From Colony to Superpower: U.S. Foreign Relations Since 1776 (76 page)

Poland was a special case and demonstrates quite clearly the limitations of U.S. policies in the 1920s. A large and vocal bloc of Polish American voters and Poland's extremely important and vulnerable geographical position between the jaws of what State Department official William Castle called the "nutcracker" of Russia and Germany made it an issue Americans could not ignore. Yet even as a problem, Poland was not taken that seriously. "Warsaw is so damned far away," the journalist Walter Lippmann observed.
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Poland's hopes for U.S. security guarantees against its larger neighbors and for generous U.S. loans were not realized. The Harding and Coolidge administrations carefully avoided entanglement in its ongoing and potentially explosive border dispute with Germany. They hoped through expanded loans, investment, and trade to encourage in Poland a stability that in turn would help stabilize Eastern Europe. Yet while keeping a close eye on events, they relied on the private sector to develop and implement programs. With the "covert backing" of the Coolidge administration, Edwin Kemmerer, who had served as a "money doctor" for Central American nations, drew up an economic reform plan for Poland including the gold standard, a balanced budget, and stabilization loans. Subsequently, U.S. bankers granted Poland a credit of $20 million and a loan of $72 million. The Chicago banker Charles Dewey went to Warsaw as financial adviser. The results were meager. Dewey's performance made palpably clear the shortcomings of unofficial "experts." He knew little of Poland and less of international finance. Employing, in his own words, the booster "methods of the President of the Kiwanis Club," he waxed enthusiastic about Poland and developed a series of grandiose and totally unrealizable schemes for economic development, provoking his colleagues to dismiss him as "Pan Deweski." Poles, like other Eastern Europeans, looked suspiciously on foreign capital; Americans hesitated to invest in a nation seemingly so backward and vulnerable. In any event, the loans that were supposed to represent a beginning marked the end as U.S. capital shifted after 1927 to domestic markets and then dried up during the depression.
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In dealing with Bolshevik Russia, the Republicans initiated a debate that would be repeated many times over in the twentieth century with mixed and inconclusive results: Is it better to try to change an obnoxious government by isolating it politically or "engaging" it economically? With Russia in the 1920s, the United States tried both. Drawing on precedents set with Huerta's Mexico, Wilson in 1917 had refused to recognize the revolutionary government. When Lenin took Russia out of the war in 1918, a policy of expediency hardened into dogma. The Bolshevik government had taken power by force, U.S. officials insisted, and did not represent the Russian people. It had refused to carry out its international obligations, especially the repayment of debts incurred by predecessor regimes. It was committed to overthrowing other governments. Americans hoped that non-recognition and the Allied military interventions would topple the hated Bolshevik government or cause it to collapse under its own weight.
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The regime did not collapse, of course—if anything, the Allied interventions helped solidify its hold on power—but the Republicans did not deviate from the position Wilson had staked out. Because it emphatically rejected their most fundamental tenets such as religion and private property, Communism was anathema to many Americans—"the most hideous and monstrous thing that the human mind has ever conceived," Robert Lansing averred, a "murderous tyranny," according to Hoover.
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Antipathy to Communism remained a potent force throughout the 1920s. It was regularly fed by such bedrock institutions as the Roman Catholic Church, labor unions, and patriotic organizations such as the Daughters of the American Revolution. Russia's clumsy and generally ineffectual efforts to subvert other governments through the Communist International, or Comintern, reinforced American fears. A State Department already fervently anti-Communist closely monitored Comintern activities through its listening post in Riga, Latvia. The Comintern succeeded only in remote and insignificant Outer Mongolia, but its subversive activities in Europe and especially Latin America aroused exaggerated U.S. fears and provided a continued reason for non-recognition. Even in 1931, when the United States was the only major power still withholding recognition and the Japanese takeover of Manchuria suddenly brought a convergence of Soviet and American interests, the Hoover administration refused to reconsider the policy.
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While seeking to isolate Russia through non-recognition, the United States also engaged it economically. Lenin and his successor, Joseph Stalin, recognized their desperate need for Western capital and technology and assumed that the United States, to meet its pressing needs for foreign markets, would provide it. Americans hoped that exposing the Russian people and perhaps even some of its leaders to the wonders of capitalism would persuade them to reject Communism. The result, ironically, was to assist in the preservation of the despised Soviet state.

