The other independent portions of the American continents, for the most part, resembled the United States in organization, but the distribution of the economic factors differed and produced different results. Except in the United States, the capital which has been necessary for the occupation of the wilderness has come, for the most part, not from other portions of the same country, but from foreign countries.
The most important of these frontiers during the nineteenth century has been that of Argentina. Here the established section was until recently comparatively unimportant,
both labor and capital came in large measure from abroad; the greater portion of the labor from Italy, of the capital from Great Britain. The conflict between the debtor and creditor sections, therefore, was not one of politics, but of diplomacy. Argentina might have what system of banking and currency it wished, but most creditors had to be paid in an international standard of value. In a world state, doubtless, all the frontiers would unite to further their interests, as the frontier states have in the United States; in the world as at present unorganized the ultimate appeal is to force. A debtor country, and one relatively weak as compared with its creditor, Argentina has not been without its plans, conceived like those of the American frontiersman without moral dishonesty but with incapacity or unwillingness to think the thing through, for easing its burden. In the efforts of Calvo and Drago to incorporate into international law the principle that debts between nations and their citizens may not be collected by force, we see as surely the reflection of frontier views, as in the programs of Greenbacker and of Populist. In the greater interest in international affairs in Argentina than in the United States, we see a new illustration of the aphorism “For where your treasure is, there will your heart be also.”
In the long run, Argentina has had to pay up, and has had to pay also in high interest rates, for the lack of a feeling of absolute security on the part of the investor. Probably few countries have had more expensive statesmen than Drago and Calvo.
To attract capital, moreover, it has been necessary to offer it abundantly the undeveloped natural resources of the country. On the other hand, the logic of the situation has kept development in the hands of the nation to a greater degree than in the United States, for the nation has been able to borrow money more cheaply than individuals or domestic corporations, and public ownership has played an important part in her upbuilding.
Argentina has paid, and so we have a situation which has never culminated in a crisis. The republics of the Caribbean have not been so fortunate. Much of the money has been borrowed, not for the purposes of improvement, but to finance revolution and for personal expenditure. Frittered away instead of put at productive work, it has become an increasing burden, in many cases an unbearable burden, and countries like Hayti, San Domingo, Honduras, and at times Mexico, have become internationally bankrupt. Protected against legal action by their sovereignty, the creditor and the debtor stood in a situation where force alone could determine their relationship. What the result would normally have been, is clearly enough indicated by the intervention of France in Mexico in 1861, and of Germany in Venezuela in 1902. The subjugation of the weak debtor by the strong creditor has been prevented not by sovereignty, but by the interposition of a third force, the United States inspired by the Monroe Doctrine.
While, however, the Monroe Doctrine served to maintain the appearance of independence for the nations concerned, it produced an impasse in the development of the frontier. Capital did not have to go to countries which could not be relied upon to pay up and which were protected from foreclosure by an outside force. The United States served the republics in somewhat the same manner that it did its own repudiating states. It was, however, unable to do as much for them as it did for its own. The wayward republics found themselves debarred from directing their own development as did our states in the critical forties, and there was no domestic capital to undertake the task. The capital willing to engage in work under such circumstances was that of the most speculative sort. Some gamblers staked their money on presidential contenders, seeking to gain control of the government. Others, more powerful and trusting in their power, offered to embark huge sums on condition of receiving
stupendous grants of the natural resources and practical control of the whole development to be made in certain regions. Such was the much-discussed Morgan syndicate proposal to Honduras, and that of the English Pearson syndicate to Columbia. In the latter instance, the United States again intervened, fearing the influence of such aggregations of foreign capital, and expressed its opinion that such special concessions violated the spirit of the Monroe Doctrine and could not be allowed.
From the tightening deadlock thus produced, Diaz extricated Mexico for a time, but it lapsed, and the others showed no signs of the power to emerge. Such European capital as had been loaned felt not unjustly angry, such as was for hire sought other avenues and frontiers less peculiarly hedged in. The situation shouted for action, and action could come only from the United States, which would not permit simple logic to work its own conclusion. It was under such circumstances that President Roosevelt assumed the financial administration of San Domingo and inaugurated a policy which has been followed and extended by his successors. Justice, or approximate justice, has been done between debtor and creditor, but the active development of these frontiers is still halted for lack of a machinery for the future.
In striking contrast with these American frontiers has been that of Siberia. Here has taken place one of the greatest frontier advances of history, here the same localization of creditor and debtor has existed, yet the conflict of classes and sections has led neither to politics as in the United States, nor to diplomacy as in Latin America. Much of the capital has been provided by France, but the money has, for the most part, been borrowed by the national Russian government, representing a strong nation and an essential ally. The security of the creditor has rested in the good faith, not of the frontier but of an established society, which has wished