American Experiment

by James Macgregor Burns

  A deadly spiral of naval shipbuilding had begun as the British, once America had opted out of the League, wished to reassert their traditional command of the seas, as the Japanese undertook their own buildup, and as American watchdogs called for escalation. But there were calls too for an end to the arms race. Borah, moving to head up the disarmament movement, proposed a simple halving of naval construction by the three maritime superpowers. Lodge earlier had buried two such resolutions, but Borah proved his match in legislative maneuver. Moreover, the Borah Resolution captured the imagination of the public, which hailed it as the “Model ‘T’ ” of diplomatic proposals for its simplicity and practicality. A sizable portion of the business community, concerned that the cost of the naval arms race—in an era when an estimated 93 percent of all federal expenditures went to military or veterans’ programs—would interfere with Mellon’s planned tax cuts and business subsidies, quietly rallied behind the peace movement.

  In this thrust toward peace, women leaders were now playing their part. Fresh from their success in helping secure female suffrage, members of the League of Women Voters made disarmament the first issue on which to demonstrate the power of the woman’s vote. Carrie Chapman Catt roused the LWV convention in April 1921 with a hard-hitting call to action: “Everybody at this time is extremely careful about being nonpartisan. I don’t care a rap about it. I am for disarmament. I believe in taking action…. We are the appointed ones to lead in this question.” The women coordinated an alliance of church groups, unions, business and academic spokespeople in favor of arms control.

  Lodge and Harding succumbed to the mounting public pressure; on July 10, Secretary of State Hughes invited the Japanese, British, and six other powers to send representatives to Washington to discuss naval armaments and political problems in the Far East. Hughes saw in the negotiations an opportunity to revive the internationalist wing of the Republican party. Throughout the summer he consulted with a group of young naval officers and administrators, led by Assistant Secretary of the Navy Theodore Roosevelt, Jr., and together they hammered out an audacious proposal to end the arms race.

  Although Harding appointed him as one of the four American negotiators, Lodge at first put little stock in the conference. “I do not for a moment believe that either Japan or England will accept any disarmament proposals,” he confided to his diary just days before the talks opened, “but ... we shall have made our position clear and will lay the responsibility where it will belong—with them.”

  In mid-November 1921, the negotiators and their advisors assembled in Continental Memorial Hall for the first session of the naval talks. Only the handful of American experts who had been working with Hughes suspected that they were about to witness one of the most dramatic acts of individual leadership in the history of peace. The crowd of distinguished guests—senators and congressmen, Holmes and Brandeis from the Supreme Court, Vice-President Coolidge, British pacifist spokesman H. G. Wells—heard President Harding make a vapid introductory speech and then applauded politely as the Secretary of State took the floor.

  It was the moment of a lifetime. Hughes, erect and gray-bearded at the podium, shocked the audience by calling for an immediate end to all naval construction, and went on to spell out in exquisite detail a plan for stopping the construction of capital ships for at least ten years. As the foreign negotiators sat bolt upright in disbelief, Hughes listed the ships that each power would have to cancel or scrap—seventy-eight battleships in all, totaling nearly 2 million tons. In the gallery, William Jennings Bryan, still the leader of American pacifists, sat with tears of joy in his eyes.

  Hughes had instantly riveted world attention on the Washington Conference, making it difficult for any of the delegates to challenge the American proposal. Though weeks of hard negotiating still followed, the Secretary’s task was made considerably easier by the cryptologists of the Navy’s “Black Chamber,” who broke Japan’s diplomatic codes and so were able to learn the Japanese negotiating positions in advance. But it was Hughes’s benign persistence, coupled with his willingness to link the arms talks to the resolution of the political problems pending in the Far East, that finally turned the tide. The Americans’ flexibility in mixing diplomatic, territorial, and arms compromises, Hughes said later, “alone made possible the success of the Conference.”