Americans responded with characteristic generosity to a devastating Russian famine in 1921–22. The Communist regime hesitated to ask for outside assistance, but the need was desperate, and it hoped that famine relief might somehow lead to recognition and trade. Working through the American Relief Administration (ARA), a private agency with close ties to Washington, Hoover with typical energy organized a massive emergency relief program. In the war years, food had been openly used as a political weapon; Hoover this time explicitly disavowed political activities. Nevertheless, with the Soviet regime seemingly on the ropes, he hoped that this most vivid display of the contrast between the bounty of capitalism and the deprivation of Communism would cause Russians to reject a system imposed on them. For most of the nearly four hundred ARA workers in what they called Bololand (for Bolshevik), the only goal was to feed the hungry, especially the children. Encountering horrific conditions of hunger, disease, and death, even stories of cannibalism, they employed eighteen thousand Russians and established seventeen thousand relief stations from the Ukraine to Siberia. During its two years in operation, ARA, working with other non-governmental organizations such as the American Red Cross, provided more than half a million tons of food, clothing, and medicine at a cost of some $50 million in U.S. funds and an additional $11 million provided through Soviet shipments of gold to the United States. The ARA may have saved as many as ten million people from starvation. It earned the gratitude of many Russians, and shouts of "Arah" were often heard as its trucks went by. Disappointed that the relief effort did not lead to recognition, the Soviet government in time attacked ARA for dumping surplus food and for espionage and counterrevolutionary activities. In fact, as the government must have recognized but could not admit, America's efforts to undermine its authority through goodwill helped it survive a most critical period in its history.
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Despite the absence of formal trade ties, American businesses, sometimes with Washington's blessings, also cut numerous deals that helped promote economic development in Stalin's Russia. Lenin and Stalin recognized their desperate need for U.S. capital, technology, and equipment and sought to limit the control of foreign capitalists by granting short-term concessions. For the Republican administrations, such contacts presented a dilemma. They did not want to help a hated regime. On the other hand, they were deeply committed to the expansion of American trade and investments and reluctant to interfere with the operations of private business. Like GE's Young, they could also rationalize that U.S. aid might give the Communists "the very gun with which they will shoot themselves."
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In fact, because of Soviet restrictions and controls, especially limits on profits, American capitalists generally fared poorly in Russia. International Harvester lost over $41 million during the period of its concession. W. Averell Harriman, son of the railroad magnate and a future ambassador to the Soviet Union, ran an unprofitable manganese operation in the Caucasus. A major exception was the legendary Armand Hammer. In the richest of ironies, Lenin himself converted the eccentric physician and son of a Russian immigrant into an "entrepreneur who milked capital for his future businesses from the communist state." Hammer ran concessions in asbestos production and pencil manufacturing. The Soviets permitted him to take away his profits by buying and taking home priceless Russian works of art.
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Stalin relied heavily on American technical expertise in his First Five-Year Plan, adopted in 1928. More than two thousand U.S. engineers helped build automobile and tractor plants, construct steel mills, and develop mining operations. General Electric constructed a massive dam on the Dnieper. Arch-capitalist Henry Ford provided a foundation for the Russian automobile industry by building a huge automobile plant in Novgorod and selling the Russians two thousand vehicles. Despite various impediments, trade expanded significantly. The United States provided about 25 percent of total Soviet imports, including such important items as cotton, tractors, and industrial and agricultural equipment. Overall, the import of American expertise, investment capital, and equipment helped to stabilize economic and thereby political conditions in the Soviet Union during a critical period.
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In East Asia, the Republicans pursued similar goals with much the same methods and fewer results. Hughes hoped to create through the Washington treaties a firm basis for stability in the region. The agreements on naval armaments and the Pacific islands had eased Japanese-American tensions, and the reaffirmation of the Open Door principles appeared to establish great-power agreement in respect of Chinese sovereignty. "We are seeking to establish a
Pax Americana
maintained not by arms but by mutual respect and good will and the tranquilizing process of reason," the secretary proclaimed in 1923.
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Typical of the era, dollars were to abet "the tranquilizing process of reason." American officials hoped that trade and loans would promote peace in an often turbulent area.

