CHAPTER FOUR
THE LEGEND OF ISOLATIONISM

I. A GREAT DEBATE OVER THE TACTICS OF EMPIRE

It is wrong, perhaps, to say that Hughes stole Wilson’s thunder, for Wilson himself had stolen Hay’s.

A. WHITNEY GRISWOLD, 1938

I want for my part to go in and accept what is offered us, the leadership of the world. A leadership of what sort, my fellow citizens?  .  .  .   a liberating power  .  .  .

Article X is the heart of the enterprise.  .  .  .  [It] says that every member of the League, and that means every great fighting power in the world,  .  .  .  solemnly engages to respect and preserve as against external aggression the territorial integrity and existing political independence of the other members of the League. If you do that, you have absolutely stopped ambitious and aggressive war.

WOODROW WILSON, 1919

If perpetual, [Article X] would be an attempt to preserve for all time unchanged the distribution of power and territory made in accordance with the views and exigencies of the Allies in this present juncture of affairs. It would necessarily be futile.  .  .  .  It would not only be futile; it would be mischievous. Change and growth are the law of life, and no generation can impose its will in regard to the growth of nations and the distribution of power, upon succeeding generations.

ELIHU ROOT, 1919

We are a great moral asset of Christian civilization.  .  .  .  How did we get there? By our own efforts. Nobody led us, nobody guided us, nobody controlled us.  .  .  .

I would keep America as she has been—not isolated, not prevent her from joining other nations for these great purposes—but I wish her to be master of her own fate.  .  .  .

HENRY CABOT LODGE, 1919

You must either give them independence, recognize their rights as nations to live their own lives and to set up their own form of government, or you must deny them these things by force.  .  .  .  You must respect not territorial boundaries, not territorial integrity, but you must respect and preserve the sentiments and passions for justice and for freedom which God in his infinite wisdom has planted so deep in the human heart that no form of tyranny however brutal, no persecution however prolonged can wholly uproot and kill. Respect nationality, respect justice, respect freedom, and you may have some hope of peace.  .  .  .

But your treaty does not mean peace—far, very far from it. If we are to judge the future by the past it means war.

WILLIAM E. BORAH, 1919

Though they did not do so at the time, Americans have come to think of the 1920s as the nation’s Lost Weekend in international affairs, as a period when the United States disregarded its world responsibilities by getting inebriated on the homemade gin of isolationism. Natural though it may be to take that view, looking back at the era through the smoke and debris of World War II with a vision distorted by decades of cold war, such an outlook nevertheless produces serious misconceptions about American diplomacy. It not only deforms the history of the decade from 1919 to 1930, but it also twists the story of American entry into World War II and warps the record of the cold war.

Reconsidered, the postwar era appears as a crucial period during which American leaders debated, formulated, and put into operation their basic policy in response to the broad revolutionary movements that erupted between 1910 and 1919. Approached in that fashion, the great debate over the League of Nations appears less as a fight over accepting or rejecting one document and one organization, or as a personal struggle between Senator Henry Cabot Lodge and President Wilson, and more as a broad argument over how America should sustain and extend its power and authority in a world of revolutions.

Though often defined and interpreted as an argument over strategy for achieving basic objectives, the fight over the League of Nations was in reality a conflict over tactics, or the means of implementing the strategic program. The vast majority of American leaders, both private and official (and of both parties), accepted the Open Door Policy as the strategy of the United States in foreign affairs. That was not at issue.

Wilson and his supporters advocated joining the League of Nations on the grounds that its system of collective security to preserve the fundamental features of the status quo offered the best method of keeping the world safe for the Open Door Policy. Given that framework, American power consolidated behind the integrated program of reformist and economic expansion would produce the perpetual welfare of the United States and the world. The bulk of Wilson’s opponents accepted every essential point in that argument except the unequivocal involvement in a system of collective security which was in their view charged and committed by Article X of the League Covenant to a course of action that was—in Root’s words—both futile and mischievous. They argued, in short, that Wilson’s tactics would subvert the strategy.

Only a small, even tiny, minority maintained that the strategy itself was either inherently wrong, or that it had been rendered obsolete by the upsurge of revolutions throughout the world. Such men automatically opposed the tactics proposed by Wilson and his other critics. They disagreed among themselves over the kind of strategy that should be adopted to insure the security and welfare of the United States. Some wanted to align America more openly and actively with the revolutionary ferment in the world. Others were more conservative, but thought that the best strategy was to concentrate on affairs at home and let the example of a successful America win international influence and authority for the nation.^* Whatever those differences, the minority as a group nevertheless insisted that the nation had to re-evaluate its role in the world and develop policies relevant to the new circumstances. And they had enough votes in the Senate to insure Wilson’s defeat on the League of Nations.

Thus the end result of the great debate was neither a bold new strategy nor approval for Wilson’s tactical proposal for implementing the existing one. The consensus that emerged was based on an agreement to push American overseas political and economic expansion, and on a further decision to avoid the policy of collective security on the grounds that it might easily weaken the United States, both defensively and offensively, by tying it to various features of the status quo that were sure to disappear—and others that ought to be altered by America itself. The key to understanding American diplomacy of the 1920s is the realization that it was based on this coming of age of the Open Door Policy. It represented, indeed, a synthesis of the Open Door Notes, the Monroe Doctrine, and Washington’s Farewell Address. By preserving and using its independence of action, America would employ its great economic power and ideological attractiveness through the means of the Open Door Policy to apply the principles of the Monroe Doctrine to the entire world. Woodrow Wilson and Herbert Hoover agreed that this was the “road away from revolution.”

Often presented as classic antagonists, Wilson and Hoover actually complemented each other in their common effort to preserve the world of classical liberalism.^† Wilson’s greater human appeal made him a more successful politician and gave him more insight into certain aspects of the revolutionary ferment throughout the world. But Hoover thought more incisively about the basic problems of saving liberalism in an age of corporations and labor unions (even if he did not solve those issues), and also understood the dangers of an a priori commitment to the principle and practice of collective security.

Hoover unquestionably grasped the central weakness of Article X. It was seldom necessary for dealing with small conflicts; and, where the case was marginal, the collective security approach initiated a momentum that could easily turn it into a major crisis. When applied to one of two major powers involved in a conflict over vital national interests it would not resolve fundamental issues. Either the nation judged the aggressor would retreat only to emerge more antagonistic and dangerous or it would fight. To this extent, at least, and despite his personal aloofness, Hoover understood the principle and the psychology of self-determination better than Wilson.

For such reasons, coupled with his far better understanding of the American economy, and its interrelationships with the world, Hoover placed less emphasis than Wilson on the political aspects of foreign policy. He felt that the right kind of politics would evolve from sound economics, and that it was more important to avoid serious political mistakes than to strive for brilliant political victories.^‡ Hoover therefore concentrated, both while he was Secretary of Commerce (1921–1929) and President (1929–1933), on the more prosaic—but no less vital—job of building the kind of a system of overseas economic expansion envisaged by the strategy of the Open Door Policy. He wanted working agreements with the advanced industrial nations: they were to accommodate their differences peacefully so that they could stand together in the face of the revolutionary challenges of the age. On the other hand, and while he most certainly wanted to limit and control that ferment throughout the world, Hoover viewed the poor and underdeveloped societies as “the crippled countries” that should be helped by the United States.

During the crisis defined by communist triumphs in Russia and Hungary, and the revolutionary activity elsewhere in the world, Wilson and Hoover worked together very effectively. Both men grasped the fundamentals of America’s dilemma. They realized, in different but overlapping ways, the broad challenge of the revolutions against the liberal world. They saw that the assault had grown out of the failure of liberalism to realize its theory and ideals, and hence understood the need to make it work in the United States as well as elsewhere. They agreed, moreover, that peace was a necessary prerequisite for this to be accomplished. At that point, however, the problem became very difficult. Policies had to be formulated to deal with each aspect of the crisis, yet all such policies had to be co-ordinated in one general outlook and program. Otherwise, American diplomacy would ultimately fail and leave the United States in a negative and weakened position.

Naturally enough, the issue of what to do about the communist victories in Russia and Hungary was of immediate importance. Hoover has provided a classic statement of this fact: “Communist Russia was a specter which wandered into the Peace Conference almost daily.” The crisis completely disrupted Wilson’s original peace program, making it necessary to delay the work of reforming the world under American leadership as part of sustaining America’s own democracy and prosperity. First priority had to be given, at least temporarily, to the problem of checking the revolutions. That specific phase of the crisis was generalized, though not in communist form, by similar upheavals in the Middle East and Asia, where anticolonialism and nationalism challenged the existing order. But the noncommunist revolutions served to intensify rather than mitigate the differences among the victorious Allies. England and France, for example, opposed some of Wilson’s suggestions concerning Germany and colonial territories. And Japan, though formally allied with the Western powers in Europe, was busy in Asia trying to exploit the anticolonial and nationalist revolutions for its own imperialist purposes. Yet all three powers shared Wilson’s opposition to the communist revolutions, and their help was necessary if the liberal coalition was to be effective.

Though it sometimes appeared vague, even irresolute and contradictory, Wilson did develop a general program to cope with the complex crisis. His objective was to structure the peace settlement so that America could provide the intellectual, moral, economic, and military power and leadership to reinvigorate and sustain the liberal way of life throughout the world. So strengthened, liberalism would effectively undercut, and ultimately defeat, its revolutionary and radical antagonists.

True to the logic of his frontier-expansionist outlook, Wilson concluded that the victory abroad would insure domestic American welfare. That would make it possible to embark upon his desired “slow process of reform,” which was to be based upon “some sort of partnership” between capital and labor, with the government playing the multiple roles of agent for each broad group within society and mediator between all of them. American diplomacy was thus the instrument of domestic well-being, and to this end Wilson proposed and acted upon two key ideas. He insisted upon Article X of the League of Nations Covenant, which secured the “territorial integrity and existing political independence” of member states (Russia was excluded), and he sought to halt further revolutionary gains.

Wilson actively opposed the communist revolutions in Russia and Hungary. To do so he resorted to force, the manipulation of food supplies, and economic and military aid to counter-revolutionary groups. In Hungary, for example, Wilson collaborated closely with Hoover in employing the American Food Relief Mission to unseat the radical government of Bela Kun by denying needed supplies to that country as long as the communists stayed in power. This American intervention to overthrow a locally established communist government in Hungary offers more than just an illuminating parallel with the Russian intervention in Hungary in 1956. Of course, the Russians were directly ruthless. Yet it is self-righteous to argue that the American use of food to accomplish the same kind of objective was somehow more moral or civilized. Furthermore, the American action in 1919 may well have influenced the vigorous and very serious debate among Russian leaders before their decision to intervene with the Red Army in 1956.

In Russia, moreover, the United States used guns as well as the control of food and other economic supplies in its support of anti-Bolshevik forces. A great many efforts have been made, particularly during the years of the cold war, to prove that the United States did not intervene in Russia to overthrow the Bolshevik Revolution. Only a few of them have been based on extensive research and argued with any degree of sophistication. And even those have not been convincing because the evidence does not bear out the contention.^§

The key to understanding and interpreting American intervention in Russia was supplied by Wilson himself. He did so while arguing against Winston Churchill, who advocated ruthless armed assault on the Bolsheviks, in a meeting of the Big Five at the Paris Peace Conference on February 14, 1919. In reply to Churchill’s powerful rhetoric, the President put it all in two sentences: “President Wilson  .  .  .  himself felt guilty in that the United States had in Russia insufficient forces, but it was not possible to increase them. It was certainly a cruel dilemma.”

