The elimination of any immediate foreign threat to the hemisphere as a result of World War I eased concerns about the security of the region. The excesses of Wilsonian interventionism had produced a backlash at home, raising demands for the liquidation of military occupations and abstention from future interventions. Muckraking journalists produced damning exposes of the torture and murder carried out by occupation forces in Haiti and the Dominican Republic. Throughout the 1920s, moreover, the so-called Peace Progressives in Congress, led by the indomitable Borah, insisted that the United States practice what it preached in terms of self-determination. The tone was set in the campaign of 1920. Making a case for entry into the League, Democratic vice presidential candidate Franklin D. Roosevelt confidently reassured the electorate that the United States could depend on the votes of the Central American republics. He then planted foot firmly in mouth by gratuitously boasting that he personally had written the constitution of Haiti. Harding seized the opening. Seeking to discredit his opponents and win African American votes, he condemned the "rape" of the Dominican Republic and Haiti and promised that his administration would not "cover with a veil of secrecy repeated acts of unwarranted interference in domestic affairs of the little republics of the Western Hemisphere."⁸⁵

As in other areas, business interests had precedence in Latin America in the 1920s, providing another incentive for the velvet glove. Europe's economic exhaustion left the hemisphere open for U.S. economic expansion. In the aftermath of war, capital poured into Latin America in unprecedented quantities, and trade soared. Americans sought oil in Venezuela and Colombia to meet the needs of the automobile society, exploited critical raw materials, and took over utilities and banking. Gunboat diplomacy had given the United States a bad name in the hemisphere. It seemed important for the sake of business to repent for past sins and refrain from new ones.

At the same time, the Republicans could not go too far. Protection of property and investments more than ever required stable societies and responsible governments that would respect foreign business interests. Defense of the canal still demanded order in a notably volatile region. U.S officials—especially the "experts" in the State Department's Latin American division—still looked upon their southern neighbors as childlike and backward, hopelessly prone to violence, and inherently incapable of self-government. The Russian and Mexican revolutions aroused an exaggerated fear of Bolshevik influence in the hemisphere. Thus while scrapping direct military intervention, the Republicans sought new means of control to balance the need for a lighter touch with the continued requirement of order and protection of property rights.

A familiar device was to work through private financial agents, using loans to force reforms that would stabilize Latin economies and politics and in turn promote U.S. trade and investment. The first such arrangement, worked out by the peripatetic Kemmerer with Bolivia, provided for the direct involvement of the State Department and U.S. bankers and provoked protest at home and in Latin America. The Republicans then shifted to a less intrusive and blatantly exploitative model where Latin American countries would voluntarily seek help from private financial advisers. As applied first in Colombia and later in Chile, Bolivia, and Ecuador, the new arrangement called for bankers to lend money to Latin American governments that sought the help of a "private" financial adviser. Kemmerer would then draw up plans for financial and currency reform. Members of a nominally private mission would remain to supervise the program after he had gone on to the next stop. Thus was created the new profession of international financial advisers, a quasi-colonial substitute for traditional relationships. "Kemmerized" countries appeared to do well in the 1920s. They drew sizeable U.S. investments, and the State Department's hand was much less visible. On the other hand, these arrangements promoted dependency on U.S. foreign trade and capital and led to overborrowing, with disastrous long-term economic results, provoking a nationalist backlash in the very different milieu of the 1930s.86

The United States also sought to win friends by conciliating the anger and wounded pride of its southern neighbors. Americans were eager to move into Colombian oil fields. With the old Rough Rider now snugly in the grave, the Republicans could do what they had kept Wilson from doing. Leaving out the apology that had helped defeat Wilson's 1913 treaty with Colombia, they approved a new pact providing "heart balm" of $25 million for the theft of Panama. Hughes went out of his way to show respect for his Latin counterparts. He sought to resurrect the spirit of Pan-Americanism first enunciated by Henry Clay and promoted by James G. Blaine, speaking eloquently of a "common sentiment that makes us neighbors in spirit." With varying degrees of success, he tried to assist in the resolution of border disputes that for years had plagued relations among the South American nations themselves. Although not a glad-hander by nature, he met with Latin American diplomats in his office, dined with them, and sought to make them feel like representatives of important nations.87

