Jefferson Byrd

HIST 573

10/9/08

Rosenberg, Emily S., Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy, 1900-1930. Duke University Press, 2003.

Dollar diplomacy refers to the policy of exporting America’s economic infrastructure to potentially unstable foreign countries. (1) During the early decades of the twentieth century, U.S. government officials, private bankers, and a growing class of financial advisers actively pursued a policy of expanding and stabilizing existing trade networks through the creation of a homogenous and predictable global financial system. This required American supervision of foreign financial development. In exchange, cooperative governments received private loans from American banks. (2-3)

Chapter 1: Dollar diplomacy evolved from the turn-of-the-century Gold-standard diplomacy movement. During the close of the nineteenth century, a debate emerged in American domestic politics concerning the viability of a gold-based monetary system over a bimetallic (gold/silver) system. (4) Gold-standard advocates found allies in the first generation of international financial advisers, based around New York’s banking industry. (5) Their almost-religious devotion to economic stability and expansion prompted a campaign to introduce the monometallic monetary system to America’s colonies and trading partners worldwide. (10-11). U.S. policymakers commenced an aggressive and ambitious campaign to introduce new forms of gold-standard currency in Latin America and Asia. (14-15)

Chapter 2: The emergence of dollar diplomacy was also made possible by American gender and racial ideals that portrayed the maintenance of economic stability as part of the code of manliness and the “white man’s burden.” (31-32) The model for dollar diplomacy was first established in the Dominican Republic, where U.S. investors offered the Dominican government loans in exchange for U.S. supervision of Dominican finances. (42) The Dominican Republic became a “fiscal protectorate” of the United States without the need for annexation. (44) Another contributing factor to the rise of dollar diplomacy was the development of the investment banking industry. Railroad companies and industrial corporations began relying on investment bankers and private investors to raise capital. By the early twentieth century these investors had begun looking towards international markets for lucrative investments. (48-49) As American bankers gained experience in “managerial capitalism,” the organizing and managing financial resources domestically and abroad, U.S. policymakers came to rely on the private business sector to “fulfill commitments the U.S. government had made under the Monroe Doctrine.” (51) The line between big business and government activism became blurred. (57)

Chapter 3: President Taft formally institutionalized dollar diplomacy. Private loans would be offered to debtor nations in exchange for U.S. control of foreign economic and political structures. Taft argued this would eliminate the need for military intervention. (61-62) Leading bankers and the Taft administration pushed to apply the Dominican model throughout Latin America and in Africa, yet they faced opposition from anti-banking and anti-imperialist factions in Congress. (70) This led dollar diplomacy advocates to rely upon private loan contracts with foreign nations, avoiding Congressional oversight. (76) Dollar diplomacy was expanded under President Wilson, who enforced dollar diplomacy in Haiti with military intervention. (82-83) During World War I, Wilson became more aggressive in extending foreign loans and demanded tighter control over foreign financial and military institutions. (86-87)

Chapter 4: In the post-war period, the United States’ position as a global financial leader became even stronger. Europe borrowed money from the U.S. to rebuild after the war, and the collapse of European finances led Latin America to rely even more heavily on U.S. loans. (97) In the 1920s, private loans from U.S. banks came to be seen as the means by which the world could be re-stabilized. (98) Reparation loans became divorced from government control and remained in the hands of private banks. (100) When foreign nations approached the U.S. for economic aid, the State Department generally responded by farming out private financial advisers. (103) A conflict of interests between the public and private spheres emerged over post-war loans to Latin America. The State Department intended to remain detached from the loans process, yet private investors sought assurances from the U.S. government that Latin American debtor nations would not default on their loans. (111) This highlights the often-conflicting dual goals of dollar diplomacy: to make money in the private sector and to create progress and stability internationally in the public sector. (112) Bankers demanded greater government intervention in the negotiation of foreign loans. (117) Yet by the mid-1920s, the State Department had grown weary of supervising private investments. (120-121)

Chapter 5: Antibanking sentiment and public criticism of dollar diplomacy surged in the years following the war. Mobilized by protest against U.S. military actions in Haiti and the Dominican Republic, critics claimed dollar diplomacy was “exploitation, militarism, and imperialism.” (122-123) Diverse figures including African American leaders, feminists, and “peace progressives” in Congress united as anti-imperialists to condemn dollar diplomacy. (124)

Chapter 6: While government support for controlled loans waned in the mid-1920s, ensuring economic stability in the interwar period remained a priority of U.S. policymakers. (151) Stabilization programs generally used the same means and pursued the same goals as dollar diplomacy: the centralization of banking, rescheduling of debt, reform of public administration, and the integration of the gold standard in foreign countries. (152) In order to minimize direct government involvement in the administration of foreign loans, the government dispatched financial advisers on professionalized advising missions. Ideally such missions would establish professional relationships between private banks and foreign countries (in Latin America and Europe) before the issuance of loans by contracts or treaties. (159) Such missions generally failed to produce lasting results, and foreign bonds issued by supervised states withered in value. (165) What is significant about these programs is that they were carried out in the same manner as dollar diplomacy, albeit under a different name. (186)

Chapter 7: Such financial advising missions were predicated on cultural abstractions that portrayed financial responsibility as masculine and necessary for civilization and racial superiority. These concepts were reinforced by the mass media of the 1920s, which often depicted the world as bisected into groups of civilized, rational, and masculine cultures that exercised financial responsibility and primitive, irrational, feminized cultures that needed to be uplifted by American economic systems. (217)

Chapter 8: The failure of advising missions prompted the U.S. government to withdraw its involvement in foreign finance. This further destabilized international financial systems by weakening investor confidence and devaluing foreign bonds. (219) U.S. financial advisors regularly became embroiled in foreign political disputes, yet the advisers were powerless without the backing of the U.S. government. The lack of formalized accreditation for international financial advisers frequently led to cultural misunderstandings, confusion, incompetence, and profiteering. (224) U.S. reliance on private loans to advance foreign policy goals came to an end with the economic crises of the late 1920s. (241) The results of dollar diplomacy on the global economy remain unclear. Though they advocated stability, international financial advisors may have contributed to economic instability. (258) The political and cultural implications of dollar diplomacy are more apparent. Internationally, dollar diplomacy fueled revolutionary struggles in discontent dependent nations. Domestically, dollar diplomacy provoked debate about the relationship between public policy and private enterprise and energized a progressive anti-imperialist movement. (259)