Timely and generous U.S. aid for the victims of a horrible 1923 earthquake in Japan helped build on the spirit of Japanese-American cooperation evinced at the Washington Conference. The disaster killed as many as two hundred thousand Japanese, left as many as two million homeless, and threatened countless others with starvation and disease. Americans provided $11.6 million in relief, and the Asiatic Fleet and the U.S. Army in the Philippines helped deliver and distribute emergency aid. Americans naturally hoped that their generosity would improve relations with Japan, often strained in the twentieth century. While some Tokyo officials sought to obscure the extent and importance of foreign aid, many Japanese responded in kind. The Americans have behaved "like the Americans of old," a Tokyo newspaper gratefully exclaimed. "They have been efficient, sentimental and generous in giving and forgetful of everything else in their zeal to help helpless sufferers."
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Gratitude is fleeting in international relations as in ordinary life, of course, and the goodwill earned by earthquake relief was more than destroyed by new and restrictive congressional immigration legislation the following year. The product of decades of agitation among old-stock Americans against the flood of "new" immigrants from Eastern and Southern Europe, West Coast hostility toward Orientals, and the especially virulent racism of the 1920s, the legislation created quotas sharply limiting the number of European immigrants. It took specific aim at the Japanese. Partly as the result of a well-intended but extremely unfortunate diplomatic gaffe, an amendment excluded Japanese immigrants altogether. Recognizing the seriousness of the exclusion proposal, U.S. officials encouraged the Japanese to protest. Tokyo dutifully warned of "grave consequences" should the amendment pass. Ironically, leaders of the
exclusionist bloc in Congress used the alleged Japanese "threat" to secure overwhelming support for their amendment. Hughes properly lamented that in a few minutes Congress had "spoiled the work of years and done a lasting injury." The legislation unilaterally abrogated Roosevelt's Gentleman's Agreement of 1907. It provoked an outburst of anti-Americanism in Japan. Protestors organized boycotts and tore down the flag at the U.S. embassy. One militant committed suicide. The misguided legislation shook Japan's policy of cooperation with the West to its foundation, giving ammunition to those who preferred a unilateral approach and encouraging a shift toward expansion on the East Asian mainland.
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Private economic diplomacy, a major instrument of Republican policy, also failed to promote U.S. goals in East Asia. In most cases, the bankers who were supposed to be the agents of Hughes's policy behaved like bankers rather than the diplomats Washington wanted them to be. The State Department hoped to use loans to promote economic development in China, thereby helping to protect its sovereignty as well as expand U.S. trade. But the major banking houses already had millions of dollars of unpaid Chinese loans on their books. Troubled by China's weakness and internal divisions, they naturally hesitated to put more money at risk. In contrast, State Department efforts to limit loans that Japan might use to expand its influence in Manchuria, Mongolia, and North China generally failed. On one occasion, when the Japanese protested, the State Department withdrew its objections. Bankers like Lamont found Japanese-controlled areas more stable, therefore a better risk, and devised means to "launder" funds to get around State Department objections. American loans played a significant role in Japan's quiet expansion on the Asian mainland in the 1920s.
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The major challenge to Hughes' design for peace and order in East Asia was Chinese nationalism. After the fall of Yüan Shih-k'ai's government in 1916, China descended into chaos and civil war. A nominal government at Peking controlled little of the country; local warlords prevailed, fighting among themselves, in most regions. The one thing the various factions agreed upon was hatred of the foreigner. In the mid-1920s, Sun Yat-sen's Kuomintang Party sought to establish itself as the leader of China. It gained vital support from the Soviet Union, which sacrificed some of its concessions under the unequal treaties and provided military and political assistance. Using nationalism to rally the people to its banner, the Kuomintang
set off a period of nationalist agitation. A May 1925 incident in Shanghai led to an explosion of anti-imperialism across the country with attacks on foreign interests and demands for the removal of foreign military forces and ending the unequal treaties. A year later, when the Kuomintang under its new leader Chiang Kai-shek mounted its Northern Expedition and occupied Nanking, there were further attacks on foreigners and foreign property. Six foreigners were killed, including one American. A youthful Pearl Buck, later to be the interpreter of China to millions of Americans, escaped by hiding in a hut. "You Americans have drunk our blood for years and become rich," one protestor screamed.
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British and U.S. gunboats eventually quelled the violence, but there was talk of war.