68 International Organization conflicting interests.The various economic interests entrenched themselves in the political arena and found allies within the government bureaucracy,so that domestic sociopolitical strife was carried out within the state apparatus. The Federal Reserve System and the State Department were dominated by economic internationalists,whether of the Wilsonian or Republican vari- ants;the majority of the Congress,and the powerful Commerce Depart- ment,were more closely aligned with the economic nationalists who might support limited measures to encourage American exports but stopped there. The result was a foreign policy that was eminently contradictory and volatile.The same administration encouraged foreign lending and trade pro- tection against the goods of the borrowers,worked for international mone- tary cooperation and sought to sabotage it,struggled to reinforce European reconstruction and impeded it at crucial junctures.This was not due to policy stupidity but to the underlying differences in international outlook of powerful domestic socioeconomic groups.The period is thus a useful and illuminating illustration of the interaction of international and domestic sources of foreign policy. Although it concentrates on the analytical issues of the 1920s and early 1930s,the article shows how after 1933 the world crisis served to thaw some of the policy paralysis that had characterized the postwar Republican admin- istrations.The international and domestic crisis both changed the relative strength of important social actors and allowed policymakers to reformulate their relationship to these social actors. The remainder of this article analyzes the development of American for- eign economic policy from 1914 to 1940 in the light of the preceding consid- erations.The analysis focuses on the interests and activities of America's international bankers.The nation's international financiers were both the most internationally oriented group of economic actors in the United States at the time (as they are today)and the most powerful and prominent mem- bers of the internationalist coalition.Their trajectory demonstrates the gen- eral lines of the approach taken here quite well,and also clarifies the role of the differentiated state apparatus in the evolution of U.S.foreign economic policy after World War I.The article does not present a complete account of the period in question-this would require a much more detailed discussion of,among other things,overseas events,America's economic nationalists, and institutional and bureaucratic developments-but it does discuss enough of the era to show how a fuller analysis could be developed. The emergence of American economic internationalism, 1914-1933 For fifty years before World War I,the American political economy was oriented to the needs of domestic industry.The war accelerated a process
68 International Organization conflicting interests. The various economic interests entrenched themselves in the political arena and found allies within the government bureaucracy, so that domestic sociopolitical strife was camed out within the state apparatus. The Federal Reserve System and the State Department were dominated by economic internationalists, whether of the Wilsonian or Republican variants; the majority of the Congress, and the powerful Commerce Department, were more closely aligned with the economic nationalists who might support limited measures to encourage American exports but stopped there. The result was a foreign policy that was eminently contradictory and volatile. The same administration encouraged foreign lending and trade protection against the goods of the borrowers, worked for international monetary cooperation and sought to sabotage it, struggled to reinforce European reconstruction and impeded it at crucial junctures. This was not due to policy stupidity but to the underlying differences in international outlook of powerful domestic socioeconomic groups. The period is thus a useful and illuminating illustration of the interaction of international and domestic sources of foreign policy. Although it concentrates on the analytical issues of the 1920s and early 1930s, the article shows how after 1933 the world crisis served to thaw some of the policy paralysis that had characterized the postwar Republican administrations. The international and domestic crisis both changed the relative strength of important social actors and allowed policymakers to reformulate their relationship to these social actors. The remainder of this article analyzes the development of American foreign economic policy from 1914 to 1940 in the light of the preceding considerations. The analysis focuses on the interests and activities of America's international bankers. The nation's international financiers were both the most internationally oriented group of economic actors in the United States at the time (as they are today) and the most powerful and prominent members of the internationalist coalition. Their trajectory demonstrates the general lines of the approach taken here quite well, and also clarifies the role of the differentiated state apparatus in the evolution of U.S. foreign economic policy after World War I. The article does not present a complete account of the period in question-this would require a much more detailed discussion of, among other things, overseas events, America's economic nationalists, and institutional and bureaucratic developments-but it does discuss enough of the era to show how a fuller analysis could be developed. The emergence of American economic internationalism, 1914-1933 For fifty years before World War I, the American political economy was oriented to the needs of domestic industry. The war accelerated a process
