CHAPTER TWO
THE IMPERIALISM OF IDEALISM
That which is good for communities in America is good for the Armenians and Greeks and Mohammedans of Turkey.
THE AMERICAN BOARD OF FOREIGN MISSIONS, 1881
I would extend the Monroe Doctrine to . . . the assistance of every people seeking to establish the Republic.
HENRY DEMAREST LLOYD, 1895
. . . a republic gradually but surely becoming the supreme moral factor in the world’s progress and the accepted arbiter of the world’s disputes.
WILLIAM JENNINGS BRYAN, 1900
If America is not to have free enterprise, then she can have freedom of no sort whatever.
WOODROW WILSON, 1912
Our industries have expanded to such a point that they will burst their jackets if they cannot find a free outlet to the markets of the world. . . . Our domestic markets no longer suffice. We need foreign markets.
WOODROW WILSON, 1912
The world must be made safe for democracy.
WOODROW WILSON, 1917
Taken up by President Theodore Roosevelt and his successors, the philosophy and practice of the imperialism that was embodied in the Open Door Notes became the central feature of American foreign policy in the twentieth century. American economic power gushed into some underdeveloped areas within a decade and into many others within a generation. It also seeped, then trickled, and finally flooded into the more developed nations and their colonies until, by 1939, America’s economic expansion encompassed the globe. And by that time the regions where America’s position was not extensively developed were precisely the areas in which the United States manifested a determination to retain and expand its exploratory operations—or to enter in force for the first time.
Throughout those same years, the rise of a new crusading spirit in American diplomacy contributed to the outward thrust. Such righteous enthusiasm was both secular, emphasizing political and social ideology, and religious, stressing the virtues (and necessities) of Protestant Christianity. In essence, twentieth-century Manifest Destiny was identical with the earlier phenomenon of the same name.
Americans assumed a posture of moral and ideological superiority at an early date. Despite the persistence of the Puritan tradition, however, this assertiveness took predominantly secular forms. Supernatural authority was invoked to explain and account for the steady enlargement of the United States, but the justifications for expansion were generally derived from this world. The phrase “Manifest Destiny,” for example, symbolized the assertion that God was on America’s side rather than the more modest claim that the country had joined the legions of the Lord. As that logic implied, the argument was that America was the “most progressive” society whose citizens made “proper use of the soil.” For these and similar reasons, it was added, the laws of “political gravitation” would bring many minor peoples into the American system.*
Though it had appeared as early as the eve of the American Revolution, the assertion that the expansion of the United States “extended the area of freedom” gained general currency after the War of 1812. President Andrew Jackson seems to have coined the phrase, with his wildcatting intellectual supporters adding many variations. One of the more persuasive and popular, which won many converts during and after the war with Mexico, stressed America’s responsibility to extend its authority over “semi-barbarous people.” By thus taking up the duty of “regeneration and civilization,” America could perform the noble work of teaching inferiors to appreciate the blessings they already enjoyed but were inclined to overlook. In turn, that would prepare them for the better days to follow under America’s benevolent leadership.
Near the end of the century, American missionaries and domestic religious leaders began to impart a more theological tone to such crusading fervor. That resulted in part from the effort by the clergy to marry traditional Christianity with the new doctrine of evolution and so adjust their theology to the latest revelations, and also to sustain their influence in the age of science. Josiah Strong was an innovator in that idiom. As a Congregationalist minister in whom the frontier experience and outlook exercised an important influence, Strong concluded that the theory of evolution only substantiated the doctrine of predestination. America had been hand-picked by the Lord to lead the Anglo-Saxons in transforming the world. “It would seem,” he explained with reference to the American Indians and other benighted peoples, “as if these inferior tribes were only precursors of a superior race, voices in the wilderness crying: Prepare ye the way of the Lord.”
After New England ministers accepted the challenge of saving the heathens of Hawaii, a crusade that began in the eighteenth century, American missionaries were noticeably concerned about Asia—and in particular China. As the Reverend Hudson Taylor explained in 1894, there was “a great Niagara of souls passing into the dark in China.” Though they never lost faith, a growing number of missionaries did become discouraged enough to question whether the hell-fire sermon on the dangers of damnation was an approach sufficient unto the need. Some thought fondly of the sword of righteousness, and toyed with the idea of a “Society for the Diffusion of Cannon Balls.” That kind of crusade was never organized, but the missionaries did begin in the 1890s to demand formal support and protection from the American Government.
That request, while never acted upon with the same vigor as those from business groups, did receive sympathetic consideration. For one thing, the religious stake in China was significant: America had over 500 missionaries in that country, and their schools claimed a total student body of nearly 17,000 Chinese. Many churches had also supported intervention in Cuba. But the most important factor was the way the missionary movement began to evolve an approach that offered direct support for secular expansion.†
Missionaries had always tended to operate on an assumption quite similar to the frontier thesis. “Missionaries are an absolute necessity,” explained the Reverend Henry Van Dyke of Princeton in 1896, “not only for the conversion of the heathen, but also, and much more, for the preservation of the Church. Christianity is a religion that will not keep.” Religious leaders began to link the missionary movement with economic expansion in what the Reverend Francis E. Clark of the Christian Endeavor organization called “the widening of our empire.” The Board of Foreign Missions also welcomed such expansion as “an ally.”
Then, beginning in the mid-1890s, the missionaries began to change their basic strategy in a way that greatly encouraged a liaison with secular expansionists. Shifting from an emphasis on the horrors of hell to a concern with practical reform as the lever of conversion, they increasingly stressed the need to remake the underdeveloped societies. Naturally enough, they were to be reformed in the image of the United States. Such changes would lead to regeneration identified with Christianity and witnesses for the Lord would accordingly increase.
Not only did this program mesh with the idea of American secular influence (how else were the reforms to be initiated?), but it was very similar to the argument that American expansion was justified because it created more progressive societies. Missionaries came to sound more and more like political leaders, who were themselves submerging their domestic ideological differences at the water’s edge in a general agreement on expansion as a reform movement.
The domestic reformer La Follette offers an excellent example of this convergence of economic and ideological expansion that took place across political lines. He approved taking the Philippines because it would enable America “to conquer [its] rightful share of that great market now opening [in China] for the world’s commerce.” Expansion was also justified because the United States had a “bounden duty to establish and maintain stable government” in the islands. Pointing out that from the beginning “the policy of this government has been to expand,” La Follette justified it on the grounds that “it has made men free.” Thus, he concluded, “we can legally and morally reserve unto ourselves perpetual commercial advantages of priceless value to our foreign trade for all time to come” by taking the Philippines.‡
Theodore Roosevelt’s outlook reveals an even more significant aspect of this progressive integration of secular and ideological expansionism. His concern for economic expansion was complemented by an urge to extend Anglo-Saxon ideas, practices, and virtues throughout the world. Just as his Square Deal program centered on the idea of responsible leaders using the national government to regulate and moderate industrial society at home, so did his international outlook revolve around the idea of American supremacy being used to define and promote the interests of “collective civilization.”
