4.

The Canal as an "extension of our coast line."

VI. SPECIAL INTEREST IN HOME GOVERNMENT OF AMERICAN NEIGHBORS

1. Transfer of the foci of insurrection across the border. 2. Loss of life and property of Americans from bad governments.

3. Difficulty of maintaining polite relations with irregular and despotic governments.

4. Excitement and irritation caused in the United States.

VII. SPECIAL MILITARY INTEREST IN AMERICAN CONDI

TIONS

1. West India Islands as bases of military and naval operations.

2. Northeastern and northwestern British possessions as bases.

3. Panama Canal as a military objective.

VIII. DESIRABILITY OF MAINTAINING PEACE IN

AMERICA

1. By preventing wars between foreign nations and American powers.

2. By preventing internal wars between American nations.

3. By preventing internal insurrections within an American neighbor country.

4. By avoiding causes of war between the United States and our neighbors.

IX. DOCTRINE OF INFERIOR NATIONS

1. Such nations exist in various parts of the earth, i.e. Persia, the Balkan States, Turkey, Portugal.

2. Such states are members of the family of nations, but are in the position of minority stock-holders.

3. The policy of European nations is to supervise such powers.

X. UPON THE BASIS OF THESE UNDERLYING CONDITIONS WHAT IS THE NATURAL POLICY OF THE UNITED STATES WHETHER YOU CALL IT THE MONROE DOCTRINE OR SOME OTHER DOCTRINE?

1. No conferences or congresses with foreign nations upon American affairs.

2. Recognition of special interest and special friendship for the American neighbors.

3. Acceptance of the Drago Doctrine, so that no power shall use military force for the collection of contract debts. 4. Recognition of the presumption of the international equality with the United States of those Latin American powers who shall have demonstrated their capacity to take care of themselves.

5. Recognition of Latin American governments which clearly are supported by the people of the country-but not of political adventurers as heads of the state.

6. Moral aid to all peoples who are tying to raise their civilization.

"If this be the Monroe Doctrine, make the most of it.'

THE DEVELOPMENT OF OUR LATIN-AMERICAN

TRADE

By Hon. John Hays Hammond, LL.D.

It is unfortunate that the solution of great problems purely economic in character is not entirely dissociated from party politics, but such is, nevertheless, the fact. Legislation affecting the tariff, the currency and other problems essentially economic and vital to the welfare of the entire nation is determined too often on strictly political lines— settled, indeed, in a large measure by politicians upon the stump, not by business men in boards of trade.

What I shall say with respect to foreign trade is from the point of view of a business man and I assure you that any criticisms I make which may seem suggestive of partisanship are made entirely free from political bias.

I have been requested to speak of our government's Mexican policy, but, in view of the critical condition of negotiations now pending with Mexico, I would prefer to speak of foreign trade in general. I would say this, however, that, irrespective of what we may think individually of President Wilson's Mexican policy in the present serious situation, we must back him up collectively.

“As a great industrial nation, especially in manufactured products, the United States leads the world. Of the value of these products in the year 1910, amounting to $20,000,000,000, our home market absorbed $19,000,000,000, or 95 per cent, and our exports amounted to $1,000,000,000, or only 5 per cent." Authorities regard this as nearing the limit that is to say, the point of saturation-of our domestic markets, so far as present demands during normal periods are concerned. It is because of the extraordinary capacity of our home markets that our nation hitherto has made no strenuous efforts to exploit foreign markets. Great Britain and Germany, on the other hand, with comparatively

restricted domestic markets, have paid more attention to the development of foreign trade, and for that reason the value of the annual exports "of each of these nations has exceeded that of the United States by 30 per cent."

A new tariff has been recently enacted. It will result, as was designed, in an increased importation of manufactured products, aggregating, probably, a very large amount. The inevitable effect of such imports will be to restrict the capacity of our home markets for domestic products. (I am not discussing the merits of the new tariff, but referring only to its inevitable effect in this one particular.)

Therefore, having regard to these facts, it is obvious that we must either curtail the capacity of our factories, which would result in throwing out of employment hundreds of thousands of wage earners, or we must depend upon the exploitation of foreign markets for the relief of our congested industries.

In her foreign trade Great Britain has followed the lines of least resistance. In the year 1911 she exported to British colonies and possessions (where she enjoyed preferential tariff rates), 35 per cent of her entire exports; while only 30 per cent was sent to other manufacturing countries having a protective tariff, and of the remainder, a large part of her exports was to countries where there was no competition on the part of home industries, i.e, to neutral markets.

America and Germany, on the other hand, have succeeded in developing trade with countries which have highly organized competitive industries in the same lines of merchandise; that is, America and Germany have "bucked the center," while England has "played the ends." Conformably with this policy Great Britain has given special attention to the development of markets in South America. Until recently her supremacy there was acknowledged, but the extraordinary development of German trade during the past few years has threatened the predominance of English interests in that quarter.

I agree with the optimism which has been expressed as to the great opportunity offered the United States for the development of important markets in South America, and

especially on the West Coast, after the opening of the Panama Canal. But we shall undoubtedly have to meet the keen competition of England and Germany and we must be prepared to meet other formidable competitors as well—Japan, for example, which is already gaining a firm commercial foothold even on the eastern coast of South America.

In the extension of her South American trade, Great Britain has given us an object lesson. Within a decade she has trebled her exports to Brazil and to Argentina. While this increase is in a large measure due to special efforts in the exploitation of those markets, it is, nevertheless, the fact and this is a point I wish to emphasizethat the increase is chiefly due to the investment of enormous sums of British capital in the development of the industries of those countries. Likewise, the experience of Great Britain in many other countries where British capital has been invested demonstrates the proposition that trade follows the investment of a nation's capital as well as a nation's flag. In short, the investment of a nation's capital in foreign countries for the development of their industries is the sesame that opens the door of trade. How wide the door of trade will be opened depends upon the success attending that nation's efforts in securing rapid and cheap communication and transportation; in providing the character of commodities needed by the countries in question; in the establishment of banking facilities to meet the requirements both of the exporter and the importer, and, finally, in the fostering of friendly relations by intimate intercourse between the citizens of the respective nations.

Now, in order to stimulate the investment of capital in foreign lands it is prerequisite that the investor be assured of protection by his government against any unfair interference or discrimination on the part of foreign governments where these investments are made.

If our nation is to pursue a policy of laissez-faire and decline to assume its obligation to afford legitimate protection to its nationals, then its nationals will not be so foolhardy as to risk capital in the development of foreign industries. Or if, in spite of the lack of protection from their govern