Dec 1, 1979
U.S. Foreign Policy and Latin America
“When Argentina did not accept American terms, the Navy’s “white squadron” of New Cruisers were readied to visit the Rio Plata.”
“Reciprocity and Latin America in the Early 1880’s: A Foretaste of Dollar Diplomacy.” Pacific Historical Review 47(February 1978):53–89
The foreign policies of Theodore Roosevelt and William Howard Taft typified an approach known as “dollar diplomacy.” “Dollar diplomacy” sought ways to expand American profits and export American product surpluses by inducing foreign governments into trading relationships favorable to the United States. Going beyond threats of mere economic reprisals, the American dollar diplomats occasionally applied direct military pressure to recalcitrant signatories. Although some businesses solicited government aid, the State Department urged financial arrangements with foreign governments.
Was “dollar diplomacy” a revolutionary new departure of the late 1890s, or did it reflect continuity with earlier American foreign policy? These two alternatives define the two conflicting schools of thought among current students of American foreign policy. The diplomacy of the 1880s discloses a coherent pattern of diplomacy uniting late nineteenth-century diplomacy with the policy of the previous century; we also find a foundation being laid in reciprocity agreements for the so-called new departures of military imperialism and “dollar diplomacy.”
Reciprocal trade agreements were commenced primarily during the administration of Benjamin Harrison (1889–1893), and reveal a three-fold purpose. First, they cleared channels for American investments in foreign enterprises. Guided by the chief architect of reciprocity, Secretary of State James G. Blaine, the State Department believed that it knew what was best for American business. Second, Blaine hoped that reciprocity with the United States would revitalize the flagging Monroe Doctrine and abate the influence of Great Britain in the Caribbean and southern South America.  Finally, reciprocity was intended to bolster the high protective tariff policy of the Republican party by providing discretion to Congress and the Executive in rewarding cooperative foreign governments with preferential trading relationships.
These political and economic motivations for reciprocal agreements prompted four years of vigorous negotiations with Central and South American countries. When negotiations broke down, Blaine and Harrison applied new pressures. For example, when Spain withdrew from reciprocity talks, Blaine and Harrison directly helped precipitate revolution in Cuba. When Argentina did not accept American terms, the Navy’s “white squadron” of New Cruisers were readied to visit the Rio Plata.
The change from a protectionist Republican to a free-trade Democratic administration in 1893 shelved reciprocity and all but destroyed its usefulness when Grover Cleveland signed the low-tariff, Wilson-Gorman bill into law. A few years later, however, all three of Blaine’s purposes for preferential trading relationships were embodied in the more vigorous “dollar diplomacy” of the first two Republican administrations of the twentieth century.
Both reciprocity and “dollar diplomacy” sought positive results for American business through persuasion and veiled coercion. Yet both policies’ economic intervention produced anti-American sentiment throughout Latin America.