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International Harvester in Russia: The Washington-St. Petersburg Connection?

Published online by Cambridge University Press:  11 June 2012

Fred V. Carstensen  and
Richard Hume Werking
Fred V. Carstensen
Affiliation:
Associate Professor of Economics, University of Connecticut
Richard Hume Werking
Affiliation:
Director of Libraries, Associate Professor of History, Trinity University
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Abstract

Diplomatic historians have frequently cast American foreign policy from 1890 to 1915 as handmaiden to the expansion of American enterprise in foreign markets, but the relationship between government and business was neither one-sided nor simple. Government officials had their own agenda of objectives for which they wanted business support, sometimes even trying to use specific firms as their agent. Business itself did not speak with a single voice — policies which one firm might find beneficial, another found detrimental. Moreover, business was only one among various interest groups competing for attention and influence in the policymaking process. This case study of International Harvester's efforts to gain government assistance for the development of a Russian branch factory uncovers these intertwined threads of intersecting and conflicting objectives and interest groups, revealing the tangled complexity of business-government relations in this turbulent era.

Type
Research Article
Information
Business History Review , Volume 57 , Issue 3 , Autumn 1983 , pp. 347 - 366
Copyright
Copyright © The President and Fellows of Harvard College 1983

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References

1 The single most important work in this debate is Williams, William A., The Tragedy of American Diplomacy, now in its second, revised, and enlarged edition (New York, 1972).Google Scholar Other important works which emphasize the importance of marketplace expansion include: LaFeber, Walter, The New Empire; An Interpretation of American Expansion, 1860–1898 (Ithaca, 1963)Google Scholar; McCormick, Thomas J., China Market: America's Quest for Informal Empire, 1893–1901 (Chicago, 1967)Google Scholar; McCormick, , “American Expansion in China,” American Historical Review, 75 (June, 1970), 1393–96CrossRefGoogle Scholar; Williams, , The Roots of the Modern American Empire: A Study of the Growth and Shaping of Social Consciousness in a Marketplace Society (New York, 1969)Google Scholar; Gardner, Lloyd, “American Foreign Policy, 1900–1921: A Second Look at the Realist Critique of American Diplomacy,” in Bernstein, Barton J., editor, Towards a New Past: Dissenting Essays in American History (New York, 1968), 202–231.Google Scholar A thoughtful dissent to this set of interpretations is Tucker, Robert W., The Radical Left and American Foreign Policy (Baltimore, 1971).Google Scholar See also: Varg, Paul A., The Making of a Myth: The United States and China, 1897–1912 (East Lansing, 1968)Google Scholar; Holbo, Paul S., “Economics, Emotions, and Expansion: An Emerging Foreign Policy,” in Morgan, H. Wayne, editor, The Gilded Age (Syracuse, 1970), 199–221Google Scholar; Thompson, J. A., “William Appleman Williams and the ‘American Empire,’” Journal of American Studies, 7 (April 1973), 91–104.CrossRefGoogle Scholar The discussion became especially heated in Becker, William H., “American Manufacturers and Foreign Markets, 1870–1900: Business Historians and the ‘New Economic Determinists,’” Business History Review, 47 (Winter 1973), 466–481CrossRefGoogle Scholar, and in Becker, , “Foreign Markets for Iron and Steel, 1893–1913: A New Perspective on the Williams School of Diplomatic History,” Pacific Historical Review, 44 (May 1975), 233–248CrossRefGoogle Scholar, and 255–259, with a rebuttal by Howard Schonberger, 249–255.

2 Varg, Making of a Myth, 37; Munro, Dana G., Intervention and Dollar Diplomacy in the Caribbean, 1900–1921 (Princeton, 1964), 531, 537.CrossRefGoogle Scholar Wilton B. Fowler's essay on foreign policy in the progressive era has little to say about dollar diplomacy; its theme is captured in its title. Fowler, , “American Diplomacy in the Progressive Era: The Dictates of Strategy and Defense,” in Gould, Lewis L., editor, The Progressive Era (Syracuse, 1974), 153–180.Google Scholar Unfortunately, some defenders as well as critics of dollar diplomacy have confused economic motives with helping American bankers line their pockets. See Munro, Intervention and Dollar Diplomacy, 537.

