"La Enojosa CuestiÃ³n de Emery": The Emery Claim ...

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The Americas, Volume 65, Number 3, January 2009, pp. 375-409 (Article)

3XEOLVKHGE\&DPEULGJH8QLYHUVLW\3UHVV DOI: 10.1353/tam.0.0075

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The Americas 65:3 January 2009, 375-409 Copyright by the Academy of American Franciscan History

“LA ENOJOSA CUESTIÓN DE EMERY”: THE EMERY CLAIM IN NICARAGUA AND AMERICAN FOREIGN POLICY, C. 1880-1910

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his article will argue that a seemingly trivial dispute between the Nicaraguan government and an American lumber company operating on Nicaragua’s Mosquito Coast escalated to become a major source of tension between the U.S. State Department and Nicaragua, as well as a catalyst that drew U.S. banks into Nicaragua. Despite its significance, the convoluted story of this dispute has attracted little scholarly attention. The importance of the Emery claim was widely acknowledged at the time, however. Stories about it appeared in contemporary newspapers and magazines, and it became a topic worthy of discussion by a U.S. Senate hearing. The claim was also connected to José Santos Zelaya’s resignation as president of Nicaragua in the autumn of 1909, a gesture that came shortly after he had agreed to settle the Emery claim. The following pages describe the various events that made up the Emery claim, from the first disputes involving Emery and the Mosquito Coast’s mahogany in the 1890s, to the payment of a significant sum of money in 1917 to a New York bank (Brown Brothers), perhaps the final chapter in this convoluted narrative. In tracing the story, we identify competing interpretations of significant events—the reincorporation of the Mosquito coast, the state of the Emery concession, the unruliness of Zelaya, the disposition of the Emery debt, the control of Nicaraguan finances by U.S. bankers, and the debate in America over the purpose of U.S. intervention in Nicaraguan affairs—to demonstrate how struggles over meaning informed political debates and decisions. The controversy surrounding the Emery dispute reverberated through various international networks: commercial, journalistic, financial, diplomatic, military and personal. Business entrepreneurs, state actors, reporters, elites, and even bit players in the Emery case all tended to characterize Zelaya as a threat to the region and consequently endorsed the need for a strong American hand over Nicaraguan affairs. Such

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perceptions encouraged Americans to visualize Latino peoples and spaces in ways that legitimated American imperialism. The Emery claim’s resolution was difficult; indeed, such was its complexity that the claim continued to affect events even after the death of Emery and even after the issues in the dispute had been resolved. By then the case had broadened to include such things as regional and national sovereignty, geo-politics, international finance and fiscal policy, and much else besides. Our aim here is to delve into this convoluted story, interrogating the language and metaphors used by the chief actors, to see what readings of the dispute are possible. We conclude that interpretations favoring the U.S. national project have come to dominate even professional knowledge and historiography in North America, silencing alternative understandings of the Emery Claim and the larger issue of U.S.-Nicaraguan political relations between 1880 and 1920. But the story began with a dispute over the right to log mahogany on the Mosquito Coast. MAHOGANY LOGGING ON THE MOSQUITO COAST Mahogany is to the American, what the teak wood is to the Chinese. Everybody who can have it wants it. Parlor cars are finished in it. Private houses are paneled and wainscoted with it. Hotels, offices, drug stores and bars are finished in it. All furniture dealers carry heavy lines of goods made from it. Yachts are fitted with it in their cabins—it is everywhere, this wood of luxury—until the American public has what would seem to be a surfeit of it.1

George D. Emery, founder of the company that bore his name, spent his working life engaged in the lumber industry. This began in 1849 when the fifteen year-old Emery found work as a tally boy in an upstate New York lumberyard. By the 1870s, he had his own saw mill in Indianapolis specializing in black walnut. Although he achieved a degree of prominence—the American Lumberman described Emery as “the largest producer in the country”—the exhaustion of readily available black walnut encouraged him to seek other sources of timber. Emery subsequently became interested in the tropical woods of Central and South America. In 1882, he established a manufacturing base in Chelsea, Massachusetts and began to purchase mahogany, cedar, and ebony logs from Honduras, Nicaragua, and Colombia. 1 “Boston’s Mahogany Kindlings,” Boston Daily Globe, 4 June 1899, p. 25. Note the similar comments about mahogany by Aldous Huxley, in Beyond the Mexique Bay (New York: Harper and Brothers, 1934), pp. 28-29.

MICHAEL GISMONDI AND JEREMY MOUAT

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“Labourers in one of Geo. D. Emery’s Mahogany Camps” An illustration from a book of photographs, Views from the Mosquito Reservation, Nicaragua C.A. (Dresden, Germany: Wilhelm Hoffman, 1893), showing a representative workforce.

Emery’s company brought the logs to Chelsea, where they were milled into veneers, decorative wood that would be used to line the passenger cars of the expanding American railway system. Emery encountered some financial difficulties getting his Chelsea operations up and running, but by the mid 1880s his company, along with a Canadian firm, was logging in the forests of the Mosquito Reserve in northeastern Nicaragua along Rio Grande.2 2 Detail on Emery’s career is from “A Perfect House,” Indianapolis News, 11 November 1878, p. 4; “George D. Emery,” American Lumbermen: The Personal History and Public and Business Achievements of One Hundred Eminent Lumbermen of the United States (Chicago: The American Lumberman, 1905), Vol. 1, pp. 19-22; “Recent Deaths [obituary of George D. Emery],” Boston Evening Transcript, 9 January 1909, p. 4; and “Developed Mahogany Trade [obituary of Herbert C. Emery, George D. Emery’s son],” Boston Evening Transcript, 14 April 1909, p. 4. On Emery’s initial financial difficulties in Chelsea, see “Business Embarrassments,” New York Times, 20 December 1883, p. 1, as well as the various entries on Emery in the R. G. Dun Collection, in MA, Vol. 86, p. 346, at the Baker Library, Historical Collections Department, Harvard Business School. James Parsons describes the Emery operations as a combination of two earlier concessions in the Mosquito territory, in “The Miskito Pine Savanna of Nicaragua and Honduras,” Annals of the Association of American Geographers 45:1 (March 1955), p. 55.