Since it was Wilson himself who said in January 1918, that policy toward Russia was “the acid test” of Allied and American intentions, it does not seem unreasonable to suggest that the President knew he was failing his own examination question. Wilson and his advisors first attempted from November 1917 through the spring of 1918 to resolve the “cruel dilemma” by aiding anti-Bolshevik forces short of committing American troops. They realized that open armed intervention would very probably strengthen the Bolsheviks by enabling them to play upon the normal patriotic feelings of all Russians. As should be obvious, that policy did not mean that the Wilson Administration approved of the Bolsheviks, and it did not mean that the United States refrained from intervention.

Two developments changed the situation, and that early strategy, by the early summer of 1918. First, the Bolsheviks were still in power, and Wilson was clearly interested in seeing them overthrown. He had by that time ignored several overtures from Moscow. Second, Japan was intervening in Siberia, and that was viewed by Wilson as a danger to the Open Door Policy throughout Asia, including Siberia. Wilson considered it “essential” to maintain the open door strategy by checking the Japanese maneuver. The resulting policy was a bit complex, perhaps, but by no means so complicated or shrouded in mystery as to be impervious to research and analysis. The United States intervened against the Bolsheviks with troops and aid to anti-Bolshevik Russians, and it did so in a fashion designed to thwart Japan’s ambitions in Siberia, Manchuria, and Northern China. Those who try to defend American action by denying the anti-Bolshevik side of it might be more effective in their general purpose, as well as more accurate, if they would defend the policy as a rather sophisticated attempt to accomplish an extremely difficult task.

Several factors combined to limit the extent and the effectiveness of American intervention. At first, the war against Germany claimed priority. Then, after the armistice, opponents of intervention in Russia (such as Senators William E. Borah and Hiram S. Johnson) blocked more vigorous action by threatening a Congressional investigation. Wilson told his subordinates to overcome that opposition by “the utmost frankness” in describing the situation and the objectives to Senate leaders. His assistants replied that the critics were holding the high ground: “Senator Johnson is demanding that troops be withdrawn from Archangel, and there is considerable support of his position on the ground that our men are being killed and no one knows why they are still there.” In addition, American troops in Russia made it clear that they were against the policy. Some of them refused to fight. And finally, the anti-Bolshevik forces offered poor and uninspiring leadership in Russia. The cruel dilemma was finally resolved by the Bolsheviks who won the Russian civil war.^¶

While Wilson handicapped himself in his efforts to block Japan by refusing to work directly and vigorously either with China or the Russians, he did stabilize the situation after Japan’s first penetration into Manchuria and Siberia. His persistent opposition, manifested by the American forces and his efforts to reorganize and use the banking consortium to keep the Japanese from taking over the Chinese Eastern Railway, did prevent Tokyo from consolidating its initial gains.

Finally, Wilson opposed both traditional colonialism and revolutionary nationalism, seeking a compromise in the mandate system, under which the Open Door Policy would be used to reform the political and economic life of the areas according to American interests. And in all of this program, he vigorously asserted (though he was not always able to maintain) the predominance of American power and leadership. Granted its essentially conservative character, for it was a program designed to preserve the existing order in the face of broad revolutionary challenges, Wilson’s program was about as comprehensive an approach as anyone could have devised.

Along with Herbert Hoover, who helped Wilson formulate and put it into operation, such men as Elihu Root, Charles Evans Hughes, and Henry L. Stimson initially supported the program and its policies. Had they continued to do so, the League of Nations Treaty would have passed the Senate, for the influence of these men would have been sufficient to override the opposition. Hence it is vital to understand the reasons that led these key leaders to leave Wilson and join other opponents of the treaty.

Political and personal motives no doubt influenced all of Wilson’s opponents, but the basic sources of their opposition can be found in their conception of America and its role in the world. For the group led by Hoover, Hughes, and Stimson, one factor seems crucial. They had more insight into the structure and functioning of industrial society and thus grasped the weaknesses of classical liberalism more thoroughly than Wilson. As men who knew the market as well as the library, they were aware that the liberal system in practice did not function according to its theory. That knowledge led them to propose a more concrete program for the future.

With Wilson, they accepted the principles of natural law, but they knew from experience that the individual was no longer free to act in accordance with this theory. The individual had become part of a larger group. Realizing that, they had more specific ideas about how to define and structure what Wilson vaguely referred to as “some sort of partnership” between capital and labor.

Hoover provided the most advanced intellectual leadership within this group. He analyzed America’s mature industrial system as an intrinsically corporate society composed of, and organized on the basis of, three primary units—capital (including agriculture), labor, and the government. The objective was to establish a pattern in which, despite their differences and short-run conflicts, those groups would work together to create the conditions under which the natural harmony of interests would manifest itself. Hoover even predicted four ways in which the effort to create such a corporate society might fail: large business interests could take over and produce fascism; labor could win out and turn to socialism; the government bureaucracy could itself become dominant and create a kind of ad hoc and aimless tyranny; or the government would become in practice the market place in which the other units scrambled for power and profit, an alternative that Hoover quite accurately called capitalistic syndicalism.^#

Transferred to the international scene, Hoover’s analysis pointed to the necessity of defining and establishing a similar community with Germany, Japan, and Italy, as well as with England and France. Secretary of State Hughes explicitly called for such a “community of ideals, interests, and purposes.” That kind of community would not only strengthen each country individually, but would, being led by the United States, be capable of controlling the revolutionary challenge to the existing order. While Hoover was the central figure in this group opposing Wilson over Article X, the others understood the approach, accepted its central features, and worked in their own ways to put it into operation.

These men recognized that the American economy was an interrelated and interdependent system, rather than a random conglomeration of individual operations mysteriously unified by the abstract functioning of the market place. This knowledge, which most of them had gained as practicing entrepreneurs or as corporation lawyers before they entered politics, was the source of their differences with Wilson and the basis of their own foreign policy. Since they thought about economic and political affairs as an interlocking system, they had far more in common with mercantilists than with the advocates and philosophers of laissez faire. They were not mercantilists: mercantilism was a Weltanschauung of the seventeenth and eighteenth centuries. The term is used for the purpose of offering an analogy that may help clarify their efforts to transform the existing private enterprise syndicalism into a truly corporate capitalism.

Two similarities to mercantilism are important for understanding the outlook and activities of such men as Hoover and Hughes. One concerns the active role of government in promoting the internal organization and stability of the economic system. Hoover and others such as Bernard Baruch and Owen D. Young gave considerable attention to the problem of rationalizing the domestic economy through such institutions as trade associations and by establishing the practice and habit of close co-operation between government and business. Of itself, this was nothing new. Theodore Roosevelt and Herbert Croly of the Progressive movement favored it, and Woodrow Wilson practiced the same kind of collaboration during World War I. But Hoover and Baruch did a great deal to develop, extend, and popularize the idea through the 1920s.

The second aspect of their political economy that bore similarities to mercantilism affected foreign policy even more directly. For in thinking of economic activity in terms of the system, while at the same time keeping their basic capitalistic concept of economic life, such men as Hoover, Hughes, and Stimson emphasized that the overseas economic expansion of the system was necessary for continued prosperity. Corporation and banking leaders agreed. The result was a vitally important integration of thought: political and economic leaders came to share the same idea about the relationship between domestic and foreign policy. Overseas economic expansion became an integral part of the domestic expansion of the system itself, rather than the interest or concern merely of certain segments of the system. This did not conflict with the average citizen’s understanding of America’s greatness and prosperity, for the frontier thesis explained the nation’s democracy and well-being in terms of just such expansion.

For these reasons, and because most of them had less of the crusading temperament than Wilson, men such as Hoover and Hughes stressed the importance of extending America’s economic empire. So, too, did most businessmen. Many economic leaders, such as Thomas Lamont of the House of Morgan, originally favored Wilson’s program for peace, thinking it a good plan to stabilize world conditions and prepare the way for American expansion. But the majority of corporation leaders and bankers lost their early enthusiasm for Wilson’s approach, some because they came to agree with Hoover’s criticism of the League Covenant and others because they were anxious to get to work “in the frontier countries” and hence wanted to stop wasting time in an apparently endless, and profitless, argument.

Frank Vanderlip caught the spirit of that growing impatience in his remark (and concern) about what he called “the war after the war.” He had organized the American International Corporation in 1914 for the specific purpose of opening up the poor, underdeveloped countries. In similar rhetoric, the Wall Street Journal emphasized its concern with the “stupendous trade battle” then developing. Another man with the same ideas—and fears—was Silas H. Strawn of Montgomery, Ward & Co. He flatly asserted that the United States “must expand”; a failure to do so “would result in such intense competition as to precipitate an economic panic in this country the like of which has never been seen.” And John Hays Hammond warned the N.A.M. of the same danger. “It is obvious  .  .  .  that we must either curtail the capacity of our factories  .  .  .  or we must depend upon the exploitation of foreign countries for the relief of our congested home markets.” All such economic spokesmen, as well as the majority of the political figures who opposed Wilson, stressed expansion of the American economic system, as well as the enlargement of their own particular operations. But they were less immediately concerned with the political and ideological aspects of that imperial growth. They generally assumed that those features of the American system would develop more or less automatically as a consequence of economic progress; or, if not, that such affairs were the concern and responsibility of the politicians.

Two other groups also opposed Wilson over the issue of Article X. Each did so, however, for different reasons. The vigorous empire men, led by Senator Henry Cabot Lodge and Theodore Roosevelt, defined America’s role as the new—and better—British Empire. At home, they called for an aristocratic elite to control labor and capital within the framework of an industrialized concept of noblesse oblige. Overseas, they proposed to use America’s power to implement the Open Door Policy and build a modern industrial empire. “Let us make it our policy,” advised Lodge, “that what we shall do and when we shall do it shall be determined by us.” Some businessmen shared his view. Edward A. Filene, who was at one time national director of the Chamber of Commerce, thought that the United States was “in the exact position of a man of peace in a frontier community. It is our duty to advocate and to stand ready to join an International Vigilance Committee.” He assured America that it could, “in no way, write a better insurance policy for its future material prosperity” In their own way, such politicians and businessmen agreed with Bismarck’s classic phrase: “If there is to be a revolution, we would rather make it than suffer it.” This outlook led them to support the Hoover group once Wilson was defeated on the League issue.

At the other extreme was an even smaller group of men who were almost doctrinaire laissez-faire liberals in domestic affairs and antiempire men in foreign policy. Led by Senator William E. Borah, they made many perceptive criticisms of existing policy, but their specific policy suggestions did not appeal to many Americans. Their domestic proposals, based as they were on an almost pure theory of competition, had but little relevance to a mature and complex industrial society. Hence they attracted little support from urban or rural businessmen and almost none from organized labor. Each of those groups wanted to regulate or control competition in its particular behalf. The men around Borah suffered from similar weaknesses in foreign affairs, for in criticizing America’s imperial expansion they opposed the general feeling that this expansion was economically necessary as well as ideologically and morally just.

In an ironic way, moreover, the Borah group undercut its own position by aligning itself with the Lodge and Hoover groups to defeat Wilson’s League treaty. For in this fashion they inadvertently strengthened the impression that America was not (and need not become) involved politically by such economic expansion. Hence it was difficult for Borah and similar critics to attract much organized and effective support for their own program. They were often misunderstood, further-more, as a result of their opposition to Wilson. These weaknesses and misimpressions tend to obscure the fact that their criticism was insightful and fundamental, that they were by no means as naive about international politics as their critics charge, and that they had a strangely “modern” attitude toward aid to underdeveloped nations.

