THE advance of American business interests into Central and South America has now reached a point where it may soon become necessary to formulate a policy as momentous as the Monroe Doctrine itself. This new policy is now in the making. The problem which it is meant to solve is the conflict between the vested rights of Americans in the natural resources of the Caribbean countries and the rising nationalism of their peoples. The problem could not have arisen before Americans had acquired titles to important properties and had invested large sums of money in developing them; nor could the problem have arisen while government of these countries was in the hands of a ruling class which conceived its interests to be those of the foreign owners of natural resources. The establishment of large American interests at a time when nationalist feeling has begun to run high has created the situation which now perplexes us in Mexico and may perplex us tomorrow in Venezuela, Colombia and elsewhere.

This is not a simple problem. We have become exporters of capital, and we are called upon to decide what is to be the attitude of the United States Government towards that exported capital when a foreign government subjects the property of American citizens to new and drastic social regulation.


Until quite recently the clear and dominating purpose of American policy has been to find national security. The declaration of President Monroe in his message of December 2, 1823, was a development of the original rule laid down by Washington that "in extending our commercial relations (with foreign nations) we have with them as little political connection as possible." When in May, 1823, France, acting under a commission from the Congress of Verona, put Ferdinand back upon the throne of Spain, and when Russia at the same time was advancing from Alaska down the western coast of this continent, the United States was threatened on two sides by an entanglement with the Europe of Metternich. It was threatened with a Russian Empire extending down to what is now California, and with a war to the south for the reconquest of the revolted Spanish colonies. These two threats, had they been successful, would have encircled the United States with the forces of the Quadruple Alliance, and would almost certainly have embroiled it in the dynastic politics of Europe.

Fortunately the interests of Britain, as Canning conceived them, coincided with those of the United States, and President Monroe was therefore able to state the epoch-making doctrine that bears his name. In this, its original form, the United States declared that it would resist future colonization (of European Powers) in this hemisphere, and that it would "consider any attempt on their part to extend their system (i.e. the system of Metternich, popularly known as the Holy Alliance) to any portion of this hemisphere as dangerous to our peace and safety." This is the policy which the United States maintained with some difficulty but in the end triumphantly from Monroe to Roosevelt. Its purpose was American security; its method was to prevent European political intervention in this hemisphere.

The important events in the history of the Monroe Doctrine between 1823 and the beginning of this century were inspired by a determination to resist European expansion. So Clay protested in 1823 against the sale of Cuba to France, and the French withdrew their fleet. In 1843 the United States protested against the British naval occupation of Hawaii. In 1848 Polk warned Spain and Britain against listening to the appeal of the white population of Yucatan, then engaged in a war with the Indians. Seward in 1861 protested to Spain against the occupation of Santo Domingo. And in spite of the extreme difficulties of the situation, Lincoln never recognized Maximilian in Mexico and continued to recognize Juarez. In 1895 Cleveland actually threatened war against Great Britain if the disputed boundary between Venezuela and British Guiana were not submitted to arbitration. The last and latest phase in what might be called the evolution of the simple Monroe Doctrine was the Lodge Resolution of 1912 arising out of the Magdalena Bay incident.

I have called this line of policy the simple Monroe Doctrine because it was confined to resistance to the acquisition of new territory. Thus for many years after 1823 the United States did not oppose European naval blockades of the Latin republics provided the acquisition of new territory was disclaimed. In 1825 Clay told Argentina and Brazil that they would not be protected from an "obligation the performance of which foreign nations have a right to demand." The United States did not attempt to interfere with British blockades of Nicaragua in 1842 and 1844, of Buenos Ayres in 1845, of Salvador in 1851, nor with the Spanish bombardment of Valparaiso and Callao in 1866. But when in 1902 Britain, Italy and Germany blockaded Venezuela as a result of certain property claims, President Roosevelt became active and insistent, and according to his account had actually ordered Admiral Dewey to assemble the battle fleet at Porto Rico if the Germans did not withdraw their squadron within a certain number of days.

This was a new phase, not so much in the principle as in the practice of the American policy, and out of this incident emerged the Roosevelt corollary to the Monroe Doctrine. Two years elapsed, however, before President Roosevelt actually announced the new doctrine. Then, in connection with the occupation of Santo Domingo, he said:

"This country would certainly decline to go to war to prevent a foreign government from collecting" on defaulted debts; and since a temporary occupation by a European Power might turn into a permanent occupation, "the only escape from these alternatives may at some time be that we must ourselves undertake to bring about some arrangement by which so much as possible of a just obligation shall be paid."

In the meantime the Panama Canal route had been decided upon, and the treaty signed with the Republic of Panama, and in his message of 1904 President Roosevelt stated his corollary to the Monroe Doctrine:

"Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society may in America as elsewhere ultimately require intervention by some civilized power, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power."