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Emery brought skilled workers from the United States to the Mosquito Coast as foremen, mechanics, carpenters, machine operators, and muleskinners. Most were white, although some were Afro-Americans from the southern states. The hard work of cutting, hauling, and booming logs fell to coastal Indians and Creoles as well as migrant Caribbean Creoles, many from the Bahamian island of Inagua, a fuel stop for Emery’s Boston bound ships. The logging cycle required men to live inland at camps far from their families for four to six months. Contracts specified that Emery would return foreign workers to their homes, although many West Indian Creoles would remain on the Mosquito Coast. Nicaragua’s tropical forests include both wet and dry regions; mahogany typically grows in areas of high rainfall, usually on inland hillsides. On average only one merchantable mahogany tree is found per acre of forest and thus, as one expert pointed out, “Mahogany logging is strictly a single tree operation.” To some extent, the nature of the resource dictated the way in which work could be carried out most effectively: The specialized nature of mahogany logging is a result of the scattered occurrence of the tree in mixed tropical forest, primitive isolated areas in which this forest occurs, wide seasonal variation in weather, and the large capital outlay required to underwrite a successful logging operation.3

Logging mahogany in the late 1800s was a complex process. The first step involved mahogany hunters, who located the trees and then cut trails to allow for their removal. Since the roots of the trees often extended in buttress-like fashion from ten to fifteen feet aboveground, the men felling the trees had to work on scaffolding. Religious beliefs, especially the “widespread belief of the native laborers in the importance of the lunar cycle,” often determined the cycle of work. Once the trees were cut down, workers would saw them into set lengths—each tree producing two to three saw logs—which were then hauled by oxen to the nearest stream bed. With the onset of the rainy season, the logs could be floated downstream to the major river arteries, where they were lashed into rafts and transported to tidewater. At the coast the logs were grouped into large booms; then tugboats took the booms back upstream, to prevent insect damage in the brackish waters of the delta and the lagoon. The next step was to load the logs onto the ship, which would take them to the Emery sawmill in Massachusetts, “the largest mahogany importing house in the world.” In 1899, a Boston Daily Globe reporter observed a steady stream 3 F. Bruce Lamb, Mahogany of Tropical America: Its Ecology and Management (Ann Arbor: University of Michigan Press, 1966), p. 35; the quotation in the text is from Lamb’s article, “Status of Forestry in Tropical America,” Journal of Forestry 46:10 (October 1948), p. 722.


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“Dumping Ground in one of Geo. D. Emery’s Mahogany Camps Wa Wa River” Another photograph from Views from the Mosquito Reservation, Nicaragua C.A. (Dresden, Germany: Wilhelm Hoffman, 1893), showing the rudimentary way in which mahogany logs were transported. During floods, they would be floated down to the coast although half of the logs could be lost in transit.

of mahogany, noting that “Today the world’s markets are supplied through the agency of steam transportation from the bases where the concessionairs have the cutting and handling of the great trees down to a science.”4 In fact, the long trip from forest to mill was not particularly efficient: only about half of the cut mahogany completed the journey.5 Northeastern Nicaragua’s ecosystem was not the only factor dictating the rhythms of work and determining the Emery company’s chances of success. The region’s political status changed considerably during the closing decades of the nineteenth century, changes that also had a profound impact on the company’s operations, as well as its relationship with the Nicaraguan government. 4 “Boston’s Mahogany Kindlings,” Boston Daily Globe, 4 June 1899, p. 25. This passage is part of an extensive description of Emery’s overall operations; the article’s subtitle notes that “Chelsea Concern is the Largest Importer of Mahogany in the World.” 5 Details in this paragraph are taken from the description of logging operations in Lamb, Mahogany of Tropical America, pp. 35-40.

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From the early 1600s, the Mosquito Coast had formed part of a larger region—the Atlantic coasts of Nicaragua, Honduras, Costa Rica, and Panama—influenced by British commercial and political interests. Britain claimed indirect or informal authority over the English traders and indigenous peoples of the coast, although nominal control over indigenous peoples and resources remained with the Mosquito Kings. British control took the form of a colonial superintendency between 1749 and1787, and later a protectorate from 1844 to1860, although the dynamic was essentially the same, a “Miskito-English alliance on the coast pitted against Spanish colonial settlements to the west.”6 As geographer Karl Offen explains: “Nicaragua had no meaningful relationship with the Mosquitia before Independence in 1838. The region was principally controlled by Miskitu Indians and British officials and, after emancipation in 1842, Afro-Caribbean Creoles.” In 1860, Britain signed the Treaty of Managua with Nicaragua, establishing the Mosquito Reserve as an autonomous area for the Mosquito people. While the Treaty gestured to Britain’s gradual withdrawal from the region, it left unresolved the issue of Nicaraguan sovereignty over lands outside the Reserve as well as the limits of Mosquito sovereignty. Nevertheless, “the veneer of political stability [within the Mosquito Reserve]” became “a necessary condition attracting North American capital to the Reserve.”7 Bluefields, already the Atlantic Coast’s principal port, emerged as the political capital of the region, and its economy and politics became heavily influenced by Creoles and American merchants.8 6 Philip A. Dennis and Michael D. Olien, “Kinship among the Miskito,” American Ethnologist 11:4 (November 1984), p. 719. See Germán Romero Vargas, Historia de la Costa Atlántica (Managua: CIDCA-UCA, 1996) and G. Romero Vargas, Las Sociedades del Atlántico de Nicaragua en los Siglos XVII y XVIII (Managua: Fondo de Promoción Cultural—BANIC, 1995). For discussion of the split in support for Zelaya by the peoples of the Mosquito Coast, see Karl Offen, “Creating Mosquitia: Mapping Amerindian spatial practices in eastern Central America, 1629-1779,” Journal of Historical Geography 33:2 (April 2007), pp. 254-282, and K. H. Offen, “The Sambo and Tawira Miskitu: the colonial origins and geography of Mosquito differentiation in Eastern Nicaragua and Honduras,” Ethnohistory 49:2 (Spring 2002), pp. 319-372. 7 Karl Offen, “The Geographical Imagination, Resource Economies, and Nicaraguan Incorporation of the Mosquitia, 1838-1909,” in Christian Brannstrom, ed., Territories, Commodities and Knowledges: Latin American Environmental History in the Nineteenth and Twentieth Centuries (London: Institute of Latin American Studies, 2004), p. 52. 8 See Dennis and Olien, “Kinship among the Miskito,” pp. 718-737; Flor de Oro Solórzano, “Reincorporación y Saqueo de la Mosquitia,” América Indígena 1-2 (1993), pp. 61-80; James Parsons, “English Speaking Settlement of the Western Caribbean,” Yearbook of the Association of Pacific Coast Geographers 16 (1954), pp. 3-16; Ricardo Beltrán Rózpide, “La Mosquitia: Algunas notas documentadas para la historia territorial de esta parte de Centroamérica,” Boletín de la Real Sociedad Geografíca (Madrid), 52 (1910), pp. 438-460; Mary W. Helms, Asang: Adaptations to Culture Contact in a Miskito Community (Gainesville: University of Florida Press, 1971); and Claudia Garcia, The Making of the Miskitu People of Nicaragua: The Social Construction of Ethnic Identity (Uppsala: Acta Universistatis Upsaliensis, 1996).


