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Closed-Door Imperialism: The Politics of Cuban-U.S. Trade, 1902–1933

2005; Duke University Press; Volume: 85; Issue: 3 Linguagem: Inglês

10.1215/00182168-85-3-449

1527-1900

Mary Speck,

Race, History, and American Society

On December 5, 1899, President William McKinley vowed that the United States would forge a special relationship with the island of Cuba, still recovering from its devastating war for independence from Spain. “The new Cuba yet to arise from the ashes of the past must needs be bound to us by ties of singular intimacy,” he said in a brief passage of his annual address to Congress. “Whether these ties shall be organic or conventional, the destinies of Cuba are in some rightful form and manner irrevocably linked to our own, but how and how far is for the future to determine in the ripeness of events.”1The “form and manner” of U.S.-Cuban relations would be codified in two measures: the Platt Amendment of 1901 (later embodied in a permanent treaty between the two nations) and, after McKinley’s assassination, the Reciprocity Treaty of 1903.2 The Platt Amendment limited Cuban independence, most notoriously by asserting a U.S. right to intervene militarily. Cuba’s constitutional congress approved it under duress in order to speed the withdrawal of U.S. troops. The Reciprocity Treaty promised Cuba a discount on the United States’ protectionist tariff rates. Despite the bilateral trade treaty, however, the “intimacy” promised by McKinley did not extend to commercial relations. Cuba’s internationally minded entrepreneurs wanted free trade; North American sugar-beet farmers and refiners wanted to maintain the tariff barriers that protected them from foreign competition. While many Cuban patriots felt the Platt Amendment locked the new nation in a too-tight political embrace, they criticized the bilateral trade agreement for leaving the island adrift economically. The United States was insistent on maintaining its political tutelage over the island in the name of preserving government stability; it was far less willing to promote economic stability by assuring Cuba of a market for its products.This article first looks at the debates over reciprocity that took place in Washington and Havana as the treaty was being negotiated. I then discuss how the treaty affected the each nation’s trade, comparing the evolution of Cuban trade to that of neighboring countries. Finally, I describe the end of the first bilateral trade treaty, as both Cuba and the United States sank into depression in the late 1920s. Did the Reciprocity Treaty bind Cuba into an informal U.S. economic empire? Many historians argue that it did and maintain that these economic relations distorted Cuban economic growth, condemning it to an unstable dependence on sugar monoculture. I argue that Cubans suffered more from the lack of U.S. interest in closer economic ties than from the zeal of eager U.S. business interests. The U.S. government may have paid lip service to increased trade, but it was far less liberal—in economic terms—than its newly independent neighbor. Cubans resented the United States’ insistence on intimate political relations, but they also resented its refusal to offer close economic ties. It was the United States’ lack of commitment to economic union—not any U.S. desire to take over the country’s economy—that proved most harmful to Cuba. Despite the Reciprocity Treaty, Cuban exports were limited by U.S. protectionist policies, culminating in the Hawley-Smoot Tariff of 1930, which cut short the progress made in the first quarter of the twentieth century and ushered in a painful era of economic depression and political unrest.Many historians of U.S.–Latin American relations interpret the Platt Amendment and the reciprocity agreement as part of a general strategy of hemispheric domination, launched to further U.S. economic interests. Such scholars assume that the United States at the end of the nineteenth century, like Great Britain, sought to secure hegemony in Latin America and the Caribbean through increased trade and investment. This informal and essentially commercial empire allowed the United States to “obtain the benefits of imperialism without assuming its costs,” says diplomatic historian Peter Smith.3 “Defense of capital interests served as the cornerstone of U.S. policy,” says Louis Pérez, arguing that these interests demanded “a docile working class, a passive peasantry, a compliant bourgeoisie, and a subservient political elite.”4 In this view, trade and investment were both the ends and the means whereby the United States could, at the dawn of the twentieth century, assure its domination of the Western Hemisphere. Echoing William Appleman Williams’s arguments about America’s “open-door” foreign policy, historians of U.S.-Cuban relations have tended to attribute U.S. political interference in Cuba to the desire to open up Latin American economies. And like analysts from the dependencia school popular in the 1970s and 1980s, they have assumed that close U.S.