Special Providence_ American Foreign Policy and How It Changed World - Walter Russell Mead

TheAmericanForeignPolicyTradition 15

wantsthemarketoftheworld.TencountiesofthatStatecouldsupplyall
thehomemarket."I9AsthebestsellingpamphleteerWilliamH."Coin"
Harveypointedout,theinterestratesfarmerspaidontheirloans,and
thefreightratestheypaidtherailroadsthatcarriedtheirproduce,were
alsodeterminedtoa largeextentbyconditionsinLondon.Oncea farm-
ingcommunityhadpassedtheinitialpioneeringstageofsubsistence
agricultureandbegantosellitssurplusproduce,itenteredtheworld
market.Andoncethatcommunitydevelopedbanksandsoughttobor-
rowmoneyforpublicorprivateimprovements,itencounteredaninter-
nationalsystemofcreditandtradethatinsomewayswasmoreclosely
integratedinthenineteenthcenturythanitistoday.
Thenineteenthcenturywasnotimeofarcadianisolationfromthe
rigorsoftheworldmarket.Timeaftertime,Americandomesticpros-
perity was threatened or ruined by financial storms that originated
overseas.RonChernowreportsinhisbookTheHouse ofMorganthata
memberofCongressgrousedin 1833 that"thebarometeroftheAmeri-
canstockmarkethangsupatthestockexchangeinLondon."20Hewas
notwrong.TheEuropeandepressionthatfollowedtheNapoleonicWars
spreadtotheUnitedStates.Thepanicof 1837 haditsoriginsinLon-
don.^21 Thepanicof 1857 beganaftertheCrimeanWarwhentroublesin
FrancespreadtoLondonmoneymarkets,andfromtheretoNewYorkY
Afterthesuccessfulpermanentlayingofthetransatlanticcablein1866,
informationfromLondonfinancialmarketstraveledtoWallStreetand
therestofthecountryattelegraphspeed.Fortherestofthecenturythe
Americaneconomyremainedvulnerabletoshockscausedbycollapses
andcrashesoninternationalfinancialmarkets.Thepanicof1893,for
example,wascausedbythecollapseoftheArgentineloanmarketandits
effectsonBritishbanks.^23
Foreigninvestmentplayeda greaterroleinAmericanprosperitydur-
ingthenineteenthcenturythanitdoesnow.TheUnitedStateshadto
borrowthemoneyfortheLouisianaPurchasefromtheDutch,anddur-
ingJefferson'spresidencyforeignersarebelievedtohaveheldmorethan
halfthenationaldebt."Noman,'"saidSen.JohnTaylorofSouthCarolina
duringan 181 Idebateoverbankpolicy,"whohasattentivelyconsidered
therise,progress,andgrowthoftheseStates,fromtheirfirstcolonization
tothepresentperiod,candenythatforeigncapital,ay,Britishcapital,has
beenthepaponwhichwefirstfed;thestrongalimentwhichsupported
andstimulatedourexertionsandindustry,eventothepresentday."2^4
Foreignmoneydugthecanals,builttherailroads,andsettledmuch