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American capital had a profound impact on Nicaragua’s Mosquito Coast, realigning existing social groups, importing circum-Caribbean labor, and introducing American merchants, commodities, machinery, technology, and contraband to the region. These new socioeconomic, political, and transportation relations enabled the smooth flow of goods, labour, and mahogany to and from Emery’s inland camps and offices in Nicaragua, to the plant in Boston which shipped to the world market. As well, information about Emery’s logging operations reached both Managua and Washington. This was the context in which Nicaraguan President Zelaya and the Emery firm began to manoeuvre for advantage during the late 1890s. THE COAST AND THE NATION José Santos Zelaya had become president of Nicaragua in 1893. He was determined to extend his government’s authority over the Mosquito Coast. In his view, the area was a region that the British had seized from the Nicaraguan nation at the time of the collapse of the Central American Federation. This established a prior claim and justified the Coast’s return to its rightful owners. It also assumed that the nation possessed a natural unity and needed to become whole again. Zelaya’s language drew on social prejudices and cultural clichés that depicted the Indians as inauthentic residents and the Creoles as pirates and former slaves; both groups became seen as corrupt outsiders who had assisted the English on the Coast and who now should leave the region. In Zelaya’s view, Pacific Nicaraguans would bring civilization to the Coast and its peoples, the latter having failed to utilize its vast resources. In addition, Zelaya depicted the landscape as a wilderness or frontier that required the progressive role of the foreign investor who, subject to government control, would assist Nicaraguans in overcoming the obstacles of nature, unleashing the region’s wealth, and turning its natural resources into commodities. As a Liberal writer editorialized in El Diario Nicaraguense in late 1895: (We need to) attract foreign capital and industry to this country (suelo casi virgen) bringing with them their practical knowledge, energy, and spirit of enterprise and industriousness which is an indispensable factor in the prosperity of nations.9

The role of the foreign concession was key to Zelaya’s plans, reflecting his longstanding belief that North American attitudes towards development 9 “Nicaragua—Su Pasado, Su Presente, Su Porvenir,” El Diario Nicaraguense (Granada), 6 November 1895. Geographer Derek Gregory argues that “space is an effect of practices of representation, valorization, and articulation” in his book, The Colonial Present: Afghanistan, Palestine, and Iraq (Malden, MA: Blackwell Pub., 2004), p. 19.

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would hasten Nicaragua’s modernity. A decade later, Interior Minister Don Feliz Romero described the locomotive’s whistle along the 40-mile railroad at Monkey Point as “a hymn of glory with which a virgin nature greeted this triumph of progress and civilization.”10 Such tropes of virgin lands and progressive technology legitimated opening the region to both foreign merchants and mestizo colonizers. A growing number of national and international geophysical surveys, maps, ethnographies, field reports, and government inquiries constructed a new landscape of the Mosquito Coast. The American public and that country’s politicians began to encounter this “dreamwork of imperialism” in a wide range of newspaper and magazine pieces by mining engineers, naturalists, and adventurers, or in the photographic records of industrialists and missionaries who visited the Coast.11 “Objective images” and “disinterested scientific facts” began to appear as more authentic depictions of the Coast and its peoples, displacing indigenous and local understandings of ecology and economy. The latter were eclipsed by imperial understandings of timber stands, ore deposits, obstacles to river navigation, problems of race and labor, and so on—a topography of exploitation.12 Americans had used similar racial, political, and spatial imaginaries to justify internal expansion across the U.S. West. As Nathan Citino argued recently, once the U.S. consolidated its own western frontier, it redeployed this same imaginary of the ‘frontier’ to justify military and diplomatic support for its economic expansion around the globe. Thomas Schoonover, in Uncle Sam’s War of 1898, argues that the U.S. sought to control access to Asia and the lucrative China market—against rival European nations—via the Caribbean and Central America. And Richard Tucker outlines how 10 Sr. Ministro de Hacienda Don Feliz Romero, Informe de la Visita oficial que hizo al Departamento de Zelaya (Managua: Tipografica Internacional, 1906). 11 For representative examples, see R. Keeley, “Nicaragua and the Mosquito Coast,” Popular Science Monthly 5:6 (1894) or the special issue on Nicaragua of the Pan-American Magazine 12:2 (1911). On landscape as a medium of imperialism, see W. J. Thomas Mitchell, ed., Landscape and Power (Chicago: University of Chicago Press, 1994). On topographical knowledge, see Patricia Hayes, “Camera Africa: Indirect Rule and Landscape Photographs of Kaoko, 1943,” in Wolfram Hartmann, Jeremy Silvester, and Patricia Hayes, eds., The Colonising Camera: Photographs in the Making of Namibian History (Athens, OH: Ohio University Press, 1998). Bruce Braun explains how in the Canadian context, government surveys of forests acted as technologies of displacement, “constructing spaces of visibility (and spaces of invisibility) that were at once both partial and of immense social, ecological, and political consequence.” (Braun, The Intemperate Rainforest: Nature, Culture, and Power on Canada’s West Coast (Minneapolis: University of Minnesota Press, 2002), p. 47). 12 Geographer Karl Offen makes a similar argument in his paper, “The Mythical Landscape: Indians, Nature, and Geography in the Historiography of Eastern Nicaragua,” presented at the Latin American Studies Association, Chicago, Illinois, September 24-26, 1998.