Thus it was necessary, he warned in his Presidential Message of December 1901, to exercise restraint in dealing with the large corporations. “Business concerns which have the largest means at their disposal . . . take the lead in the strife for commercial supremacy among the nations of the world. America has only just begun to assume the commanding position in the international business world which we believe will more and more be hers. It is of the utmost importance that this position be not jeopardized, especially at a time when the overflowing abundance of our own natural resources and the skill, business energy, and mechanical aptitude of our people make foreign markets essential.”
Roosevelt integrated that kind of expansion with ideological considerations and imperatives to create an all-inclusive logic and set of responsibilities which made peace itself the consequence of empire. In his mind, at any rate, it was America’s “duty toward the people living in barbarism to see that they are freed from their chains, and we can free them only by destroying barbarism itself.” Thus, he concluded, “peace cannot be had until the civilized nations have expanded in some shape over the barbarous nations.”
The inherent requirements of economic expansion coincided with such religious, racist, and reformist drives to remake the world. The reason for this is not difficult to perceive. As they existed, the underdeveloped countries were poor, particularistic, and bound by traditions which handicapped business enterprise. They were not organized to mesh with modern industrial systems in a practical and efficient manner. It was economically necessary to change them in certain ways and to a limited degree if the fruits of expansion were to be harvested. As with the missionaries, therefore, the economic and political leaders of the country decided that what was good for Americans was also good for foreigners. Humanitarian concern was thus reinforced by hard-headed economic requirements.
The administrations of Theodore Roosevelt understood this relationship between economic expansion and overseas reform, and explicitly integrated it into the strategy of the Open Door Policy. It was often commented upon in dispatches and policy statements concerning China and Latin America. In his famous Corollary to the Monroe Doctrine, for example, Roosevelt (who thought of the Open Door Policy as the Monroe Doctrine for Asia) stressed the need for reforms and asserted the right and the obligation of the United States to see that they were made—and honored.
It was in connection with the Algeciras Conference of 1905–06, however, that the relationship was most fully (and even brilliantly) explained and formally made a part of the Open Door Policy. Growing out of the imperial rivalry in Africa between Britain, France, and Germany, the Algeciras (or Moroccan) Conference proceeded on two levels. The dramatic battle involved limiting German penetration to a minimum while giving it superficial concessions. In that skirmish the United States sided with England and France. But the conference also offered the United States a chance to renew and reinforce its old drive of the 1880s to secure equal commercial rights in Africa. Roosevelt and Secretary of State Elihu Root used the strategy of the open door to wage both campaigns. Their policy instructions on the specific problems of organizing an international Moroccan police force, and on instituting financial reforms, revealed their full understanding of the nature and the extent of the interrelationship between reform and economic expansion.
After discussions with Roosevelt, Root summarized the issue beautifully. Police reform was essential: it was “vital” to American “interests and no less so to the advantage of Morocco that the door, being open, should lead to something; that the outside world shall benefit by assured opportunities, and that the Moroccan people shall be made in a measure fit and able to profit by the advantages of the proposed reform.” Fruitful economic intercourse depended upon “the existence of internal conditions favorable thereto.” Those prerequisites included not only the “security of life and property,” but establishing “equality of opportunities for trade with all natives.” §
The need to enlarge the domestic market within Morocco, so that the open door would “lead to something,” called for both negative and positive kinds of reform. Root defined the first as actions designed to remove conditions “which impair the freedom of salutary foreign intercourse with the native population.” It was thus necessary to modify religious discrimination against non-Muslims; to establish the “orderly and certain administration of impartial justice” which guaranteed “vigorous punishment of crimes against persons and property;” to insure “exemption from erratic taxes and [similar] burdens” upon business enterprise; and to maintain an internal police force strong and efficient enough “to repress subversive disorder and preserve the public peace.”
Root was equally blunt about the positive kind of reform. In the fundamental sense, Moroccan poverty and stagnation had to be ended. Economic development had to be initiated. There had to be enough of the kind of “improvement of the condition of the people that will enable them to profit by the opportunities of foreign trade.” Loans had to lead to development: poor people cannot buy the goods and services exported by the richer industrial countries. No income, no purchases; no purchases, no trade; no trade, no prosperity in America and no “salutary” effects in the poorer country. Or so, at any rate, ran the logic and the fears of the open door strategy.
Root went on, in his handling of American policy during the conference, to stress the importance of securing access for American capital to the competition for public works construction. That was not only desirable as an economic opportunity in and of itself, but also represented one of the ways in which a minimum level of general development could be facilitated. Transportation and sanitation systems were as important as large loans or legal reforms in establishing the conditions for successful enterprise. Root was unequivocal about the crucial element in arranging such financial reform: “the ‘open door’ seems to be the sound policy to advocate.”
At the end of the conference, the American representative reported that the principle of “the open door in matters of commerce” had been acknowledged, and thus the way had been prepared for American participation in “the execution of public works, or the future development of the great mineral wealth of Africa.” In the narrow sense, the Algeciras episode offers an illuminating perspective on newspaper stories about the present-day activities in Africa of the Rockefeller and Kaiser corporations (to name but two), and other reports on American governmental loans for public works such as highways and power installations.
The broader aspects of the analysis and policy statement prepared by Roosevelt and Root are even more significant. That document establishes once and for all the connection between, and the convergence of, the drive for overseas economic expansion and the urge to reform other societies according to American and industrial standards. It likewise removes any doubt about whether or not American leaders were conscious of the relationship. And finally, it helps clarify the nature and the dimensions of the tragedy and the terror of American foreign policy that evolved out of the Open Door Policy.
On the one hand, of course, the positive features of the reforms, including the general concern to initiate a minimum of economic development, emerge very clearly. On the other hand, it becomes apparent that the United States was opening the door to serious and extensive unrest, as well as to potential economic development and political reform. Perhaps the failure to understand this, or a not unrelated kind of persistent wishful thinking that such unrest could somehow be avoided, provides the final, irreducible explanation of America’s difficulties in foreign affairs during the twentieth century. For America’s integrated reformist and economic expansion provoked trouble. And the reaction to the trouble ultimately took the form of terror.
First: it undertook to initiate and sustain drastic, fundamental changes in other societies. The process of wrenching Morocco, or China, or Nicaragua out of their neo-feudal, primarily agrarian condition into the industrial era involved harsh, painful alterations in an established way of life. Even under the best of circumstances, those consequences can only be mitigated. They cannot be entirely avoided.
