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Dollar Diplomacy

Ever since the 17 republics of mainland Latin America emerged from the wreck of the Spanish Empire in the early 19th century, North Americans had viewed them with a mixture of condescension and contempt that focused on their alien culture, racial mix, unstable politics, and moribund economies. The Western Hemisphere seemed a natural sphere of U.S. influence, and this view had been institutionalized in the Monroe Doctrine of 1823 warning European states that any attempt to "extend their system" to the Americas would be viewed as evidence of an unfriendly disposition toward the United States itself. On the one hand, the doctrine seemed to underscore republican familiarity, as suggested by references to "our sister republics," "our good neighbors," our "southern brethren." On the other hand, the United States later used the doctrine to justify paternalism and intervention. This posed a quandary for the Latin Americans, since a United States strong enough to protect them from Europe was also strong enough to pose a threat itself. When Secretary of State James G. Blaine hosted the first Pan-American Conference in 1889, Argentina proposed the Calvo Doctrine asking all parties to renounce special privileges in other states. The United States refused.
After the Spanish-American War in 1898 the United States strengthened its power in the Caribbean by annexing Puerto Rico, declaring Cuba a virtual protectorate in the Platt Amendment (1901), and manipulating Colombia into granting independence to Panama (1904), which in turn invited the United States to build and control the Panama Canal.
The secretary of war, Elihu Root, formulated the Platt Amendment; Sen. Orville H. Platt of Connecticut presented the amendment to the Senate. By its terms, Cuba would
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not transfer Cuban land to any power other than the United States, Cuba's right to negotiate treaties was limited, rights to a naval base in Cuba (Guantanamo Bay) were ceded to the United States, U.S. intervention in Cuba "for the preservation of Cuban independence" was permitted, and a formal treaty detailing all the foregoing provisions was provided for. To end the U.S. occupation, Cuba incorporated the articles in its constitution. Although the United States intervened militarily in Cuba only twice, in 1906 and 1912, Cubans generally considered the amendment an infringement of their sovereignty. In 1934, as part of his Good Neighbor policy, Pres. Franklin D. Roosevelt supported abrogation of the amendment's provisions except for U.S. rights to the naval base.
In the Roosevelt Corollary (1904) to the Monroe Doctrine the United States assumed "an international police power" in cases where Latin-American insolvency might lead to European intervention. Foreign intervention in Latin American resurfaced as an issue in U.S. foreign policy at the turn of the century as European governments began to use force to pressure several Latin American countries to repay their debts. For example, British, German, and Italian gunboats blockaded Venezuela’s ports in 1902 when the Venezuelan government defaulted on its debts to foreign bondholders. Many Americans worried that European intervention in Latin America would undermine their country’s traditional dominance in the region. Quoting an African proverb, Roosevelt claimed that the right way to conduct foreign policy was to "speak softly and carry a big stick." Roosevelt resorted to big-stick diplomacy most conspicuously in 1903, when he helped Panama to secede from Colombia and gave the United States a Canal Zone.
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Construction began at once on the Panama Canal, which Roosevelt visited in 1906, the first president to leave the country while in office. He considered the construction of the canal, a symbol of the triumph of American determination and technological know-how, his greatest accomplishment as president. As he later boasted in his autobiography, "I took the Isthmus, started the canal and then left Congress not to debate the canal, but to debate me." Other examples of wielding the big stick came in 1906 when Roosevelt occupied and set up a military protectorate in Cuba and when he put pressure on Canada in a boundary dispute in Alaska.
As part of his annual address to Congress in 1904, President Theodore Roosevelt stated that in keeping with the Monroe Doctrine the United States was justified in exercising "international police power" to put an end to chronic unrest or wrongdoing in the Western Hemisphere. This so-called Roosevelt Corollary to the Monroe Doctrine contained a great irony: whereas the Monroe Doctrine had been sought to prevent European intervention in the Western Hemisphere, the Roosevelt Corollary justified American intervention throughout the Western Hemisphere.
Such "dollar diplomacy" was used to justify--and probably made inevitable--the later "gunboat diplomacy" of U.S. military intervention in Santo Domingo, Nicaragua, and Haiti. Foreign policy created by U.S. president William Howard Taft and his secretary of state, Philander C. Knox to ensure the financial stability of a region while protecting and extending American commercial and financial interests there. It grew out of President Theodore Roosevelt's peaceful intervention in the Dominican Republic,