  A broad-ranging series of agreements grew out of the Washington talks. The British and Japanese accepted Hughes’s ten-year freeze and a ratio of 5:5:3 in battleships between their fleets and the U.S. Navy. Japan settled for the short end of the ratio, but in return Britain and America promised not to build or fortify any new bases in the Western Pacific. France and Italy also agreed to limit the number of their capital ships, as long as smaller vessels were exempted from the treaty. Limits were set on the tonnage and armament of all remaining warships. On the political front, Japan and Britain replaced their military alliance with a four-power nonaggression pact that included France and the United States, thus laying to rest American fears of a possible joint Anglo-Japanese attack. Lodge was able to secure Senate approval of all these agreements, although the isolationists balked at the Four-Power Treaty, which barely passed with help from Senate Democrats. The final fruit of the negotiations was a nine-power treaty in which all the nations with interests in the Far East bound themselves to uphold the independence and territorial sovereignty of China. After more than twenty years, John Hay’s Open Door proposal had finally been transformed into an international covenant.

  A triumph for American ideals and interests, the Washington Conference also proved to be the swan song of the Republican internationalists. Over the rest of the decade, the leaders of the GOP proceeded to undermine or fritter away the gains that the talks had brought them. Relations between Japan and America began to improve after the conference, only to be poisoned by the xenophobic Immigration Act of 1924. Sponsored by Lodge and by California’s Hiram Johnson, the bill closed the United States to immigrants from the Orient—a mortal insult in the eyes of the Japanese. Partly as a result of rising anti-American and anti-Western sentiments in Japan, a second round of arms talks, convened in Geneva in 1927, ended in failure.

  Another set of negotiations, held in London in 1930, did produce an agreement to limit all vessels, not just battleships, but only at the price of major new concessions to Japan. The London talks, moreover, foreboded a bleak future for arms control. The French and Italian delegates walked out of the conference, and the Japanese government suffered a wave of assassinations and mass protests when it ratified the new treaty.

  On other fronts as well the Republicans failed to capitalize on the openings made by Hughes. After years of coaxing, the Senate in 1925 agreed to America’s joining the World Court, but only with a series of reservations that the court administrators in Geneva declined to accept. The United States also joined an international movement, led by Columbia professor James Shotwell, to “outlaw” war. The resulting Kellogg-Briand Pact, which twenty-six nations signed in 1928, had no enforcement mechanism—and just to be sure, the Senate appended a list of occasions when the United States would not be bound by it. One senator labeled it “an international kiss.”

  If the Republicans stood divided in their response to internationalism, on the economics of foreign affairs they were somewhat more united. The economic thrust of American policy in the 1920s was set by Andrew Mellon and Herbert Hoover, who despite occasional disagreements over tactics basically concurred. The Treasury and Commerce secretaries promoted a business approach to international affairs. Drawing on their experiences in private enterprise, the two focused on “fostering the use of experts, on finding apolitical solutions, on encouraging private voluntary and cooperative action, and on enlarging but circumscribing the role of government.” They would rely on private trade, buttressed by federal data-gathering and voluntary international cooperation, to advance American interests abroad. Most of all, they would rely on Mellon’s old colleagues, the staid Republican investment bankers.


  The help of the bankers was especially needed to untangle the international financial mess left by the World War and the peace settlement. The war had disrupted the old, London-based network of financial ties between Europe and the rest of the world. The Allies had been forced to borrow billions of dollars from the United States, and the various European states needed billions more to rebuild their economies when the fighting ended. When Harding entered the White House, the American government had loans out to seventeen European nations totaling more than $10 billion. The main debtors, Britain and France, made their repayment contingent on receiving reparations from Germany.

  Here the Republicans reaped one of the unintended fruits of their failure to ratify the Treaty of Versailles. In Paris, Wilson and Lloyd George had agreed to leave unspecified the amount to be paid by Germany, as they expected that later the British and American representatives on the reparations committee would work out a fairly moderate sum. When America rejected the treaty, however, the French were left as the dominant power on the committee, and in 1921 they presented Germany with a bill for the astronomical sum of $32 billion. After the Germans refused to pay, the specter of international debts unsettled efforts to stabilize European currencies and economies.