He also initiated a change in the interpretation of the Monroe Doctrine of considerable long-range significance. Without entirely disavowing the right of U.S. intervention, he set out in the doctrine's centennial year to separate the two. In a Rio de Janeiro speech celebrating one hundred years of Brazilian independence, he declared that we "assert no rights for ourselves that we do not accord to others." In several 1923 speeches, he limited intervention to the region near the canal and vowed it would be used only as a "last resort." "I utterly disclaim as unwarranted . . . ," he affirmed, "a claim on our part to supervise the affairs of our sister republics, to assert an overlordship, to consider the spread of our authority beyond our own domain as the aim of our policy, and to make our power the test of right in this hemisphere."⁸⁸

As a major part of their new approach, Harding and Hughes began to liquidate the Central American protectorates created by Roosevelt, Taft, and Wilson. Certain that blacks were not capable of self-government and that a premature withdrawal would lead to barbarism, even cannibalism, the administration stopped short of pulling out of Haiti. Ignoring Borah's protests that the Haitians "may not be capable of self-government as we understand it, but it is their government," they contented themselves with reorganizing the occupation government and seeking to make it more responsible. They did, however, terminate military occupation of the Dominican Republic. The process had actually begun under Wilson but had run afoul of conflicts over the terms of withdrawal. Hughes unilaterally broke the deadlock. Troops were withdrawn in 1924. The United States maintained substantial leverage through its continued control of the customs house. Americans congratulated themselves on the improvements brought to the Dominican polity; normality returned soon after the marines left. The occupation had little positive impact.89

In the Dominican Republic, the United States stumbled onto a device that helped solve the problem of how to maintain stability without direct intervention. In the last stages of the occupation, U.S. officials created a domestic constabulary, the Guardia Nacional, to promote internal order. The aim was to establish an apolitical force that would provide security while the electoral process worked. In this way, Americans applied their own values and institutions to a very different political culture with quite different results. The Guardia Nacional quickly became politicized and in time assumed dominant power. One of its early leaders, the notorious Rafael Trujillo, used his position with the organization to assume absolute political control. For the next thirty years, he ran the country in the most brutal and authoritarian fashion while carefully respecting U.S. interests. "He may be a sonofabitch," Franklin Roosevelt is supposed to have remarked, "but at least he's our sonofabitch." The Dominican model enabled the United States to reconcile its conflicting interests in the Caribbean and Central America.⁹⁰

The Republicans found extrication from Nicaragua much more difficult. They brought the marines home in August 1925, but Nicaragua immediately erupted in civil war. The Coolidge administration faced a dilemma. It did not want to reimpose a military government, but neither could it permit a nation so close to the canal to descend into anarchy. Coolidge and Kellogg saw Nicaragua as a "test case" for U.S. control in a vital region. State Department officials warned that by dabbling in Nicaragua, Mexico, acting at the instance of the Soviet Union, was seeking to "drive a 'hostile wedge' between the United States and the Panama Canal." In August 1926, the administration sent the marines back into Nicaragua. In April 1927, Coolidge dispatched New Yorker Henry Stimson to Nicaragua with instructions to "clean up that mess."⁹¹

Stimson cleaned up only part of it. Viewing free elections as the solution to Nicaragua's political woes, he persuaded the combatants to lay down their arms and agree to U.S.-supervised elections. Under the able direction of Brig. Gen. Frank McCoy, the elections held in 1928 and 1930 were widely viewed as fair, but they did not bring peace to Nicaragua. The self-appointed "general" César Augusto Sandino rebelled against the U.S.-imposed settlement, fled to the rugged mountains of northwest Nicaragua, and for five years waged a brutal and effective guerrilla war against the marines, making himself a hero to anti-American Nicaraguans, other Latin Americans, and anti-imperialists in the United States. The marines pursued the guerrillas relentlessly and bombed villages suspected of harboring them, but they could not capture the elusive Sandino.92

Ultimately, a Dominican-type solution emerged in Nicaragua. Reintervention and the costly, nasty, and unsuccessful war against Sandino provoked widespread and noisy agitation in Congress and among activist citizens' groups to get out of Nicaragua once and for all, and the Peace Progressives managed to secure a cutoff of funds for further operations. Having trained a Guardia Nacional to maintain order, the marines left in early 1933 with Sandino still at large. Guardia leader Anastasio Somoza, who spoke fluent English and impressed Stimson as "very frank, friendly [and] likable," lured Sandino to Managua and arranged to have him gunned him down on an airstrip. Within a short time and despite rules designed to prevent a military takeover, Somoza assumed control of the presidency and then the country, establishing a brutal dictatorship through which he and his family would rule with an iron hand and U.S. complicity until 1979.⁹³