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American interests, particularly in tropical resources, grew in tandem with the country’s increasing imperial power and the rising demand for rubber, coffee, bananas, and the like. Emery began his mahogany logging on the Mosquito Coast just as U.S. political ambitions to control global trade and the route across the isthmus assumed far greater importance in American foreign policy.13 Central America had long been of commercial interest to American capitalists. After the U.S. Civil War, southern elites began to develop trade along the Mississippi river and via the port of New Orleans to Central America and the Caribbean. Acting as a kind of counterweight to trade efforts by elites in the industrial northeast, New Orleans merchants played an understudied role along the Mosquito Coast.14 Despite rivalries, American capitalists shared a belief that U.S. expansionism would “meet moral obligations in guiding inferior and inefficient inhabitants of the Caribbean area” and that “colonization and filibustering schemes to control the Caribbean or isthmian territory” would “relieve internal U.S. disorder.”15 Increasingly U.S. business and commercial expansion into the region was depicted as a “civilizing mission” which would enable Central American and Caribbean nations to escape from chronic mismanagement. Ironically, both Zelaya and U.S. expansionists relied on similar cultural tropes—of unstable frontiers, unruly peoples, untapped nature, and a unique civilizing role—to legitimate their actions on the Mosquito Coast.16 13 Nathan J. Citino, “The Global Frontier: Comparative History and the Frontier-Borderlands Approach,” in Michael J. Hogan and Thomas G. Paterson, eds., Explaining the History of American Foreign Relations (Cambridge: Cambridge University Press, 2004, 2nd ed.), pp. 194-211 (cf. Paul Sabin, “Home and Abroad: The Two ‘Wests’ of Twentieth-Century United States History,” Pacific Historical Review 66:3 (August 1997), pp. 305-335); Thomas Schoonover, Uncle Sam’s War of 1898 and the Origins of Globalization (Lexington: University of Kentucky Press, 2003); Richard P. Tucker, Insatiable Appetite: The United States and the Ecological Degradation of the Tropical World (Berkeley: University of California Press, 2000). 14 Tennant S. McWilliams, “The Lure of Empire: Southern Interest in the Caribbean, 1877-1990,” Mississippi Quarterly 29 (Winter 1975/76), pp. 43-63. See also J. Valerie Fifer, United States Perceptions of Latin America 1850-1930: A ‘New West’ South of Capricorn? (Manchester: Manchester University Press, 1991); Tennant S. McWilliams, The New South Faces the World: Foreign Affairs and the Southern Sense of Self, 1877-1950 (Baton Rouge: Louisiana State University, 1988); Burton I. Kaufman, “Organization for Foreign Trade Expansion in the Mississippi Valley, 1900-1920,” Business History Review 46:4 (Winter 1972), pp. 444-465; James P. Baughman, “Gateway to the Americas,” in Hodding Carter et al., eds., The Past as Prelude: New Orleans 1718-1968 (New Orleans: Tulane University Press, 1968), pp. 258-287; and Ricardo D. Salvatore, “Early American Visions of a Hemispheric Market in South America,” in Berndt Ostendorf, ed., Transnational America: The Fading Borders in the Western Hemisphere (Heidelberg: Winter, 2002). 15 Schoonover, Uncle Sam’s War of 1898, p. 23. 16 American business people and concession hunters in Central America in the late 1800s were a mix of types, according to one diplomat, who questioned these caballeros de industria who “formulate

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“LA ENOJOSA CUESTIÓN DE EMERY” COMING TO TERMS WITH ZELAYA

Zelaya’s efforts to bring the Mosquito Coast within the orbit of the Nicaraguan state, what he called its reincorporation, reflected a broader political agenda. Like his predecessors, he sought to initiate projects, including a long hoped-for trans-isthmian canal, which would hasten Nicaragua’s economic development. To accomplish his ambitious goals, Zelaya was prepared to negotiate agreements or concessions with foreign investors that would give the latter access to the country’s resources in exchange for money and/or royalties, as well as stipulations that the concession holder would fulfill such obligations as constructing roads and railways, dredging shipping routes, and creating wharves and ports. Nicaraguans on the Pacific coast welcomed news of the reincorporation of the Mosquito Coast in 1894 and supported Zelaya’s efforts to incorporate the country’s northeastern and eastern frontiers, analogous to the broad popular support that accompanied American expansion westward in the first half of the nineteenth century. Zelaya’s actions continued the cosmopolitan state-building begun earlier in the century by Nicaraguan elites keen to emulate the United States, what another scholar has called “Americanization from within.”17 Zelaya’s cosmopolitanism, however, was Pan American and included a vision for a reunited Central American Federation or Republica Mayor. At first this appealed to local elites and even to North Americans; later, it would be seen as a threat.18 Zelaya signalled his determination to assert sovereignty over the Atlantic Coast in early 1894, when he sent troops to Bluefields.19 As a consequence, the Emery company was forced to re-negotiate the terms of logging concessions that it had negotiated earlier with the rulers of the Mosquito Reserve complaints, present claims of doubtful merit, and call upon the Legation to launch ultimatums at frequent intervals . . . seeking impossible privileges they can never utilize and piling up embarrassments for their own government as well as for the misguided government, which through illusion or devious means may have been induced to compromise national interests.” Philip M. Brown, “American Diplomacy in Central America,” Proceedings of the American Political Science Association 8 (1911), p. 156. 17 See Michel Gobat, Confronting the American Dream: Nicaragua under U.S. Imperial Rule (Durham, NC: Duke University Press, 2005). Doug Tompson provides a comparative history of Nicaraguan views of the Atlantic coast, in his paper, “Territory, Sovereignty, and National Identity: Honduras, Nicaragua, and the Incorporation of the Atlantic Coast, 1859-1894,” presented at the SECOLAS Annual Meeting, April, 2005. 18 “Zelaya: The Menace of Central America,” The American Review of Reviews 37 (1908), pp. 496497. The title is misleading since the article portrays Zelaya as a cosmopolitan leader who introduced material reforms, a “strong man” who could potentially play the role of a new Bolivar: “He stands to-day a menace and a promise to all Central America” (p. 496). 19 See “The Nicaraguan Attack on Bluefields,” The Times (London), 27 March 1894, p. 3.