  Mellon’s banking instincts urged him toward a moderate solution to the growing debt/reparation crisis. “If we insist on too difficult terms,” we would “receive nothing,” he noted. But he was unwilling to have the American government simply write off $10 billion in supposed assets which would then have to be replaced out of the pockets of bondholders and taxpayers. His solution was to renegotiate the loans, granting the Europeans lower interest rates and longer terms of repayment. Using the leverage provided by Treasury Department oversight of private loans to foreign powers—the bankers seldom risked a loan not approved by Mellon and Hoover—the Republican banker-in-chief brought country after country to the bargaining table. Slowly the loan tangle was resolved, in the finance ministries and the banking houses. For the press and the public, however, the issue remained an acrimonious one; Coolidge’s bland and perhaps apocryphal “they hired the money, didn’t they,” rather than Mellon’s strategy of enlightened self-interest, seemed to define the American position on the debts.

  Sound American business sense was also needed to help defuse the explosive question of German reparations. France’s attempt to bludgeon the Germans into paying by occupying the Ruhr in 1923 only helped wreck the German economy, unleash wild inflation that pauperized the country’s middle class, and encourage political extremists on both the left and the right. Two Americans, the Chicago banker Charles Dawes and General Electric chairman Owen Young, helped shape a solution under which Germany’s reparation payments were fixed at a reasonable yearly sum. Meanwhile private American capital flowed into Germany, helping restore prosperity to that country and indeed to much of Europe.

  The cycle of private loans, reparation payments, and rescheduled war debts seemed to some a “financial merry-go-round,” as the United States collected in debt payments approximately the same amount the bankers lent to Germany. But in fact the cycle of payments seemed to be fulfilling the Republicans’ goals. With the structure of international credit restored, prosperity returned to both sides of the Atlantic. Urged on by the American banks, Britain and other European powers went back onto the gold standard. Stable prices, sound currencies, steadily growing trade—the Republican millennium appeared to be at hand as Hoover moved from the Commerce Department to the White House in 1929.

  The real source of the international recovery, however, was the expansion of trade, and here the Republicans’ business sense would eventually play them false. But, for a time, Hoover’s efforts to promote American sales and investment abroad gleaned tremendous dividends. Yankee investment in Latin America tripled, and commerce with the region grew by 87 percent. Even while Congress—over Hoover’s objections—offended Japan with exclusionary immigration laws, trade with the island kingdom swelled. In revolution-torn China, where the United States government maintained a brigade of Marines from 1927 on, Model T Fords shared streets with rickshaws, and the Standard Oil refinery was one of the largest employers in Tientsin.

  It was dollar diplomacy—but with a difference. Throughout the decade, the Republicans worked steadily to placate anti-American feelings triggered by previous heavy-handedness. In 1924 Coolidge withdrew the Marines from the Dominican Republic; in 1925 the occupation of Nicaragua ended, although a year later American troops returned to that country to battle the guerrilla forces of the legendary General Sandino.

  The most dramatic improvement came in relations with Mexico. The Mexican government had aroused both American Catholics by its anticlerical policies and American oil companies—which controlled 70 percent of Mexico’s oil—by its nationalization of foreign oil holdings. Talk of war even bubbled up on both sides of the Rio Grande until Coolidge moved to head off the building crisis by appointing his old friend Dwight Morrow, of the House of Morgan, as envoy to Mexico City. Morrow’s tact and infectious good nature won him the friendship of Mexican officials, and he sponsored a visit to Mexico by the aviation hero Charles Lindbergh (soon to be his son-in-law) that helped turn public attitudes toward the United States around. Morrow helped negotiate a reconciliation between the government and the church in the Latin republic and he worked out a businesslike compromise on the question of oil. In the next year, Hoover put the presidential seal of approval on the tenuous new friendship with Latin America by undertaking a seven-week goodwill tour of the region just before his inauguration.