The argument advanced by Borah and other antiempire spokesmen was based on the proposition that America neither could nor should undertake to make or keep the world safe for democracy. They maintained that the idea was unrealistic because it neglected the different cultural traditions of most of the rest of the world and because of the power that some or all of those nations could bring to bear against the United States. And even if it were possible to build such an empire, they concluded, the effort violated the spirit of democracy itself. Borah provided a classic summary of these two arguments in one of his speeches attacking the proposal to clamp a lid on the revolutionary ferment in China after 1917. “Four hundred million people imbued with the spirit of independence and of national integrity are in the end invincible. There is no power which can master them or hold them in subjection. Warships and Gatling guns and dead students may mislead some but the forces which determine the action of empires and great nations lie deeper.”

Borah and others also relied on this assumption in making their assessment of events in Europe, Latin America, and Asia, and in proposing modifications of American policy. Johnson, for example, concluded that the story of American loans to Latin American countries was “a sordid tale, at once grotesque and tragic.” Concluding that his investigation of the facts had “stripped some of the hypocrisy” away from the usual accounts of the policy, he pointed out that American money was used to “maintain dictators in power,” and that it was “party to the suppression of every natural right of citizens of South American Republics.” Johnson quickly added that citizens at home also suffered. Some were subject to “shameful, and even infamous, exploitation” by the bankers who sold the securities. And everyone lost because of the bitter reaction against the United States.

Representative Fiorello La Guardia and Senators La Follette and Borah joined Johnson’s attack. Borah condemned the “drumhead diplomacy” of Wilson and Bryan in Central America, and denied that the Monroe Doctrine gave the United States any right to intervene throughout the hemisphere in that manner. Just as he opposed the narrow policy of many business interests in China, Borah also used his influence to block the oil companies and other groups that wanted vigorous intervention against the government of the Mexican Revolution. He played a significant role in the appointment of Dwight Morrow as Ambassador to Mexico, and supported Morrow’s ultimately successful efforts to halt the deterioration of relations and to negotiate an interim settlement of the oil and other property issues.

As that action suggests, Borah and the other anti-imperialists were more than critics. They offered many positive suggestions. Borah was particularly active, for example, in urging the government to take the lead in the economic reconstruction of Europe, and in reaching some agreement on limiting armaments in the Pacific. La Guardia, Johnson, and La Follette all supported the recognition of Russia for economic reasons as well as on the grounds that such action was in keeping with the principle of self-determination. Borah agreed with those arguments and added others that were even more perceptive. He concluded that a rapprochement with the Soviet Union was “the key to a restored Europe, to a peaceful Europe.” In addition, he thought that the United States could play a crucial role in creating the circumstances in which there could “emerge a freer, a more relaxed, a more democratic Russia.” Finally, and perhaps most striking of all, Borah offered a keen analysis of the importance of Russia to America’s general security. His estimate of the strategic and power factors was considerably more astute than the supposed realism of most of the critics who dismissed him as an isolationist.

Borah warned in 1923 that American policy—“a narrow-visioned, intolerant policy”—was helping to push Russia and Germany together. That was “not at all desirable,” and he urged the government to recognize the Soviets as a move to weaken that relationship. A bit later, after Japan had again indicated its determination to expand on the mainland of Asia, Borah offered a very direct warning: unless the United States moved to prevent it, Russia would be forced to come to terms with Japan. “I feel more strongly than ever,” Borah wrote Secretary of State Stimson in 1932, “that our relationship with Russia ought to undergo a change. I am satisfied that by proper steps taken upon the part of our government any close relationship between Russia and Japan could be avoided.” ^** Dramatic as they are, Borah’s observations on the interaction between the United States, Russia, Germany, and Japan were only conclusions drawn from his basic insight into the broader issue. His remark of 1925 on the consequences of American policy toward Russia was indeed prophetic: “So long as you have a hundred and fifty million people outlawed in a sense, it necessarily follows that you cannot have peace.”

Toward underdeveloped and poor countries, Borah and others like him manifested a complex and somewhat contradictory attitude. Men like La Follette and Borah were of course concerned and sympathetic with the problems of poverty and independence. But they did not in the last analysis believe that a nation or a people could be given freedom and prosperity by outsiders. They were very skeptical of the argument that democracy could be exported along with surplus commodities and manufactured goods or created by foreign loans. That conclusion was an integral part of their knowledge of, and judgment on, European colonialism and America’s own imperial expansion. They were all opposed, as La Follette put it, “to the dollar diplomacy which has reduced our State Department from its high place as a kindly intermediary of defenseless nations, into a trading outpost for Wall Street interests, aiming to exploit those who should be our friends.”

As a result, Borah and the others preferred to deal with other nations on a strict, even narrow, economic basis, leaving them alone and free to use their wealth as they saw fit. Clearly enough, they underestimated the importance per se of a minimum, and improving, level of economic welfare, and of the relationship between that foundation and the development of political and cultural maturity. And they discounted—no doubt because they generalized American experience to other nations—the great difficulties that underdeveloped countries faced in starting and sustaining such improvement on their own. Yet they were willing to help nations weakened by war or catastrophe or nations just getting started in their own development. Perhaps this explains their preference, when pushed to the wall (as in the case of Liberia in the 1920s), for outright grants of assistance over government loans or private investment.

Of all Americans, the group around Borah most clearly understood the principle and practice of self-determination in foreign affairs. For that reason, as well as other aspects of Borah’s criticism, President Wilson singled out Borah as his most important critic—as the man who might turn out to be right. In his own time, however, Borah enjoyed little praise and almost no support. He served as spokesman for various small groups which sought to change policy toward Russia, China, and Latin America, but at most—with the possible exception of Russia—these groups exercised a minor influence on American foreign policy. Borah himself became stereotyped as a naive, irresponsible, and wrong-headed gadfly. But a generation later, in the midst of a cold war, those who like their history with a twist of irony might find it illuminating to compare his speeches and letters between 1917 and 1935 with the most recent policy proposals advanced by later “realists” who had ignored or deplored his earlier actions.^††

Opposed by the powerful coalition of Hoover, Root, Lodge, and Borah, and unwilling to compromise over Article X, President Wilson lost his battle for the League of Nations Covenant. But most of his opponents shared Wilson’s conception of America as the leader of the world, and they turned quickly from the tactical skirmish with him to the work of putting the strategy into operation through the policy of the open door.

II.THE INTERNATIONALIZATION OF BUSINESS

We are seeking to establish a Pax Americana maintained not by arms but by mutual respect and good will and the tranquilizing processes of reason.  .  .  .

When we have a clear sense of our own interests, we are just as inflexible as others.

CHARLES EVANS HUGHES, 1924

We must finance our exports by loaning foreigners the wherewith-all to pay for them.  .  .  .  Without such loans we would have the spectacle of our neighbors famishing for goods which were rotting in our warehouses as unusable surplus;

JOHN FOSTER DULLES, 1928

We must find a profitable market for our surpluses.

HERBERT HOOVER, 1928

Our investments and trade relations are such that it is almost impossible to conceive of any conflict anywhere on earth which would not affect us injuriously.

CALVIN COOLIDGE, 1928

The present is a time of great unrest and disquiet throughout the world, and it is to the interest of all governments to try to maintain order and stability.

HENRY L. STIMSON, 1932

Confronted by revolutionary opposition throughout much of the world, plagued by conflicts with and among their recent Allies, and disturbed by the continued antagonism between the victors and the defeated, American policy-makers concluded that peace was the sine qua non of any effort to implement the strategy of the Open Door Policy. Without stability and peace, there could be no economic expansion, which all of them considered the dynamic element in producing America’s well-being. In the view of these men, at any rate, most of the troubles they faced in the 1920s had either been caused by World War I or had been intensified by that disruption of law and order. It later became fashionable among historians and other commentators to criticize leaders like Hoover and Hughes (as well as Borah) on the grounds that they were naive, or that they trusted Germany and Japan too much on too little evidence. Much of that criticism resulted from interpreting the 1920s in a very narrow, relativistic manner. Men who had to fight Germany and Japan (and who thought they might well have to fight Russia) concluded that anyone must have been blind or misguided not to see what would happen if those countries were not blocked by the threat—or the use—of force. That judgment was further strengthened by the effect of World War II on attitudes toward force: having come to use force without limit in international affairs, and in many respects to take that approach for granted, such critics tended to define realism in foreign affairs largely in terms of such an acceptance of force.

Whatever its merits as a general approach to foreign policy, that point of view produces serious misconceptions about American policy-makers of the 1920s. In the first place, those men were not naive about power. All of them had broad experience in economic and legal affairs, which are hardly unrelated to conflicts of power, and had also participated in the American war effort. None of them were pacifists. It is true that they preferred not to employ force. Neither did they take its use casually or cynically. But those characteristics may be signs of their maturity instead of symptoms of their naiveté.

In the broader sense, men like Hoover and Hughes understood the crucial point about the strategy of the Open Door Policy that their critics overlooked: it was designed to win the objectives without recourse to war. These critics might with more relevance (and perhaps even profit) examine the objectives instead of continuing to condemn the reluctance to resort to force. It is one thing to say that the objectives of American foreign policy in the twentieth century could not have been achieved without resorting to force. That is a straightforward, cogent line of argument. But contrary to the apparent belief of many people who follow that interpretation overtly or implicitly, it does riot prove two other things. It does not prove that any nation which resisted (or resists) those objectives was (or is) evil, and therefore to blame for subsequent conflict or violence. And it most certainly does not prove that men were naive because they were inclined either to abandon or modify those objectives, or postpone the victory, rather than use force. Finally, the leaders of the 1920s were hardly naive in seeing a correlation between war and social unrest culminating in revolutions, or between war and the restriction of democracy even in the United States.

American leaders concluded that the best way to reconcile the necessary expansion of the American economic system with the necessity of peace was by working out a general concert of policy among the United States, Great Britain, France, Germany, and Japan based on the acceptance of the Open Door Policy by all those powers. Such a de facto entente in behalf of a “community of ideals, interests, and purposes” was designed to operate on three levels. The nations would compromise their differences and stand firm against the Soviet Union and other revolutionary movements. Thus aligned, they would direct and set limits on the development of colonial, mandated, and other nonindustrialized areas. Finally, America’s economic predominance would enable it to guide the operation while at the same time strengthening and extending its own open-door empire.

In this fashion, economic expansion became both a means and an end for American policy-makers. Defined as a goal because of its vital importance to the continued success of the domestic economic system, it was also considered a means to build the empire of peace and prosperity which would secure the world for continued expansion in the years to come. One of the most striking features of American diplomacy of the 1920s was the extent to which all policy-makers expressed this in their public, as well as private, remarks. President Harding urged Americans to “operate aggressively” and “go on to the peaceful commercial conquest of the world” in order to avoid social conflict at home. Though by no means gregarious, President Coolidge was not backward about expressing his similar view of America’s role in the world. Feeling it was “perfectly obvious” that if any action was “wrong  .  .  .  within the confines of the United States, it is equally wrong outside our borders,” Coolidge asserted that “the one great duty that stands out requires us to use our enormous powers to trim the balance of the world.” It was in keeping with that outlook, moreover, that Secretary of State Hughes explained that “the preponderant thought among us undoubtedly is that our influence would not be increased by pooling it” in an organization such as the League of Nations.