–Latin American economic relations actually undermined Latin American development.While Williams and his followers imply that more-enlightened U.S. leaders might have resisted the dictates of economic interests and forged nonimperialist relations with Latin America, scholars of the dependencia school see relations between Cuba and the United States as exploitative by definition. Moreover, U.S. trade and investment did not simply hamper or distort the Cuban economy; it “decapitalized,” “denationalized,” and “underdeveloped” the island.5 For Cuban Marxist scholars writing after the revolution, U.S. political leaders did not have goals or interests that were distinct from the overriding imperative of U.S. financial capital “to take possession of a considerable part of Cuba’s economic surplus.”6 Cuban historian Oscar Zanetti argues that “commerce and power” were functionally equivalent. In his analysis of U.S.-Cuban economic relations after 1898, he describes U.S. actors (whether businessmen or bureaucrats) as working inexorably to bring the “fundamental components of [Cuba’s] productive apparatus under foreign control.”7More recently, historians have emphasized the cultural dimension of U.S. hegemony. The United States’ “pervasive belief that Latin Americans constitute[d] an inferior branch of the human species” justified U.S. interference in the Western Hemisphere.8 The U.S. “market culture” itself becomes an instrument of hegemony, serving to “condition the moral order in which power was exercised and encountered.”9 Like those who stress U.S. economic interests, cultural historians tend to see U.S. policy as part of a seamless process of over-seas domination. On one side is the overwhelmingly powerful United States, secure in its own superiority and intent on imposing its own commercial or capitalist norms on its southern neighbors. On the other is Cuba, frustrated in its futile resistance to the onslaught of U.S. military, commercial, and cultural might. This frustration becomes the source of nearly all of Cuba’s economic, political, and cultural failures, culminating in the 1959 revolution. One major assumption of recent literature on U.S.-Cuban relations, according to a 1996 review, is that the revolution “was the logical outgrowth of a century of U.S. hegemonic intentions in the Western Hemisphere and Cuban determination to resist them.”10The problem with such characterizations of U.S.–Latin American relations in general, and U.S.-Cuban relations in particular, is that they are not only one-sided (only U.S. economic interests matter) but also one-dimensional (only U.S. economic interests that favor international trade matter). Many scholars ignore the protectionist, isolationist strain in U.S. politics and business, as well as the liberal, cosmopolitan strain among the Cuban political and economic elite. Cuba’s own market culture—the product of the island’s long history as an open, competitive export economy—is dismissed. Thus, Cuban frustration over U.S. tariffs, which limited economic relations between the two countries, has received little attention. Instead, pre-Communist Cuban history becomes a tale of nationalist frustration in the face of U.S. efforts to incorporate the island economically, politically, and culturally. Many scholars argue, implicitly or explicitly, that Americans thwarted Cuban nationalism by imposing policies that undermined the island’s economic independence, as if nationalism were equivalent to autarky.11 Cuban efforts to enter the U.S. market are minimized, while the United States’ desire to penetrate Cuba’s is greatly exaggerated.Radical critics of U.S. imperialism share the view of neorealists who argue that hegemonic powers such as the United States tend to pursue open trade policies. While this may have been true after World War II, it was not true in the early twentieth century, when, as political scientist Stephen Krasner asserts, “the call for an open door was a shibboleth, not a policy.”12 Far from forming a coherent whole, U.S. economic and political policies toward the island were frequently at odds. Scholars of U.S. trade policy have often pointed out the contradictory and inconsistent nature of U.S. commercial policies. “In the Gilded Age, America’s industrial, commercial, and agricultural economy diversified, establishing the United States as one of the giants on the world scene,” writes political scientist Judith Goldstein. Nonetheless, U.S. trade policies, far from projecting U.S. economic might by promoting commerce, turned progressively more defensive. Despite “increasing American competitiveness and relatively more open European markets,” she continues, “the United States moved to institutionalize trade protections . . . counter to America’s apparent interests; as the United States became increasingly competitive on world markets and more interested in world trade, American policy became increasingly more autarkic.”13Cuba’s misfortune was to gain