Second: the United States identified itself as a primary cause of such changes. It thereby also defined itself as a principal source of the related pain and unhappiness. This is true, not only in connection with those groups in power which oppose the changes as they begin, but also for those who suffer from the consequences without means to oppose or moderate them, and even for others who generally approve of the new ways but despair of the costs and question the morality of outsiders interfering in such fundamental and extensive respects.
Third: the United States wanted to stop or stabilize such changes at a point favorable to American interests. This was at best naive. Even a modest familiarity with history reveals that such alterations have wide and continuing consequences. It was at worst a knowing effort to slap a lid on dynamic development. That attempt can only be described as a selfish violation of the idea and ideal of self-determination, and even as an evasion of the moral obligation to accept the consequences of one’s own actions.
Fourth: the effort to control and limit changes according to American preferences served only to intensify opposition within the developing countries. The extent to which Algerian revolutionaries of the 1940s and 1950s revealed and illustrated all these points in their attitudes toward the United States offers a particularly relevant example of the tragic consequences of American reformist and economic expansion as it emerged during the Roosevelt administrations.
The integration of these elements was carried forward, and given classic expression in the rhetoric, style, and substance of the diplomacy of President Woodrow Wilson and Secretary of State Bryan. Both men were leaders of the American reform movement, and they brought to their conduct of foreign affairs a religious intensity and righteousness that was not apparent in earlier administrations and which may not have been matched since their time. As Protestants imbued with a strong sense of Anglo-Saxon self-consciousness, they personified the assertive idealism that complemented and reinforced the economic drive for markets.
Bryan was a Fundamentalist in religious matters. Typified by the famous “Cross of Gold” speech which climaxed his nomination for the presidency in 1896, his sense of calling and mission infused all his political actions with a kind of hell-fire enthusiasm and determination. Those characteristics could be misleading, and in the Crisis of the 1890s prompted a good many Americans to view Bryan as a threat to social order. But as revealed even in the “Cross of Gold” speech (where he defined everybody as a businessman), as well as in his actions, he was wholly a reform capitalist. Bryan himself joked about the misconception. Upon at least one occasion, when he visited the White House after his defeat in the election of 1904, he did so with considerable charm. President Roosevelt was one of those who had hurled all kinds of invective and wild charges at Bryan at one time or another during their political rivalry. As he arrived to make an invited call on the victor, Bryan revealed a kind of pleasant fatalism about such things. “Some people think I’m a terrible radical, but really I’m not so very dangerous after all.”
As far as foreign affairs were concerned, Bryan’s outlook was that of the Christian leader who concluded that his society needed overseas markets and was determined to find them. He fully intended, however, to do so in such a way that order and stability would be assured, a protestant peace secured and preserved, and the backward nations protected from rapacious foreigners while being led along the path of progress by the United States. Confident that Wilson was a man with the same goals, Bryan could without any reservations praise the President, in May 1914, as one who had “opened the doors of all the weaker countries to an invasion of American capital and American enterprise.”
Candidly asserting America’s “paramount influence in the Western Hemisphere,” Bryan’s objective was to “make absolutely sure our domination of the situation.” Such moral and economic expansion, he explained in 1913, would “give our country such increased influence . . . that we could prevent revolutions, promote education, and advance stable and just government . . . we would in the end profit, negatively, by not having to incur expense in guarding our own and foreign interests there, and, positively, by the increase of trade.”
While no less determined—his will won him more than one defeat—Wilson’s idealism was that of the high church Presbyterian Calvinist who viewed himself and the United States as trustees of the world’s welfare. The destiny of America was to be “the justest, the most progressive, the most honorable, the most enlightened Nation in the world.” Small wonder, then, that Wilson led the country into World War I with the argument that “the world must be made safe for democracy.” Or that he considered his own postwar program to be “the only possible” plan for peace which therefore “must prevail.”
Wilson was both responsible and candid enough to admit that all was not perfect either in America or the rest of the world. But since he considered the philosophy of revolution to be “in fact radically evil and corrupting,” he insisted that the only recourse was “a slow process of reform” led by trustees such as himself. At least, that is to say, within the United States. But America, just because it was the elect among the trustees of the world, had both a right and an obligation to use force “to do justice and assert the rights of mankind.”
Wilson’s imperialism of the spirit was well defined by his attitude toward the Philippines. The United States should grant independence to the Filipinos just as soon as American leadership had instructed them in the proper standards of national life, instilled in them the proper character, and established for them a stable and constitutional government. Such noble objectives justified—even demanded—the use of force. “When men take up arms to set other men free,” he declared, “there is something sacred and holy in the warfare. I will not cry ‘peace’ as long as there is sin and wrong in the world.”
But since Wilson’s fundamental assumption about the nature of man was that he “lives not by what he does, but by what he thinks and hopes,” this type of imperialism was, by the President’s own standards, the most persuasive and extensive of any that could be devised. For in effect—and in practice—it subverted Wilson’s support for the principle of self-determination. He asserted that other peoples were at liberty, and had a right to be free; but he judged whether or not they chose freedom by his own standards. Or, as he put it during the Mexican crisis, he would approve and recognize none but “those who act in the interest of peace and honor, who protect private rights, and respect the restraints of constitutional provisions.”
Both then and later, Wilson used American power to go behind the forms of government to see if the substance squared with his criteria and, if it did not, he deployed American power in an attempt to force reality into correspondence with his imagery and ideals. The policy was the broadest kind of imperialism. Thus his refusal to go along with American corporations that wanted to recognize and sustain the regime of Victoriano Huerta during the early phases of the Mexican Revolution is at most only half the story. Wilson was perfectly willing to intervene vigorously, even to the brink of war, in order to force the Mexicans to behave according to his standards. “I am going to teach the South American republics,” he explained to a British diplomat, “to elect good men.”
These features of Wilson’s foreign policy have understandably led many historians, including some of his admirers, to characterize his diplomacy as “moral imperialism,” “imperialism of the spirit,” or “missionary diplomacy.” While accurate as far as it goes, that approach is seriously misleading because it ignores or neglects the extensive degree to which Wilson advocated and supported overseas economic expansion. It also does Wilson an injustice. For he brought the two themes together in a manner that surpassed even the similar achievement of Roosevelt and Root.