Whatever may have been the actual circumstances and the contributing motives, it was under this Roosevelt corollary of the international police power that there took place the intervention of 1905 in Santo Domingo, the interventions by Secretary Knox in Nicaragua and Haiti which culminated in the treaties of 1911.

This assumption of the right to police the Caribbean grew out of the vital national interest created in that region by the construction of the Panama Canal. The American system of defence was based on the Canal, and it followed from this new fact that the United States could no longer tolerate European naval activity in that strategic area. There followed from this same fact the establishment of a seriesof naval bases at Key West, Guantanamo, Samana Bay, Mole St. Nicholas, in Porto Rico, in the Virgin Islands, in the Corn Islands of Nicaragua, and in Fonseca Bay on the Pacific side. With this development the United States could no longer tolerate political disorder in the countries involved in its naval defense. It could not tolerate the threat of European intervention in case of disorder, and it could not tolerate disorder which threatened the security of its own strategic system. From this point it was but a short step to the theory that the United States must insure itself in the Caribbean region against supposedly unfriendly governments. It was this point which was reached apparently in the present affair in Nicaragua.

Thus in a hundred years the Monroe Doctrine evolved from the simple prohibition of further colonization through the assumption of an international police power in the Caribbean to an insistence that governments in that region shall be, not only orderly, but friendly to the interests of the United States. This growth of American policy is however an evolution out of the principle of national security, and each new phase of it is consistent with that principle. That other motives played their part, that private interests may at times have created the situation, or made themselves the instruments and the beneficiaries, need not be denied. I shall not discuss here this aspect of what is popularly known as "Dollar Diplomacy," because when in these disputed cases the United States Government acted, it appealed always, and I believe sincerely, to the principle of national security.

It is important to bear this in mind because in the present dispute with Mexico the Government is appealing to a new and radically different principle. What that principle is, what its acceptance may imply, is a matter of real concern to the United States and to the rest of the world.


After the fall of Porfirio Diaz there was a revolution in Mexico which was essentially different from the ordinary Latin-American civil commotion. It was not a mere brawl between the Ins and the Outs, but a national upheaval against the landed gentry, against clericalism, and against the foreign concessionaire who was rapidly acquiring the richest natural resources of the country. An ancien régime was violently overturned amidst considerable disorder, much irregularity, plenty of selfishness and dishonesty and inefficiency and floods of revolutionary rhetoric. This revolution, which is loosely called bolshevik and is often ascribed by careless writers to the Russian Communists, was fought out and consummated while the Tsar was still on the throne of Russia. The new Mexican Constitution which embodies the results of the revolution went into effect on May 1, 1917, over six months before Lenin seized the government in Russia.

Whatever name is to be given to it, the fact is indisputable that the Mexican revolution arose out of Mexican conditions in an effort to correct Mexican evils, and that it takes its place historically with that series of nationalist uprisings which from China to India, from Egypt to Morocco, offer so profound a challenge to the supremacy of the Western Empires, and so deep a riddle to their statesmanship. One persistent motive in these uprisings is the desire to assert the national independence and the dignity of an inferior race. The whole spirit of extra-territorial privileges in all its forms is therefore under attack, -- the whole system of special courts, codes, concessions which give the foreigner a status in these countries superior to that of the native.

This nationalism inevitably comes into conflict with the vested rights of foreigners. These rights have a varied history. Most of them were probably acquired legitimately, or at least in good faith under the old régime; some of them, enough of them perhaps to stand out as horrible examples, may not have been so legitimately acquired even under the old system. Yet no matter how they were acquired they represent after the lapse of years a large investment of honest capital, much hard work, and in the case of rare and essential natural resources, a considerable national interest to the people at home. There is then a real conflict between the nationalism of the country and the acquired rights of the foreigner.

It is this conflict which the United States Government has been trying to deal with ever since the Mexican Constitution was established in 1917, and even earlier. There is a long record of diplomatic notes on the subject extending back to the time when the Convention of Queretaro was still drafting the Constitution. The fundamental point of protest is Article XXVII, which declared the subsoil of Mexico the property of the nation. This famous article embodies the purposes and the slogans of the revolution; in the eyes of Mexicans it represents a recovery by the nation of property that belonged to it, except for a brief period under President Diaz and then only in respect to some minerals, ever since the title passed from the King of Spain to the States of the independent Republic of Mexico.