independence at a time when American political expansionism was coupled with economic retrenchment. Because its economy was small and open, Cuba had every interest in expanding trade with the United States. Centuries of Spanish mercantilist policies, as well as the limitations of the island’s small market, had left it with little domestic industry to protect. Capitalist or commercial norms were not alien to Cuba’s creole elite. By 1898, Cuban sugar and tobacco producers had already competed on world markets for decades.Cuban historians writing in the late 1920s and 1930s were well aware of the U.S. tendency toward economic autarky coupled with political imperialism. U.S. interference in Cuban politics became especially galling when combined with U.S. indifference to the decline of the island’s once-dynamic sugar and tobacco industries. In pre-Communist Cuba, scholars blamed Cuba’s frustrations largely on the limitations placed on trade by the United States. Ramiro Guerra y Sánchez, who as both a scholar and a social reformer defended the interests of Cuban colonos and mill owners, maintained that Cuba must seek more foreign trade. Prosperity could only be assured, Guerra felt, by increasing the exports that enabled Cuba to buy the imports that were “indispensable for civilized life.” He praised the Reciprocity Treaty as a “powerful factor in [Cuba’s] economic rehabilitation” after the war. But he also blamed U.S. protectionism for preventing Cuba from exporting a greater quantity and variety of products.14Perhaps no historian has written more scathingly of U.S.-Cuban relations than Herminio Portell Vilá, who in 1938 began publishing his four-volume Historia de Cuba en sus relaciones con los Estados Unidos y España. Unlike Guerra, who saw sugar exports as vital to Cuban development, Portell Vilá attacked the “parasitic sugar industry,” blaming it for nearly all of his country’s economic problems. But for Portell Vilá, U.S. protectionism was the greatest evil, based as it was on the “fluctuations of the electorate of the United States, which one year may be intensely protectionist and another in favor of new tariff concessions.” This inconsistency ended up harming the economic interests of both Cuba and its gigantic northern neighbor, Portell Vilá argued, depriving Cuba of a stable economy and the United States of a prosperous market.15The asymmetry of power between Cuba and the United States made the Cuban elite fearful of political domination. Relations between the two countries also suffered from an asymmetry of economic interests, which rendered the Cuban economy vulnerable to the vicissitudes of U.S. trade policy. Cuban leaders wanted economic integration with the United States, even as they rejected U.S. political domination. “The United States desires certain political advantages in Cuba, while Cuba desires certain economic advantages in the United States,” an April 1901 editorial in the Havana newspaper La Discusión declared.16 Both sides would be disappointed. The United States never established a stable government on the island, immune from extra hemispheric interference. And Cuba never won the long-term, free access to U.S. markets it needed to develop a dynamic and diversified export economy.In 1902, the Corporaciones Económicas—a powerful interest group that represented the island’s principal creole entrepreneurs—began to push for a bilateral trade agreement, sending delegates to testify before the Ways and Means Committee of the U.S. House of Representatives. Luis Placé, a Cuban of French extraction, spoke on behalf of the island’s merchants. “The proper solution for both countries,” he told the committee, “is virtually free trade.”17 Placé argued that free trade would open up the Cuban market to U.S. textiles (most of which were then imported from Great Britain) and shoes (most of which came from Spain), as well as other manufactured items. The United States already sup-plied most of Cuba’s imports of foodstuffs and machinery. The benefits to U.S. exporters, especially manufacturers, he argued, would far outweigh the cost to other “U.S. interests,” meaning the domestic sugar industry. Another advocate for greater trade was Luis V. de Abad, who came to Washington representing the island’s struggling tobacco industry. Abad advocated free or reduced duties on both raw tobacco and Cuban cigars, arguing that Cuban products would never control more than a fraction of the huge U.S. market. Cuba was exporting only 40,000 cigars a year to the United States, Abad said, because of “prohibitive” duties of more than 125 percent. Tobacco farmers suffered from low prices, and cigar workers faced unemployment. De Abad warned the committee that the “Cuban workingman” was unable to explain why, with the U.S. flag flying over Havana harbor, there was “less bread and butter in his home and he is worse off than under Spanish domination.”18However, the Reciprocity Treaty, as approved by Congress, fell far short of free trade and short even of the concessions granted