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and then with Nicaraguan President Roberto Sacasa in 1892. In the summer of 1894, George Emery’s son, H. C. Emery, arrived at the company’s main office in Bluefields. Roberto Cabezas (Zelaya’s new Governor on the Mosquito Coast) informed Zelaya: “With this fellow you need to ask for a lot in order to come out with just enough and keep in mind that this house [Emery] has done every wrong thing against us that was possible in the mosquito question.” Given Emery’s large capital investment in the country, Cabezas encouraged Zelaya to press for a more favorable deal by declaring Emery’s concession unconstitutional. He recommended that Zelaya use the Managua newspapers to portray the current deal as scandalous and ruinous, adding “The policy should be to keep him in a state between threat and hope.”20 The new contract, reproduced in the 1894 Diario Oficial, gave the company the exclusive right for five years to log mahogany over nearly half the country, an area that included most of the province of Zelaya as well as the Matagalpa region. The size of the company’s concession reflected the depletion of the Mosquito Coast’s most accessible timber. Drawn further into the forest in order to continue logging mahogany, the company required an extensive network of trails, roads, and railroads to work the area effectively. An engineer’s report in 1895 described the growing scale and scope of the Emery operations, which had become the most important industry in the district.21 THE CANAL Zelaya negotiated with a number of foreign and American firms seeking access to Nicaragua’s natural resources but he was particularly interested in arranging a trans-isthmus canal concession. Both Nicaraguans and Americans believed in the need for such a canal. Since 1850, a series of Nicaraguan presidents had emphasized the geographic advantages of a canal route following the Rio San Juan, while the U.S. opposed European efforts to control rail and canal routes across Central America. For example, De Lesseps’ efforts at Darien in 1878, backed by European capital, concerned Americans. They regarded Central America as their hinterland and feared French, German, and even Japanese efforts to control the canal. De Lesseps’ bankruptcy in 1888 scuttled the Panama route, renewing hope among Nicaraguans as well as many members of the U.S. Senate for an American-funded canal. William Merry, representing the San Francisco Board of Trade and Chamber 20 Roberto Cabezas to Zelaya, 4 June 1894, File 06811, in Fondo Felipe Rodriguez Serrano, Instituto de Historia de Nicaragua. The text has been translated from the original Spanish by the authors. 21 “La Costa Atlántica por el Ingeniero don José Vitta,” printed in Revista de la Academia de Geografia e Historia de Nicaragua (Managua) 8:2 (Agosto 1946), pp. 1-46.

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of Commerce, saw the Nicaraguan canal as a “commercial necessity” for the U.S.: “The west coast of the United States needs such a convenient water way to the Atlantic, while to Nicaragua it would be a great benefit.”22 Merry negotiated a concession from Nicaraguan President Zavala Solis in 1893 and subsequently became the senior U.S. diplomat in Central America. The U.S. choice of the Panama route in 1902 shattered Zelaya’s dream of a canal.23 He then sought other sources of funding for the Nicaraguan route and began to look more closely at American concessions on the Mosquito Coast. Both tactics brought him into further conflict with U.S. government officials. RESCINDING THE EMERY CONTRACT As already noted, Zelaya had renegotiated Emery’s contract in 1894. Over the next six years, the agreement was altered a number of times, refining the obligations of both parties and extending its term to 1913. Emery had originally paid $200,000 for the concession, as well as agreeing to pay $20,000 annually and a dollar royalty on each log harvested. He also agreed to replant logged areas and build fifty miles of railroad.24 At a time when popular 22 William Merry to President Joaquin Zavala, 6 February 1882, in Zavala Solis Collection, Tulane University. A sea captain who went on to become Minister to Nicaragua, Salvador, and Costa Rica 18971907, and U.S. Minister Plenipotentiary to the region in 1908, Merry lived in Nicaragua from 1866, when he began working for the Central American Transit Company and the North American Steamship Company. In the 1880s and 90s, he was a director of the San Francisco Chamber of Commerce and represented Nicaragua in the western United States. The Pacific coast’s pioneer mercantile promoter of the Nicaragua Canal, Merry published several pamphlets on the Nicaraguan route, including The Nicaragua Canal: The Gateway between the Oceans (San Francisco: Press of Commercial Pub. Co., 1895). Cf. the entry “William L. Merry,” in the National Cyclopedia of American Biography . . . (New York: J. T. White 1904), p. 310. 23 Ironically, the Seligman Brothers Bank of New York was among those working against the Nicaraguan canal route, although the bank later worked with the Brown Brothers to redesign Nicaraguan finances (in part to recoup the Emery claim). It championed the Panama route in order to recover its substantial financial losses from the De Lesseps bankruptcy. This is clear from the firm’s internal business correspondence: “We naturally are very much interested to see the latter [Panama] Canal completed, inasmuch as it would give us back a good deal of money which we have already put in there, by making the securities we now hold valuable.” —Henry Seligman to Isaac Seligman, 9 November 1899, J. & W. Seligman Papers, Harry W. Bass Business History Collection, at the University of Oklahoma. At this point Seligmans had invested over $700,000 in the abortive Panama project; see Henry Seligman to Isaac Seligman, 24 November 1899; Logan Marshall, The Story of the Panama Canal (Philadelphia: John C. Winston Co., 1913), pp. 88-90; and David G McCullough, The Path between the Seas: The creation of the Panama Canal, 1870-1914 (New York: Simon and Schuster, 1977), p. 289. 24 The amended 1898 contract stipulated that Emery would build 50 miles of railway for his own use and that this work would meet various specifications in terms of design, rolling stock, warehouses, water towers, rail bed, rail quality, width of tracks, and so on. The railway would revert to Nicaragua at the end of the 15 year period. The line was to run from Rio Grande to Nuringues, or Laguna de Perlas River. Construction began from camp No. 9 near La Cruz and went towards the Department of Matagalpa. See the copy of 1898 contract in the Certified Copy of the Proceedings of the Court of Appeal between Public


