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

ChangingtheParadigms 67

Meanwhile,otherfactorslargelyunrelatedtotheU.S.-USSRrivalry
helpedmakeContinental realismlookmoreplausibleinthe United
StatesbyconcealingtheeconomiccontextoftraditionalAmericanpolicy
frombotheliteandmassaudiences.Thisprocessbeganwiththeshiftin
theU.S.internationalpositionfromdebtortocreditorstatusearlyinthe
twentiethcentury,gainedforcewiththebreakdownoftheBritain-based
internationalsystemoffinanceandtradebetween 1914 andtheGreat
Depression,andclimaxedafterWorldWarII.
ThestatusoftheUnitedStatesasa debtor,capital-importingnation
wasoneofthegreatdeterminingfeaturesofitsexistenceduringthelate
eighteenthandthroughthenineteenthcentury.VirtuallyeveryAmeri-
canbusinessandhouseholdwaskeptconstantlyawareofitsconnection
toanddependenceontheinternationalfinancialsystem;andattitudes
towardBritainandtowardtheexternalworldgenerallywereshapedtoa
significantdegreebytheeffectsofthisdependencyandtheresentment
andmultipleinconveniencesitcaused.
Allthatchangedinthetwentiethcentury.DuringWorldWarI,Brit-
ainbecamethoroughlyandmassivelyindebtedtotheUnitedStates,and
provedtobea notablylesspunctiliousdebtorthantheUnitedStates
hadbeen.BythetimetheDepressionwasinfullswing,Britainhadin
essencedefaultedonits$4billionofficialwardebttotheUnitedStates.^7
ThisdefaultcausedsubstantialAmericanillfeeling,butthemore
profoundconsequenceofthechangeinfinancialfortunesinthetwenti-
ethcenturywasa changeinAmericanpsychologyandpolitics.Foreign
investorswerenolongerseenaspowerful,unaccountableforcesshaping
theAmericaneconomyastheypleasedregardlessoftheconsequencesfor
ordinaryAmericanfarmers,workers,andsmallbusinessmen.TheFed-
eral Reserve System was nowin charge ofAmerican interestrates;
Britainhadnothingtodowithit.
FeweventsshowthegrowingindependenceofAmericanfinancial
marketsfromEuropemoreclearlythandotheverydifferentreactions
onWallStreettotheoutbreaksofthetwoworldwars in 1914 and
1939.On]uly31,1914,tradingonWallStreetstoppedwiththeout-
breakofhostilitiesanddidnotresumefullyforeightmonths.^8 Twenty-
fiveyearslater,whenEuropeansrushedofftotheslaughterhousesagain,
neithertheoutbreakofhostilitiesnoreventhefallofFranceclosedthe
NewYorkStockExchangefora singlesecond.DuringtheColdWar,
Americanfinancial marketswereevenmoreindependentofEuropean
developments.