DOLLAR DIPLOMACY (190028)

Consequences of the SpanishAmerican War

A distinguished professor of history at Harvard wrote at the beginning of the twentieth century that the United States had assumed a new position among nations and should now be considered as one of the chief forces in international affairs.1 Although American interest in the wider world of Europe and, notably, the Far East was increasing, most diplomatic activity was still concentrated within the Western Hemisphere, especially the Central AmericanCaribbean region. The splendid little SpanishAmerican War not only underscored and enhanced the strategic significance of this region for the United States but it also reawakened the sense of American mission to spread freedom and democracy. American trade and investment benefited significantly from this pro-active attitude that would soon be popularly referred to as dollar diplomacy. The term derived from a speech in 1911 by Assistant Secretary of State Francis Huntington Wilson, who remarked that the substitution of dollars for bullets was an aim of American foreign policy.2 Indeed, the booming American economy was eager to take advantage of the growing commercial opportunities so close to home. Between 1900 and 1910 American trade and investment with Latin America more than doubled and grew at a faster rate than with other areas of the world. The growing importance of the region was reflected in the fact that the state department established a separate Latin American Bureau in November 1909. Tafts secretary of state, Philander C. Knox, remarked: With the creation of the Latin-American Bureau, the producers of the United States will have at their command facilities which will enable them to understand just the sort of market offered to them and what is to be done in order to secure customers in that quarter.3 Going to war against Spain required the projection of American military power, both army and navy, beyond the borders of the United States. The subsequent military victory not only facilitated but was also used to lend justification to the development of the Caribbean as an American lake or American Mediterranean, a sphere of influence that successive presidential administrations sought to insulate from foreign interference while seeking to dominate politically, militarily and economically. Although the government and people of the United States rejected the creation of formal colonies as an undesirable and undemocratic practice associated with the Old World, Spains former colonial possessions of Cuba and Puerto Rico were firmly placed under American protection and tutelage. In the case of Cuba, the country was legally independent but, in reality, it was a protectorate of the United States. The latters influential role was illustrated by Cuba adopting the political system of the United States, agreeing not to make treaties of military alliance with foreign powers, handing over the naval base of Guantnamo Bay to the American navy and accepting the Platt Amendment that allowed the United States a constitutional right of intervention in Cuban political affairs. Under the protection of the Platt Amendment and with the cooperation of the Cuban elite, American trade and capital investment flowed into Cuba. US investment in Cuba rose to $200 million in 1911 and increased further to more than $1 billion in 1925. With Cuba as the prototype, a system of informal rule based on protectorates was extended throughout much of the Central American Caribbean region. This interventionist policy reflected not only Americas greatly increased naval and economic power but also the influence of progressive ideas that advocated the imposition of political stability and financial rectitude in those republics considered guilty of irresponsible behaviour. The idealistic and well-meaning aspects of progressivism, however,

