Constructing A Colonial People

Puerto Rico And The United States, 1898-1932

Pedro A Caban

• Publisher: Routledge
• Year: 2018
• ISBN:
  9780429981036
• Edition: 1
• Topic: Storia
• Subtopic: Storia mondiale

Constructing Colonial People provides a new and comprehensive interpretation of how the United States attempted to transform Puerto Rico from a neglected backwater of the Spanish empire into one of its key props in establishing hegemony in the western hemisphere. The book looks at the formative three-and-one-half decades of U.S. colonial rule, when the colony's key institutions, economic structures, and legal doctrines were transformed. Policy papers, speeches, newspaper articles, and memoirs from the period inform the study with particular detail and insight. Cabán further examines the dynamics of U.S. expansionism during the Progressive Era and examines the normative and ideological constructions that were used to rationalize a campaign of territorial acquisition and colonial administration. He also demonstrates how the military and subsequent civilian regimes directed a process of institutional transformation, state building, and capitalist development.

1
U.S. Imperialism and the New Colonial Era

The advent of the United States of America as the greatest of world-Powers is the greatest political, social, and commercial phenomenon of our times. It is only when we look at the manifold manifestations of the exuberant energy of the United States that we realize how comparatively insignificant are all the other events of our time.

—William T. Stead, 1901

Extending the Empire Overseas

Economic dislocations and political disorders during the last decade of the nineteenth century convinced policymakers and important business interests of the need for the United States to acquire external commercial markets. But in the context of late-nineteenth-century European imperialism the development of markets was not necessarily a benign process of investment and trade. The corollary of the imperative for market expansion was a militaristic drive for territorial acquisition. Overcoming economic crisis and fear that the commercial opportunities necessary to overcome this crisis would be lost moved the United States to war. The country pursued war against Spain in 1898 to defeat the aging empire and wrest control of its last remaining colonies in the Caribbean Sea and Pacific Ocean. On these strategic insular possessions the United States built naval bases and cable and coaling stations, from which it launched a campaign of economic penetration into Latin America and China. Puerto Rico, more than any other former Spanish possession, was the hapless victim of an explosive U.S. drive to assert military and naval hegemony in the Caribbean.

In the context of growing late-nineteenth-century European commercial interest in Latin America and German aspirations for a Caribbean naval base, Puerto Rico quickly emerged as a potentially important asset to the United States. Its strategic value rose as a direct consequence of U.S. commercial expansion into Latin America in the early twentieth century. German war plans in the early 1900s to establish a naval presence in the Caribbean only heightened U.S. resolve to retain colonial control over Puerto Rico. Once the Panama Canal was operational, Puerto Rico's strategic significance escalated further. Puerto Rico was important to the U.S. for other reasons as well; it served as an experimental station for colonial administration and was a laboratory to design and test the campaign to Americanize a subject people. Puerto Rico was envisioned as a cultural bridge that would serve to link North and South America. By 1932 Puerto Rico had been transformed into an invaluable outpost of the empire and an important agricultural asset that supplied the United States with 14 percent of the sugar its people consumed. The reasons for Puerto Rico's annexation and its role in the emerging commercial empire of the United States are the themes of this chapter.

The U.S. empire's hemispheric political and economic objectives in the late nineteenth century decisively influenced the colonial policy it devised for Puerto Rico. However, Puerto Rico did not figure prominently in the public debates or newspaper accounts during the period leading to the outbreak of war with Spain in 1898. Puerto Rico was scarcely mentioned in debates in Congress or the Spanish Cortes and seldom referred to in the diplomatic exchanges of the period (Carr 1984, 33). Before the outbreak of war only a small group of naval planners and policymakers realized the potential strategic significance of Puerto Rico. Nevertheless, once Spain was defeated, the island's fate as a colonial possession of the United States was sealed. Puerto Rico was simply too small and too vital for the United States to allow it an independent existence. Senator John T. Morgan, the chairperson of the Senate Foreign Relations Committee, had expressed this position in June 1898, barely a month before the U.S. invasion of Puerto Rico: "The ability to sustain an independent government is more questionable because her population cannot increase in so limited an area to the strength that is essential to independent statehood. Her geographical position is too important to distant nations, to admit of her separate independence" (Morgan 1898, 643).

A sovereign Puerto Rico, lacking a military capability and led by a political elite with close economic and cultural ties to Spain and France, was unacceptable to the new empire. The defenseless island nation could fall prey to an aggressive European state and be converted into a base from which to challenge U.S. naval dominance and jeopardize the new empire's commercial interests.