under the Foster-Cánovas Treaty, an agreement negotiated between the United States and Spain in the 1890s. Sugar and other Cuban products were not allowed into the United States duty-free of but merely granted a 20 percent discount on the tariffs faced by other countries. Although the Corporaciones Económicas still supported the treaty, some nationalists argued that Cuba should hold out for greater concessions. Even more dedicated to liberal economic principles than the Corporaciones—who wanted an assured market in the United States—they argued that Cuba should not tie itself to one trading partner. Liberal Party leader Juan Gualberto Gómez, a close associate of José Martí in the struggle for independence, argued that it was foolhardy to pin Cuban hopes on a five-year treaty with a country that had shown so little commitment to free trade. “Within five years it is possible that there will not be any American willing to concede even the 20 percent [tariff preference] that now, very reluctantly, a few are conceding,” he told the newspaper El Mundo. Manuel Sanguily, another prominent independence leader, also opposed an exclusive treaty with the United States. Like Gómez, he feared that the treaty would tie Cuba to an unreliable partner. He also argued that, given the inefficiency of the highly protected U.S. sugar industry, Cuba would be able to export sugar to the United States even without the 20 percent preference. In March 1903 he opposed the Reciprocity Treaty in the Cuban Senate, dismissing the threat of competition from U.S. sugar producers. “Thirty years of effort and official protection have demonstrated that the U.S. sugar industry cannot produce even one-fifth of the amount of sugar demanded by an ever-growing population,” he told his fellow legislators.19Supporters of the treaty, like their opponents, donned the mantle of nationalism. In his reply to Sanguily’s lengthy oration, Antonio Sánchez Bustamante called the treaty “an anti-annexationist project.” Much like his political opponent Juan Gualberto Gómez, Sánchez held out the threat of annexation (which was privately favored by many business people) as the inevitable consequence of inaction. Only the prosperity achieved through increased trade would give Cuba the economic might it needed to preserve its independence. As a new nation, still struggling to recover from years of warfare, Cuba ran a greater risk than the United States if the treaty failed, the senator argued, citing the laws “of natural science and political economy.” “The organism that wants to survive in the wars between the species, as in the wars between societies, must feed itself, so as not to weaken, must grow, so as not to diminish,” he said in his speech to the legislature. “It is not through poverty that we can preserve our own sovereign and independent personality against the foreigner, but through prosperity and wealth.”20Sánchez Bustamante’s argument in support of the treaty prevailed, and it was passed in March 1902.21 But passage of the treaty by the Cuban congress did not put trade reciprocity with the United States into effect. A far greater hurdle lay ahead in the U.S. Congress. President Roosevelt had pledged in his first message to Congress, on December 3, 1901, that the United States was “bound by every consideration of honor and expediency to pass commercial measures in the interest of [Cuba’s] well-being.”22 His administration had introduced a bill in the 1901–2 congressional session requesting authorization to negotiate the agreement. It was not until December 1903 that Roosevelt was able to sign the treaty into law.Few U.S. congressional leaders, especially in the Republican Party, would have cited the “laws of political economy,” as Sánchez Bustamante did, to convince their colleagues of the need for more trade. The disciples of David Ricardo, who believed in the virtues of trade and specialization according to each nation’s comparative advantage, were not determining U.S. policy. Unlike Cuba, the United States at the turn of the century did not depend on foreign trade; the then 45 contiguous states (plus the territories of Oklahoma, New Mexico, and Arizona) were already the largest economic union in the world. In comparison with Cuba, the United States was a “closed economy,” with exports representing only about 6 percent of its gross national product in 1903.23The debate over Cuban reciprocity pitted protectionists against those who believed that the United States, having defeated Spain, was duty-bound to grant the island certain economic advantages. Although McKinley had vowed to bind Cuba to the United States by “ties of singular intimacy,” he never said whether these ties were to be political, economic, or both. McKinley, known as one of the Republican Party’s most stalwart protectionists, had good reason to be vague. He had to fear the opposition not only of the anti-imperialists in the Democratic Party but also of the economic isolationists in his own. The U.S. Congress did not shed its protectionist convictions after it stepped onto the international stage in 1898. By 1902, even a bilateral trade agreement with preferences for U.S. products was in jeopardy. Far from being hailed as a boon for U.S. exporters, the proposed agreement was roundly condemned in the House of Representatives. Critics called it a handout to Cuban producers. If Cuba had to endure economic hard times, so be it. The United States had liberated them from Spain, and now it was up to them to revive their own economy. As congressman Samuel M. Robertson, from the sugar-producing state of Louisiana, phrased it, “After the [U.S. Civil] War, it was ‘Root, hog, or die.’ And we rooted. Let Cuba root awhile.”24The transcripts of the House Ways and Means Committee’s January 1902 hearings on Cuban reciprocity fill 752 pages, including appendixes. The committee heard 54 witnesses: 16 in favor of reciprocity and 38 opposed. Testifying for reciprocity were representatives of the Cuban government, along with Cuban sugar planters, tobacco growers, and manufacturers. They were joined by U.S. sugar producers on the island, commission merchants, refiners, and some U.S. foodstuffs exporters.25 Against the treaty were American beet sugar and tobacco interests, as well as the U.S. Department of Agriculture. Public opinion was, at best, lukewarm toward reciprocity. The treaty’s opponents had the most intense conviction on their side: Republican leaders who supported the administration “showed none of the traditional zeal of converts,” wrote a biographer of Cuba’s military governor, Leonard Wood. “[T]he beet-sugar men, on the other hand, flamed with the enthusiasm of men fighting for their skins.”26 Passion and powerful interests were on the side of the anti-reciprocity forces. According to the New York Times, the battle was lopsided from the start, with “a great pressure . . . brought upon the committee to prevent it, if possible, from yielding anything to Cuba.” The president of the American Beet Sugar Association and his allies “completely filled the space in the committee room to the left of the committee table, and every man in the party was alert and active in furnishing information and in offering suggestions to the members of the committee who had espoused their cause.” Meanwhile, the “Cubans apparently lacked earnest advocates of their proposition. There was no member of the committee with whom they seemed to be on such relations that they could prompt him to ask questions likely to furnish answers favorable to their contention.”27Despite the growing controversy, President Roosevelt vowed to stand behind the treaty. He regarded enacting a reciprocity treaty with Cuba as a moral obligation and believed that the Platt Amendment should not be imposed on the young republic without offering material benefits in return. “We expect her to accept a political attitude toward us which we think wisest both for her and for us,” he said in an August 1902 speech. “In return we must be prepared to put her in an economic position as regards our tariff system which will give her some measure of the prosperity which we enjoy.”28 As an internationalist, Roosevelt was also less committed to high tariffs than his solidly protectionist predecessor, McKinley. In a private letter, Roosevelt supported a “loosening” of some rates, particularly those on manufactured goods. Unfortunately, the treaty had aroused the ire of the powerful Western agricultural lobby. “I have been a little afraid of the western senators & congressmen,” Roosevelt wrote. “I wish that Cuba grew steel and glass, as I should much rather see us reduce duties on these than on agricultural products.”29Noticeably absent from the pro-reciprocity side were representatives of U.S. manufacturing interests. Industrialists, who would presumably benefit most from increased exports, were more concerned with protecting their home markets. It was the Roosevelt administration and its supporters in Congress, not business interests, who argued that the treaty would help increase U.S. exports. Representative Serano Payne, who sponsored the reciprocity bill in the House, urged Congress to “let Cuba become prosperous with closer trade relations with the United States. . . . Let there be a demand for better things and more of them. Multiply the buying capacity of the people . . . so that people want more, buy more, and are ready to give bigger prices, because they get larger wages.”30 Colonel Tasker Bliss, the head of Cuban customs during the first U.S. military occupation, stressed the treaty’s advantages as a means to “develop and secure the rich Cuban market for our farmers, artisans, merchants, and manufactur-ers.”31 Bliss predicted that under the treaty, the United States (which in 1901 furnished less than half of Cuba’s imports) would quickly secure 80 percent of the island’s import trade and increase its share even more as Cuba recovered from the war for independence. Bliss confidently predicted that within a few years, Cuba’s imports from the United States