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accounts in North America frequently invoked the stereotype of the poorlymanaged Latin American republic, the contract was striking in its thoroughness. For example, a clause required Emery to pay $500,000 should he fail to finish the railway, and the contract also included a process for dispute resolution in the case of a fundamental disagreement between the two parties.25 Zelaya invoked the latter provision in 1903, when he accused Emery of defaulting on the contract. The Nicaraguan president claimed that Emery had neglected reforestation and failed to build the railroad. For this failure, Zelaya demanded the $500,000 provided for in the contract. Emery objected and the dispute went to arbitration. Hearings were held in Bluefields, chaired by the American merchant Samuel Weil (who was appointed by Zelaya), with J. A. Belanger, a French Canadian, representing Emery. Although they found Emery guilty of various minor infractions and fined him $12,000, they upheld the validity of the company’s concession, noting that Emery had ten more years to complete the railway and that he had paid up his contract until 27 July 1906.26 Zelaya interpreted the decision to mean that the contract was valid only until July 1906. Zelaya annulled the Emery contract on 7 August 1906, seizing goods and embargoing Emery’s operations.27 He argued that the company was selling duty-free goods in the marketplace and that it had failed to complete the railway.28 Emery counterclaimed for $2,000,000 in damages.29 Reports from the American consul in Bluefields emphasized the impact of Zelaya’s embargo, which prevented Emery from logging, stopped the shipment of 6500 logs,30 and impounded various company assets, including Emery’s tugboat, the Treasury of Nicaragua and Geo. D. Emery Company, 29 May 1907, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 129. 25 “Se Aprueba un Contrato (Prorroga el contrató de Emery),” Diario Oficial, 22 March 1898. 26 These hearings, which reviewed Emery’s compliance with the contract, were held in February 1903; the decision came on 11 June 1903 (see the Certified Copy of the Proceedings of the Court of Appeal between Public Treasury of Nicaragua and Geo. D. Emery Company, 29 May 1907, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 129). 27 Zelaya to Spellman, 9 August 1906, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. 28 “El Gobierno y La Compania Emery,” Diario Oficial, 28 December 1906. 29 See Cade to State Department, 21 April 1909, Assets and Liabilities Emery Co., 1 July 1902 at time of formation (the company had gone public that year). The report valued the Chelsea property at $243,219, the Nicaraguan concession at $200,666, two Nicaraguan gold mines, La Leonesa at $107,615 and Viva Siempre at $6,452, and goodwill at $483,241. The total assets were estimated to be $1.9m, with liabilities of $478,000. 30 See Spellman to Estrada, 10 August 1906, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. Spellman listed the number of logs already cut and sitting at various camps at 6,275 logs.

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steamship Yulu, equipment, repair yards, and even the office in Bluefields.31 Emery appealed for international arbitration and turned to the U.S. State Department for help. The bitter wrangling that followed strained relations between the U.S. and Zelaya. U.S. State Department files include a lengthy series of letters between Secretary of State Elihu Root, Emery’s Washington lawyer Judge William Penfield, the U.S. Consul in Managua, Emery’s representatives, and President Zelaya. Letters debated the finer points of international law, legal hairsplitting which led to a good deal of irritation and frustration. Much of this correspondence was intended to persuade Zelaya to permit Emery to continue logging while the dispute was being resolved. In late 1906, the senior American official in Nicaragua, W. L. Merry, began to look into the matter. He summoned Sam Spellman, the man in charge of Emery’s Nicaraguan operations, to Managua. Spellman denied the charges levelled against the company and stressed the hardship caused by delays in resolving the issue. Merry found Spellman “combative, unyielding and mentally so constituted that he entirely lacks the judicial faculty. ‘The House of Emery right or wrong’ is his abiding mental position.”32 Merry felt that this was a problem: “I regret that the Emery Company insist on keeping Mr. Spellman at Managua as their Agent. With the cordial dislike entertained against him by President Zelaya, however unjustly, it will make for me increased difficulty to reach a friendly solution.”33 In a report written three weeks later, Merry told the U.S. Secretary of State that “Mr. Spellman, so much from desiring a compromise, aims at a diplomatic rupture and a heavy reclamation to be enforced by our Government. No man who wants peace will declare war and state the damages he claims.”34 For his part, Zelaya was becoming far less sympathetic to American business people with investments in Nicaragua. As noted already, the U.S. decision to build the canal through Panama instead of Nicaragua had angered him and he subsequently began to investigate the work of foreigners who 31 “Protest Filed by Nicolay Petersen on behalf of Geo. D. Emery Company, Bluefields, Nic.,” in Clancy to Secretary of State, 6 November 1906, Enclosure 7 and Enclosure 60, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. Petersen was Emery’s bookkeeper in Bluefields and a German citizen. 32 Merry to Root, 3 December 1906, in Numerical and Minor Files of the Department of State, 19061910, M862, microfilm roll 128. 33 Merry to Elihu Root, 4 November 1906, 807-16, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. 34 Merry, San Jose, to Elihu Root, 30 November 1906, marked “Confidential,” in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128.