International Trade, the Canal, and Empire

In the closing decade of the nineteenth century the United States was an emerging global power that was preparing to compete militarily and commercially with European nations. During the 1880s European industrialized states rushed to carve out spheres of influence and colonies in Asia and Africa. Japan was also asserting its imperial ambitions. Paul Reinsch, a political economist whose writings on colonial administration influenced U.S. policy makers, dramatically described the situation: "All are straining every nerve to gain as large a share as possible of the unappropriated portions of the earth's surface. Wherever sharp methods of competition are necessary to accomplish this object, they will be employed. By rapid preemption the available area is becoming exceedingly limited, so that the eyes of the civilized world are already turned to the South American continent for further fields of exploitation" (Reinsch 1900, 66).

Of particular concern to the United States were the heavy investments by Europeans in Latin America at the turn of the century. Reinsch apprised his readers that through banking relations and the merchant marine British and German capitalists had achieved "the conquest of South American trade." According to Reinsch, "Geographically and politically the United States would seem to have a decided advantage in the competition for this trade, but there are no direct banking relations and very few direct sea communications between North and South" (Reinsch 1900, 35). Latin America was an attractive alternative to Asia precisely because its "many small republics, weak yet independent, provided an ideal setting for penetration with a minimum of formal responsibilities," that is, without the burdens of formal colonialism (Weibe 1967, 239).

Latin America was the only area in which United States business could expect to compete effectively with European capital. But China, despite its distance, was simply too huge and disorganized to relinquish to the Europeans. The islands in the Caribbean and the Pacific would become stepping stones for U.S. firms to penetrate the fabled China market and from which to compete more effectively in Latin America against European business.

The United States had expressed territorial ambitions in the Caribbean decades before embarking on war in 1898 (See Martínez-Fernández 1994). In 1848 President Polk offered to purchase Cuba from Spain for $100 million. In 1866 Denmark agreed to sell its Caribbean possessions to the United States for $7.5 million; however, the Senate refused to ratify the treaty (Nearing and Freeman 1925, 239, 210). In the midst of the U.S. Civil War, the secretary of state wrote to his minister in Spain that the United States "have constantly indulged in the belief that they might hope at some day to acquire those islands [Cuba and Puerto Rico]" (Fitzgibbon 1964, 12). According to U.S. diplomatic historian Robert Beisner, in 1891 the Harrison administration "seriously considered" acquiring Cuba, Puerto Rico, and the Danish West Indies, and requested Senate ratification of a treaty for Hawaii's annexation (Beisner 1968, 188). Senator Henry Cabot Lodge, one of the more influential and relentless expansionists of the period, wrote in an 1895 issue of the Forum, "England has studded the West Indies with strong places which are a standing menace to our Atlantic Seaboard. We should have among those islands at least one strong naval station, and when the Nicaragua canal is built, the island of Cuba ... will become to us a necessity" (Quoted in Van Alstyne 1960, 207).

For three decades expansionists were consumed by two policy objectives: to establish naval bases in the Caribbean and Pacific and to build a transisthmian canal (Campbell 1976, 67). The naval bases and coaling stations were necessary to protect maritime commerce and defend the entrances to the proposed canal. President Garfield's secretary of state, James G. Blaine, negotiated treaties with strategic Caribbean islands that could be used as bases to protect the proposed Panama Canal (Challener 1973; LaFeber 1962). In 1889 he pressured the Senate to adopt reciprocity provisions to gave certain Cuban and Puerto Rican products preferential tariff treatment in the US (Taussig 1931, 278-279). Blaine wrote to Garfield that "Cuba, because of its relation to the future canal and the Gulf trade, must never be permitted to pass out of the American system" (Pratt 1939, 23). He was a proponent of Caribbean and Pacific naval bases and confided in the President in 1889, "I think there are only three places that are of value enough to be taken, that are not continental. One is Hawaii, the others are Cuba and Porto Rico. Cuba and Porto Rico are not imminent and will not be for a generation" (quoted in Grenville and Young 1966, 85). Exclusive U.S. control of the interoceanic canal was the key to strategic and commercial domination of the hemisphere (Seager 1953, 506). Naval bases and coaling and cable stations were needed in defensible Caribbean islands that had good harbors for the empire's navy.

Of Economic Depression and Expansionist Euphoria

The Progressive Era (1890s to 1916) marked the emergence of the United States as a global power. Of all the events of this heady period, the foremost must have been McKinley's decision to embark on war with Spain. This "splendid little war" announced the formal arrival of the United States as the latest empire. By 1898 the expansionist sectors of the state and capital felt confident the country was ready to acquire by war what it had failed to attain by diplomacy—territorial possessions that could serve as gateways to Asia and Latin America. Scholars of the Progressive Era seem to agree that the decision to embark on war was driven by domestic economic factors and international competition. Among the most important were growing excess capacity of the nation's industries and declining domestic consumption, combined with anxiety over possible European encroachment in the Caribbean and fear of being locked out of China.