The single most important insight into Wilson’s propensity and ability to fuse those two traditions very probably lies in his Calvinistic Weltanschauung. Two of Calvin’s central assumptions concerned the complementary nature of economics and morality, and the responsibility of the trustee for combining them to produce the welfare of the community. He emphasized these very clearly and forcefully in his writings, and tried to carry them out in actual practice. It is of course true that Wilson was not Calvin (though upon occasion the President’s actions provoked some of his critics to remark that there seemed to be some confusion in his own mind on that issue). Nor was he a disciple in the rigid and narrow theological or clerical sense. But he did make sense out of reality from the basic vantage point offered by Calvinism, and his consolidation of economics and ideas stemmed from that conception of the world.
Granted this combination (contradictory as it may have been) of Calvinism and capitalism, the consideration most directly pertinent in comprehending Wilson’s handling of foreign policy is his commitment to the frontier thesis of Frederick Jackson Turner. They enjoyed a close personal and intellectual friendship while Turner was developing his thesis about American expansion and its prosperity and democracy as an advanced student at Johns Hopkins University. Wilson accepted the argument as the central explanation of American history. “All I ever wrote on the subject,” he later remarked of Turner, “came from him.” That was true, even though it was an exaggeration. Wilson shaped and used the intellectual tool of interpreting American politics from the perspective of the British parliamentary system on his own (and it was a stimulating approach). Even so, the frontier thesis was a crucial element in his thinking about the past and the present.
Wilson put it very directly as early as 1896 in explaining the Crisis of the 1890s. “The days of glad expansion are gone, our life grows tense and difficult.” He read George Washington’s Farewell Address in the same light. Wilson argued that Washington “would seem to have meant, ‘I want you to discipline yourselves and . . . be good boys until you . . . are big enough to stand the competition . . . until you are big enough to go abroad in the world.’” Wilson clearly thought that by 1901 the United States had become a big boy: expansion was a “natural and wholesome impulse.” And in a speech on “The Ideals of America” of December 26, 1901, which was remarkable for its close following of the frontier thesis, he projected the process indefinitely: “Who shall say,” he asked rhetorically, “where it will end?”
With the publication the next year of his five-volume History of the American People, it became apparent that Wilson saw overseas economic expansion as the frontier to replace the continent that had been occupied. A section in Volume V (which reads like a close paraphrase of some essays written by Brooks Adams) recommended increased efficiency in government so that the United States “might command the economic fortunes of the world.” Referring a bit later to the Philippines as “new frontiers,” he concluded his analysis by stressing the need for markets—markets “to which diplomacy, and if need be power, must make an open way.” In a series of lectures at Columbia University in April 1907, he was even more forthright. “Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed must be battered down.” “Concessions obtained by financiers must be safeguarded,” he continued, “by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused. Peace itself becomes a matter of conference and international combinations.” It was something of an anti-climax to learn that Wilson expected “many sharp struggles for foreign trade.”
His persistent repetition of that warning serves to symbolize the extent to which Wilson’s campaign for the presidential nomination and election in 1912 stressed overseas economic expansion. During January and February he reviewed the importance of a merchant marine, and bewailed the weaknesses of the banking system which handicapped American financiers in overseas competition. By August, when he won the nomination, he was ready with a general interpretation. The United States was an “expanding” nation. “Our industries have expanded to such a point that they will burst their jackets if they cannot find a free outlet to the markets of the world. . . . Our domestic markets no longer suffice. We need foreign markets.” And also, he added, a major effort to educate the general public on the problem and its solution. Wilson was even more specific about the reason behind his sense of urgency at a campaign dinner for his supporters among the working class. (Not many day laborers could afford the prices, but their leaders attended.) “We have reached, in short, a critical point in the process of our prosperity. It has now become a question with us,” he warned, “whether it shall continue or shall not continue.” “We need foreign markets,” he reiterated, because “our domestic market is too small.” And as McKinley and Root before him, Wilson in 1912 unequivocally pointed to Germany as the most dangerous rival of the United States in that economic struggle.
Wilson’s dramatic language about American prosperity seemed within a year to have been justified. The nation entered a recession at the end of 1913, and the downswing continued in 1914. Even before that unhappy development, or before he had to cope with the Mexican and Russian Revolutions, Wilson revealed the keen and sophisticated way in which he integrated crusading idealism and hard-headed economics. The situation in which he displayed such leadership was almost literally waiting for him as he moved into the White House in March 1913. Giant American bankers wanted a prompt if not immediate policy statement on their efforts (in conjunction with the Japanese and European financiers) to push through a large loan to China. Wilson’s response has usually been interpreted as an abrupt and significant break with the whole tradition and practice of overseas economic expansion. That conclusion has been reached by an intellectual broad jump of prodigious proportions, taking off from the fact that Wilson did refuse to support the bankers in that one operation. But historical interpretation is not broad jumping. The fact is indisputable. The conclusion is wrong. In order to understand the apparent contradiction in Wilson’s action, however, it is necessary to consider several factors that are seldom integrated into the analysis.¶
It is essential first of all to review the difficulties that arose in putting the open door strategy into operation in Asia. Given the objective of winning the economic and political victory without the war (or wars), American leaders faced a difficult task. There was no easy answer to their problems, and most certainly no handbook of operations for them to follow. They had to make difficult choices in innovating tactics, and to cope with limitations and other troubles imposed by events at home and in China. To avoid confusion in outlining such considerations (all of them cannot be summarized in one neat paragraph), they will be numbered.
First: the natural and obvious tactic was to go it alone, plunging ahead in China with the hope of rapidly establishing extensive American influence. President William Howard Taft tested this approach. “I regard the position at Peking as the most important diplomatic position that I have to fill,” he explained in April 1909, “and it is necessary to send there a man of business, force and perception.” He followed through by applying direct and personal pressure on the head of the Chinese Government to secure participation by American financiers (and industrialists) in a railroad development project in Hukuang Province. His objective was “a practical and real application of the open door policy.”
The United States never abandoned this ideal of direct action. It remained the preferred method of exploiting the Open Door Policy in Asia. Other techniques were seen as means to establish the preconditions for handling the problem in that manner. But as Taft and other American leaders discovered, there were two major difficulties involved in pursuing that course of action. One was defined by the simple (though perhaps to many surprising) fact that American entrepreneurs were unable on their own as capitalists to accumulate sufficient private capital to do the job alone.# The other reason was more obvious. Such a blunt, bold move by the United States was sure to provoke, and did provoke, sharp and increasing opposition from Japan and other industrial nations. If persisted in, that confrontation would lead to war. Yet the policy itself was designed to avoid war. For both reasons, therefore, American policy-makers had to consider other tactics.