The Coolidge administration's peaceful resolution of a mid-1920s dispute with Mexico also demonstrated how the United States in a very different way could employ new methods to achieve old aims. Under President Venustiano Carranza and his successors, Álvaro Obregón and Plutarco Calles, the Mexican Revolution turned sharply to the left after 1917. The decidedly nationalist constitution of that year sought to regain for Mexico the land and natural resources generously dispensed to foreigners by Porfirio Díaz. Article 27 in particular specified that land and rights to subsoil deposits belonged to the Mexican people, threatening the vast holdings of Americans who owned more than 40 percent of Mexico's land and 60 percent of its oil. The constitution also included a progressive statement on labor policy that alarmed American businessmen.94

These measures provoked a conflict that would fester for more than a decade and once more spark talk of war. Oilmen naturally feared the threat to their interests and insisted that concessions to Mexico might provoke attacks on U.S. property throughout the hemisphere. Harding and Hughes at first backed the oilmen, withholding recognition from Obregón, who took power in May 1920 after the assassination of Carranza. An empty sleeve gave graphic demonstration to Obregón's revolutionary credentials, but he also desperately needed U.S. recognition, money, and arms to stabilize his regime. He thus offered private assurances not to rigorously enforce Article 27, but Washington held out for a formal treaty. Eager to end the dispute so that Mexico could repay its substantial debts and contract new loans, banker Lamont in 1923 helped broker a deal, the so-called Bucarelli Agreement, excluding from the provisions of Article 27 those lands on which some "positive acts" had been taken toward development. Overriding Hughes on one of only several occasions, Harding insisted on acceptance, clearing the way for recognition and a loan. The United States displayed its gratitude by providing arms to Obregón and lending him aircraft and pilots to bomb rebel troops.⁹⁵

Conflict erupted again in 1925 after Calles, a former teacher, shopkeeper, and bartender, known as "the Turk," replaced Obregon. The colorful Calles's base was in the trade unions, and he too sought to walk a high and thin tightrope between his more radical supporters and the United States. Calles promoted a new law limiting to fifty years possession of oil lands owned by foreigners prior to 1917. To display his nationalist credentials and distract attention from Mexico's economic problems, he also launched an attack on the powerful Catholic Church, causing a strike by Mexican clerics and a brutal civil war with the so-called Cristeros that would last three years, take seventy thousand lives, and inflict huge economic costs on Mexico.⁹⁶

Calles's initiatives provoked a resumption of conflict with the United States. Oilmen once again screamed in outrage. Catholic organizations such as the Knights of Columbus protested the attack on the church. Ambassador James Sheffield, a worthy successor to the numerous other ugly Americans sent to Mexico, vigorously backed the oil companies. He privately denounced Calles as a "murderer and assassin." He described Mexicans as greedy and ignorant because of their Indian blood. "Calomel [a nasty-tasting purgative] is more effective than pink lemonade when you have ills to cure," he advised the State Department. Sharing Sheffield's alarm at the specter of a "Bolshevik Mexico," Kellogg issued an ill-considered statement that Mexico was on trial before all the world. The situation was worsened by U.S. fears that Mexico was stirring up perennially embattled Nicaragua, thus challenging its control of the region. Preparing the way for possible military intervention, Kellogg ominously warned the Senate Foreign Relations Committee that Russian agents were active in Mexico. Calles meanwhile threatened to "light up the sky all the way to New Orleans" by setting fire to Mexico's oil wells.97

Once again, cooler heads prevailed, this time fortunately before the United States dispatched troops across the border. The talk of war was probably more ritualistic than earnest. In fact, neither side wanted conflict. The oilmen's influence was seriously compromised because of their involvement in the Teapot Dome scandal that had rocked the Harding administration. Bankers like Lamont and peace groups urged Coolidge to negotiate. The Senate dismissed Kellogg's ranting about Bolshevism as nonsense and called for arbitration.