Less traditional in their conceptions of empire than Coolidge, Hughes and Hoover explicitly sought to eliminate “the old imperialistic trappings.” In a crisis, they agreed with Coolidge: interventions undertaken “to discourage revolutions” were not war “any more than a policeman on the street is making war on passers-by.” But Hoover and Hughes concentrated on preventing revolutions by the expansion of American economic power. Anxious to locate “the antidote to Bolshevism,” Hughes understandably viewed “the tendency to have revolutions” as a “regrettable condition” of world affairs. He also emphasized the importance of controlling key raw materials. And he reacted promptly to a warning from his departmental advisors that “the vast increase in the surpluses of manufactured goods  .  .  .  must find a market, if at all, outside the United States.” Hence he gave first priority to the problem of establishing and maintaining peace in order to “deal with the economic verities.”

Striving for an American-led community of interests with other industrial nations, it was natural for him to conclude that “it is self-determination which makes for wars and places obstacles in the way of all plans for keeping the peace.” That sentence provides one of the neatest, if also most unnerving, clues to the tragedy and the terror of American diplomacy. For, committed in principle to self-determination, Hughes was turning away from that axiom in order to insure the expansion and consolidation of the status quo.

Stimson shared this concern with “peace and order.” At home, he thought that the “richer and more intelligent” citizens should manage affairs. Extending that hypothesis to the world, he defined America as the elite of international society. As for the white man’s burden, he believed “in assuming it.” His basic strategy called for the expansion of “big, high-class American business” throughout the world and for political intervention of the subtle and behind-the-scenes variety that would not arouse the antagonism of the natives or the American public. According to Stimson, such a foreign policy would ultimately bring inferior peoples into step with America’s standards and practices. His vigorous and extensive conception of America’s role in the world led Stimson to feel more at home with Franklin Delano Roosevelt than with Herbert Hoover, but during the 1920s he shared with Hughes and Hoover a broad area of agreement.

Though officially no more than Secretary of Commerce from 1921 to 1928, Hoover demanded, and received, a quasi-official veto over foreign policy as a condition of entering the cabinet. Armed with this authority, he exercised great influence on foreign affairs. Highly disturbed by the “spread of revolution over one-third of the world,” he developed a program designed to halt the “drift toward socialism.” Hoover’s basic proposition was simple: the American system was “the only safe avenue of human progress.” Concluding that the world was “passing from a period of extreme individualistic action into a period of associational activities,” he sought to organize the new system within a capitalistic framework that protected political democracy. He approached the problem by defining labor and capital as “both producers  .  .  .  not classes.” As such, they had “great areas of mutual interest,” the most important of which was the continued existence of corporate capitalism itself. Hoover was aware that American labor was not radical, and he wanted to keep it from moving in that direction.

In formulating his ideas concerning such a co-operative, or corporate, capitalistic political economy, Hoover understood that the corporation had asserted its fundamental supremacy over the banker. Between 1900 and 1916, the corporation had been forced to rely temporarily on the financier for capital. But soon after the war the corporation began producing enough surplus capital to finance and thereby control most of its own decisions. The bankers were still important, and struggled bitterly for a time to regain their earlier power, but they were on the defensive,^‡‡

Some of their battles had an important bearing on foreign policy. In Latin America and Asia, for example, the financiers fought hard for policies that would help them reap profits they could use at home. Those efforts delayed or blocked some of the more sophisticated programs advocated by Hoover, such as his desire to limit investments to productive enterprises. The bankers often disregarded such rational, equitable and long-range considerations. They operated far more as narrow, interest-conscious entrepreneurs. Partly as a result of that nature of their dealings, and also because of the general impact of their expansion, the financiers antagonized many foreigners. That only complicated and increased their difficulties. Along with the Great Depression, those considerations ultimately convinced the bankers of two things: they needed to evolve a new and more equal relationship with the corporations; and both economic groups had to increase, regularize, and institutionalize the kind of government assistance that Willard Straight had helped initiate before World War I. Such an approach finally brought the bankers, the corporations, and the government into a very intimate working arrangement concerning domestic and foreign affairs during the years of the New Deal and World War II, but it did not change the underlying primacy of the corporations.

Based on his understanding of the central role of the corporation, Hoover developed his conception of associational capitalism around two themes. First, all economic co-operation would center on the corporation; and second, the government, representing the populace at large, would co-operate with the corporation to insure national prosperity and democratic procedure. Hoover first announced his approach at the national economic conference of 1921, which was originally called by President Wilson to implement his own idea of “some sort of partnership” between capital and labor. The problems were dangerous and difficult, Hoover admitted, but “a large degree of solution could be expected through the mobilization of co-operative action of our manufacturers and employers, of our public bodies and local authorities.  .  .  .  While our industry and commerce must be based upon incentive to the individual, yet the national interest requires a certain degree of co-operation  .  .  .  in order that we may reduce and eliminate industrial waste, lay the foundation for constant decrease in production and distribution costs, and thereby obtain the fundamental increases in wages and standards of living” that would guarantee “increased social stability” and world peace.

Hoover understood that labor had to participate in this cooperation, and upon many occasions voiced public support for unionization and for collective bargaining. It is of course true that Hoover feared and opposed socialism; and in the years after the Bolshevik Revolution and the end-of-the-war labor unrest in the United States he was concerned that the unions might through their practice if not their intent push the emerging corporate capitalism ever further to the left. But most of the usual criticism of Hoover on the labor issue is misleading because it is based upon such a narrow conception of the general question.

Hoover was not prolabor in the sense of giving it first priority in his policies or in taking its side in any situation. Yet several elementary truths are always overlooked in judging Hoover by that elementary standard. The American labor movement of the 1920s was not very large, for example, and it accepted the basic features of the existing capitalist system. Furthermore, its few leaders who concerned themselves with the underlying problems of the relationship with management, and of markets, revealed broad areas of agreement with Hoover.

This was particularly significant in connection with foreign affairs. The labor movement did have two primary reservations about the policy of overseas economic expansion. It worried that jobs lost to foreign workers when an American corporation established a branch factory in another country were not balanced out by new investment at home or by the increased trade. And a few leaders fretted about the possibility that such expansion would lead to wars involving the United States. In general, however, the labor movement in the 1920s supported America’s overseas economic expansion because it provided more sales and because it was interested in expanding its influence over the labor movements in foreign countries. The latter consideration was nothing new, for labor had backed the Spanish-American War and President Wilson’s intervention in Mexico for the same reason.

In his approach to the problem of stabilizing agriculture at the level of prosperity created by the war, Hoover stressed co-operation between individual farmers. They should work together to control production and marketing, which would in turn maintain and even enlarge their foreign markets as well as helping them at home. Though it may seem unrelated to foreign affairs, the issue of agricultural surpluses actually offers in many respects the neatest overview of how overseas economic expansion was the central theme of American foreign policy in the 1920s. It is also worth exploring because it provides a clear picture of the more general problems facing Hoover and other American leaders.^§§

While one would expect the farmers to be concerned about their markets, it may be surprising to realize the extent to which bankers and industrialists shared that concern. Hoover described the problem very clearly. Farmers were in “great difficulties,” he explained in 1921, because of their “position of inequality in purchasing power as compared with other industries.” That imbalance was “already digging a grave of unemployment” for the nonagricultural sectors of the economy. Part of Hoover’s understanding very probably came from his experience in handling war relief, and from his close friendship with Julius Barnes, who was a major grain exporter. But the most important point concerns the way he analyzed the farm problem as an integral aspect of the whole political economy. “We must have,” he concluded, “the co-operation of our bankers and our industry.” They “must be brought together” with the farmers by the government—and specifically by Hoover’s Department of Commerce—to work out a solution for the problem. It is not unusual, of course, that George N. Peek, a manufacturer of agricultural implements, shared that view. He thought it was a question of exporting the surpluses or else “we are going to have state socialism.” But Baruch and other eastern urban leaders like Otto Kahn had the same idea. So did Charles G. Dawes, a midwestern financier who had economic and political connections with eastern bankers.

The trouble arose over how to underwrite the exports. Farmers generally wanted the government to sell their surpluses abroad, paying them the difference between the world price and the American price from government funds, or from money collected from the processor and the consumer at home. Senator Peter Norbeck provided a blunt summary of the basic approach at the end of 1922. “Slowly but surely, the idea is getting home that it [the issue] is the surplus, and that the way to stimulate the market is to find some way to dispose of the surplus. Sell it at a good price, if we can; sell it at a poor price if we must; give it away if we cannot do better.  .  .  .  In other words, let agricultural products have the same benefit of a similar control that big business gives its products.”

Acting through their representatives in the Congress, the farmers pushed their program into law in 1927 and again in 1928. It was vetoed both times. The key to understanding those vetoes lies in the negative and positive sides of Hoover’s broad outlook as applied to the agricultural crisis. On the negative side, he militantly opposed the plan advocated by the farm bloc. First: it put the government into business. That not only threatened to accelerate the movement toward socialism or bureaucratic tyranny, but it also increased the risk of serious international conflict by formally tying the government to economic activities. Conflicts in the market place would automatically become political conflicts. Second: the two-price system proposed by the farmers was unfair to the consumer because it forced him, either through increased taxes or higher retail prices, to pay twice for a loaf of bread.

On the positive side, Hoover and others like Baruch, Kahn, and Dawes had their own solution which tied agricultural prosperity to industrial and financial well-being. Their approach was to loan money abroad, particularly to European industrial countries. That would not only provide funds for buying American farm surpluses (directly, and as a result of general prosperity), but it would also facilitate the building of that broader convergence of interest which Hoover and Hughes were so eager to establish. They also anticipated at least four other benefits: (1) such loans would give the United States influence on foreign countries creating lines of direct and formal responsibility to Washington; (2) the loans would help solve the broader problem of post-war recovery throughout the world; (3) by giving strong if unofficial approval to the loans, the government would help the bankers obtain the kind of assistance they needed in accumulating capital from the average citizen; and (4) the plan would satisfy the agricultural bloc and thereby strengthen the Republican Party at a time when it was again in danger of losing the farm vote.

For that matter, the easiest way to fix all such considerations in one’s mind is to remember that Dawes won the Republican nomination for vice president in 1924. He got the call because of his role in negotiating the huge, inclusive international economic arrangement known as the Dawes Plan, and more directly because he was a midwesterner who could plausibly argue that the program would solve the farm problem. The plan itself was much more than a device to sell agricultural surpluses. It was based on American loans to Germany, which would enable that nation to start reconstruction while also paying reparations to England and France. That triple play would abet economic development among the defeated as well as the victors and thus increase the demand for all kinds of American exports.

Clearly, then, Hoover, Hughes, and other American policy-makers of the 1920s viewed overseas economic expansion as the crucial element in establishing a secure foundation for peace, and in guaranteeing the successful functioning of the American political economy. Secretary of State Hughes explained the point in a particularly direct manner: “All political questions  .  .  .  broadly, have some economic aspect or some economic force lying back of them.” It was only natural, therefore, that the “businessman has the most direct interest in the conduct of foreign relations.” And to the Secretary, at any rate, it was obvious that one of his main responsibilities concerned “the enlarging of the opportunities for industry and commerce by the recognition and extension of the policy of the ‘Open Door’.” A good example of the way this strategy guided all foreign policy actions is provided by the tariff legislation of 1922. For the central importance of that law lies not so much in the rates that it established on various goods, but rather in Section 317, which specified that the principle of the open door was to be written into all enabling agreements negotiated with foreign countries.