Sectoral conflict 69 already underway,the expansion of international investments by one seg- ment of the U.S.business community.Along with this economic change came the development of a new set of political interests that challenged the previous pattern of foreign economic policy.In the fifteen years after World War I,the economic internationalists developed great,if quite private,in- fluence over foreign policy,but lost many public political battles.Until the Depression,American foreign economic policy was divided between measures to support "nationalist"industries and most of agriculture and those preferred by "'internationalist'banks,industries,and some export agriculture. From the Civil War until the early 1900s,however,the country's foreign economic policy was clearly designed to serve domestic industry,mostly home production for the home market and some exportation.The strategy adopted had a number of aims and evolved over time,as David Lake has demonstrated.Raw materials available overseas needed to be developed and imported.Industrial goods,especially the products of basic industry, needed to find overseas markets.American tariffs on raw materials might come down,but the American market was essentially closed to industrial goods. In this picture,America's embryonic international bankers played a sub- sidiary but important role.They financed overseas raw materials develop- ments and facilitated the transport and sale of raw materials to American industry.They lent dollars to overseas consumers of America's basic indus- trial products-railways,railroad and subway cars,mining equipment, ships.And,of course,they financed much of the domestic expansion and merger activity of the industrial combines. World War I was a turning-point in the evolution of American interna- tional economic interests.During the war and the period immediately fol- lowing it,New York became the world's center for long-term lending. Amerian financial supremacy drew America's internationally oriented busi- ness people and politicians into world leadership during the war and in the postwar reconstruction of Europe,a role that was to be severely hampered by the strength of economic nationalists within the United States. The outbreak of hostilities caused financial chaos on European money markets.Panic was only narrowly averted in New York,but by early 1915 the New York market had been stabilized and was the only fully functioning major capital market in the world.Originally the Wilson administration had indicated that it considered the extension of all but short-term loans to the warring powers by American financiers"inconsistent with the true spirit of neutrality."But as the fighting continued,the belligerents began to place major orders in the United States to supply their industries and compensate 9.David Lake,"The State and American Trade Strategy in the Pre-Hegemonic Era,''in this volume
Sectoral conflict 69 already underway, the expansion of international investments by one segment of the U.S. business community. Along with this economic change came the development of a new set of political interests that challenged the previous pattern of foreign economic policy. In the fifteen years after World War I, the economic internationalists developed great, if quite private, influence over foreign policy, but lost many public political battles. Until the Depression, American foreign economic policy was divided between measures to support "nationalist" industries and most of agriculture and those preferred by "internationalist" banks, industries, and some export agriculture. From the Civil War until the early 1900% however, the country's foreign economic policy was clearly designed to serve domestic industry, mostly home production for the home market and some exportation. The strategy adopted had a number of aims and evolved over time, as David Lake has dem~nstrated.~Raw materials available overseas needed to be developed and imported. Industrial goods, especially the products of basic industry, needed to find overseas markets. American tariffs on raw materials might come down, but the American market was essentially closed to industrial goods. In this picture, America's embryonic international bankers played a subsidiary but important role. They financed overseas raw materials developments and facilitated the transport and sale of raw materials to American industry. They lent dollars to overseas consumers of America's basic industrial products-railways, railroad and subway cars, mining equipment, ships. And, of course, they financed much of the domestic expansion and merger activity of the industrial combines. World War I was a turning-point in the evolution of American international economic interests. During the war and the period immediately following it, New York became the world's center for long-term lending. Amerian financial supremacy drew America's internationally oriented business people and politicians into world leadership during the war and in the postwar reconstruction of Europe, a role that was to be severely hampered by the strength of economic nationalists within the United States. The outbreak of hostilities caused financial chaos on European money markets. Panic was only narrowly averted in New York, but by early 1915 the New York market had been stabilized and was the only fully functioning major capital market in the world. Originally the Wilson administration had indicated that it considered the extension of all but short-term loans to the waning powers by American financiers "inconsistent with the true spirit of neutrality." But as the fighting continued, the belligerents began to place major orders in the United States to supply their industries and compensate 9. David Lake, "The State and American Trade Strategy in the Pre-Hegemonic Era," in this volume