3 Scholes, Walter V. and Scholes, Marie V., The Foreign Policies of the Taft Administration (Columbia, Missouri, 1970), 31.Google Scholar See also Scholes, Walter V., “Philander C. Knox,” in Graebner, Norman A., editor, An Uncertain Tradition: American Secretaries of State in the Twentieth Century (New York, 1961), 59–78Google Scholar, esp. 78. See also Werking, Richard Hume, The Master Architects: Building the United States Foreign Service, 1890–1913 (Lexington, 1977).Google Scholar For a recent summary of U.S. foreign commercial policy, see Becker, William H., The Dynamics of Business-Government Relations: Industry and Exports: 1893–1921 (Chicago, 1982).Google Scholar

4 Chandler, Alfred D., The Visible Hand: The Managerial Revolution in American Business (Cambridge, 1977).Google Scholar One of the best recent treatments of multinational enterprise and foreign policy is Bersten, C. Fred, Horst, Thomas, Moran, Theodore H., American Multinationals and American Interests (Washington, 1978).Google Scholar An excellent, balanced assessment of the impact of multinationals is Kumar, Krishna, “Social and Cultural Impact of Transnational Enterprises: An Overview,” in Kumar, Krishna, editor, Transnational Enterprises: Their Impact on Third World Societies and Cultures (Boulder, 1980), 1–44.Google Scholar Other governments have a richer history of using business to promote foreign policy objectives. See, for instance, McKay, John, Pioneers for Profit: Foreign Entrepreneurship and Russian Industrialization: 1885–1913 (Chicago, 1970)CrossRefGoogle Scholar; Crisp, Olga, “The Financial Aspects of the Franco-Russian Alliance, 1904–1914” (Doctoral Dissertation, University of London, 1954).Google Scholar Domestic relationship often prefigured foreign; see Nakagawa, Keiichiro, editor, Government and Business (Proceedings of the Fifth Fuji Conference) (Tokyo, 1980).Google Scholar

5 Kumar, “Social and Cultural Impact.” Hunt, Michael, “Americans in the China Market: Economic Opportunities and Economic Nationalisms, 1890s–1931,” Business History Review, 51 (Autumn 1977).CrossRefGoogle ScholarCochran, Sherman, Big Business in China: Sino-Foreign Rivalry in the Cigarette Industry, 1890–1930 (Cambridge, Mass., 1980)Google Scholar; Wilkins, Mira, The Emergence of Multinational Enterprise (Cambridge, Mass., 1970)Google Scholar; Carstensen, Fred V., “American Multinational Corporations in Imperial Russia: Chapters on Foreign Enterprise and Russian Economic Development” (Doctoral Dissertation, Yale University, 1976).Google Scholar

6 Werking, The Master Architects: Building the United States Foreign Service, 1890–1913 passim.

7 Ibid., chapters 2 and 10.

8 Robert Chilton to Secretary of State, June 24, 1896; Miscellaneous Reports and Correspondence on Consular Inspections, Department of State Records, Record Group (RG) 59, National Archives (NA).

9 Elihu Root to Secretary of the Navy Victor H. Metcalf, October 20, 1908, file 16251, RG 59/NA.

10 Wilbur Carr. Director of Consular Service, to H. D. Van Sant, American Consul, Kingston, Canada, December 14, 1909, Consular Bureau Decisions and Precedents, RG 59/NA.

11 Hubert H. D. Pierce to American Consular Officers, April 30, 1906, Circulars to Consular Officers, RG 59/NA.

12 Carr to Van Sant, December 14, 1909, Consular Bureau Decisions and Precedents, RG 59/NA.

13 Dennis, Roland R., American Agricultural Implements in Europe, Asia and Africa, Department of Commerce and Labor, Special Agent Series No. 23 (Washington, 1909), p. 50.Google Scholar Memo: European Manufacturing, Paris preliminary conference, September 4, 1905: W. B. Brinton to W. M. Reay, June 5, 1908; International Harvester Archives (hereafter: IHA), F: 1228.

14 C. H. McCormick to Board of Directors, June 3, 1908; Extract from Minutes, Meeting of Board of Directors, June 5, 1908. IHA: F: 1238. W. B. Brinton to W. M. Reay, June 5, 1908. IHA: F: 1228.

15 C. H. McCormick to G. W. Perkins, June 12, 1908. IHA: F: 1238. H. L. Boyle, “American Branch Factories Abroad,” May 6, 1930. IHA: F: 2186.

16 Carstensen, “American Multinationals,” 229–232. IHC to C. F. Gregory, September 12, 1905. IHA:F: 1317.

17 C. H. McCormiek's interviews regarding Russian Factory, June 28, 1909. IHA: F: 1228. C. H. McCormick's interviews regarding Russian Factory, July 5-July 7, 1909. Russian Investigations, B.A. Kennedy. IHA: F: 1238.