At the turn of the century the United States faced a situation that seemed to mandate that it adopt a more aggressive posture in international relations. During the 1890s the economy was undergoing a disruptive transition characterized by the growing importance of manufacturing capital and the emergence of monopolistic firms. Important sectors of the business community and key policymakers were certain that without foreign markets industrial growth was threatened. However, U.S. aspirations for global economic expansion were tempered by the reality that powerful European rivals stood ready to protect their markets from U.S. incursions.

The global depression of the 1890s propelled a new round of European imperialism. As is the case with all complex economic events, no one factor can explain the economic collapse of 1893. However, economic historian Eric Hobsbawm demonstrates that the depression was precipitated by a persistent deterioration in the profitability of investments (Hobsbawm 1989, 36). Europeans who had invested heavily in the highly speculative and booming U.S. economy began to withdraw their investments when the financial crisis hit in their home economies. The depression revealed major imbalances in the U.S. economy—growing surplus manufacturing capacity, saturation of domestic markets, declining corporate profitability. An adverse shift in the U.S. balance of payments in the early 1890s further aggravated the investment problem (Brands 1992, 8). Nervous foreign capitalists liquidated their U.S. investments and converted their dollar holdings into gold, which they repatriated. Between 1890 and 1894 European investors sold off about $300 million of their holdings in U.S. companies, The net outflow of gold from the United States outran domestic gold production (White 1982, 5). The financial retrenchment and ensuing credit panic precipitated an acute shock for the U.S. economy.

European capital had financed the expansion of U.S. heavy industries, primarily railroads, but also steel, iron, and coal. Once Europeans began to dispose of their equity in these firms, many companies were forced to curtail their production, causing widespread unemployment. The economic downturn, combined with the depletion of the gold reserves, triggered a stampede by U.S. depositors to withdraw their holdings from financial institutions, further intensifying the drain on U.S. reserves (Brands 1992, 8). In the ensuing panic the stock market plummeted, resulting in the greatest number of bank failures and suspensions in U.S. history to that date (see Hoffman 1970, 57; White 1982). As banks and speculators hoarded their capital during this period of financial instability, credit was severely reduced, leading to a contraction in production and further unemployment.

The crisis came in the wake of an unprecedented period of growth and economic restructuring. After the end of the Civil War the country's productive capacity increased dramatically During the 1880s exports tripled, aided in large measure by tremendous European demand for wheat and cotton (Callcott 1942, 71; Campbell 1976, 141). Industrial output was also increasing at a staggering rate, resulting in a substantial rise in exports of manufactured goods. In 1890 the United States had only 3.9 percent of worldwide trade in manufactured goods, but by 1898 it controlled 9.8 percent, and by 1913 11 percent (Pletcher 1984, 177). Machinery exports, in particular, increased rapidly, from 15 percent of the value of manufactured exports in 1890 to 23.3 percent in 1899 (Becker 1973, 478).

During the Progressive Era, the economy was moving from a competitive to a corporate stage of capitalist development. The depression was an added stimulus to a reorganization of the corporations that controlled productive and financial resources (Becker 1982, 35-42, Vatter 1975, 238-263). Firms experimented with new organizational forms, trade associations, pools, and holding companies in an effort to counteract the business cycle downturn (Becker 1973, 469). Between 1898 and 1904 this process of corporate reconstructing grew into a merger mania (Sklar 1988, 4-5). The organization of giant holding companies and mergers was an attempt to restore the erosion in corporate profitability caused by overproduction and accumulated surpluses. The large corporations that dominated the economy became important instruments for "capital investment imperialism" (Sklar 1988, 81-85).

Export-oriented agricultural firms intensified their efforts to compel the U.S. government to develop overseas markets during this period of economic difficulties (Williams 1969, 36). Some of these corporations were monopolies that invested heavily in the colonial possessions. Most prominent among these giants was the American Tobacco Company, which started manufacturing cigarettes in Puerto Rico in 1899. In 1902 the American Cigar Company, another monopoly firm, incorporated the Porto Rican-American Tobacco Company as a tobacco-growing subsidiary (Wilkins 1970, 156). Investment banking houses and trust companies were formed in an attempt to overcome the problem of saturated domestic markets and to sop up surplus capital (Sklar 1988, 72). These great financial houses became the principal financial instruments for investment and were firm advocates for opening foreign markets (Weibe 1967, 231). Firms such as Morton Trust Company, House of Morgan, and Kuhn and Loeb were established in the wake of the corporate restructuring. Organized specially to find profitable investment outlets for this capital, these firms had direct and ready access to the investable stocks of accumulated capital (Parrini 1993,44). These financial firms, however, could not rely on domestic markets to consume the "enormous congestion of capital in excess of legitimate demand" (Conant 1898, 337).