  As the decade closed, the earlier rifts in the GOP seemed to have yielded to the party’s general pro-business consensus. With Hughes heading for the Supreme Court and Lodge dead, the League a political cipher, and the drama of disarmament drained by the very success of the Washington Conference, the way was at last clear for a moderate foreign economic policy. Then the GOP took another leap—backwards—as it turned in 1929 to write into law the last facet of Mellon’s economic program: a high, across-the-board protective tariff. President Hoover viewed with misgivings his party’s rally around upward tariff revision. Few men recognized better than Hoover the importance of international trade to America’s continuing prosperity, or more feared tariff retaliation by other nations.

  “Break this chain” of trade, Hoover declared during the 1928 campaign, “and the whole machine is thrown out of order…. Cease exporting automobiles to South America or Europe, and automobile workers are thrown out of work in Michigan. The suffering does not stop there.... The steel mills slacken in Pennsylvania and Indiana. The mines employ fewer workers at Lake Superior. And every farmer in the United States suffers from diminished purchasing power.”

  Thus Hoover had serious private doubts about the Smoot-Hawley bill that the Republicans in Congress enacted in early 1930. In public, however, the President emphasized the handful of concessions the legislative leaders had granted him. The fusillade of antitariff protests from academics and from Democrats—although many of the latter had joined in the orgy of log-rolling as Smoot-Hawley took final form—also apparently stiffened Hoover’s resolve to follow his party and accept the bill. In June 1930 the President signed the tariff into law, hailing it as the fulfillment of “the repeated demands of statesmen and industrial and agricultural leaders over the past twenty-five years.”

  The ghosts of John Sherman, Mark Hanna, and Nelson Aldrich no doubt smiled down in approval.

  The Voices of Protest

  Smoot-Hawley towered as a party achievement, the culmination of a century of Whig and Republican economic nationalism, the climactic act of the 1920s’ “compact majority.” At the end of that decade of conservative business rule, as at the start, the party had its way, despite the misgivings of Herbert Hoover and the fears of internationalists in both parties. James Madison’s old checks and balances, designed to delay and fragment “naked majority rule,” still seemed to be suspended. By 1931, the Republicans had achieved what no libe
ral or progressive leadership had brought about at least since Reconstruction—ten solid years of party government. The voices of protest were shrill and scattered, minority opposition weak and divided.

  If the Framers’ anti-majoritarian Constitution could not protect minority interests, what could? The American people had supplied their own answer within a dozen years of adopting the 1787 charter, by establishing a Jeffersonian party opposition to challenge the Federalist incumbents. That opposition went on to take office in 1800. The flowering of the party system had nurtured a “loyal opposition” ready to critique, challenge, and balance the party in power. As parliamentary systems grew in Europe during the nineteenth century, the idea of the militant but loyal opposition grew with them. By 1930, the labor movement in Britain, for example, and German socialists, had long since been challenging the established parties.

  Emboldened by their midterm gains of 1922 and the “Ohio gang” scandals the next year, the Democrats marched into 1924 with high hopes of ousting the GOP. With a host of promising leaders, including such veterans as Oscar Underwood and former Treasury Secretary McAdoo and rising young figures like Governor Alfred E. Smith of New York, the Democracy’s prospects looked good, as they assembled in Manhattan for the quadrennial conclave. But everything fell apart in their convention hall, “Tex” Rickard’s old Madison Square Garden. Even the place was wrong—a red-brick edifice used to host circuses and six-day bike races and adorned by a ten-story tower (in which the architect Stanford White had been murdered), and located in the middle of Al Smith territory—urban, polyglot, and very “wet.” McAdoo arrived breathing fire against the city itself—“the city of privilege,” he called it, “reactionary, sinister, unscrupulous, mercenary, and sordid,” rooted in corruption and dominated by greed. At the convention, when the keynote speaker declaimed that what this country “needs is Paul Revere,” he was greeted with a round of boos because the delegates thought he said what the country needed was “real beer.” During a demonstration by the Georgia delegation, the convention band struck up with “Marching Through Georgia,” thinking it was a beloved Southern song, instead of Sherman’s victory march.