Hoover’s view of the relationship between domestic welfare and overseas economic expansion was even more explicit. The “export market becomes of peculiar importance to us,” he noted in 1924, “in maintaining a stable and even operation of our domestic industries. It has an importance in that regard far beyond the percentage of our exports to our total production.” It was a crucial “part of our domestic progress, both socially and economically.” Hence it was essential for the government to provide “protection and support to Americans interested in the development of American enterprise abroad.”

One of Hoover’s most significant acts of assistance involved a thorough reorganization and beefing-up of the Department of Commerce in order to push such economic expansion. The importance of that work is suggested by the way that later Secretaries of Commerce, including Democrats Harry Hopkins, Henry A. Wallace, and Luther Hodges, identified their own programs with both the ideas and the policies stressed by Hoover. Hoover picked his assistants with extreme care, and hence it is illuminating to review their basic ideas. Some of the most revealing statements of their outlook were provided by Julius Klein, who served as Hoover’s top aide during the time he was Secretary of Commerce. Klein described the general objective as “the internationalization of business” under the leadership (and the predominant influence) of the American corporation. As one who accepted the frontier-expansionist explanation of American history, he offered in 1927 a brilliant two-paragraph statement of the thesis advanced by Brooks Adams, Frederick Jackson Turner, and other philosophers of the frontier, presenting it as a major policy statement under the title, “The Tendency of the Frontier is to Move Westward.”

Klein’s essay opened with the unequivocal assertion that “the economic history of the world has been a history of frontiers.” “This movement started from China,” he explained, and then “swept through central Asia,” Greece, and Rome on its way to establishing Europe “as the center of world commerce.” Then America “became the great frontier [and in turn].  .  .  .  The history of the United States itself has been a history of frontiers.” The result was in Klein’s view the final example of the way that the last frontier became in turn the newest center of expansion. “Now the circle is complete, the last great frontier has been conquered, and we come to a new era of world history. America, with an economic and industrial organization which is the fruit of centuries of world progress, is facing across the Pacific what is at the same time the oldest and the newest trade area.” The Chinese Empire had become America’s economic frontier.

Another document of similar interest was an analysis of the branch factory movement prepared by Louis Domeratzky, Chief of the Commerce Department’s Division of Regional Information. He interpreted what he called “the aggressive expansion policy” of American corporations as the final proof of America’s economic predominance. It had developed as a balance wheel to offset domestic fluctuations and as a way of evading tariff restrictions thrown up by foreign countries against American exports. He also emphasized the newer significance of the overseas investment program in “the exploitation of foreign natural resources” to provide raw materials for American production. Given the ability to provide their own capital, Domeratzky saw the process as one which the corporations would continue indefinitely. Hoover not only agreed with that analysis, but sought after the crash in 1929 to generate the recovery of the entire economy by stressing such overseas expansion of American corporations.

The Great Depression is always offered as proof of the limitations and the failure of Hoover’s ideas and policies. That judgment is neither very accurate nor particularly helpful.. Hoover did not cause the depression. It was brought on by the general malfunctioning of American and world capitalism. His after-the-fact critics offered no significant preventatives before the crisis, and in large measure derived their own programs from the general ideas already put forward by Hoover.

For the most part, such critics merely compare Hoover’s efforts to end the depression with the state of the economy after the start of World War II, credit the New Deal with the improvement, and offer harsh and unfavorable conclusions about Hoover. Their verdict conveniently ignores the failure of the New Deal to generate sustained recovery until armament orders began to roll in during the latter part of 1940; it slides over the social and psychological, as well as many of the political and economic, costs of the prosperity achieved; and in general neglects to mention that President Franklin Delano Roosevelt and Secretary of State Cordell Hull relied ever more extensively on overseas economic expansion to counter the economy’s propensity to stagnate.

Some partisans of the New Deal assert that a double standard of judgment is involved in pointing out such aspects of the Roosevelt record. The reverse is more nearly true, for the weaknesses of the New Deal are certainly as relevant as the failures of Hoover in reaching any general conclusions about recent American history. Beyond the question of explaining Hoover’s approach to the depression, the real issues involve the objectives sought by Hoover and the New Deal, the consequences of their actions, and the extent to which they were aware of—and concerned about—those consequences.

Both Hoover and Roosevelt wanted freedom, prosperity, and peace for the United States. Neither of them approached the problems facing twentieth-century America with the attitude and outlook of a narrow nineteenth-century entrepreneur. Hence there is little relevance in shooting down Hoover as a Simon Legree of industrialism. That target is a straw man. The difficulty is to explain why Hoover was unwilling to plunge into the crisis of the depression with the attitude of “do something, anything” manifested by Roosevelt during his first term.

Hoover was not cautious because he was callous or ignorant. He hesitated because of what seemed to him the serious dangers inherent in all the easy or obvious remedies. In contrast, Roosevelt charged forward with little regard for the rather obvious, as well as the more subtle or latent, consequences of his actions. What is so revealing in this connection is the way the critics of Hoover admit—at least when pressed—to many reservations about the effects of the New Deal. They are often very perceptive in their evaluation of those results, but they seem never to realize that their criticisms were offered in advance—as premonitions—by Hoover.

A good example of this irony is provided by President Dwight David Eisenhower’s famous warning in 1962 about the dangers to democracy posed by the growth of a military-industrial complex with great influence inside the government. That blunt admonition found favor with most of those who criticize Hoover. Yet Hoover was intensely concerned in 1930–1932 that fascism would begin to develop if big business was allowed to gain great influence in combating the depression. Thus he flatly rejected several versions of the program ultimately adopted as the N.R.A. by the Roosevelt Administration, an approach that did delegate extensive power to business. Hoover also feared the consequences of giving the government primary and formal responsibility for saving capitalism through overseas economic expansion. He argued with great force and insight that such a policy would turn every economic clash into an international political incident and thereby continually increase world tensions.

In a different way, Hoover feared that socialism would result from giving labor a predominant role in the fight against the depression. That was probably Hoover’s main mistake. American labor was not inclined toward socialism. It sought no more than a position of parity with the farmer and the corporation. Even so, Hoover’s analysis was not demolished by that error. For his most general fear about precipitate action in the depression was based on an astute analysis of the kind of syndicalist capitalism that would emerge from trying to balance the major elements of the political economy through ad hoc government intervention. He thought that approach would produce a nameless but nevertheless insidious kind of bureaucratic and presidential tyranny that would deaden public interest and participation in government, and that would fail to produce either peace or prosperity.

It may be that Hoover is one of the few tragic figures in American history. Each of his analyses of the main alternatives in 1930–1932 contained a significant amount of truth. And it seems quite likely that his failure to commit himself and the nation to any of those possibilities was the result of a temporary psychological bloc in the face of such unhappy choices that prevented him from taking any vigorous action. Be that as it may, the irony of all the liberal and New Deal criticism of Hoover lies in the way that the New Deal and subsequent administrations carried certain essential aspects of Hoover’s basic foreign policies to their logical and extreme conclusions.

While it is certainly true that many of those later developments were inherent in Hoover’s program, just as his were implicit in the Open Door Notes, it is vital to realize that his successors went far beyond Hoover’s actions. Perhaps the most effective way to dramatize this point is by comparing Hoover’s assumption in 1920 that the Soviet Union would collapse if confronted by a hostile world with the thesis advanced by George Frost Kennan in 1947 that the policy of containment would “force” such a result. The similarity is obvious and significant. But Hoover’s program was characterized by a moderation and ambivalence that had been lost by the time Kennan made his proposal.

Hoover did not like socialism or communism, and he opposed the Soviet Union. But he also understood the great danger inherent in externalizing evil in the form of one country, in resting American security and welfare exclusively on the outcome of a trial of strength with one other nation. Hence he did not define American foreign policy so narrowly in terms of putting direct pressure on the Russians. He thought that the inherent difficulties of realizing the ideals of socialism or communism in a backward country would, when combined with the successful example of the United States, ultimately turn the Russians away from doctrinaire communism toward the American model. And that, in turn, would create the conditions for steady American improvement.

Hoover did not enjoy Borah’s empathy with revolutions in general, or the Senator’s specific insight into the Soviet upheaval. But neither did he make the reductionist error of simplifying the problem to the point of thinking that the challenge of the Bolshevik Revolution could be dealt with through policy toward Russia. He understood very clearly that the only effective answer would be in avoiding war between the advanced industrial nations, and in making capitalism produce results in the poor countries as well as in the rich nations. That analysis brought Hoover back to the importance of a program of overseas economic expansion that would actually develop the poor societies. An understanding of this broad outlook makes it possible to resolve the contradictions of his specific approach to Russia.

Hoover was candid and insistent about the proper way to handle the Russian problem. His remarks at the end of 1921 in a letter to Secretary Hughes about American food shipments to the Soviet Union were not only revealing of the specific subject, but were similar to Secretary of State Root’s explanation in 1906 of the role of reform in furthering American influence in Morocco. “The relief measures already initiated are greatly increasing the status and kindness of relations and their continuation will build a situation which, combined with other factors, will enable the Americans to undertake the leadership in the reconstruction of Russia when the proper moment arrives.” By the proper moment he meant the end of Soviet rule. Hoover continued his analysis with a blunt explanation of why the United States could not allow other nations—and in particular Germany—to function as middlemen in shipping American exports to Russia. “The hope of our commerce lies in the establishment of American firms abroad, distributing American goods under American direction; in the building of direct American financing and, above all, in the installation of American technology in Russian industries. We must, of necessity, in the future finance our own raw materials ^¶¶ into Russia and if our manufactured goods are distributed through German hands it simply means that when Germany has established trade of sufficient distribution to warrant her own manufacture we shall lose the market.”

Because they wanted the immediate economic market and the longer-range political influence, Hoover and Hughes unofficially encouraged Americans to embark upon the economic penetration of Russia even though they refused to recognize the Soviet Government or to allow it to negotiate loans in the United States. Perhaps the history of American-Russian relations reveals no greater irony than the fact that this covert approval of certain specified economic relations, designed to speed the collapse of the Soviets and strengthen American influence in the following government, led Americans to contribute significantly to the recovery and development of the Soviet economic system. At the end of the 1920s, indeed, it was the depression-racked American economy which looked to Russian markets as a crutch for its own recovery. And by that time more Americans, including some among the Hoover, Hughes, and Stimson group, were thinking of Russia as a potential ally against Japan and Germany.

Such thoughts were far from the minds of Hoover and Hughes as they undertook to integrate Germany and Japan into their American-led community of industrial powers. Concerned with making Germany safe against internal revolution and strong as a bulwark against world communism, Hoover and Hughes gave high priority to its recovery. Their main lever to overcome the opposition of France and England was the astute and forceful use of American economic power. Hughes finally backed France and England into the entente by controlling the relationship between the debts they owed to the United States and the reparations they demanded from Germany.

Hughes accomplished this by tying the reduction of Allied debts to the United States to a similar cut in German reparations to Britain and France. This move, formalized in the Dawes and Young plans (1924 and 1929), enabled the United States to speed the end of military occupation of Germany and to open the way for its re-entry into the Western community. In line with this objective, they supported the Locarno Pact of 1925, by which Germany, France and Britain underwrote the boundaries of western Europe but left the frontiers facing Russia unguaranteed. More than one American leader viewed the Locarno Pact as the first political result of the nation’s economic policy. It was in the context of this general settlement in Europe that the American Government encouraged private loans to Germany as a further move to speed that nation’s recovery.