The Mexican revolutionists, however, have had the prudence to recognize that the acquired rights of foreigners could not be wiped out. Their courts have declared that Article XXVII is not retroactive, and in their legislation which enacts Article XXVII they have made provision for the continued use of such property in the subsoil as was legitimately acquired before 1917. Whether this provision is substantially just or not, and whether the Mexican courts fairly interpret former Mexican law, is fiercely disputed by most of the American oil companies, and their claim is supported by the State Department. Into the merits of that dispute I shall not attempt to enter here. My concern is with the doctrine upon which the American contention is based. That is much more important in the long run than the immediate dispute about the oil properties, for the doctrine we now announce, and may in the end establish, will govern our future relations not only with Mexico but with any country in which acquired rights are affected by a radical change of social policy.

Mr. Hughes, when he was Secretary of State, laid down the following rule in relation to Latin-America:

"Each state may have its code of laws in accordance with its conception of domestic policy, but rights acquired under its laws by citizens of another state it is under an international obligation appropriately to recognize."

Under Secretary Kellogg this doctrine seems to have lost whatever qualification there may have been in Mr. Hughes's mind when he used the word "appropriately." Mr. Kellogg's doctrine as laid down in the series of notes between July and November 1926 was that Mexico did not have the power to diminish in any way a legal title acquired before 1917 whether or not the change of title inflicted a substantial loss upon the owner. Mr. Kellogg, if I understand him correctly, contends that a title to property once acquired must be left intact in letter, in spirit, and in substance for all time to come. And President Coolidge, if I understand the official spokesman correctly, has added that the rights of a vested interest to an unchangeable title against acts of the sovereign is so clear under international law that it is not even an arbitrable question. This is a radical and unqualified position, allowing no room for compromise, as does Mr. Hughes's principle qualified by the word "appropriately." The Kellogg doctrine does not, in principle at least, allow Mexico to confirm the oil companies in the use of their lands while maintaining the theory or the fiction that the title vests in the nation.

Whether or not Secretary Kellogg would adhere to so strict a dogma if Mexico offered a better bargain to the oil companies, I do not know. But it is certain that the rigorous form in which the American claim has been formulated has produced a head-on collision between two irreconcilable principles. They are the principle of national sovereignty and the principle of acquired rights. The doctrine for which Secretary Kellogg is now contending is in effect that a right to property is an inalienable right which no government can ever impair, that it is superior under international law to the right of sovereignty, and that when the acts of the sovereign conflict with the vested rights of foreign property holders these acts of the sovereign are null and void under international law. Mr. Kellogg has argued that the wrong done by the legislation which carries the Mexican Constitution into effect is such that it cannot be righted by reparation for the material damage suffered by American property holders in specific cases. He has rejected the Mexican offer to make reparation if damages could be proved. He has argued that the wrong is too deep to be remedied by the payment of damages, even assuming that Mexico would or could pay the damages which might be assessed against her. For an act of the sovereign which diminishes a title to property inflicts an injury for which no compensation after the fact can be sufficient. The act itself is confiscatory and strikes at the root of international law as Mr. Kellogg understands the law of nations.

Just where or when it became the law of nations that the sovereign has not the power to affect the established title to property has never been explained by the State Department. For if this were the law of nations then legislation anywhere in the world, including the United States, is subject to review not only by the highest domestic courts, but by the foreign offices of aliens whose rights are affected. The United States Supreme Court has for generations been deciding cases in which the question was whether an act of Congress or of one of the State legislatures was "confiscatory." In a long series of decisions it has sanctioned legislation which drastically diminished the free use of legitimately acquired property. Under these decisions the railroads and other public utilities have been regulated, the use of real estate has been hedged with restrictions like the rent laws and the zoning laws, employers have been subjected to all kinds of "welfare" legislation. Americans have differed greatly among themselves as to whether these laws were wise, and immense law suits have been carried through the courts to determine whether they were confiscatory. But I doubt whether any American ever dreamed that after the Supreme Court had rendered its decision, a British subject who owned railway securities or New York City real estate could carry the case to the British Foreign Office for an ultimate review and decision.

If this were the law of nations it would mean that each nation possessed a veto on the legislature and courts of every other nation in so far as its nationals had rights that were affected. This theory that the vested rights of aliens are immutable, and superior to the acts of the sovereign, would mean, if it were accepted, that in proportion to the size of alien holdings, a nation's social developments would be frozen in statu quo. If this were the law of nations then no people which cherished its independence could ever again permit foreigners to acquire property. For such property, once acquired, would be forever removed from national control. The foreigner with his property would be above the law of the country, and his rights would be determined not by the sovereign power but by an alien foreign office.