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held concessions, especially Americans, to determine if they were honouring the terms of their contracts.35 This was the context of Emery and Spellman’s complaints, and at least some evidence suggests that their grievances were legitimate. For example, in September 1905, Zelaya sold Lomax Anderson “all the pine timber on all the territory covered by the Emery Company concession . . . for $500,000 gold.”36 The concession included a long list of duty-free imports, provoking Emery to complain of double standards, citing his own company’s much shorter list of duty-free goods and comparing his export duties on cut wood with Anderson’s duty-free status. Merry was sympathetic: “It seems to me,” he wrote, “that the granting of the subsequent Anderson concession to cut timber within the limits of the old Mosquito Reserve was a violation of the Emery exclusive concession which makes no exception as to the class of timber they are permitted to cut.”37 Nor was the Anderson concession the only one that appeared to infringe upon the Emery concession: Zelaya signed a similar contract with his crony Angel Caligaris, granting him the right to log another 40,000 hectares of pine within its boundaries.38 Spellman tried to persuade Merry that the issue was one of defending American property overseas. “The act in the annulment of the Emery concession,” he argued, and the placing of the embargo on Emery Company’s property is in its essence confiscation, by striking down the law, and the tribunal, provided for their protection. 35

See David Healy, “A Hinterland in Search of a Metropolis: The Mosquito Coast, 1894-1910,” International History Review 3:1 (1981), p. 35, and Craig L. Dozier, Nicaragua’s Mosquito Shore: The Years of British and American Presence (University, Alabama: University of Alabama Press, 1985), pp. 172-175. Rice argues that after 1903 Zelaya lost the support of other Nicaraguan elites, even Liberals, and that internal fissure among elites undermined his rule; see M. Rice, “Nicaragua and the U.S.: Policy Confrontations and Cultural Interactions, 1893-1933,” PhD thesis, University of Houston, 1993. 36 Penfield to Elihu Root, 5 December 1906, 924/49-51, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. 37 Merry to Root, 30 October 1906, emphasis in the original, 924, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. 38 Noyes, Emery Counsel, to Secretary of State Knox, Memorandum about Emery Damages, n.d.. This letter is attached to a memo from Knox to Espinosa, Minister of Nicaragua, 26 March, 1909, and is in Numerical and Minor Files of the Department of State, 1906-1910, M862, roll 130. Noyes lists the various Emery losses as in excess of one million dollars, mentioning in particular the concession to Caligaris (18 May 1905) of 40,000 hectares within the Emery concession, and the concession to Lomax Anderson (7 February 1906) for which the latter paid $500,000 to log pine within the Emery concession. See the booklet, “Exploitation of Pine Forests on the Atlantic Coast: Concession of Angel Caligaris, Republic of Nicaragua Central-America” (Managua: Tipografía Alemana de Carlos Heuberger, 1922), enclosure, US State Department 1910-1929, 817.6172/3, Frames 654-688. This booklet describes the terms of the concession and its history, including its cancellation by the Mixed Claims Commission.

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This therefore is not the case of a mere breach of executory contract, it is essentially an attack on vested rights of property. A law expressly enacted for the security of the Emery Company has been annulled. The right to the protection of the law of the land is guaranteed by the law of nations when private property is invaded.39

Spellman’s appeal to the rule of law touched a nerve. The U.S. State Department was much concerned with “order and stability” in a region where American business interests were pressuring U.S. government officials to define the term in a specific way: protecting concessions, defending contracts, maintaining currency stability, establishing international legal forums and due process, and guaranteeing the trans-national flow of resources.40 The State Department subsequently intervened to get the Emery Company’s logs released from embargo and pressed for the larger issue to be referred to arbitration.41 THE FOREST AND THE TREES Merry worked diligently to address the difficulties confronting the Emery Company. However, in November 1906, Nicaragua’s Minister of Foreign Relations wrote to Merry, raising questions about the sincerity of the company’s motives. The letter asserted that “the Mahogany which is the principal article of [Emery’s] business is almost exhausted,” and claimed that only three years’ supply of wood, or less than 100,000 logs remained, “the value of which will not suffice to compensate the construction of the 25 miles of railway which they lack.” The Nicaraguan Government saw this railway as playing a significant role in overcoming the inadequacies of Nicaragua’s internal transportation network. However, the Minister observed that the railway built by Emery was good only for timber transport, “not for the ends of commerce and transit of passengers which constitutes the purpose which my Government had in view in celebrating the contract.” The letter also 39 Spellman to Merry, 24 November 1906, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 129. 40 See Emily Rosenberg, Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy 1900-1930 (Cambridge, Mass.: Harvard University Press, 1999), and Michael Gismondi and Jeremy Mouat, “Merchants, Mining, and Concessions on Nicaragua’s Mosquito Coast: Reassessing the American Presence, 1893-1912,” Journal of Latin American Studies 34:4 (November 2002), pp. 845879. Cf. the more general argument in A. G. Hopkins, “Back to the Future: From National History to Imperial History,” Past and Present 164 (August 1999), pp. 198-243. Harry Magdoff makes a similar point in “Imperialism without Colonies,” in Roger Owen and Bob Sutcliffe, eds., Studies in the Theory of Imperialism (London: Longman, 1972), pp. 144-169. 41 Bacon to Secretary of State, 21 March 1907, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 129. Emery was allowed to export logs cut prior to 27 July 1906.


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drew Merry’s attention to Emery’s personal financial woes.42 Merry was beginning to appreciate that more was involved in protecting the Emery Company from the actions of the Nicaraguan government than he had originally believed. Merry decided to go to Bluefields and investigate matters further. He soon encountered people who corroborated the letter’s analysis of Emery’s motives. Merry spoke again with Spellman, who acknowledged that the Emery Company had been cutting mahogany for seventeen years. Spellman told him “that they had taken ‘the cream of the business’:—that timber was becoming scarce, and by reason of distance from seaboard and rivers [it was] more expensive to take out: that there was not much left and some times he thought it might be as well to get out of Nicaragua.”43 Merry added that “These are nearly his precise words, evidently spoken honestly.” Claud Hollick, who had worked for Emery for eight years, assured Merry that: . . . it is an inside fact well known that the Company has only about three years work left in Nicaragua: about 1000 logs at 2 1/2 logs per tree: that they cannot complete their contract if they would and have no intention of so doing or to build the 25 miles railway to complete the 50 miles required at the end of their contract, in default of which, the Company must pay the Government $500,000 dollars.