All of this was done quietly, much of it “unofficially,” and all of it without American entry into the League of Nations. None of these considerations alters the fact that the effort was part of a broad program of conscious involvement in world affairs for well-defined objectives. As Senator Borah remarked at the time, “It does not rise even to the level of sophistry” to assert that such actions are described accurately by the term “isolationism.”

But neither is it true, as others have maintained, that American policy was designed to make Germany dominant in Europe. American leaders wanted peace, and to that end they sought the reintegration of Germany into a Western community led by the United States. They were willing to go—and did go—a long way to facilitate German recovery and to accept or acquiesce in the assertion of German strength. It was the failure of American policy, not a mistake, which contributed to the coming of World War II.

American policy in Asia after World War I was characterized by similar features, though the problem itself was more complex. China was not only considered important as an area which would absorb large quantities of American surpluses, but it had been a region of American interest, activity, and influence for more than a century. It was impossible to ignore developments there, even had the policy-makers wished to do so. But neither was it possible to step in and run the show. On the one hand, Americans did not want a formal empire and, on the other, Japan blocked that kind of action. Japan’s position was further strengthened by its color and ethnic affinities with the rest of Asia. Its occupations of parts of Manchuria and Siberia and its old alliance of 1902 with Great Britain also increased its bargaining power.

Working from the basic premise that wars and revolutions had to be prevented in the Far East, and concluding that the best way to accomplish that was to bring Japan into the American-led “community of ideals, interests, and purposes,” Hughes offered Tokyo two commitments: a generous and unquestioned share in the development of China and an understanding that the United States would help check China’s revolutionary nationalism. In return, he asked Japan’s agreement to the Open Door Policy and to a program of balanced naval power in the western Pacific. Given that quid pro quo, Hughes was confident that the United States—as represented by the banking consortium and other businessmen—could control the situation over the long haul. Concerned with future markets for the American economic system, not formal empire, he was willing to sacrifice immediate and marginal goals. Here, as elsewhere, Hughes was following Wilson, who had revitalized the consortium in 1917, acknowledged Japan’s special position in Manchuria the same year, and specified in 1919 that it was “essential” to assert and maintain the open door in Siberia and elsewhere throughout Asia.

Hughes overcame Japan’s reluctance to commit itself to such a program by a combination of three kinds of diplomacy. First, he made astute use of pressures and attitudes which reinforced his hand. These included the general postwar desire for disarmament, America’s traditional support for the Open Door Policy, the agitation in Canada and Australia (as well as in England itself) against Britain’s alliance with Japan, economic and social unrest in Japan, the growing strength of the Bolsheviks in Siberia (which worked to push Japan out but also to encourage other nations to compromise their differences), and the general opposition to China’s attempt to assert its economic and political sovereignty. Second, his tactic of opening the discussions at the Washington Conference with a concrete plan for disarmament, under which America would take the lead, kept Japan and other opponents off balance. Most important of all, however, was his willingness to give Japan “an extraordinary favorable position” in northeastern Asia in order to establish “co-operation in the Far East.”

Japan accepted the offer (though with some skepticism and private reservations), and the agreement was formalized in the Four- and Nine-Power Treaties signed in Washington in 1922. Those documents defined the coalition of industrial powers in the Pacific, just as the Dawes and Young plans and the Locarno Pact did in the Atlantic. The United States, Japan, France, and Great Britain agreed to respect each other’s rights in various island possessions, to uphold the status quo in Asia, and to proceed with the development of China and other areas within the framework of the Open Door Policy. Answering some of his critics at home, who feared that the treaties weakened America’s position, Hughes justifiably asserted that the negotiations and settlement “were conducted within limitations defined by the American Government.”

American leaders honored their understanding of those commitments throughout the ensuing decade. China’s protest against the limitations imposed upon it by the Washington treaties was brushed aside with the cryptic reply that “various American expressions of sympathy with an academic position may have misled the Chinese,” and that the “matter had been decided at Washington adverse to the Chinese view.” Entertaining that attitude toward conservative Chinese nationalists, it was natural for Hughes to ignore the appeals for sympathy and help made to the United States by Sun Yat-sen, leader of the revolutionary nationalist movement in China. He did not even open Sun’s letter.^##

Russia was more responsive to Chinese requests. It offered Lenin’s theory of imperialism, which gave Chinese nationalists an explanation of their country’s weakness; Marxian economic theory, which outlined a way to gain strength rapidly; the example of a successful revolution; and advisors in the art of such revolution. Thus armed with ideas and encouragement, and goaded by Western policy and actions, the revolutionary nationalist movement in China gathered momentum and acquired a stronger sense of direction and purpose.

Leaders in the United States replied with the assertion that America had “a responsibility for effort directed toward saving the Chinese from their own folly.” This remark, a somewhat astringent and blunt synthesis of all the themes implicit in open-door imperialism, characterized an attitude which limited America to a very few alternatives. Since they ignored, or disapproved of, the possibility of working either with Russia to check Japan or with liberal Chinese nationalists, American leaders had one basic choice. They could join four-power action against the left-wing revolutionary movement in China, but simultaneously effect a broad understanding with conservative nationalists in China. Within that context, they could then undertake a vigorous program of economic development in China. Or they could work with and through Japan, considering that nation as an agent of American policy and a channel through which American economic power would develop China.

The difficulty in resolving the issue stemmed from several considerations. Either proposal could be defended as a continuation of the Open Door Policy designed to establish American predominance in Asia without recourse to war. The idea of working with and through Chinese conservative nationalists who were dependent upon American aid was the ideal way of putting the policy into operation. The central drawback of the approach was the probability that it would, if undertaken with vigor and determination, lead to war with Japan. That was undesirable per se, and doubly so because after 1917 American leaders feared war as the hothouse of revolution.

The other proposal involved working with and through Japan until American economic power asserted itself in that country as well as in China. This argument took into account the dangers of war and revolution, considerations which tended to compensate for the fact that it again postponed the day of American pre-eminence in Asia. Despite its short-run disadvantages and frustrations, however, it was a persuasive answer to the question of how best to implement the open door in Asia. Though continually challenged by different groups for conflicting reasons, this developed as the basic outlook of American policy-makers from the Bolshevik Revolution until the strong American note delivered to the Japanese Government in November 1941. Neither Wilson, Hughes, nor Hoover considered going to war against Japan; and later leaders argued that American economic power could confine Japanese action within limits defined by the United States.

Beyond the broad considerations of preventing wars and revolutions, policy in Asia was strongly influenced by the last phase of the struggle between the bankers (supported for the time by certain traders and exporters) and the corporations to define the basic character and set the tone of American foreign policy. Though they reasserted their power during and immediately after World War I, the corporations did not have enough surplus capital to embark immediately on further expansion everywhere in the world. For one thing, the severe depression of 1920–1921 caused some temporary loss of influence to the bankers. Then, after recovery began in 1922, the corporate leaders emphasized domestic investments as well as direct overseas investments in factories, service installations, and the development of raw material supplies.

Such companies as Ford, General Motors, International Business Machines, and American Telephone and Telegraph concentrated their activities in European and other industrialized countries. Others, including oil and mining corporations and such raw material processing firms as the Aluminum Corporation of America, centered their attention on the Middle East, Latin America, and parts of Asia. This activity led to a great expansion of direct overseas investments during the 1920s. In 1919 they totalled 94 million. By 1925, they had jumped to 268 million. Up again to 351 in 1926, they ballooned to 602 million in 1929.

For their part, the bankers were caught in a more difficult situation and their actions were more complex and contradictory. On the one hand, they agreed with corporation executives and government leaders that expanded exports were “essential to industrial prosperity.” They accepted the analysis prepared by William B. Fleming, the State Department’s adviser on commercial treaties: “A number of our big manufacturers  .  .  .  in normal times can produce enough to supply the home market in seven months.” As the editors of the Acceptance Bulletin, one of the key journals of the financial community, pointed out in January 1922, “it is useless to attempt to further develop our own country until a satisfactory market is created for our surplus products.” Thus the bankers supported Secretary of State Hughes in his drive for “effective recognition of the Open Door Policy.”

On the other hand, the bankers admitted that they lacked the capital for an all-out loan campaign. Fred I. Kent of the Bankers Trust Co., George H. Kretz of the National Park Bank, and George Woodruff of the First National Bank of Joliet, Illinois, offered typical testimony on that crucial point. Perhaps the most dramatic and impressive evidence was provided by the failure of the National City Bank to establish and sustain a world-wide chain of branch banks to finance such expansion. This fundamental weakness forced the financiers to follow less perfect alternatives. Some, like the House of Morgan, continued to pursue their broad strategy of working with and through the British and French while expanding their connections in Germany. Others decided that Europe should be given priority for the capital that was available. Some of that group argued that there would be no possibility of expanding into the underdeveloped countries if Europe collapsed. The rest of them thought that they would be able to move into the poor nations through the European door. In general, therefore, the capital that was directly available for the underdeveloped countries was relatively small in amount and was further limited to short-term loans. The result, as in Latin America, was a scramble for investments that were neither very sound nor very productive.

This drive for accounts did, however, intensify two existing features of banking policy. Financiers continued their maneuvers to obtain government assistance in accumulating capital. They first tried to enlarge and sustain the operations of the War Finance Corporation; such a move would not only have given them the kind of direct aid they wanted, but would also have reassured smaller investors in the general security market that the government supported the undertakings. While that effort failed, the bankers (along with some of the weaker corporations) did not give up trying to get what the Journal of Commerce called “federal credit” as a means of accumulating “the capital necessary” for major overseas operations. But it was not until after the start of the Great Depression that such funds became available.

The financiers were more successful in preventing government control of their operations. Hoover wanted to set limits on the bankers, restricting them to loans that were in line with the tactics of the Open Door Policy, and which actually promoted viable economic development in the poor, under-developed nations. He tried hard to obtain such authority during the first years of the Harding Administration, even though he was aware that it might set a dangerous precedent for government intervention. The bankers blocked him by appealing to the fears (and to the narrower philosophy) of Harding and others in the administration. Their argument was stated with considerable power by John Foster Dulles, who in those years was a leading lawyer for the financial community. “Control of foreign loans,” he explained with obvious concern, “involves a vast power over our national economy” It “would obviously be unfortunate if [an] established precedent warranted the use of control over foreign loans as a medium for carrying into effect any economic or financial policies which might happen at the moment to be those of the heads of our executive departments.” It proved difficult for Dulles, as for others in the financial community, to attain the more inclusive, long-range view of Hoover. In the 1920s, at any rate, the interests of the bankers obscured their vision. “No foreign policy could be intelligently conceived and carried out,” Dulles judged, “by a Department of State which was ignorant of or indifferent to the past and current acquisitions by American interests in foreign lands.”

These conflicts incident to the maturation of America’s corporate economic system manifested themselves in Asia in a complex fashion. At one level they appeared as a battle between the banker Thomas Lamont, who was aligned with Japan, and several corporations which proposed to do business in China. But Lamont was supported by those corporations which had developed significant trade connections with Japan. Other corporations pushed trade with China, however, and those firms lined up with the companies interested in direct investment in that country.

Such economic crosscurrents caused Hughes and Hoover considerable trouble throughout the 1920s. Official strategy was to push American penetration in China while holding a checkrein on Japan. But Hoover and Hughes also wanted all the foreign markets they could get, including those in Japan. Hence they acquiesced in Lamont’s tie with Japan, and in exports to Japan, hoping meanwhile to encourage and extend America’s position in China. Ultimately, of course, American leaders thought to resolve the dilemma by influencing Japan through its economic ties to the United States. But this posed serious difficulties of its own, and the United States finally went to war to preserve the open door in Asia.

