Escaping the Intellectual Trap of Empire

Like many pathbreaking books, Noel Maurer’s Empire Trap raises as many questions as it answers. Even its questions raise questions. Although Maurer splendidly documents a century’s worth of conflict over money—showing an epic trend away from armed force and towards arbitration—his book shies from some of the implications of its own evidence.

Maurer posits that the U.S. government twice became victim of an “empire trap” set by American businesses. Captured by private interests, Washington strong-armed countries that owed money to Yankee capitalists. According to Maurer, the United States eventually escaped the trap only when European governments innovated better mechanisms for resolving disputes with the Third World.

Yet the widely accepted framework of “American empire” is a flimsy setting for this intriguing evidence. A sturdier one might be the challenges of sovereign immunity in an interdependent world where nation-states replaced empires. As Maurer shows, numerous wealthy countries loaned money to, or purchased investments in, poorer nations that solicited capital. For all investors, the problem was how to get their money back. For many recipients, the goal was to avoid repayment without repercussion. This classic dilemma does not necessarily prove the existence of an “empire.”

Maurer assiduously documents the ways in which “Americans would risk their capital overseas, and . . . ask their government for political support against hostile or unstable foreign governments” (p. 57). He equates such government support with imperialism. For example, he says, when the United States froze foreign aid to borrowers who stiffed investors—as required by an irate, popularly elected Congress—America fell into the “empire trap.” But Maurer mostly ignores the fact that multiple creditor nations had an identical problem. They all struggled to protect citizens’ property abroad, whether through sanctions, negotiations, bribery, or force. Britain, Italy, and Germany bombarded the Venezuelan coast in 1902 to collect bad debts. France and Spain allowed companies to bribe South American officials. (The United States prohibited its own companies from doing so.) Surely these actions don’t mean they all possessed empires in the same debtor countries at the same time? Wasn’t it the lack of imperial control that compelled creditors to come up with patchwork solutions when poorer nations flaunted their sovereignty by eschewing debts, breaking contracts, and expropriating assets?

The bulk of Maurer’s book focuses on the early twentieth century, when the United States repeatedly intervened in Caribbean nations to stabilize their economic and political systems, mostly without success. This is a subject Maurer has plumbed elsewhere, and his familiarity with the financial intricacies of dollar diplomacy is impressive. He effectively shows how far the United States was willing to follow the money. Beginning with the Roosevelt Corollary of 1904, and despite Woodrow Wilson’s fervent opposition to imperialism, the United States persistently leaned on sovereign governments. When companies approached Washington for assistance, Uncle Sam typically acted like a Dutch uncle—frustrated with compatriots for getting themselves into a jam and hoping to avoid expensive commitments, but willing to come through in a pinch.

Maurer convincingly documents a bargaining pattern that relied on both “carrots and sticks.” The U.S. government usually obtained fair market value for nationalized investments and at least some return on bad loans, despite buzz cuts on principle (p. 301). Infamously, on a few occasions, Washington actually took over customs houses in small countries like Haiti to ensure debt repayment, though Maurer shows this was America’s least effective tool, discarded under the “Good Neighbor Policy” of the 1930s. Direct intervention entangled squeamish Americans with unsavory dictators, and “supervision” rarely resulted in improved governance or higher customs receipts. Americans found they had negligible power over sovereign nations. Maurer calls such interventions “informal empire.” Yet it’s worth observing that neither Marines nor military governors ever appropriated assets, but simply tried (unsuccessfully) to help foreign governments collect and spend their own resources better, in order to service loans...