Coolidge thus opted for negotiation. In September 1927, he and Calles opened the first long-distance connection between Washington and Mexico City, conducting a telephone "summit" that immediately eased tensions. Coolidge made an especially inspired choice by replacing Sheffield with his old college roommate, now a J. P. Morgan Company partner, Dwight Morrow. Morrow turned out to be a true rarity in the long and troubled history of Mexican-American relations, setting out above all to like the people he was assigned to deal with. According to French foreign minister Aristide Briand, Morrow was as "shrewd as a pocketful of mice." Eschewing calomel, the newly appointed diplomat adopted a shocking "pink lemonade" approach toward an old adversary.⁹⁸ He applauded Mexican food and culture and ventured into the marketplace to meet ordinary people. His clumsy efforts to speak Spanish won widespread praise. He changed the sign to read "United States Embassy" instead of "American Embassy," a small measure of enormous symbolic significance. To demonstrate his trust, he met with Calles with only a Mexican interpreter. He spoke to Washington over the telephone in full knowledge that the line was tapped. To the delight of an entire nation, he persuaded his future son-in-law, the world hero Charles Lindbergh, to fly directly from Washington to Mexico City, two-thirds the distance from New York to Paris, and the popular "ambassador of the air" received a wildly enthusiastic reception. Morrow eventually persuaded Calles to return to the essence of the Bucarelli Agreement. The oil companies were not appeased, but the ambassador's "Ham and Eggs" diplomacy had saved them from the more serious threat of seizure of their assets without compensation. Morrow also brought in a U.S. Catholic priest to mediate between Calles and the Mexican church, helping settle the Cristero revolt and ease Calles's domestic problems. It was the last time serious consideration was given to U.S. military intervention in Mexico. Without giving up anything, Morrow had shown what one person with a conciliatory approach could accomplish. The settlement was much more important to Calles than to Coolidge. Well might some Mexicans admonish: "God save us from friendship with the United States."99

The high-water mark of the Republican era came in August 1928 with the signing of the Kellogg-Briand Pact outlawing war as an instrument of national policy. This much maligned and frequently ridiculed agreement had a curious birth in France's unrelenting efforts to protect its security against a future German attack. Seeking to entice the United States into the French security system, at least by indirection, Foreign Minister Briand shrewdly capitalized on the surge of goodwill generated by Lind-bergh's trans-Atlantic flight to propose through a quite extraordinary public letter to the American people a bilateral treaty outlawing war. Such a treaty, he reasoned, would tie the United States closely to France and perhaps serve as a deterrent to Germany. It would create a sort of negative alliance that, in the event of war with Germany, would permit France to exploit U.S. neutrality without fear of war.¹⁰⁰

Furious with Briand's decidedly undiplomatic intrusion in U.S. politics, Coolidge and Kellogg would have preferred to ignore the overture. But in the best spirit of the 1920s, the peace movement organized a massive public relations campaign in support of outlawing war. Seeing little choice but to give in, Coolidge and Kellogg, with equal cleverness, oneupped Briand by proposing a multilateral agreement. Hoist on his own petard, the foreign minister in turn had no choice but to go along, and a suddenly enthusiastic Kellogg vigorously pushed the agreement at home and abroad. Fittingly, after months of sometimes difficult negotiations, fifteen nations, including all the European great powers, signed an agreement renouncing war as an instrument of national policy. The U.S. Senate approved the treaty with but one dissenting vote. Few believed it would actually eliminate war, but many did hope that an important step had been taken toward promoting peace. Americans were especially pleased that their nation had taken the lead in this most worthy of causes. Conspicuously lacking in enforcement provisions, the Pact of Paris perfectly fitted the Republican approach of involvement without commitment, most often cited as its major flaw. A more important omission may have been the lack of provision for peaceful change.101

V

In March 1929, Herbert Hoover and Secretary of State Henry Stimson assumed responsibility for carrying forward the policies initiated by Harding and Hughes. Taking office at a time of optimism, they found their task complicated by their own uneasy working relationship and very soon by the economic crisis that began with a stock market crash eight months after their ascension to power. Out of necessity, Hoover and Stimson involved the United States in the increasingly serious European problems to an even greater degree than their Republican predecessors. They promoted with new resolve the seemingly tried and true solutions of the era. Such efforts proved insufficient. By 1931, the world was deeply mired in economic crisis. In Europe and East Asia, economic dislocation provoked political and military challenges not simply to the regional status quo but to the entire postwar structure of peace.

