A Patriot's History of the Modern World (40 page)

Resettlement ripped groups apart and placed them amid ancestral enemies. Some states engaged in massive relocations of populations across one another's borders, adding to the hundreds of thousands of refugees from the war. To complicate matters, Europe could no longer ship people to America, Australia, or Latin America. Meanwhile, changes in citizenship regulations left even more people without a nationality. Citizenship based on the legal principle of jus sanguinis (by blood—a child's citizenship was determined by the parent's citizenship, normally the father, rather than place of birth) was almost universally adopted, leaving only the United States and a handful of other nations granting citizenship by birthplace (by 2011, the United States would be the only such country). The head of the
International Red Cross lamented that almost a million Europeans were “unprotected by any legal organization recognized by international law,” which while true ignored the fact that the Versailles Treaty had guaranteed such an outcome by redrawing the map of Europe.
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The League of Nations' flimsy system of minority guarantees was egregiously flawed, seeking to force-feed a national sense of identity within states from an outside body, while concurrently blessing the deportation of vast populations under the guise of protecting their “human rights.”

Banditos and Bayonets

While Europe sank further under the weight of unobtainable dreams, the Americas went their own way. The United States applied a realistic, though occasionally harsh, policy of intervention as necessary, in the Caribbean and Philippines, where American troops came under sharp criticism for the “practically indiscriminate killing of natives.”
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Responding to these unfounded accusations, Marine generals Smedley Butler and John Lejeune both insisted that any civilians killed by American troops constituted exceptions, not the rule, but the issue became politicized when Warren Harding, the presidential candidate in 1920, insisted he would not permit U.S. authorities to draft a constitution and “jam it down [the] throats [of Caribbean neighbors] at the point of bayonets.”
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Once in office Harding continued the Haitian occupation with substantially beneficial results to Haitians. The Haitian government was relatively uncorrupt; officials carefully screened all would-be investors to protect their citizens (to the point that they may have actually retarded growth somewhat); and despite press censorship, there was more free speech and criticism of the United States permitted than would have been under most dictators. By 1929, though, when new riots broke out over student vouchers, the United States was tumbling into the Great Depression, and neither President Herbert Hoover nor President-elect Franklin Roosevelt had any interest in the Haitian distraction. Troops were finally withdrawn in 1934 by FDR, having constructed a thousand miles of roads, 210 major bridges, nine airfields, eighty-two miles of irrigation canals, nearly a dozen hospitals and more than one hundred clinics, and a thousand miles of phone lines. Much of this fell into disrepair or complete collapse after the bulk of the American troops left, once again underscoring the problems in attempting to build nations when effective social, economic, and political institutions were absent.

Well into the 1920s, American administrations found compelling reasons
to dispatch Marines or other troops to warm tropical locales. American Marines kept a small 100-man legation force in Nicaragua after 1909, and in 1916, the little-known Bryan-Chamorro Treaty gave the United States exclusive rights to build a canal and naval bases there, all as part of an effort to protect the Wall Street banking community's loans and a trans-Isthmian railroad. President Calvin Coolidge, isolationist to his core, ordered the troops out as soon as the debts were paid back to the New York banks, and in 1925, the Marines came home. Immediately, a free election tossed out General Emiliano Chamorro, the president of Nicaragua since 1917, but he led a coup to regain his power in 1926. This time, Coolidge would not support him, and when revolution spread throughout Nicaragua, the Marines came in again (and remained there until 1933) over objections from isolationists like Idaho senator William Borah, who denounced the operation as part of Wall Street's “mahogany and oil” policy.
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As in Mexico, relations with Nicaragua produced numerous low-level conflicts in the early twentieth century, including battles between Marines and guerrillas in 1921–22, when American forces were sent in to ensure the repayment of loans to U.S. banks. Smedley Butler, who found himself heading many Caribbean and Latin American expeditionary forces, was later quoted endlessly by the Left when he described himself as a “high-class muscleman for Big Business, for Wall Street and the bankers.”
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Butler may have had an ax to grind after being passed over as commandant of the Marine Corps, but he accurately described the U.S. military's role as a collection agency for American investment interests (though European militaries were just as guilty of such an offense). On the other hand, who else does one send when a foreign power steals one's property?

Whatever the degree of American investment in Latin American countries, it was never the prime factor in those states' failure to exploit their natural resources or to develop an industrial infrastructure. Those advocating the “dependency theory” of undeveloped nations, which claims that their lack of progress stems from their dependence on colonial or capitalist states and that they are constrained from establishing their own markets, sources of capital, and infrastructure by the imperialist and developed nations, have held sway in academic debate for much of the twentieth century. But such academicians have ignored the central and critical fact that those states were missing all four of America's pillars of exceptionalism, and were unable to make substantial progress on their own without first developing the necessary legal and societal framework. In short, the “dependency theory”
is dead wrong. One must look elsewhere to explain why Latin and Central America, independent since early in the nineteenth century, have been unable to develop their own markets, capital, and infrastructure for the better part of two hundred years ago.