18 Carstensen, “American Multinationals,” 251–260.

19 Ibid., 261–265. Based on International Harvester archives.

20 B. A. Kennedy to C. S. Funk, January 17/30, January 19/February 1, January 24/February 6, 1910. Cable, B. A. Kennedy to IHC, February 3, 1910 IHA: F: 1225. NB: Letters sent from Russia carried two dates, the old style Russian calendar date and the new style (Gregorian) calendar date.

21 C. S. Funk to G. W. Perkins, February 11, 1910. IHA: F: 1396.

22 G. W. Perkins to C. S. Funk, February 19, 1910. IHA: F: 1225. Carstensen, “American Multinationals,” Chapter 9. Wilson, memo to John B. Osborne, March 10, 1910, File 164.21/9, RG 59/NA. Secretary of State Philander C. Knox to American Diplomats and Consuls, March 24, 1910, File 164.21, RG 59/NA. The pressure for new instructions came in part from Canadian consuls, who had been seeking clarification of the 1906 circular for some time. See Theodosius Botkin, consul at Campbellton, New Brunswick, to Assistant Secretary of State, March 10, 1910, file 164.21/6, RG 59/NA.

23 W. W. Rockhill to Secretary of State, April 2, 1910; Osborne to Wilson, April 23, 1910, File 164.21 In 8/5, RG 59/NA. John Snodgrass to Secretary of State, October 5, 1910, File 164.21 In 8/12, RG 59/NA.

24 U. S., Senate, Reorganization of the Consular and Diplomatic Service, Report 1101, 56th Congress, 1st Session, 1900, pp. 9, 13–14, 17; U.S., House, Hearings on the Legislative, Executive, and Judicial Appropriations Bill for 1906, December 2, 1904, pp. 201ff. Another manifestation of the developing institutionalized relationship between the federal government and this segment of the nation's business community was the organization in 1912, by the government, of the U.S. Chamber of Commerce. See Werking, Richard Hume, “Bureaucrats, Businessmen, and Foreign Trade: The Origins of the U.S. Chamber of Commerce,” Business History Review, 52 (Autumn 1978), 321–341.CrossRefGoogle Scholar

25 Class to Bureau of Trade Relations, February 4, 1910, file 12701; same to same, February 25, April 5, 1912, lile 21204, RC 59/NA.

26 P. S. Posk to E. A. Bancroft, April 5, 1910; C. S. Funk to C. H. McCormick, April 22, 1910. IHA. F. 1395.

27 E. A. Bancroft to C. H. McCormick, April 26, 1910. IHA: F: 1395. John Greaves was an Englishman who established a trading house in Russia in the 1870s. In 1883 he established a small implement factory at Berdiansk; in 1899 he incorporated his firm under Belgian law, probably because of the laxity of Belgian corporate law and the tax benefits he would enjoy in Russia. By 1912, Greaves operated one of Russia's largest agricultural machinery factories. Dennis, American Agricultural Implements, p. 69. Fabrichnozavodskaia predpriiatiia rossiiskoi imperii (St. Petersburg, 1914), 869B.

28 Wilson to Osborne, May 2, 1910, File 164.21 In 8/5, RG 59/NA.

29 Farm Implement News, June 30, 1910. Report on Interviews with Russian Ministers, April, 1910. IHA: F: 1395. A. Legge to C. S. Funk, June 27, 1910. IHA: F: 1354.

30 C. H. McCormick to Secretary of State, January 13, 1912, file 661.113 AI/2, RG 59/NA.

31 MacMurray to Anderson, January 27, 1912, file 661.113 AI/2, RG 59/NA.

32 Ibid.

33 Knox to McCormick, January 31, 1912; same to Guild, January 31, 1912, file 661.113 AI/2, RG 59/NA.

34 Guild to Secretary of State, February 19, 1912, File 661.113 Al/3, RG 59/NA.

35 C. H. Haney to T. A. Kosters, October 21, 1911. IHA: F: 1313.

36 C. Borg to B. A. Kennedy, March 1/14, 1912, IHA: F: 1309. For text of law, see Sobranie uzakonenii i rasporyozhenii pravitel'stva 75 (May 4), 1912, #700; 126 (July 3), 1912, #1107. C. H. Haney to R. C. Haskins, December 7, 1912. IHA: F: 1310.

37 The Russian government did run a large number of retail implement stores in Siberia through which International Harvester sold a large number of implements. The government did use this fact to pressure the company to hasten production of binders at its Russian factory, but this pressure was not decisive in the decision to build the factory. See Carstensen, “American Multinational Enterprise.”

38 There is now an enormous literature on multinational enterprise. There is a clear consensus that manufacturing, mass consumption, market-oriented investments were undertaken to protect established markets. See Kumar, Transnational Enterprise.