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where U.S. loans had been exchanged for the right to choose the Dominican head of customs (the country's major revenue source).
Under the name of Dollar Diplomacy the Taft administration engineered such a policy in Nicaragua. It supported the overthrow of Jose Santos Zelaya and set up Adolfo Diaz in his place, it established a collector of customs, and it guaranteed loans to the Nicaraguan government. The resentment of the Nicaraguan people, however, eventually resulted in U.S. military intervention as well.
Taft and Knox also attempted to promulgate Dollar Diplomacy in China, where it was even less successful, both in terms of U.S. ability to supply loans and in terms of world reaction. The dismal failure of Dollar Diplomacy--from its simplistic assessment of social unrest to its formulaic application--caused the Taft administration to finally abandon the policy in 1912. The following year President Woodrow Wislon publicly repudiated Dollar Diplomacy, though he acted as vigorously as had his predecessors to maintain U.S. supremacy in Central America and the Caribbean. Dollar diplomacy has come to refer in a disparaging way to the heedless manipulation of foreign affairs for strictly monetary ends.
In his first term President Wilson also became embroiled in the Mexican Revolution. An affront to U.S. sailors led to his bombardment of Veracruz (1914), and border raids by Pancho Villa prompted a U.S. expedition into northern Mexico (1916). The Mexican Constitution of 1917 then granted to the state all subsoil resources to prevent their exploitation by U.S. firms. Such revolutionary efforts to nationalize resources, however, only meant that they went undeveloped or were exploited at home by
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corrupt officials, while the United States retaliated by cutting off loans and trade. The Latin-American dilemma of weakness and disunity in proximity to a mighty and united power was thus insoluble through unilateral efforts or a Pan-American movement dominated by Washington.
Wilson’s proposed League of Nations seemed to offer Latin America a means of circumventing U.S. influence. But the United States inserted Article 21 to the effect that "Nothing in this Covenant shall be deemed to affect the validity of international engagements, such as treaties of arbitration or regional understandings like the Monroe Doctrine." Secretary of State Hughes later defended U.S. behavior by candidly questioning the ability of some Latin-American states to maintain public order, sound finance, and the rule of law. When the Chaco dispute between Bolivia and Paraguay erupted into war, League of Nations President Briand offered his personal good offices, but he refused to assert League authority for fear of irritating the United States. In the end, the Pan-American Commission of Inquiry assumed jurisdiction.
Latin-American protests grew in volume, especially in 1926, when a Mexican-supported leftist rebellion in Nicaragua prompted U.S. Secretary of State Frank B. Kellogg to report to the Senate Foreign Relations Committee on "Bolshevist Aims and Policies in Mexico and Latin America." But intervention by United States marines in Nicaragua only paved the way for the dictatorial regime of the Somozas. At the Pan-American Conference of 1928, rivalry between Argentina and Brazil and the Chaco contestants, and the caution of other states, precluded their presenting a united Latin-American front. But the U.S. administrations of the decade did labor to improve the
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American image. The Clark Amendment of 1928 repudiated the Roosevelt Corollary, while Hoover toured 10 Latin-American nations after his election as president and repudiated the "big brother" role. In the 1920s, therefore, the United States continued to squeeze out European influence in Latin America but was itself moving slowly toward the "Good Neighbor" policy of the 1930s.
The efforts made by the administration of U.S. president Franklin D. Roosevelt to improve relations with Latin America were known as the Good Neighbor Policy. Roosevelt pledged to be a "good neighbor" in his inaugural address in 1933, and the phrase was soon linked to American policy in the Western Hemisphere. At the Pan American Conference in Montevideo, Uruguay, in December 1933, the United States signed a convention forbidding intervention by one state in another's affairs. The following year Roosevelt ended the 19-year occupation of Haiti by U.S. Marines and abrogated the Platt Amendment, which had made Cuba a virtual U.S. dependent. The United States continued to adhere to the policy of nonintervention when Bolivia and Mexico expropriated American property in 1937-38. The Good Neighbor approach and cultural exchange programs improved hemispheric relations and paved the way for cooperation on security during World War II. However, relations deteriorated again, despite the creation of the Organization of American States (1948) and the Alliance for Progress (1961).


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