were belied by the implicit assumption of American superiority and the frequent use of force rather than persuasion to implement the policy.4 The Latin American countries were generally dismayed by the new activism shown in American foreign policy. Fully aware of the geopolitical might of the United States, these governments, and especially those closest in geographical proximity, were wary of provoking the colossus of the north. In the case of the SpanishAmerican War, this had shown itself in the adoption of policies of neutrality towards the conflict in Cuba. Nevertheless, the outward show of official neutrality concealed strong undertones of anti-American sentiment among the educated elite who made up the ruling class in Latin America. Although the Latin American elite was generally critical of Spanish political repression in Cuba, once American military intervention occurred there was considerable private sympathy with Spain rather than the United States. Part of the reason was the longstanding tradition of regarding the United States as an expansionist and aggressive power with particular designs on acquiring territory in the Central AmericanCaribbean region. Some Latin Americans instinctively distrusted, therefore, the idealistic motives proclaimed by President McKinley in justifying war against Spain in April 1898 and his later evangelical enthusiasm when advocating the annexation of the Philippines. But not all Latin American opinion was hostile. The notable exception was Brazil, whose Portuguese background and diplomatic ambitions to become a greater hemispheric power than its archrival Argentina resulted in the adoption of a conspicuously friendly and helpful Brazilian attitude towards the United States. Two warships were sold to the American navy and ships of the US fleet were allowed to take on fuel and to refit in Brazilian ports during the SpanishAmerican War. Nevertheless, the unexpectedly swift military defeat of Spain followed by the denial of home rule to Cuba and Puerto Rico, and the establishment instead of American military governments in those islands, served to confirm and harden anti-American sentiment in Latin America. American troops were withdrawn from Cuba in 1902 but Cuban independence was severely circumscribed by the imposition of the Platt Amendment that ensured the perpetuation of a supervisory US political influence. At the same time, however, Spain was humiliated by a crushing military defeat that its people called the disaster of 98. The final removal of Spanish imperial power from the New World was therefore a definite reality and, as a new century began, only made the Latin American nations feel even more isolated and vulnerable to the growing political, economic, military and cultural influence of the Anglo-Saxon United States. The Latin American predicament was eloquently expressed by the Uruguayan writer, Jos Enrique Rod, whose celebrated work Ariel was published in 1900. Echoing the warnings made by the Cuban poet and national hero Jos Mart, Rod likened the United States to Caliban, a character taken from Shakespeares play The Tempest and representing a monster that was respected for its great energy and strength but feared for its insensitivity and seemingly insatiable appetite for material expansion. In spite of its titanic accomplishments and the great force of will that those accomplishments represent, and in spite of its incomparable triumphs in all spheres of material success, stated Rod, it is nevertheless true that as an entity this civilization creates a singular impression of insufficiency and emptiness.5 In similar vein the Nicaraguan poet Rubn Daro lamented: The United States is grand and powerful. Whenever it trembles, a profound shudder runs down the enormous backbone of the Andes. If it shouts, the sound is like the roar of a lion.6 For salvation, Daro looked to Argentina for leadership: On the balance scales of the American continent, it is the Argentine Republic that gives us the counterweight to Yankee power. This is the country that will rescue the spirit of our race and put an end to present and future imperialist ambition.7 1111

Despite Great Britains acceptance of arbitration in the Venezuela boundary dispute in 1896 and Spains military defeat in 1898, American political and military pre-eminence in the Western Hemisphere was once again, if only briefly, put to the test by Europe in the Venezuela Incident of 19023. Venezuela was similar to a number of countries in the Central American Caribbean region that had built up large foreign debts mainly owed to European banks and bondholders. The outbreak of internal civil war at the close of the nineteenth century, however, meant that Venezuela lacked both the financial means and the political will to service its foreign debt. In November 1902 Great Britain, Germany and Italy demanded financial compensation for their nationals and, when this was refused by the Venezuelan government of Cipriano Castro, a small squadron of gunboats was sent to impose a punitive naval blockade of the main Venezuelan ports. The blockade was eventually lifted in February 1903 after all parties to the dispute agreed to seek binding arbitration at The Hague Court of Permanent Arbitration. At first, Germany had declined to go to arbitration, but it later consented to do so after (so President Theodore Roosevelt later claimed) being threatened by American naval intervention in the dispute. In fact, the European powers needed little persuasion because it was evident that none of the countries involved, including Venezuela, stood to gain very much either economically or politically from a continuation of the blockade. Indeed, arguably the United States was the principal beneficiary of the crisis. We have succeeded in . . . getting England and Germany explicitly to recognize the Monroe Doctrine, Roosevelt informed Grover Cleveland.8 The ruling of The Hague Court on 22 February 1904 found in favour of the European powers and stated that they should be given preferential treatment over other nations in the settlement of the existing financial claims made against Venezuela. The ruling raised the prospect of an increasing resort to gunboat diplomacy by European powers because it appeared to give legal justification to the use of military intervention to collect unpaid debts in cases where arbitration was refused. Latin American nations were disturbed by the clear threat the ruling posed to their sovereignty and independence. They sought recognition of the Drago Doctrine, named after Argentine Foreign Minister Luis Mara Drago, which had argued at the time of the Venezuelan blockade that foreign nations did not automatically possess the legal right to use force to recover public debt. Moreover, the employment of force was not regarded as a simple technical issue because it contained many dangerous ramifications directly affecting the principle of non-intervention and respect for the sovereignty of nations. The collection of loans by military means, explained Drago, implies territorial occupation to make them effective, and territorial occupation signifies the suppression or subordination of the governments of the countries on which it is imposed.9 Prior to the blockade, President Theodore Roosevelt had been informed privately by the German government of the intention of the European powers to issue an ultimatum to Venezuela. At the time Roosevelt had expressed no objection to this proposed course of action because no acquisition of territory was envisaged. Nevertheless, he was alarmed by the example of European gunboat diplomacy employed against Venezuela and was concerned at the prospect of its repetition, especially in the unstable republics of the strategically important Central AmericanCaribbean region. He refused, however, to endorse the Drago Doctrine and was unwilling to adopt an inter-American approach to resolving the issue. It was Roosevelts belief that the United States was already bound by the Monroe Doctrine to ensure order in the Western Hemisphere and that his government must retain complete freedom of action in foreign affairs and be prepared to act unilaterally if necessary. In his Annual Message to Congress on 6 December 1904, Roosevelt patronizingly declared that Latin American nations that conducted their affairs with reasonable efficiency and decency,