would rise to $300 million a year.32Neither Roosevelt’s invocation of a moral duty nor Bliss’s optimistic predictions convinced Congress to act, and the measure died in committee when Congress adjourned in July. President Roosevelt then decided to negotiate the tariff changes bilaterally with Cuba. In 1903, the administration resubmitted the agreement, now signed by Cuba, to Congress as a treaty, which only required Senate approval. Sugar-beet growers were appeased by assurances that tariffs would be designed to offset the lower cost of Cuban sugar. And the American Sugar Refining Company, better known as Henry Havemayer’s “Sugar Trust,” was able to protect its refiners’ profits with a differential that placed higher tariffs on fully refined sugar. The Reciprocity Treaty was finally passed on December 17, 1903.The Roosevelt administration promoted the Reciprocity Treaty mainly on political grounds: trade preferences would promote peace and stability on the island, thus forestalling foreign intervention. The U.S. government also argued that the treaty would promote U.S. exports as a fringe benefit. By doing good—helping Cuba’s economic recovery by buying the island’s exports—the United States could do well—by supplying Cuba with U.S. products. Colonel Bliss, in the midst of the battle in Congress over the treaty, had predicted that U.S. exporters would soon be selling $300 million worth of goods to the island, eliminating most foreign competition. Some historians assume that Bliss’s predictions came true and that the United States quickly dominated the Cuban market, not only taking business away from the island’s European trading partners but also undermining the development of a diversified local economy. They argue that the treaty increased Cuba’s dependence on the United States both by undermining local industry and by diverting trade. Jorge Ibarra says that the treaty “reaffirmed Cuba’s condition as a country of monoculture, because all other products, whether agricultural or industrial, would come from the United States.”33 “The tight trading connections—which led Cuba to import almost exclusively from the United States—reinforced the island’s monocultural economy,” writes Jules R. Benjamin, “and deepened its economic dependency on the United States.”34 Louis Pérez says the treaty resulted in a flood of U.S. imports that “saturated the Cuban market and hindered local competition.” The treaty “not only deterred new industry,” Pérez writes, “it also had a deleterious effect on existing enterprises.”35Colonel Bliss, in other words, was right—at least about the United States’ ability to capture the Cuban market. The Reciprocity Treaty, these authors argue, enabled the United States to crowd out other imports and bankrupt the domestic producers of import-competing goods. Did the treaty live up to the claims of U.S. negotiators and confirm the fears of its critics?The purpose of the Reciprocity Treaty was not just to increase trade between the two countries but also to increase the U.S. share of the Cuban market at the expense of European manufacturers. Given the proximity and efficiency of U.S. agriculture, the United States already supplied most of the island’s food-stuffs. U.S. producers were also already the principal source of certain types of manufactured goods, such as machinery. These types of exports increased after passage of the treaty, as their price fell relative to other imports. The treaty was far less successful, however (despite the promises of its promoters), in increasing U.S. market share in areas where the United States did not already predominate.The treaty seems to have had a modest effect on the total U.S. market share, even in the years immediately following its approval. During the five-year period before the treaty came into effect (1899–1903), the U.S. share of Cuban trade averaged 42 percent (see table 1). During the six years after the agreement went into effect, the U.S. share rose to 48 percent—still less than half of the island’s import market. Despite the preferences granted to the United States, European countries were able to maintain their level of exports. Great Britain’s exports to Cuba (in constant dollars) averaged $18 million between 1899 and 1903, rising to $21 million for 1904–9, then falling slightly to $20 million for 1910–14. Cuba’s former colonial master maintained its exports to the island as well: Spanish exports averaged $17 million from 1899 to 1903, falling to about $14 million from 1904 to 1913. These absolute levels represented a smaller share of a bigger pie, but they demonstrate that the United States was far from monopolizing Cuban trade. The U.S. share of Cuba’s exports remained about the same, hovering around 50 percent until the outbreak of World War I. Even during the European war and recovery, however, the United States was far from being Cuba’s sole supplier. From 1915 to 1924, the United States supplied an average of 71 percent of Cuba’s imports. Much of this additional business melted away