one shot had been fired against a foreign foe. We were at absolute peace, and there was no nation in the world with whom a war cloud threatened, (no nation in the world whom we had wronged, or from whom we had anything to fear." 25 Though this, no doubt, is the ideal of a nation's foreign policy, such equilibrium is seldom permanent. Nor was the present an exception.

25 Autobiography, p. 602.

F

CHAPTER XXV

THE DOLLAR AS A DIPLOMAT

OR an heir to his policies, Roosevelt chose William Howard Taft, his Secretary of War, a man of vast experience in administrative tasks, whose record both in the Cabinet and as Governor of the Philippines had won the confidence of his chief. Taft was first choice in a field containing also Charles Evans Hughes, whose reform administration in New York Roosevelt thoroughly endorsed. But in 1908 Taft seemed to have the advantage of a somewhat more comprehensive experience. To possess the support of Roosevelt was to insure election, and Roosevelt joined the ranks of those Presidents who have demonstrated the completeness of their hold upon the people by securing for themselves a second term and naming their successor.

Though Taft was Roosevelt's own choice, a rift in their affection soon became apparent. The retiring President felt misgivings that his successor's amiable disposition would render him a possible victim to the wiles of the "Ohio Gang" which Roosevelt, even in 1909, described to Captain Archibald Butt as the most sinister group of predatory politicians the country had to offer.1 But while these fears were soon demonstrated to be not wholly groundless, in the domain of foreign politics, the high character of the chief executive was certain to exercise a wholesome influence.

Now that the Taft Administration is history, one marvels that Roosevelt could ever have anticipated a continuation of his policies from a temperament so opposite to his own. Cynics have even read into events the deliberate intention of Roosevelt to impose upon the country so complete a contrast to himself, that four years later, the people would

1 Cf. Abbott, Lawrence F., The Letters of Archie Butt (New York, 1924), p. 358.

demand him back. Such a reading is unjust, however, to the real affection which "Will" and "Teddy" bore each other. And the change in methods brought about in 1909 bears testimony rather to the truth that love is blind than to anything unworthy on the part of either President.

An early evidence that Taft proposed to emulate McKinley rather than Roosevelt was his choice of Philander C. Knox to head the State Department, and the immediate introduction by the latter of the so-called "Dollar Diplomacy" in his handling of Far Eastern problems. China, in particular, after the war of 1894 and the Russo-Japanese struggle in Manchuria, needed funds to rehabilitate and modernize the country. This gave Western nations opportunity for that economic penetration which has so often proved to be the forerunner of political imperialism. And just as Hay had sought for the United States equal opportunity with other commercial nations through the medium of the Open Door, so Knox was determined to obtain for American banking interests equal opportunity with European in the exploitation of China. But Secretary Hay took stand upon a principle which harmonized with large ideals; whereas Knox, in his endeavor to obtain for American bankers a share in international loans to China, put the advantage of his country upon a somewhat sordid level.2

But if "Dollar Diplomacy" when applied to Oriental exploitation failed to stir the nation's pulse, it served an obvious utility nearer home. The action of President Roosevelt toward the Dominican Republic created a precedent for economic supervision by the United States over the unstable nations of the Caribbean. And Taft and Knox improved upon the example in Nicaragua and Honduras. Central America had been for years in almost chronic trouble. In 1906 President Roosevelt had offered mediation along with the Mexican President Diaz in a war between Salvador and Guatemala. A preliminary conference on board a United

2 Ogg, Frederic Austin, National Progress (New York and London, 1918), pp. 315-317. Cf. also Rosenthal H., "America and the Chinese Loan," Review of Reviews, vol. XLVII, pp. 726-728 and McCormick, Frederick, "America and the China Loan," Century, vol. LXXXVII, 731-734.

States warship led to the calling of a general peace congress at San José in Costa Rica. But the latter, to achieve results, required the coöperation of President Zelaya, of Nicaragua, the chief trouble-maker among the five republics. And he, refusing to acknowledge any right of the United States to intervene in Central American affairs, declined participation in the conference. Zelaya was untroubled by consistency, for he himself was meddling constantly in the affairs of Honduras.3

Zelaya baffled all attempts at peace among the republics until in 1909 an insurrection threatened his authority in Nicaragua. The United States approved the movement, and when invited by leading elements in both Nicaragua and Honduras, was readily inclined to intervene. As in the previous instance, the coöperation of President Diaz was solicited, but without avail, and the United States acted alone. Secretary Knox declared that Zelaya had destroyed free government in Nicaragua, and that the revolutionists reflected the will of the people. And when Zelaya, perceiving that the game was up, resigned in favor of a successor chosen by himself, President Taft refused him recognition.

Prolonged disturbance in the region had destroyed its economic life. It was here that "Dollar Diplomacy" offered greatest promise. Industry should be revived by loans from the United States. These in turn should find their guarantee in United States administration of the customs and supervision of the budget. Treaties to this effect were negotiated with Honduras in January, 1911, and with Nicaragua in the following June. Before the latter could be ratified by the Senate, a United States collectorship of customs was established in Nicaragua, and the State Department actually urged American bankers to lend money to the republic. These loans proved unattractive when the Senate refused to ratify the treaty. Trouble broke out afresh in Nicaragua, too, and subsided only on the intervention of United States marines. Quiet having been restored, Knox patiently negotiated another treaty, which in addition to 3 Ogg, Frederic Austin, Op. Cit. 257-265.

Latané, John Holladay, The United States and Latin America (New York, 1920), 280-285.

establishing the economic protectorate as previously guaranteed, undertook by an offer of $3,000,000 to secure a right of way for an interoceanic canal, a supporting naval base, and the lease of two small islands strategically located. This treaty went before the Senate February 26, 1913, too late to receive action in the Taft Administration."

Seldom is the economic motive of diplomacy more apparent than in the Taft régime. Many of its phases were creditable. One of these was the informal diplomatic action of a young American business man, Mr. W. Morgan Shuster, who embarked on the romantic enterprise of rescuing from bankruptcy the ancient Persian empire. He supposed his task related to the introduction of modern business methods, and the substitution of reasonable taxation for the antiquated system of farming out the taxes which for generations past had blighted Persian efforts at administration. In this limited conception of his task he achieved considerable success. But he found his economic efforts greatly handicapped by diplomatic obstacles, for Russia and Great Britain had divided Persia into spheres of influence. Neither cared to see a revival of Persian national spirit. Foreign influence secured the restoration of a reactionary Shah. Yet in face of all these complications Shuster clung to his straightforward business tactics and secured a hearing of the Persian question before the bar of world opinion. In the British House of Lords, for example, Lord Morley and Lord Curzon joined in expressions of admiration for the American and his work. Russia felt obliged to disclaim any hostile purpose toward Persian sovereignty. In the end, of course, the great powers had their way. Persia yielded. Shuster was dismissed. But the Persians had been aroused to a national self-consciousness."

While the young American business man was wrestling single-handed with the mighty Russian Empire, the State

5 Ratification occurred Feb. 18, 1916. See Ogg, Frederic Austin, Op. Cit. 258.

6 Cf. "Persia and Shuster" in Review of Reviews, vol. XLV, pages 49-53, and "An American Defender of Persian Liberty," in the Independent, vol. LXXII, pages 1153-1155.