Hoover and Stimson appeared ideally qualified to sustain the momentum generated by their predecessors, but this extraordinarily experienced and unusually talented foreign policy "team" proved much less than the sum of its parts. Hoover had been a strong internationalist in the early 1920s, but his experience as secretary of commerce appears to have made him cautious.¹⁰² Both men lacked political experience and a zest for politics—Hoover once scorned politicians as "reptiles." An engineer by training and skilled manager, Hoover conspicuously lacked leadership skills and was prone to analyze problems to death. He was also a pessimist, and working through an issue with him, Stimson once complained, was like "sitting in a bath of ink." An elitist through and through, the very embodiment of the eastern foreign policy "establishment" of Roosevelt and Root, Stimson, on the other hand, believed in the essentiality of strong executive leadership and, like his mentors, in the utility of force in diplomacy. He reveled in the nickname "Colonel" earned through war service and disparaged Hoover's "Quaker nature" and caution. When in doubt, he insisted, you "march toward the guns."103 The two men respected each other and shared similar views on most major issues, but sharp differences in personality, style, and philosophy produced an awkward working relationship.

The economic crisis that began in 1929 would dominate and in time destroy the Hoover presidency. The full force of the Great Depression would not be felt until after 1931, but the stock market crash of late 1929 had immediate and profound economic consequences. In the United States, manufacturing dropped sharply, unemployment increased dramatically, and growing numbers of businesses and banks failed. As the crisis deepened, American corporations focused inward on the domestic market. Trade declined sharply. Overseas investment slowed and then ceased altogether. Banks stopped lending money abroad, and tourism ended. The dollars that had underpinned postwar economic recovery dried up, with ripple effects across the world. The depression exposed the flaws in Republican approaches to postwar problems. It dimmed U.S. prestige in Europe, weakening its ability to lead and Europe's willingness to follow. A confirmed internationalist on many issues through much of his distinguished career, Hoover himself turned inward, seeking the solution to the nation's economic problems mainly at home.

In the face of new and increasingly daunting challenges, Hoover and Stimson clung to familiar solutions. Even more than Hughes, the Quaker Hoover saw armaments as a major impediment to peace and prosperity. He thus brought a new fervor to an old issue. Post–Washington Conference efforts to extend limits to other classes of ships had failed. A follow-up conference at Geneva in 1927 had broken down over Anglo-American wrangling on cruisers, but one indication of a sharp deterioration in U.S.-British relations in the late 1920s. In the absence of agreement, the United States in early 1929 set out to build fifteen new cruisers, signifying the onset of a new arms race. The U.S. move scared Britain into accepting parity with the United States and led to a 1930 naval conference in London.

Hoover attached great importance to the conference, sending a high-level delegation including Stimson and Dwight Morrow and putting forth bold new proposals. The United States and Britain quickly reached agreement on cruisers, but they could never palliate French insistence on a broader security treaty. They accommodated only with great difficulty Japan's demands to increase its Washington ratios. After three months of arduous negotiations, the United States, Britain, and Japan signed an agreement for a 10:10:6 ratio on light cruisers while conceding Japan 10:10:7 on heavy cruisers and battleships and parity in submarines. The London accord restored some Anglo-American amity and resolved the long-troublesome cruiser issue, pleasing Hoover and Stimson. In fact, London marked a transitional phase in the netherworld between the 1920s and 1930s. The conferees saw dimly if at all that the future of naval warfare resided in aircraft carriers. The failure to satisfy France may have been more important over the long run than the three-power agreement. The moderate Japanese government went along only because it needed Western credits and wanted to continue its policy of cooperation. The treaty was immensely unpopular in Japan—"a beautiful gold lacquer lunch box containing gruel," one critic complained. Unbeknownst to the participants, the London Conference marked the end of cooperation and the beginning of an era of conflict.104

On economic issues, as well, Hoover and Stimson fell back on old solutions in the face of new and complex problems. In the United States, as elsewhere, a natural response to the onset of depression was to protect the nation's own economy by raising the tariff. Ignorant of or indifferent to the international implications of protection and most concerned with protecting the domestic market, Congress in the 1930 Hawley-Smoot tariff raised rates on average to 40 percent, a 7 percent jump over the highly protectionist tariff of 1922 and the highest rates in U.S. history. Like many American businessmen, Stimson recognized the potential damage of such a tariff to international trade. Although he refused to risk his own political capital on what he saw as a no-win issue, he pushed Hoover to veto the bill. The president was himself sensitive to the potential dangers, but he too saw the domestic market as the key to recovery and deluded himself that the flexible provisions in the 1930 tariff could be used to sustain trade. Hoover acquiesced. The results were catastrophic. The tariff provoked huge resentment abroad—the French considered it tantamount to a declaration of war—and ultimately retaliation, further drying up international trade.¹⁰⁵