Second: it was possible to work with the Russians, and thereby strengthen them against the Japanese. China (and probably Siberia as well) would then be developed in concert with the Tsar. The approach was not only conceivable, it was actually discussed. The Russians proposed the idea as early as the 1890s. They persistently repeated their overtures during the subsequent 15 years, but the McKinley, Roosevelt, and Taft administrations never explored them seriously. Secretary of State Hay did indicate some early interest, but Roosevelt (who supported the plan when first outlined) squashed the idea. The most promising exploration of it was undertaken by the financier-railroad magnate Edward Averell Harriman at the close of the Russo-Japanese War. Though plagued by many difficulties, he was making important progress toward a broad agreement with the Russians when he was stopped by the American Panic of 1907, and then by death in 1909. Harriman’s close associate, Willard Straight, tried unsuccessfully to sustain the project at that time. The development of American-Russian economic relations did not affect foreign policy in a significant way until the end of the 1920s.**
Third: another approach, based on traditional balance-of-power maneuvers, was actually tried by President Roosevelt on the eve of, and during, the Russo-Japanese War. By encouraging and supporting Japan, which he took to be the weaker as well as the more reliable power, he hoped to wear down and cancel out both countries as opponents of American predominance. It was expected that the result would be an open field for American economic and political influence. Several advisors warned Roosevelt that, even if the tactic was sound, he should support Russia.†† Appearances notwithstanding, they cautioned the President, Japan was likely to be the stronger power in a short war, and Russia the more likely to co-operate. They were correct, and Japan proceeded to defeat Russia and push American interests out of Manchuria.
Fourth: that failure prompted Washington to make a virtue out of necessity and work with Japan. Policy-makers offered two variations on that theme.
One group maintained that Washington should join Tokyo in order to control and develop China as partners. Those men argued from many motives. They had prejudices in favor of Japan or against China, and took a somewhat fatalistic view of Japan’s power. Some were even willing, in the final showdown, to acquiesce in a broad measure of Japanese control of China. Though they influenced policy, they faced several handicaps in persuading other leaders to accept that tactic. Japan provided increasing evidence that it would never be satisfied with an equal relationship. And that only intensified another difficulty: the majority of American policy-makers did not really want a partnership—as indicated by their refusal to consider working with Russia. The Open Door Policy, even as originally conceived, anticipated a China strong enough to resist partition by Japan and European powers and strong enough to handle its responsibilities in connection with being developed by American entrepreneurs, but not strong enough to evict the foreign devils. Giving Japan a free hand under the name of partnership meant abandoning the very policy that was designed to assure American supremacy.
These factors strengthened the second group, whose plan for working with Tokyo was considerably more sophisticated. Their plan was based on the idea of exploiting developing economic ties with Japan in order to win both a short-term and a long-term objective: in the short-run, to secure Japanese markets and also an indirect share of Japan’s expansion on the Asian mainland; but, in the long-run, to use that economic involvement in Japan as a fulcrum upon which to rest America’s political lever, which could then be used to control the extent of Japan’s expansion. The essence of this plan was outlined by an American representative in China to Secretary of State Bryan in 1915, when Japan confronted Peking with its extensive Twenty-One Demands. “Our present commercial interests in Japan are greater than those in China, but the look ahead shows our interest to be a strong and independent China rather than one held in subjection by Japan.” After a good many false starts and temporary setbacks, this approach was adopted by the United States and followed down to 1939, when the Administration of Franklin Delano Roosevelt made a strong effort to coerce Japan into retreating from China by using American economic influence over Japan’s economy.
Fifth: Japan enjoyed many geographical advantages, and others of an economic and military nature that stemmed from its hierarchical social and political structure, which bedeviled and frustrated American efforts to put the Open Door Policy into action. In many respects, at any rate, it was not until the mid-1920s that the United States began to compete effectively in Asia.
The result of that handicap, and of the difficulty American entrepreneurs encountered in accumulating sufficient capital of their own, was to turn American policy-makers—both private economic leaders and elected or appointed officials—toward the idea and practice of joining international financial combines or consortia.‡‡ These organizations were similar to the pools or gentlemen’s agreements that developed in domestic economic affairs. Banking firms from several countries combined to share an opportunity in China (or another underdeveloped nation) on an agreed-upon percentage basis. Less capital was thereby required from each unit and, since deadly competition was avoided, the risk was decreased. That more than balanced the chance that any one unit could monopolize the field and the profit.
It should not be imagined, however, that American leaders abandoned their basic assumption when they shifted to the tactic of implementing the open door strategy through consortium agreements. Some were more patient than others, but all of them fully expected the economic power of the United States to dominate such arrangements, and thereby establish the nation’s predominant economic and political position. Indeed, Secretary of State Knox was so confident of his proposal of 1909 to neutralize the Manchurian railways (a maneuver he expected to reestablish American power in the region) that he did little to camouflage its rather obvious purpose. Not unexpectedly, America’s rivals turned it down out of hand.
Sixth: It soon became apparent, moreover, that the consortium tactic was in general less than successful from the American point of view. This harsh and disappointing reality was the product of a combination of factors which were not only interrelated, but whose effect on American participants in the consortia soon began to snowball into a serious crisis. Since there were a good many such elements in the situation, it may help to avoid confusion if they are enumerated formally.
A: the competitors of the United States feared its power. They broadly shared the American belief that over the long-run they were doomed to an inferior position.
B: thus they worked, both as private entrepreneurs and as governments, to combine inside the consortia against the United States. In the narrow, illustrative sense they used their power to outvote American participants.
C: these rivals soon realized, moreover, that American operators were having trouble accumulating capital. They responded in a natural way: they refused to facilitate the sale of American securities on their own exchanges.
D: Americans did not of course accept such opposition passively, and the result was a growing stagnation of the consortia.
E: this accelerated and intensified existing opposition to the consortia inside China. On the one hand, the Chinese Government became increasingly dissatisfied. On the other hand, Chinese critics of the consortia, who came to view them as symbols of outside domination, increased their agitation against the foreigners and also against their own government for negotiating such agreements.
F: as a result, independent economic entrepreneurs in several industrial nations began to compete with the consortia. The Chinese Government turned to them in exasperation with the consortia, and out of its fear that continued inaction would lead to revolution. They hoped that independent entrepreneurs could act effectively enough to dull the edge of the antiforeign unrest. In the United States, moreover, the independents began to argue that the consortium approach was the equivalent in overseas economic affairs of unfair competition at home.
G: finally, the consortium members had reluctantly concluded that it was necessary to help China organize its own government affairs before they could make any significant profit on economic development projects. Such reorganization loans, as they were called, were viewed unfavorably for three main reasons. First: they involved less profit per se. Second: they required some clear assurance from their own governments that China would be made to meet its obligations. And third: that factor raised in turn the specter of more unrest in China.