In fact, domestic upheaval usually accounted for the most important obstacle to development even with direct American investment and building of institutions. Mexico, for example, beset by revolution after revolution that produced a merry-go-round of leaders between 1910 and 1916, saw its textile output fall during the war by 38 percent, despite a captive world market. Indeed, one of the striking features about Latin America during the first part of the twentieth century is how it had monopolies on many products, yet could not take advantage of its good fortune. By 1938, Argentina, Bolivia, Brazil, Chile, Cuba, Honduras, and Mexico all controlled more than one fifth of the world's exports in at least one commodity, with little to show for it. Brazil accounted for 60 percent of the world's coffee as early as 1913, yet its currency value fell, its internal taxes rose, and even though it was thought of as an “advanced” Latin American country, its value-added per person (that is, the difference between the production cost and the sale price of a good) stood at $16 compared with Argentina's $84.
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Brazil's productivity was “dismal” in the period 1913 to 1940, and real agricultural wages fell in Mexico. These realities have caused recent scholars to admit that the so-called dependency theory—which argues that virtually all of the Third World's economic backwardness stemmed from “colonialism” or “imperialism”—has been “unable to offer much guidance as to why some Latin American countries performed so much better than others.”
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Even in cattle raising, where the Latin American countries should have had an edge, their efforts at cattle breeding were poor, producing low-quality herds and blemished hides. Nor was poor productivity linked in some way to concentration of farmland in few hands as larger estates proved no more, or less, flexible or productive than smaller farms.
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What did hold Latin America back were the missing four pillars and a disconnect in moving cottage industries toward large-scale mechanization, partly due to the absence of finance. Successful companies relied on family networks: Di Tellas in Argentina, the Prados in Brazil, the Gómez family in Mexico, and the Edwards family in Chile. Thus, dependence on foreign investment had little to do with a state's undeveloped condition. While foreign investment could occasionally be dominant and result in abuses of power, direct foreign investment “played only a minor role in most countries”
during this period and was confined to international trade sectors.
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The primary problems were local—the inability to establish private ownership of property for collateral and corrupt top-down legal structures requiring bribes to function.

Latin American banking rules favored exports, not long-term industrial loans, and immigrants in Latin America—especially Italians—put their money into banks and exports rather than local development. In exports, South and Central American firms found themselves intensely susceptible to tariff barriers. After passage of the Smoot-Hawley Tariff only Venezuela, with its oil, and Honduras (where, following major strikes, the fruit dealers led by President Vicente Mejía Colindres struck a deal by securing a loan from the U.S. fruit companies to ensure local wages were paid) avoided a collapse. Argentina's debt—which previously had been mitigated by exports—rose sharply from 1929 to 1932, and even Mexico, which at first seemed impervious to the Great Depression, watched its economy collapse in 1938. With the nationalization of the oil companies, Mexico sealed its fate as a Third World country, seeing its exports fall 60 percent by World War II.
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Along with the American government, various churches and social organizations marched south. The YMCA moved into Latin America with educational and sports programs, especially in Cuba, Peru, and Mexico, and boasted that it was “Americanizing the Mexican youth.”
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The Rockefeller Foundation joined in, spreading the “Social Gospel,” and virtually wiping out yellow fever in Veracruz and the Yucatán in the 1920s, upgrading local medical schools and clinics in the process. Author Jack London, visiting Veracruz, Mexico, in 1914, reported that Americans had purged the streets of “riff-raff” and “able bodied loafers.”
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No doubt existed among American missionary groups or, in general, politicians that the “brown brothers” would gain from American involvement. Missionary societies contributed “to the diffusion of a new faith whose cultural matrix can be found in the
American way of life
(emphasis in original).”
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Improving Latin societies to a great degree meant Americanizing them—teaching them English, Protestant Christianity, American-style work regimens, respect for the law, and democratic processes. Unfortunately, this did not establish property rights or streamline the titling process, nor change the civil law legal structure. Over the next decade, an American invasion of the Caribbean, Mexico, and Latin America would sweep the hemisphere. Phelps-Dodge and Standard Oil in Mexico,
International Petroleum Corporation (IPC) in Peru, and United Fruit in Honduras, Guatemala, and Nicaragua (which saw banana exports increase by 300 percent between 1914 and 1920) boosted local economies. Companies offered English training, self-help classes, and tried to impose traditional (legal) marriages to replace local common-law marriages. Alcohol was banned in company towns, sports and films were provided, and safety training was introduced to reduce accidents. United Fruit alone established a medical department to fight malaria and created clinics and hospitals at its plantations. American companies advertised freely in Latin America. One manager said, “I have seen the insides of huts completely covered with American magazine pages.”
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Coca-Cola launched sales drives in the Caribbean after World War I, then moved into Mexico and Guatemala; Ford opened an assembly plant in Argentina. All this was good, but none of it changed the basic institutions of Latin American countries to improve their ability to govern themselves.

Neither American goodwill, missionaries, investment capital, nor soldiers seemed to stabilize Latin American countries. By 1931, almost every Latin American government had defaulted on its loans, and military dictators toppled civilian governments throughout the southern hemisphere, imposing heavy regulation and taxes on foreign investors. President Lázaro Cárdenas in Mexico nationalized American and British oil companies (1938). Peruvian workers went on strike at U.S.-owned mines, and Secretary of State Henry Stimson told the Peruvian government the United States would not help resolve the debts if they did not end the strikes. Bolivia nationalized Standard Oil properties in 1937. Eventually President Franklin Roosevelt negotiated a tiny return from Mexico for the nationalization of American companies' investments in oil production, but they had already lost millions. If the peasants viewed the
americanos
as banditos, they only succeeded in replacing them with their own, far more ruthless, thieves.

Selling the American Way

Whether in Latin America or Europe, “Americanism” spread steadily, mostly through cultural elements such as music and movies but also through the YMCA and private business organizations such as Rotary International. It was no coincidence that Rotary International met for the first time in Europe in 1930, the same year Sinclair Lewis won the Nobel Prize, indicating that in business as well as literature, Americans had arrived. The American-born Rotary Clubs introduced to the Continent a “service ethic” that
balanced an intimate fellowship of members with an outward worldwide movement. Critics saw Rotary in light of an “ever-equivocal relationship [of] capitalist exchange between the commercial impulse that could make society whole and the cut-throat competition that could tear it apart.”
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In Tocquevillian fashion, Rotary Clubs promoted a democracy of recognition,