maintained political stability and paid their debts need not fear interference from the United States. The United States, however, had a duty to intervene in cases where governments acted irresponsibly and committed chronic wrong-doing.10 Roosevelts argument was that international incidents such as the one that had occurred in Venezuela were dangerous to hemispheric security because they had provoked European intervention and thereby presented a challenge to the Monroe Doctrine. In his opinion, such incidents could be best avoided not by collective inter-American action but by pre-emptive unilateral US intervention. Indeed, the United States must be prepared to intervene in Latin American affairs if it wished to be sure of keeping other nations out. Roosevelt was referring to the particular threat posed by the powers of the Old World, but Great Britain and the European powers were not displeased by his comments. In fact, they welcomed what became known as the Roosevelt Corollary to the Monroe Doctrine or the policy of the Big Stick because it meant that the United States would act as a self-appointed policeman to ensure that Caribbean and Central American countries acted responsibly and, most importantly, met their financial obligations to foreign investors. The right of intervention claimed by Roosevelt had already been written into the Cuban Constitution in the form of the Platt Amendment and would provide the justification for sending marines to restore political order in Cuba in 1906. The passage of a similar constitutional or congressional sanction, however, was not necessary to justify intervention in the Dominican Republic in 1905. Faced with imminent national bankruptcy and rumours of European military intervention, the Dominican government of Carlos Morales Languasco suggested that Roosevelt establish American supervision of the collection of the countrys customs duties. American officials and financial experts accordingly carried out this task and set up a depository fund to ensure repayment of the mainly European-held debt. Under American tutelage the Dominican Republic became politically stable and attractive to investors and business interests. Furthermore, European intervention was prevented and wrong-doing was punished. Responding to criticism that his aim was to acquire overseas territory, Roosevelt denied any such intention and explained that the United States was simply performing in a peaceful manner not only with the cordial acquiescence, but in accordance with the earnest request of the government concerned, part of that international duty which is necessarily involved in the assertion of the Monroe Doctrine.11 Perceived revolutionary disturbances in the Central AmericanCaribbean region resulted in subsequent presidents making even more complete use of the Roosevelt Corollary than Roosevelt had done. William H. Taft ordered marines to Nicaragua in 1912 to suppress political revolt and ensure an orderly presidential election. Not to do so and to sit by, warned Huntington Wilson, would be a blow to our prestige in all the neighboring republics.12 In 1915 serious rioting and disorder in Haiti, including the brutal killing of the president by a mob in broad daylight, prompted Woodrow Wilson to send in marines to impose martial law, disarm and disband military forces, and establish a financial receivership. A proper legal basis was also secured to justify American actions. A treaty was signed which legalized American military occupation and allowed continued American control over Haitian finances. These powers were retained until 1934 and included the creation, training and direction of a Haitian nonpolitical police force (Gendarmerie). Under the command of Lieutenant Colonel Smedley D. Butler of the US Marine Corps, the Gendarmerie maintained order in the countryside and, in suppressing a local rebellion, was held responsible for the deaths of several thousand Haitians during the 1920s. A non-political police force or National Guard (Guardia Nacional) was similarly created in the Dominican Republic where Wilson suspended the government for chronic wrong-doing in 1916 and turned over the administration of the republics affairs to American naval officers; an American Rear-Admiral, William B. Caperton, served as acting-president.

Government was returned to the Dominicans in 1924 though the financial protectorate was not formally ended until 1941