This long and admittedly rather complicated review of the circumstances and conditions incident to implementing the strategy of the Open Door Policy at the time of President Wilson’s inauguration in March 1913, has had one main purpose: to clarify the basic situation in order to grasp the great significance of two crucial aspects of Wilson’s action. President Wilson, Secretary of State Bryan, and other top government and private leaders understood the situation very accurately and clearly. They were not wandering in the dark alleys of ignorance and confusion. Wilson’s decision not to support the bankers (and the consortium) in pushing through the long-pending reorganization loan was made on the basis of his integration of reform and economic expansionism, and was very consciously designed to cut free of the limitations and dangers of the consortium tactic in order to reassert American power and influence in China and Manchuria. When they asked Wilson for a statement of policy, the American bankers were edgy and anxious. For one thing, they wanted to know where they stood with the new President. He was a Democrat coming in after 16 years of Republican rule, and his periodic vivid and righteous rhetoric about reform worried some businessmen. The bankers also felt that time was running out on the specific reorganization loan. They wanted either to push it through or get out of the affair.§§
This tone of fish-or-cut-bait, which is apparent in the documents pertaining to the attitude of the bankers, can be misleading if it is interpreted too literally or narrowly. Wall Street was not on the verge of abandoning overseas economic expansion, either in general or in China per se. If their request on the reorganization loan was not met, they planned to (and did) turn to smaller industrial and developmental loans. The bankers needed and asked for two kinds of help, both of which were relevant to the reorganization loan. They wanted firm and formal government support in their dealings with China and other consortium members. And they sought the same kind of backing from the government in order to solve their problem of accumulating capital.
The turn to the government for help in corralling capital was known, explained, and documented by a good many people at the time. One State Department official, for example, admitted ruefully that it was impossible “for us alone to float any very large international loan.” The clearest public exposition of this factor was provided, however, by Willard Straight. After his long tenure as advisor to Harriman, during which time Straight also served periodically in the Far Eastern Division of the Department of State, he went to work for the House of Morgan (which took the lead in consortium affairs). In a series of articles and speeches during 1912, 1913, and 1914, he candidly described the problem in great detail. His point of departure was the proposition that firms engaged in overseas economic expansion were “national assets;” “representatives of our country, trustees for its trade and of its reputation.”
He usually began by explaining the difference between borrowing from the public, by selling bonds and other securities, and obtaining the funds from other banks through commercial loans. Commercial loans could not provide enough money. After all, the banks participating in the consortium were the giants of the American financial community. Hence the bankers had to go to “the public.” “It is not the bankers who provide the money to finance a foreign loan,” Straight remarked bluntly, it comes instead from bonds “sold to the public.” As the bankers had learned through experience, “the American investor is not willing to buy Chinese bonds unless he believes that the American Government will protect him by all possible diplomatic means.”
Thus the issue was “whether our Government will back us up.” “If the American public,” Straight summarized, “is to be educated to the point of financing the sale of our materials abroad—and that is the question of foreign trade and foreign loans—the American Government must make some statement which will reassure the public and give them the thought and the belief that in case of default or in case of difficulty . . . the Government will act as the advocate of the public . . . and see that the American investor gets what is his due.”
Beginning with the Wilson Administration, and continuing to a steadily increasing extent, the Government of the United States proceeded to provide what Straight and the bankers asked—and considerably more. Tax monies collected from individual citizens came to be used to provide private corporations with loans and other subsidies for overseas expansion, to create the power to protect those activities, and even to create reserve funds with which to make cash guarantees against losses. The bankers lost in their effort to secure that line of policy by one hard push in March 1913, but the final program as it existed in 1972 far exceeded their original objectives.
Wilson was quite willing, even eager, to help the bankers and other entrepreneurs engaged in overseas economic expansion. But he was perceptive enough to realize that the Open Door Policy had to be reasserted and upheld outside the framework of the consortia, and in a way that would strengthen America’s position in the underdeveloped countries. That meant in the narrow sense, as Secretary of State Bryan phrased it, that Wilson refused to back the bankers in the reorganization loan because “the American group . . . could not have a controlling voice” in the operation.
For that matter, Bryan provided the best general explanation of Wilson’s decision. Significantly, it was offered as a public statement. “The President believed that a different policy was more consistent with the American position, and that it would in the long run be more advantageous to our commerce . . . I may say that American interests will be protected everywhere. . . . The President in his policies as thus far announced has laid even a broader foundation for the extension of our trade throughout the Orient. He is cultivating the friendship of the people across the Pacific. . . . The President’s policy contemplates the formulation of an environment which will encourage the growth of all that is good. . . . So, the government, while it cannot trade, can give to trade an environment in which it can develop, and that is the duty of our government to do.”
Or, as Wilson said in a memorandum to Bryan, the basic objective was “the maintenance of the policy of an open door to the world.” This explicit and heavy emphasis on long-run objectives explains why it is so misleading to interpret the President’s refusal to support the bankers in the reorganization loan as a change in basic policy. Even the published documents leave no doubt about Wilson’s vigorous support for economic expansion. Bryan reported, for example, that the cabinet expressed full agreement on “a strong declaration favorable to the extension of our commerce in the Orient.” And Wilson’s own dispatch explaining his action is even more explicit. He was “earnestly desirous of promoting the most extended and intimate trade relationship” with China. Americans “certainly wish to participate, and participate very generously, in the opening to the Chinese and to the use of the world the almost untouched and perhaps unrivaled resources of China.” He closed with a sober promise to “urge and support” such expansion, and to provide American entrepreneurs with “the banking and other financial facilities which they now lack and without which they are at a serious disadvantage.”
Finally, Wilson’s critical words to and about the bankers in his public reply to their request must be evaluated in the context of these other factors. The verbal wrist-slapping was a gesture quite in keeping with Wilson’s reformist outlook, and also an obvious maneuver to win favor with the progressives in both parties. It also served to enhance America’s image in the eyes of the Chinese. Here was the President of the United States accepting a point made by foreign critics. The criticism was not insincere, but it did not mean the end of official support for the bankers, or for general overseas economic expansion. It merely symbolized a more sophisticated approach to those objectives. The reformer as expansionist would be more successful than the conservative as expansionist.
Any doubts concerning Wilson’s basic position were removed by subsequent events. After “very satisfactory” conversations with Bryan, Straight reported to a meeting of bankers and other entrepreneurs that the Secretary of State was most co-operative. “No one could have been more ready to support [us] and to telegraph Peking, and urge measures on the part of the Chinese Government.” Even more revealing, perhaps, was the relationship between the Wilson Administration and the National Council of Foreign Trade. Secretary Bryan and Secretary of Commerce William Redfield were the major speakers during the first day of the council’s national convention in May, 1914.