The Panacea: Promoting Expansion to Avert Domestic Crisis

Policymakers and businesspeople alike believed that in the absence of foreign markets for surplus production not only would the United States be mired in stagnation, but the social fabric of the republic would be jeopardized. They feared that opportunities for domestic investments were disappearing and that employment had leveled off. The domestic market, which had been thought to be inexhaustible and infinitely elastic, was incapable of consuming the escalating output from the nation's industries. The following observation about the state of the U.S. economy was representative of much of the thinking at the time: "The Western land will not absorb farm hands at the same rate as in the past; while in the East industry has developed so fast that the home market is already fully stocked with most kinds of manufactured goods, profits have fallen, and there is little inducement for a large increase of factories"(Lowell 1899, 148).

The belief that external markets would absorb this surplus became an article of faith in late 1897. The State Department cautioned, "Every year we shall be confronted with an increasing surplus of manufactured goods for sale in foreign markets if American operatives and artisans are to be kept employed the year round"(quoted in Brands 1992, 9). W. W. Judson reported that the United States expected "the policy of expansion in the West Indies and elsewhere to yield a great increase of trade and new opportunities for the profitable use of American capital ... [and to] increase our national prosperity and our influence for the world's good in the council of nations" (Judson 1902, 383). Fear that profit opportunities were rapidly disappearing reinforced long-standing desires to acquire overseas territories and external markets (Weibe 1967, 230). In 1895 leading U.S. industrialists established the National Association of Manufacturers (NAM), which became a leading force for commercial expansion. NAM's platform stated that "to the largest extent our home markets should be retained and supplied by our own producers, and our foreign trade relations should be extended in every direction and manner not inconsistent therewith" (quoted in White 1982, 83). NAM president Theodore C. Search declared in 1897 that "many of our manufacturers have outgrown or are outgrowing their home markets and the expansion of our foreign trade is their only promise of relief" (quoted in Sklar 1959, 59).

Columbia University professor Franklin H. Giddings was an active proponent of commercial expansion who contributed to an emerging imperialist logic. His writings, particularly his 1898 article "Imperialism?" reaffirmed the structural imperative for foreign markets: "We cannot continue indefinitely to sacrifice foreign trade to domestic industry.... That American manufactures were already in many instances, outgrowing the home demands, and like our agricultural products must have a foreign market was becoming daily more obvious before the recent hostilities began" (Giddings 1898, 82).

Charles Conant was the most influential theorist for U.S. imperialism of the period. His research on the relationship between surplus capital, corporate restructuring, and imperialism influenced foreign economic policy making (see Parrini 1993; Sklar 1988, 72-85). Conant observed that all the industrialized nations were encountering severe limitations to their continued expansion. He attributed this to a glut of capital and limited domestic investment opportunities. In his highly influential article, "The Economic Basis of Imperialism," Conant argued that an outlet for surplus capital was critical "if the entire fabric of the present economic order is not to be shaken by social revolution" (1898, 326).

Conant wrote during a period of profound social ferment in the United States. Large-scale violent labor unrest often broke out into pitched battles between armed strikers and the private security forces of the corporations, as well as the national guard and federal troops. Increasingly strident socialist agitation and a spreading populist movement that decried the concentration of capital and organization of monopolies threatened to alter the country's political dynamics. Socialism, with its ringing critique of monopoly capital and the robber barons, was gaining adherents among growing contingents of workers, who were forming industrial unions (Zinn 1992, 247-289).

Conant warned that "under the present social order it is becoming impossible to find at home in the great capitalist countries employment for all the capital saved which is at once safe and remunerative" (1898, 330). This problem was propelling an "irresistible tendency toward expansion" that demanded new opportunities ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• List of Tables
• Acronyms
• Acknowledgments
• Introduction
• 1 U.S. Imperialism and the New Colonial Era
• 2 Military Occupation, 1898–1900: Building the Colonial State
• 3 The Foraker Act: The Politics and Economics of Colonial Legislation
• 4 The Colonial State at Work: The Executive Council and the Transformation of Puerto Rico, 1900–1917
• 5 Resistance and Accommodation
• 6 A New Beginning and the Growing Crisis of Legitimacy
• 7 The FLT, the Socialists, and the Crisis in Colonial Management
• References
• Index