In other areas of the world, meanwhile, such as in Latin America, eastern Europe, and the Middle East and Africa, the policies of the United States were formulated to facilitate the “internationalization of business” through the expansion of the American corporation. Aware of the voracious appetite of American industry, and of its commensurate waste, Hoover, Hughes, and corporation leaders united in a concerted program to discover, develop, and control various key raw materials throughout the world. This drive was integrated with the traditional campaign for markets, and both were heightened by the determination to protect direct, on-the-spot operations from foreign competition and revolutionary opposition.

Latin America posed in classic form two basic difficulties connected with such corporate expansion. It was necessary to control and mitigate the region’s opposition to the predominance of the United States and, at the same time, extend and rationalize the system of American authority. The effort to expand American exports, develop and control raw materials, and initiate corporate enterprises—while at the same time developing a regional political system based on local rulers loyal to the basic interests of the United States—made Latin America the laboratory of American foreign policy for all underdeveloped areas.

That comparison offers considerable insight if the foreign policy experiment of the 1920s is thought of as an effort to change the methods and style of American intervention developed by Roosevelt and Wilson while at the same time sustaining and even extending the long-range influence of the United States.^*** In many respects, moreover, the effort of the 1920s represented the same kind of convergence between reform ideas and hard-headed economics that characterized American policy toward Morocco at the time of the Algeciras Conference in 1905–1906. The developments of the 1920s in the Latin American policy of the United States were simply an adaptation of American policy to altered circumstances that was continued in the Good Neighbor Policy of the New Deal and culminated in the Alliance For Progress proposed by President John F. Kennedy.

In the 1920s, as well as in the 1960s, this modification of policy was brought about by two main considerations. First, new ideas about the nature of American predominance in the Western Hemisphere led different groups in the United States to propose and initiate policy changes. Second, and interacting with the first, the failure of traditional and existing policies to achieve the desired results prompted alterations. Specifically, American policy-makers became convinced by the end of the 1920s that the 21 military interventions undertaken between 1898 and 1924 had not served either to stabilize the region or to institutionalize American power and influence.

The beginning of the shift in approach might usefully be dated from the recognition of the Mexican Government of Alvaro Obregon by the Harding Administration on August 31, 1923. While it is true that Mexico agreed as a condition of recognition to respect subsoil rights acquired by Americans prior to 1917, the move did terminate the direct and even violent intervention carried on by President Wilson. Almost immediately, however, incoming President Coolidge indicated that his outlook was closer to the turn-of-the-century expansionism of Roosevelt than to the approach that Hoover and Stimson were to reveal after 1928. Since he is usually thought of as a pinched-in personality, such a comparison of Coolidge with Roosevelt may appear rather strange. But Coolidge actually entertained an expansive conception of American foreign policy. He described the process of American businessmen going abroad and “opening up underdeveloped countries” as—and note the similarity with the language of Roosevelt—“the natural play of the forces of civilization.” The United States, he asserted, was “a patron of tranquility abroad.” People who questioned that judgment were “treading the way that leads back to the jungle.” Holding that American “investments and trade relations” made it “almost impossible to conceive of any conflict anywhere on earth which would not affect us injuriously,” Coolidge concluded that “the one great duty that stands out requires us to use our enormous powers to trim the balance of the world.”

In keeping with that sense of responsibility, Coolidge sent Marines into Honduras in 1924 because, in the phrase of the State Department, “a condition of anarchy seems likely to develop.” In the same year, the administration also formally advised Plutarco Calles, the newly elected Mexican President, that recognition was contingent upon continuing protection and respect for American lives and property. That blunt warning served only to strengthen the groups in Mexico that wanted to push ahead with measures limiting foreign economic penetration and influence. Three such laws were passed by the Mexican legislature to take effect on January 1, 1927. One limited foreign concessions to 50 years; another specified that foreign corporations (such as American oil firms) must forego any appeal for protection to their own governments; and the third, a more general land law to break up large holdings, impinged directly upon American agricultural and mining operators.

Even before the laws went into effect, the tension and fear arising from the conflict between Washington and Mexico City had prompted Coolidge in 1926 to send Marines into Nicaragua. The President and others in the State Department were afraid that the Mexican Revolution would spread—directly as well as in spirit—throughout Central America; they were determined to prevent the challenge to the United States from growing any stronger. The intervention in Nicaragua was undertaken to put conservatives friendly to the United States in power. It is simply described as a military and diplomatic maneuver undertaken to achieve a political objective that, it was expected, would in turn prevent long-range economic difficulties and losses.

The actual results were quite different. For one thing, the Marines stayed six years. The intervention in Nicaragua also created fears of a war with Mexico. The reaction against that possibility (as well as against the move into Nicaragua) accelerated and strengthened a movement among diverse groups that opposed military intervention and sought instead to restore and strengthen American influence through more peaceful and sophisticated means. One of those elements, a coalition of pacifist and reform organizations, mobilized considerable public opinion against Coolidge and his policy. They were probably aided, at least to some extent, by the way that England and other countries referred to the President’s actions as “frankly imperialistic.”

Such general expressions of disapproval were reinforced by criticism from two other sources whose influence was considerable though their size was smaller. Reform politicians of both parties attacked Coolidge vigorously. Senator Borah’s opposition was especially militant and had added significance because of his influential position on the Senate Foreign Relations Committee. “The great problem in international affairs at present,” he observed bluntly in February 1927, “[grows] out of the relationship between strong and weak nations.  .  .  .  It is not war between the great powers but spoliation of the weak nations which seems most vital and imminent in international affairs at this time.” Borah was supported in the Congress, moreover, by men like Senators George W. Norris, Hiram Johnson, and Joseph Robinson, and Democratic Representative Fiorello H. La Guardia. They provided the leadership that produced on January 25, 1927, a unanimous vote (79-0) in support of Robinson’s resolution calling on Coolidge to settle the dispute with Mexico through arbitration.

Since most Senators were more conservative on matters of foreign policy than Borah or Norris, it is helpful in explaining that vote to realize that many large corporations and other business interests also opposed the nature and implications of Coolidge’s policy. Perhaps the most convincing evidence of the central importance of such corporation opinion takes the form of a State Department memorandum prepared during the period when Hoover and Stimson were trying to evolve a less militant approach to relations with Latin America.^†††

“The participation of American corporations in the development of Latin America involves an incalculable corrective to existing trade figures and implies a distinct and direct American influence in Latin American policies. Irrespective of the policy at Washington and the personality of the statesmen, the operations of such enterprises as the United Fruit Company or the several American oil companies create independent political interests in the territories subject to their economic operation which supplement and often determine official policy both at Washington and in the various Latin American capitals.”

In the Mexican-Nicaraguan affair, such firms as Standard Oil and the Boston Bank opposed continued militance on the grounds that it would “injure American interests” far more than it helped them. Another indication of this opinion in the business community was provided indirectly in the editorials of the New York Times. At the outset of the crisis they were brazenly nationalistic, even imperialistic. By the end of January 1927, however, the editors were advising a change in policy because a continuation of the existing one “might easily tip the balance in favor of European exporters.” Such economic considerations apparently contributed to their advocacy of a “prudent and conciliatory spirit.” And finally, evidence of business influence appeared very clearly when Coolidge picked his trouble-shooters to resolve the crisis. He sent Henry L. Stimson, a lawyer for corporate interests, to Nicaragua in April 1927. And four months later he dispatched Dwight W. Morrow of the House of Morgan as a special emissary to Mexico.

The best general explanation of this attitude on the part of large corporation spokesmen (and their associates in law and politics) was probably offered by Leo S. Rowe, Director General of the Pan American Union. “We have advanced,” he pointed out, “from the period of adventure to the period of permanent investment.” As a man who probably understood the meaning of that change for foreign policy as well as anyone in his generation, Hoover moved very quickly after his election as President in 1928 to sustain the momentum away from the older tradition of open, forceful, military intervention. Even before he took office he made a long good-will trip throughout Latin America. “We have a desire,” he assured his various hosts, “to maintain not only the cordial relations of governments with each other but the relations of good neighbors.”

Hoover’s desire to improve relations with Latin America in a manner that would also strengthen the economic expansion of the United States was wholly sincere. It was based upon a perceptive and sophisticated estimate of the phenomenon that was in later years called “the revolution of rising expectations.” He recognized that World War I had broken open the long-festering wounds of economic inequity between the advanced and the poor countries, and between classes within the underprivileged societies. “The great inequalities and injustices of centuries,” he explained in 1921, “[have been] flogged beyond endurance by the conflict and freed from restraint by the destruction of war.” He also saw the corollary of that new determination and self-consciousness on the part of the suffering millions: that the United States, emerging from the war as the richest and most powerful country in the world, could easily become the focus of that bitterness, frustration, and antagonism. “A large part of the world,” he warned the country at large (as well as businessmen), “has come to believe that they were in the presence of the birth of a new imperial power intent upon dominating the destinies and freedoms of other people.”

Hoover’s problem was to meet that danger while at the same time sustaining the overseas economic expansion that he and other American leaders considered essential to prosperity and representative government at home. He attempted to resolve that dilemma by modifying the methods of expansion so that they were more in line with his ideals. “The basis of an advancing civilization,” he observed in 1923, “must be a high and growing standard of living for all the people, not for a single class.” From that it followed, as he emphasized in 1928, that an “essential part of the sound expansion of our foreign trade [is] that we  .  .  .  interest ourselves in the development of backward or crippled countries by means of loans from our surplus capital.” “In stimulating our exports, we should be mainly interested in development work abroad such as roads and utilities which increase the standards of living of people and thus increase the demand for goods from every nation, for we gain in prosperity by a prosperous world, not by displacing others.”

A decade later, after the harsh recession of 1937–38 revealed that the depression had by no means been overcome, New Deal policy-makers finally began to use government powers and public monies in line with the analysis that Hoover offered in 1928–29. Quite rightly, they won credit for the developmental loans they granted to some Latin American countries. But to conclude that they were also the men who first thought of, or acted on, the approach is both historically inaccurate and personally unfair to Hoover.

In many ways, moreover, Hoover faced a much more difficult task. He had, in the short space of four years, to close out and reverse a tradition of military intervention and to initiate a new program. “It ought not to be the policy of the United States to intervene by force to secure or maintain contracts between our citizens and foreign states or their citizens. Confidence in that attitude is the only basis upon which the economic cooperation of our citizens can be welcomed abroad.” Hoover infused that rhetoric with substance in many ways, but one of his earliest acts involved releasing for publication in 1928 the anti-interventionist Memorandum on the Monroe Doctrine. Prepared in the State Department by J. Reuben Clark, and held up by the Coolidge Administration, the document openly and officially disavowed the approach of Theodore Roosevelt.

In moving toward his objective, Hoover was confronted by more than the obvious handicaps of tradition and an inherited intervention in Nicaragua. Secretary of State Stimson, for example, had a good bit of the crusading upper-class reformer in his temperament that had to be restrained if not overcome. But Stimson had the relatively rare kind of courage that enabled him to modify or change his opinions on some vital issues when they were battered beyond a certain point by reality. Nicaragua’s factional politics, and its resistance to the Marines, gave some of his assumptions that kind of a beating. He concluded by 1931 that it was time to withdraw. Any effort to keep Nicaragua pacified, and to establish American-style political life, would involve the United States in “difficulties and commitments which this Government does not propose to undertake.” They would impose “a very serious burden.” In a similar way, Stimson wholly agreed with Hoover that the United States should not intervene in the Cuban Revolution which erupted in 1929–30. And in a way that offered a striking contrast with the later interference by New Deal policy-makers, they did not intervene or intermeddle.

