Domingo offered a similar problem, having a debt incurred by revolutionary governments, beyond its power to pay, and San Domingo. being threatened with forcible intervention by European states. President Roosevelt, in 1904, declared that in case of wrongdoing or impotency requiring intervention in the western hemisphere the United States might be forced “to the exercise of an international police power.” In 1905 San Domingo and the United States signed a protocol under which the latter was empowered to take possession of the custom-house, conduct the finances and settle the domestic and foreign debts of San Domingo. In spite of the refusal of the Senate to assent to this protocol, President Roosevelt put the arrangement unofficially into effect, until, in 1907, the Senate consented to a treaty authorizing it with some modifications.
389. In the Far East the Boxer insurrection in China had been followed by the combined military expedition of the powers Policy in the Far East; the Portsmouth Treaty. to the relief of Peking (in which the United States shared), and the exaction of a huge indemnity, of which the United States relinquished nearly half of its share, as in excess of the actual losses. The United States protested against Russian demands upon China, and actively participated in the negotiations which resulted in Russia's agreement to evacuate Manchuria. The delays of that power and her policy toward China having led Japan to declare war, Secretary Hay's diplomacy was influential in limiting the zone of hostilities; and the good offices of President Roosevelt brought about the conference between the two powers at Portsmouth, New Hampshire, which terminated hostilities in 1905. In this, and in his efforts to promote peace by extending the power of the various international peace congresses and by making the Hague tribunal an effective instrument for settling disputes, Roosevelt won the approval of Europe as well as of America. The dispute over the boundary between Alaska and Canada was narrowed by diplomatic discussion, and the remaining questions, involving the control of important ports at the head of the great inlets which offered access to the goldfields, were settled by arbitration in 1903 favourably to the American contentions.
390. The Isthmian Canal also received a settlement in this administration by a process which was thoroughly characteristic of the resolution of President Roosevelt. The Clayton-Bulwer treaty was superseded by the Hay-Pauncefote treaty of 1901, by which Great Britain withdrew her objections to a canal constructed by the United States, and under the sole guarantee of neutralization by the latter power. The treaty also omitted a clause previously insisted on, forbidding the fortification of the canal. Having thus cleared the way, the United States next debated the advantages of the Nicaragua and the Panama routes. Influenced by the cost of acquiring the rights and property of the French company, an American The Panama Canal. commission reported in 1901 in favour of the Nicaraguan route; but upon receiving information that a smaller sum would be accepted, the Spooner Law was enacted (June 28, 1902) authorizing the president to purchase the rights and property of the Panama Company for $40,000,000, to acquire upon reasonable terms the title and jurisdiction to a canal strip at least 6 m. wide from Colombia, and through the Isthmian Canal Commission to construct the canal. But if the president was unable to secure a valid title from the French company and the control from Colombia within “a reasonable time and upon reasonable terms” the Nicaraguan route was to be made the line of the canal. With this means of pressure the president acquired the French rights; but Colombia declined to ratify the treaty negotiated for the purpose of giving the United States the specified control, on the terms offered. In this emergency an insurrection broke out in Panama on the 3rd of November 1903. The naval force of the United States, acting under the theory that it was obliged to keep open the transit across the isthmus by its treaty obligations, excluded armed forces from the canal strip, and the Republic of Panama, having declared its independence of Colombia, was promptly recognized on the 6th of November. Twelve days later a treaty was negotiated with this republic, by which the United States paid Panama $10,000,000, together with an annuity of $250,000 to begin ten years later, and guaranteed the independence of the republic, receiving in exchange the substantial sovereignty and ownership of a ten-mile strip for the canal. This treaty was ratified by the Senate on the 23rd of February 1904, and excavation was begun in 1907. (See Panama Canal.)
391. In the Philippines early in 1901 municipal and provincial governments were provided for, and the president The Philippines. had been for a brief time granted full power to govern the archipelago. He appointed judge Taft civil governor, and limited the power of the military governor to regions where insurrection continued. On the 1st of July 1902 Congressional authority was substituted for that of the president, but Taft remained governor. The provisions of the Constitution guaranteeing life, liberty and property were in general extended specifically to the dependency, and a legislative assembly was promised, the lower house elective, and the upper house to consist of the Philippine Commission. By negotiations with Rome Governor Taft secured for the Philippines the “friars' lands” which had been a source of friction. On the 16th of October 1907 the first Philippine assembly was convened in the presence of Taft, then secretary of war.
392. The tariff question complicated American relations with both the Philippines and Cuba. Beet sugar and tobacco interests feared the competition of these products, and opposed freedom of trade between the United States and the new territories. The Philippine tariff of 1902 made a reduction of only 25% from the Dingley tariff in the case of the products of those islands, instead of the 75% urged by Taft; but the duties were to go to the Philippines. In the case of Cuba a more heated controversy arose over the tariff—Roosevelt strongly urged a substantial reduction in justice to Cuba at several regular and special sessions of Congress; but not until the close of 1903 was a treaty in operation which, under the principle of reciprocity, admitted some products of the United States to Cuba at reduced rates, and allowed Cuban products a reduction of 20% from the Dingley tariff, stipulating at the same time that so long as this arrangement continued no sugar should be admitted at reduced rates from any other country. This sacrifice of the means of reciprocity with sugar countries for the advantage of the beet sugar raisers of the West was quickly followed by the acquisition of preponderant interest in the beet sugar refineries by the Sugar Trust, which was thus able to control the domestic market; but for the time being it was evident that the forces friendly to the protective tariff had increased their following in important agricultural regions.
393. The dominant historical tendencies of the beginning of the 20th century in the United States, however, were characterized by huge combinations of capital and labour, the rapid passing of natural resources into private possession, and the exploitation of these resources on the principle of individualism by aggregations of capital which prevented effective competition by ordinary individuals. Pioneer conceptions of individual industrial achievement free from governmental restraint were adopted by huge monopolies, and the result was a demand for social control of these dangerous forces.
394. After the Sherman Anti-Trust Act of 1890 the combinations found in the favourable laws of states like New Jersey opportunity to incorporate under the device of the “holding company,” which was supposed to be within the law. A “promotion mania” set in in 1901. The steel industry, after a threatened war between the Standard Oil and Carnegie groups, was united by Pierpont Morgan into the United States Steel Corporation with stocks and bonds aggregating $1,400,000,000. Combinations of Capital. This was only one of the many combinations embracing public utilities of all kinds. Where open consolidation was not effected, secret agreements, as in the case of the meat packers, effectively regulated the market. In the field of railway transportation, Harriman used the bonds of the