This date is significant, for it specifies the policy of the Wilson Administration at a time when it was clear that America was suffering a serious economic downturn, yet at an hour prior to the outbreak of World War I. Secretary Redfield, who had been president of the American Manufacturers Export Association and a vigorous advocate of overseas economic expansion before Wilson called him to the crusade for the New Freedom, led off with a broad outline of government policy. He assured the corporation leaders that “because we are strong, we are going out, you and I, into the markets of the world to get our share.” A bit later, in 1915, Redfield revealed even more clearly why he was so vehement about overseas economic expansion. Speaking again to businessmen, he emphasized that “it is a noble work that we are engaged in. It carries with it so much of hope, so much of growth, so much of power, such a promise of prosperity . . . [It is] the pendulum . . . [that] controls the whole movement of the mechanism.”
Secretary Bryan spoke next. First he reminded the audience that President Wilson had already made it clear that it was official policy to “open the doors of all the weaker countries to an invasion of American capital and enterprise.” Having made that point, Bryan referred to an engaging custom of one such country as a way of convincing the businessmen of his deep concern for their welfare. “In Spanish-speaking countries,” he reminded them, “hospitality is expressed by a phrase, ‘My house is your house.’ . . . I can say, not merely in courtesy—but as a fact—my Department is your department; the ambassadors, the ministers, and the consuls are all yours. It is their business to look after your interests and to guard your rights.”
On the next day the convention left its downtown quarters for a special meeting in the East Room of the White House. President Wilson had seen fit to take time from his more official duties to address the delegates. His purpose was to assure them that he gave full and active support to a mutual campaign to effect “the righteous conquest of foreign markets.” Perhaps it was because some in his audience seemed startled by that candid statement of policy, but in any event Wilson went on to emphasize the point by remarking that such an objective was “one of the things we hold nearest to our heart.”
As in earlier periods, the question of whether or not American leaders acted from personal economic motives is beside the point. Indeed, such an approach raises false questions. Without any doubt, the businessmen acted on an economic calculus, and it is sophistry to camouflage the obvious as the complex. It is far more important that many of the businessmen and politicians were thinking about American foreign policy in terms of the functioning of the economic system, and that they saw overseas economic expansion as the key element in such security and welfare.
In most respects, furthermore, the Wilson Administration agreed with the businessmen about the best means to facilitate overseas economic expansion. One section of the Federal Reserve Act, for example, had just that purpose. Wilson’s tariff commission also concentrated on enlarging and securing markets for surplus production. An even more dramatic step was taken with the passage of the Webb-Pomerene Act. This law developed out of the consensus on the need to improve America’s weapons in the battle for supremacy in world markets, a concern heightened by the realization that the postwar struggle would be even tougher. It repealed the antitrust laws for overseas operations, thus providing a bipartisan American answer to foreign cartels. Another law, the Edge Act, extended the provisions of the Federal Reserve Act which encouraged American financial operations overseas. Wilson also reactivated the old American banking consortium as the chosen instrument of American open door expansion in the Far East. These moves took on added significance in the context of the Bolshevik Revolution in Russia in November 1917 (after which event Wilson undertook to extend the open door to Russia), but it is vital to realize that these acts represented a consensus between the Wilson Administration and the business community which had been apparent as early as 1912.
An understanding of this consensus, and of the related convergence of the reformist and economic drives for expansion, offers a key insight into America’s entry into World War I. Most Americans shared Wilson’s nationalistic outlook. None but a handful of citizens quarreled with his assertion that it was the destiny of the United States to become the “justest, the most progressive, the most honorable, the most enlightened Nation in the world.” Indeed, a sizable plurality thought, if they did not assume, that the destiny was being realized in their own time. In the early months of the war, therefore, it was quite natural for them to feel, along with Wilson, that America had neither reason nor necessity to enter the conflict.
But, and again in agreement with Wilson, most Americans wanted the Allies to win, and they were willing to help bring about that result. Whatever the faults and sins of England and France, they were better than autocratic Germany. America could work with them toward a peaceful, prosperous, and moral world, whereas such would be impossible if Germany won. This attitude, and the actions which it prompted, led Wilson and America into a position where they had either to abandon their determination and destiny to lead the world or go to war.
The early economic decisions made by businessmen and the Wilson Administration committed the American economic system to the Allied war effort. That did not, in itself, make it inevitable that America’s nonbelligerent alignment with the Allies would involve America in the war on their side; but it did make it extremely difficult for Wilson to achieve his objectives in any other way.
The American economy was in a depression when the war erupted. Financier J. Pierpont Morgan described the situation in an accurate and straightforward manner. “The war opened during a period of hard times that had continued in America for over a year. Business throughout the country was depressed, farm prices were deflated, unemployment was serious, the heavy industries were working far below capacity [and] bank clearings were off.” Vanderlip’s comment was more elliptical: “The country was not in a prosperous situation.”
The first economic shocks of the conflict subjected the system to even more difficulties. The stock market and the cotton exchange were closed on July 31, 1914, and did not reopen for public trading for many, many months. “We were looking after our own troubles,” Vanderlip later explained, and “bankers in general were not considering technical matters of neutrality.” Instead, Vanderlip went on, “we had the idea very much of keeping up our foreign trade throughout the world.” In making that effort, it was not very surprising that American entrepreneurs concentrated on reopening their connections with the Allies, who together with their colonies had purchased 77 per cent of American exports in 1913—and with whom the majority of American bankers had their closest connections.
But in restoring America’s foreign trade by tying it to England and France (and by expanding old connections with such nations as Russia), rather than by insisting upon economic neutrality, Wilson and American businessmen tied themselves to a prosperity based on the Allied war program. Wilson developed no other plan to end the depression, and hence this way of dealing with the problem exerted a subtle but persuasive influence on later decisions.
Economic ties to the Allies also reinforced the bias of Wilson’s ideology and morality toward defining German naval warfare as the most important diplomatic issue of the war. Wilson denounced submarine warfare on moral and humanitarian grounds, whereas he opposed British trade restrictions on legal and historical precedents. And. the fact that Wilson launched no crusade against the Allied food blockade of Germany, which had equally devastating moral and humanitarian consequences, dramatized this double standard.
This ability to make such fine moral discriminations forced Wilson into an extremely difficult situation. He hoped to remain a nonbelligerent until a stalemate developed and then step in as the arbiter of the settlement and as the architect of a world organization to establish and maintain peace. But by seeming to foreshadow the defeat of England and France, the success of submarine warfare also threatened his ability to lead the world to permanent peace. Wilson resolved his difficulties (and apparently eased his troubled conscience) by defining the situation as similar to the case of the Philippines. America was justified in using force “to do justice and assert the rights of mankind.” To that end, war against Germany would be prosecuted until it established “a government we can trust.”