The old issues of war debts and reparations refused to go away. Even as Hoover took office, yet another committee of experts met in Paris to work out a final reparations settlement. Headed by veteran financial diplomat Owen D. Young, the committee also included American bankers Morgan and Lamont. The task was even more challenging than five years earlier. Europe's apparent economic recovery removed the sense of urgency that had brought about the Dawes settlement. The powers were as divided as ever. Germany continued to insist on major reductions, France on holding the line. The Hoover administration feared the Allies would use the negotiations to link reparations and war debts and believed that the Europeans should assume a greater burden of the settlement. Young summoned his considerable negotiating skills to devise an acceptable plan. He threatened to shut off credits to gain European acceptance. He used the intercession of no less than Root to bring Hoover and Stimson around. The Young Plan called for gradual and significant reductions in reparations payments while ensuring that the Allies got enough to meet their war debt obligations. To administer the arrangements, it established a Bank for International Settlements, which Young envisioned as the economic arm of the Kellogg-Briand Pact. This final settlement turned out to be anything but final. It was probably the best that could have been obtained under the circumstances, but its success hinged on continued foreign loans and German economic growth, two early victims of the global economic crisis. Reluctant converts, Hoover and Stimson gave the scheme no more than lukewarm support.106

A mounting economic crisis in Europe and especially in Germany in 1931 forced Hoover to launch a new and courageous initiative. A banking crisis that began in Austria and quickly spread to Germany and France threatened not only economic collapse in Western Europe but also political upheaval. In addition, the United States had invested huge sums of money in Germany, and a collapse could be disastrous. The situation had moved far beyond the old issues of reparations and war debts, but those twin scourges of the postwar era retained huge symbolic importance. Germany's announcement that it could no longer pay reparations forced the United States to act. After dawdling for days, Hoover finally accepted Stimson's pleas for decisive action. Without consulting the Allies, he announced in June 1931 a one-year moratorium on war debt payments conditional on Allied acceptance of a one-year moratorium on reparations. This boldest move yet proved too little, too late. Worldwide stock prices rose sharply, and U.S. exports increased. Annoyed at the administration's unilateral move and certain that it would be more beneficial to the United States, the French stalled approval. The economic surge quickly ended, and worse yet threatened.107

THE MYTHS REGARDING 1920s U.S. foreign policy refuse to go away. After its "two-year-Wilsonian internationalist binge," Arthur Schlesinger Jr. wrote in 1995, the United States returned to the "womb" of "familiar and soothing isolationism."¹⁰⁸ To be sure, the Harding and Coolidge administrations eschewed the sort of bold, imaginative steps on such crucial issues as war debts, reparations, and European security that would have been required to prevent the Great Depression and another world war. Some Americans, mostly businessmen and bankers involved in global operations, saw the need for such measures. But most did not, and it would have taken rare courage and exceptional political skills on the part of policymakers to implement them. At a time when the United States did not appear threatened and the nation, after Wilson's Great Crusade, had turned sharply inward, it is not surprising that such boldness did not emerge. Most Americans saw no compelling need to depart from their nation's long-standing tradition of non-entanglement in European politics.

To say that America in the 1920s returned to the womb of isolationism, however, is to grossly misread what actually happened. While scrupulously avoiding binding political commitments, the Republicans took unprecedented measures and managed significant accomplishments. Cautious they were. They were also non-ideological and commendably pragmatic in dealing with daunting international problems. They took the first baby steps toward ending the obnoxious unequal treaties and accommodating with Chinese nationalism. They began to liquidate the military occupations of Central American and Caribbean nations, reverted to Blaine-like efforts to set relations with hemispheric nations on a more equitable basis, and came to terms with the Mexican Revolution without sacrificing basic U.S. interests. Exploiting the worldwide postwar mood, Hughes pulled off achievements in naval arms limitation that look even more impressive after a century of frustrating efforts to contain the proliferation of increasingly menacing weapons of mass destruction. Within limits set by their own vision and powerful domestic political constraints, the Republicans assumed leadership in addressing issues of European economic recovery and political security. They recognized the growing interdependence of the world economy. They creatively used the private sector to find solutions. To some extent, perhaps, they were victims of their early successes. The return of peace, relative stability, and prosperity to Europe in the mid-1920s seemed to validate rather than raise questions about the measures taken, removing any sense of urgency for new and bolder steps. Hoover and Stimson thus tweaked programs already in operation rather than devise new ones.

The Great Depression after 1931 would shatter late-1920s complacency. Along with World War II, it would change the world beyond recognition and eventually call forth from the United States the sort of bold measures postwar commentators believed necessary in 1921.