As the London Times remarked on April 21, 1931, the approach to relations with Latin America revealed by Hoover and Stimson amounted to a “reversal of the methods” of the past. Stimson offered his own neat summary of the difference in connection with the Cuban uprising. “The situation in Cuba ought to so develop that less and less pressure would be necessary on the part of the United States to keep matters straight.” Whether or not Hoover and Stimson are given formal credit for founding what later became known as the Good Neighbor Policy is probably not a vital issue. Given the consequences to Cuba and the United States of Roosevelt’s support of Batista as he made his initial bid for power in 1933–34, perhaps even they would not press the claim too vigorously. The important things are that they broke with past methods, that their analysis and reasoning also served to guide later policy-makers, and that their objective was to sustain the overseas economic expansion and political influence of the United States under the strategy of the Open Door Policy.

Elsewhere throughout the world during the years after World War I, American policy developed within that framework. In every instance, the key move was the assertion of the policy of the open door. And in each case, the objectives were markets for American industrial exports, raw materials for American factories, and the right to enter directly into the economic life of a country by establishing factories and other enterprises. That economic expansion made it possible to exercise a growing influence on local political and economic decisions, served to provide a base for further penetration, and ultimately took on military significance. But its initial character and importance was only extended—it was neither changed nor abandoned.

The basic approach toward eastern Europe was characterized by Hoover’s insistence that the American economic penetration of Russia should be handled directly rather than through Germany. Germany was needed to block Russia, and to strengthen the community of industrial powers, but it remained a competitor. Within that framework, American activity in eastern Europe included industrial and communications development and the search for raw materials such as phosphate and oil. Having penetrated the economies of the area, as in Poland, Bulgaria, Romania, Yugoslavia, and Albania, the businessmen turned to Washington for help against restrictive legislation enacted by these nations and against competition from Germany, Britain, and France. The first official move usually was a note to the country in question, reminding it of the principle and practice of the Open Door Policy. If that hint proved insufficient, American leaders resorted to economic pressure: directly, by withholding approval of projected loans or similar projects; or indirectly, by threatening, subtly or blatantly, to break diplomatic relations. Reinforcing their own vigorous political and economic activities on the scene, such diplomatic support enabled American businessmen to establish and develop significant interests in eastern Europe throughout the 1920s.^‡‡‡

Better known, and certainly more dramatic, was the postwar pattern of open-door expansion in the Middle East. Oil was the major objective of American policy, but American leaders did not overlook the long-range importance of a “new and as yet unorganized market of prodigious size.” For these reasons, as well as in behalf of its own logistic and other interests, the Navy supported such expansion. Its program, along with President Wilson’s assumption that Russia would be kept “bottled up” in the Black Sea, was based on the proposition that the strongest navy would control the straits of the Dardanelles. With this general support, Secretaries Hughes and Hoover in Harding’s Cabinet first acted to force Britain and France to accept and honor the policy of the open door in their colonies and in the areas assigned to them under the League of Nations system of mandates. After several false starts, American interests finally began their penetration of the area by infiltrating European companies rather than by independent operations. Economic power opens its own doors.

Several factors account for the initial preference for indirect action. For one thing, it was cheaper and easier; it gave American companies a share of current production while enabling them to conduct private and secret explorations designed to outflank their European “partners.” Also, American companies were occupied for the moment in the Western Hemisphere, fighting Mexico and exploring and claiming title to newly discovered reserves throughout the rest of the region. And finally, Hughes and Hoover continued and extended the practice of favoring, however subtly and covertly, one American corporation as the “chosen instrument” of the Open Door Policy in any given area.

In the case of the Middle East, the partiality benefited the complex of Standard Oil companies. Outfits such as Barnsdall, which wanted to work with the Russians in the Baku region, or Sinclair, which tried to do the same thing in the Far East, were blocked by the Department of State. Barnsdall discovered that it was permissible to do some trading with the Bolsheviks but not to help them develop important natural resources. And Secretary Hughes bluntly told Sinclair that he would not support the company in its battles with the Japanese, who claimed the sole right to exploit oil reserves in the Russian half of the island of Sakhalin.

There is some evidence which suggests that the official bias in favor of Standard Oil helps explain Sinclair’s efforts to secure access to American domestic reserves held by the government itself—a campaign which ended in the Teapot Dome scandal of 1924. One thing is certain: favored by the government, Standard Oil could afford the luxury of delaying active production in the Middle East until it had penetrated and canvassed such areas as Saudi Arabia. That result might be described as a successful example of corporate capitalism in action. The nature and consequences of those activities became diplomatic issues for the Roosevelt Administration and its successors.

Though neither as dramatic nor as extensive as the undertakings in Latin America, eastern Europe, and the Middle East, American penetration of Africa and Southeast Asia also increased during the 1920s. After considerable maneuvering by Liberian leaders (as well as by Hoover and Hughes), designed to prepare the natives for foreign economic intervention, the Firestone Tire and Rubber Company began its development of rubber plantations in that nation. It was more difficult to penetrate European colonies in Africa and south-eastern Asia in such direct fashion, but the patterns of investment, purchasing, and marketing which originated in the 1920s ultimately made those raw-material producing areas vitally important to the existing methods and processes of the American corporate economy.

There were other ways of providing for the continuing development of the American economy, but they were never seriously considered, let alone adopted. Thus the ties with the colonies of western European powers and other underdeveloped regions gradually came to be viewed as the only source of raw materials, services, and markets, whether or not current operations were based on such connections. And the threatened loss of supplies earmarked for future development was considered as dangerous as the possible loss of current ones, both by the corporations and the American Government. Perhaps more so, for the method and the rate of current exploitation were based in part on the assumption that the future was under control—that the frontier was unlimited.

When such assumptions, as well as current operations, were threatened by Germany and Japan (and by revolutionary agitation), American leaders routinely defined the issue as one involving the principle of the open door and the strategic position of the nation itself. Men who began by thinking about the United States and the world in economic terms, and explaining its operation by the principles of capitalism and a frontier thesis of historical development, came finally to define the United States in military terms as an embattled outpost in a hostile world. When a majority of the leaders of America’s corporate society reached that conclusion, the nation went to war—at first covertly, then overtly.

Far from being unimportant, therefore, the Open Door Policy became increasingly more significant and crucial in the years after it was first enunciated by Secretary of State John Hay. The pattern of American expansion under the principles and procedures of the Open Door Notes came to maturity during the 1920s. And it was the threat posed to that program by the combined impact of the Great Depression and the competing expansion of Germany and Japan, both of which gained strength by falsely identifying themselves with one or more of the broad revolutions against classical liberalism, which ultimately accounted for American entry into World War II.

* These conservatives—a minority within a minority—are the only men to whom the term isolationist can be applied with any relevance or accuracy. The term is thus extremely misleading when generalized even to all those who voted against the League Treaty, let alone the policymakers of the interwar years. Its use has thus crippled American thought about foreign policy for 50 years.

† Readers who find this so unusual an interpretation as to be dismissed at the outset are referred to Hoover’s recent volume, The Ordeal of Woodrow Wilson (now in McGraw-Hill paperback edition). It is a moving tribute to Wilson, and also an illuminating review of American foreign policy at the end of World War I. See also the forthcoming study by Joan Hoff Wilson.

‡ Even if this propensity be called conservative, the conservatism involved is temperamental and not ideological.

§ The best efforts to establish this view are by B. M. Unterberger, America’s Siberian Expedition, 1918–1920 (Durham: Duke University Press, 1956); and G. F. Kennan, Soviet-American Relations, 1917–1920 (Princeton: Princeton University Press, 2 vols., 1956, 1958). For a contrary view see: R. D. Warth, The Allies and the Russian Revolution (Durham: Duke University Press, 1954); and this writer’s American-Russian Relations, 1781–1947.

¶ Wilson was more successful in Poland. As in Hungary, Hoover and the President collaborated to use American control of food supplies to bring conservatives to power. The conservatives were then given arms and money during their efforts to extend Poland’s boundaries eastward into Russia, and into the Baltic States.

# Perhaps the most striking evidence of Hoover’s long thought about these problems comes from his early books on mining engineering. See, for example, the discussion of the injustices of corporations and other capitalists, and of the rights and legitimate expectations of labor, in these items: Principles of Mining Valuation, Organization, and Administration (1909); “The Training of the Mining Engineer,” Science (November, 1904); “Economics of a Boom,” The Mining Magazine (May, 1912). Also consult, where available (it is unfortunately something of a rare item), his American Individualism (New York: Doubleday, Page, and Co., 1923). This approach to Hoover is developed in more detail in this writer’s Contours of American History, One of the nicest introductory essays to Hoover was prepared by a graduate student at the University of Wisconsin, Robert E. Treacy, as a seminar paper entitled “Herbert Hoover to 1920.”

** Borah’s analysis was borne out, not only by Russia’s open bid for a nonaggression treaty with China and the United States, but also by its decision, after that overture was declined, to sign with the Japanese. American policy of the years 1904–1912 was thus repeated with the identical results.

†† The orthodox view of Borah can be reviewed in R. Ferrell, Peace in Their Time (New Haven: Yale University Press, 1952). The most recent biography is M. C. McKenna, Borah (Ann Arbor: University of Michigan Press, 1961). A stimulating article is O. S. Pinckney, “William E. Borah: Critic of American Foreign Policy,” Studies on The Left (1960). The best volume of Borah’s own remarks is American Problems. A Selection of Speeches and Prophecies by William E. Borah (New York: Duffield & Co., 1924); but it is unfortunately rather hard to find.

‡‡ R. Finch and M. Oppenheimer have argued, in a three-part article in Socialist Revolution, Vol. I, Nos. 4, 5, and 6 (July-December, 1970), that the bankers-as-institutional-investors reasserted a significant degree of control after World War II. Some of their evidence indicates that this happened in connection with specific corporations. But their examples do not undercut the analysis offered here about the outlook of American leadership. Foreign policy has not been redefined as a short-term profit-taking operation.

§§ Mrs. Brady Hughes and James McHale have written illuminating master’s theses on the post-World War II aspects of this relationship of agriculture to foreign policy.

¶¶ By “raw materials,” Hoover meant food stuffs.

## While some of the quotations in this section come from unpublished documents, American policy toward China between 1917 and 1923 can be followed in its basic outlines in the appropriate volumes of Papers Relating to the Foreign Relations of the United States. Also see: D. Borg, American Policy and the Chinese Revolution, 1921–1928 (New York: Macmillan, 1947); and A. W. Griswold, The Far Eastern Policy of the United States (New York: Harcourt, Brace & Co., 1938).

*** The laboratory metaphor itself is borrowed from Fred Harvey Harrington. Two earlier books bearing on Latin American policy are: D. M. Dozer, Are We Good Neighbors? (Gainesville: University of Florida Press, 1959); and B. Wood, The Making of the Good Neighbor Policy (New York: Columbia University Press, 1961). An excellent recent study is D. Green, The Containment of Latin America (Chicago: Quadrangle Books, 1971).

††† This document, dated January 12, 1930, can be found in the National Archives (Record Group 59; Decimal File 710.11/1518).

‡‡‡ This involvement should not be forgotten when considering American differences with Russia at the end of World War II.