By the time of World War I, therefore, the basic dilemma of American foreign policy was clearly defined. Its generous humanitarianism prompted it to improve the lot of less fortunate peoples, but that side of its diplomacy was undercut by two other aspects of its policy. On the one hand, it defined helping people in terms of making them more like Americans. This subverted its ideal of self-determination. On the other hand, it asserted and acted upon the necessity of overseas economic expansion for its own material prosperity. But by defining such expansion in terms of markets for American exports, and control of raw materials for American industry, the ability of other peoples to develop and act upon their own patterns of development was further undercut.
Those unfortunate aspects of American foreign policy were summarized rather well by an American reformer who at one time had shared the attitude of Roosevelt and Wilson. He even agreed that entry into World War I was necessary. But he broke with Roosevelt and Wilson over the very points which undercut the ideal, and the practice, of self-determination. Perhaps his judgment is too harsh, yet it offers an important insight into Wilson’s failure and into America’s difficulties at mid-century. For that reason, but not as a final verdict either on Wilson or the United States, it deserves consideration.
Looking back across the years, Raymond Robins reflected on the origins of the crisis in American diplomacy in these words: “Wilson was a great man but he had one basic fault. He was willing to do anything for people except get off their backs and let them live their own lives. He would never let go until they forced him to and then it was too late. He never seemed to understand there’s a big difference between trying to save people and trying to help them. With luck you can help ’em—but they always save themselves.”
One of the most helpful aspects of that estimate of Wilson and his diplomacy lies in the suggestion that it offers about American entry into the war and America’s response to the revolutions which occurred during and at the end of that conflict. For given entry into the war on the grounds that “the world must be made safe for democracy,” the crucial questions become those about the definition of democracy and the means to insure its security. Having answered those questions, it may then be possible to determine and understand the reasons why the effort did not succeed.
* Here consult A. K. Weinberg, Manifest Destiny (Baltimore: Johns Hopkins Press, 1935).
† The best study of this development is P. A. Varg, Missionaries, Chinese, and Diplomats (Princeton: Princeton University Press, 1958).
‡ Professor Charles Vevier was probably the first contemporary historian to explore this imperialism of the reformers. He did so in an unpublished thesis written at the University of Wisconsin in 1949. Others followed, e.g.: W. E. Leuchtenburg, “Progressivism and Imperialism . . . 1898–1916,” Mississippi Valley Historical Review (June, 1952); and P. C. Kennedy, “La Follette’s Imperialist Flirtation,” Pacific Historical Review (May, i960). An excellent recent study is J. Israel, Progressivism and the Open Door, America and China, 1905–1921 (Pittsburgh: University of Pittsburgh Press, 1971).
§ Unlike many important documents, this remarkable and extremely significant dispatch has been published. The citation is: Root to White, November 28, 1905; Papers Relating to the Foreign Relations of the United States, 1905, pp. 678–79.
¶ Martin J. Sklar has analyzed this episode in great detail; he has published a summary of his findings as “Woodrow Wilson and the Political Economy of Modern United States Liberalism,” Studies on the Left (1960). While he reached similar conclusions quite independently, I have benefited since the first edition of this book appeared in 1959 from conversations with him and from reading the first draft of his Master’s Thesis.
# Historians have almost wholly neglected this extremely important problem of capital shortage in twentieth century America. It is handled indirectly in the studies of the Federal Reserve System, but its part in private and official policy—and the relationship between them—has not been explored in any significant or substantial investigations. Yet it provides, as will appear below, a very important insight into American diplomacy after the 1890s. For that matter, it can be shown that the underlying solution evolved between 1913 and 1939—that of having the government help directly and indirectly in accumulating capital for the private sector—appeared very early (if not literally first) in connection with overseas economic expansion.
** On this matter see: E. H. Zabriskie, American-Russian Rivalry in the Far East (Philadelphia: University of Pennsylvania Press, 1946); W. A. Williams, American-Russian Relations, 1781–1947 (New York: Rinehart and Co., 1952); and C. Vevier, The United States and China, 1906–1913 (New Brunswick: Rutgers University Press, 1955). A convenient indication of business interest is provided by McKinley’s Assistant Secretary of the Treasury, Frank A. Vanderlip, in his essay: The American “Commercial Invasion” of Europe (New York: Scribner’s Magazine, 1902). Also see W. C. Askew, “Efforts to Improve Russo-American Relations Before The First World War: the John Hays Hammond Mission,” Slavic and East European Review (December, 1952).
†† One such figure, Horace N. Allen, is the subject of an excellent biography by F. H. Harrington, God, Mammon and the Japanese (Madison: University of Wisconsin Press, 1944).
‡‡ Since this subsequently raised a question of historical interpretation that claimed far more intellectual energy and time than it warranted, it may be useful to examine the issue. The great majority of American historians during the last 50 years has operated from the basis of the Weltanschauung of humanitarian laissez faire. Quite naturally (and, given their understanding of the assumptions of that outlook, quite logically), they have defined economics and politics as separate entities that operate or impinge upon each other in much the same fashion as two billiard balls. As a result, they have forever been engaged in vehement, and sometimes bitter, arguments over which billiard ball— the red economic one or the white political one—caused the other one to move. They have sustained a long dispute over the question of whether it was the bankers who made foreign policy, or whether it was the politicians who made banking policy.
Yet the issue is itself a pseudo-problem. For, even by the axioms of laissez faire, economic actions were held to produce the general—including the political—welfare. Given conditions of representative government, the political leaders who won office would be those who acted on an internalized understanding of that fundamental truth. Hence they would not separate politics and economics in the way that later historians have done: they would instead hold that good economics was good policy.
Even during the heyday of laissez faire, in the nineteenth century, American politicians and entrepreneurs took for granted the interrelationship between, and the interpenetration of, business and politics. The most perceptive among them realized at the turn of the twentieth century, moreover, that the marketplace of laissez faire had to be managed in foreign affairs just as in domestic affairs if the free enterprise or capitalist system was itself to survive.
Thus both economic and political leaders viewed the tactic of consortia as natural and legitimate. Who acted first is beside the point. This is so, not only because individuals from both groups responded to the need in a similar way at the same time, but also because both groups acted in a reciprocal fashion. The consortium tactic represented a true consensus, not the result of the bankers controlling the White House—or vice versa.
One of the best introductions to such matters, now happily available in translation, is G. Lukacs, History and Class Consciousness (Cambridge: The M.I.T. Press, 1971).
§§ It might be argued that the bankers were determined in any event to leave the consortium, and in a clever maneuver used the President to accomplish that objective. After careful evaluation, however, the evidence does not persuade me that the bankers were absolutely set on withdrawal.