It is altogether unlikely that Secretary Kellogg would wish to commit this country to the full implication of his doctrine. It would lead us into great difficulties. Against a strong Power the doctrine would be unenforceable except by resort to war. If, for example, in the course of the next few years the British Government decides to nationalize the coal industry, it will not ask the consent of our State Department. American owners of coal properties in England will have to accept the same terms which are offered to English owners, and the terms will not be, I venture to suggest, a matter even for diplomatic discussion. The terms offered to landlords in Ireland were not reviewed by alien foreign offices, nor would the terms laid down by Congress be subject to review in case some day it decided to reorganize our chaotic coal industry. Any strong nation would take the position that where there was no discrimination against the foreigner or between foreigners, where there was no taking of property from aliens and giving it to its own nationals, where the action arose from a considered policy in the national interest, where in fact there was no intention to expropriate without some practicable substitute, where its own courts (or even an international tribunal) were open to hear proof of damages, there could be no ground for diplomatic interference. Mr. Kellogg has taken the contrary position in relation to Mexico. The seriousness of his position is not merely that it constitutes a threat to good relations with Mexico, but that it portends the possibility that on this continent at least the United States may set itself up as the opponent of national aspiration and social development.

No one can quarrel with the State Department for giving the oil companies every assistance in making a good bargain with the Mexican Government, nor in seeing to it that they are dealt with reasonably and without prejudice. But there is a very real danger in setting up as an unqualified dogma the theory that American investments in Latin-America are in fact extra-territorial, and that the State Department may on its own authority exercise the powers of the Supreme Court under the Fourteenth Amendment over all the governments of this hemisphere. The responsibilities we should incur under such a doctrine would be infinite. For as our investments grew the State Department would find itself acting both as attorney for interests affected by legislation in Latin-America, and as final court of review as well.

With this doctrine established in our foreign policy we could hardly expect to win the good will of the awakening nationalists of the Latin countries. They would find us confronting them whenever they contemplated a change in their social policy. And unless the State Department chose to play favorites, giving to the oil companies in Mexico a kind of support which it was not willing to give other American interests elsewhere, it would have to entangle itself in every political conflict which had economic consequences, anywhere south of the Rio Grande.

Rightly or wrongly the Latin peoples would regard this intimate interference as a threat to their independence, and we might expect anti-Americanism to become part of the creed of all Latin patriots, professional and otherwise. Nor would European traders in South America be above the temptation to point out the implications of this Kellogg Doctrine, assuming that the Latin peoples, already sufficiently suspicious, should somehow miss the implications. Nor is it unlikely, were we to deal with Latin-America in too heavy-handed a way, that the larger nations there would feel impelled to turn once more towards Europe, seeking a support there which would eventually restore some kind of balance of power in this hemisphere. . . .


To these more remote and imponderable considerations men will give weight in accordance with their temperaments and their wisdom. The immediate question before the American people is whether they wish to erect the doctrine of immutability of vested rights into a cardinal principle of their foreign policy. This is the great question which overshadows the Mexican dispute. It arises, as has been pointed out, from the conflict between the growth of capital investment in backward countries and the awakening of a national spirit in these countries. The Kellogg Doctrine, taken in the form which it has been stated in the correspondence with Mexico, holds that vested rights are unchangeable in the face of a nation's development. Such a doctrine, applied so absolutely, means an irreconcilable collision between the power of this country and the will of its neighbors.

The task of statesmanship is to avert irreconcilable collisions and to find ways of adjusting conflicting interests. That ought not to be beyond the bounds of possibility. It ought not to be impossible to protect the substantial interests of American capital abroad without challenging the right of other nations to adopt such social regulation as seems good to them. Business is a much more flexible thing than the conservative theorist is ready to believe. It cannot be irreparably injured without injury to the nation which attacks it. If Mexico really tried to injure the oil business, the worst damage would recoil upon Mexico herself. There are considerations to which the statesman can afford to pay attention, and they suggest that the solution of the problem, which is as real as it is delicate, will probably be found best by seeking a modus vivendi, respecting the national pride of sensitive peoples, and refraining, so far as it is humanly possible to avoid so great a temptation, from enunciating great general principles.

In the last analysis the security of American investments abroad must rest, as Mr. Dwight Morrow pointed out in the last issue of FOREIGN AFFAIRS, on the faith of the borrowing nations. They must believe that American capital profits them, and is consistent with their own national interest. If they do not believe this, pressure which forces them to act contrary to their convictions can give only temporary advantages to American businessmen. The victory on one point can be won only at the cost of arousing a general illwill against American capital and the American Government. Such a general illwill is more threatening to the security not only of capital but of the nation than any one Latin policy however inconvenient, however ill-considered. And nothing would be so certain to arouse still further this illwill as the realization in Latin-America that the United States had adopted a policy, conceived in the spirit of Metternich, which would attempt to guarantee vested rights against social progress as the Latin peoples conceive it.

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