Hollick doubted that the company could make such a payment even if it wanted to do so. In his opinion, a counterclaim against Zelaya “for large indemnity” would pay Emery “much better than logs hard to get and 25 miles of railway to build before the logs are entirely exhausted within three years average work, the contract running about 7 1/2 years.” Two other people with whom Merry spoke confirmed this view “the hardwood timber of Nicaraguan Atlantic Coast is nearly exhausted by the 18 years constant work of the Emery Company . . . . the impression is general that 42 J. R. Sevilla, Minister Foreign Relations, Nicaragua, to W. Merry, San Jose, 24 November 1906, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. From 1904 until 1909, the financial position of Emery’s company steadily deteriorated. To avoid bankruptcy, Emery sold his own interest to his business associate in London, Samuel Segar. This process is described in the business records of the Segar-Emery Company Ltd. (1904) and its successor, S. Segar Ltd. (1908); see BT 31/10827/82130 and BT 31/18401/97480, respectively, records of the Board of Trade held at the (British) National Archives, Kew, London, as well as in a letter from Emery’s lawyer, Noyes, to Huntington Wilson, 26 April 1909, “Brief History of the Stockholdings of the Geo. D. Emery Firm,” in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130. 43 Merry, Managua, to Elihu Root, 3 December 1906, letter marked “Confidential,” in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. The following quotations in this paragraph are all drawn from Merry’s account in this letter.

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Emery has made millions of dollars by the contract while the country has profited little.” The evidence suggested that the Emery Company was trying to get out of its contract with the Nicaraguan government in order to avoid paying the half million dollar penalty for failing to build the railroad. At the very least, Zelaya’s argument that the damages to Emery and American capital were “imaginary” appeared a reasonable counterclaim to the charges levelled against him by the Emery Company and the officials of the U.S. State Department.44 However, working against Zelaya’s claim was the powerful trope of the endless bounty of the tropical forest whose exhaustion was difficult to conceive, as was the negative trope of Zelaya as a menace to commerce. EMERY’S RAILWAY The construction of a railway was a tangible and measurable project that subsequently became a critical issue in the dispute. Zelaya saw his efforts to connect the Atlantic and Pacific coasts as a way to safeguard the country against North American imperialism. However the 50 miles of railway that the Emery Company promised as a key condition of the concession proved to be as illusory as the company’s claims about the extent of the remaining mahogany on the Mosquito Coast. In late 1908, an American familiar with the region offered a scathing assessment of the company and its railway: The [Nicaraguan] Government will do nothing for Emery Co., and it has the best reasons. I wish to make it plain to you and the facts [sic]. About 20 years ago the Gov’t granted to Emery Co. the privilege of cutting the mahogany & cedar and exporting it, on Atlantic Coast. They were to plant 2 trees for every one cut. They were to pay $1 stumpage. They were to build a 50 mile R.R. from head of navigation on Rio Grande westward towards Matagalpa & turn it over to the Gov’t. This is what they (the Emery Co) did. They bribed the inspectors & paid about 1 in every 100 trees. They planted the seed of 1 to every 1,000. They built a R.R. of 24, 30 & 40 lb. iron, which runs in very direction except towards Matagalpa. It was to be “of the type of R.R. now in operation in the U.S.” They have laid about 24 miles instead of 50 & without making a roadbed or a grade, the road can’t be walked over much less a hand car run on it. . . . It was a saw log R.R to get logs out. Emery has exported over ten million dollars worth of logs from Nicaragua. At last he cut all the timber out except a small amount on the Prinzapulca river. He was trying to steal out the worthless rails and plant he had and take it to Honduras when the 44 The quotation by Zelaya to “imaginary damages” is from Documentos, “Manifesto del general J.S. Zelaya al pueblo nicaragüense,” in J. S. Zelaya, La Revolución de Nicaragua y los Estados Unidos (Madrid: Imprenta de Bernardo Rodriguez, 1910), pp. 121, 124, 129.


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Gov’t stopped him. Emery went to State Dept. . . . [and] demanded a million damages.45

For Zelaya the railway’s failure undermined his vision in seeking foreign involvement in the Nicaraguan economy. Even if mahogany resources became depleted, the legacy of the Emery concession should have been a commercial rail link that united the nation. It was not to be. In a bitter irony, the Americans who came to Nicaragua failed to provide the American development that Zelaya sought. Faced with such contradictions, the positions of both sides in the dispute hardened. Merry informed the Secretary of State of his findings, pointing out that the Emery Company could not work its concession and that the Nicaraguan Government remained “obdurate in its decisions to carry out its confiscation of the Company’s property.” Urging international arbitration as the only solution—“Unless you desire to apply military force”—Merry assured Root that “nothing will change its attitude except international arbitration or military pressure”: The latter will create loud “squealing” at first but increased respect afterwards as has been the effect of the British action at Corinto. . . . We can increase our popularity by the same “gunboat diplomacy”, but this not being in accord with our extremely patient and forbearing treatment of these Republics, only international arbitration seems open to us at present. Even this, I think, President Zelaya will oppose but we can more consistently with our previous forbearance, force it upon him. Otherwise he commands the situation, until guns compel a “square deal” from him, and that is a process which his experience, character and intention abhors as nature does a vacuum.46

With gunboat diplomacy a real possibility in January 1907, Zelaya offered to redo the Emery contract and to waive the requirement for an additional 25 miles of railroad, if the company paid taxes on the majority of goods imported for future business. Emery rejected this offer, reiterating his claim for $2,000,000 in damages.47 45 James Deitrick to Herbert Hoover, 10 December 1908, in Misrepresentations, Smear Book Series, Box 15, Richey-Hoover Files, “Statements and refutations, Mining-Nicaragua 1908-1932 and undated,” in Herbert Hoover Papers, Herbert Hoover Presidential Library, West Branch, Iowa. Emphasis in the original. 46 Merry to Root, 11 December 1906, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. 47 For the offer and its rejection, see Corea to Penfield, 29 January 1907; Emery to Penfield, 2 February 1907; Ryder, Bluefields, to Assistant Secretary of State, 27 February 1907, all in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 128. For details of Emery’s

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Zelaya suggested submitting the decision to the Central American Court of Justice, but Emery rejected this idea as well, holding out for international arbitration. In October 1908, Emery’s lawyer, having exhausted judicial and other remedies, sent a note to Secretary of State Root asking him to end the controversy. However, another year would pass before the claim would be settled. AN AMERICAN FIRM? Philander Knox succeeded Root as Secretary of State in March 1909. Within days of taking office, he ordered the American Consulate in Managua to send copies of the Emery correspondence to Washington. He interviewed former foreign service officers and was reported to be intent on pressing “the matter to an issue at once.”48 However, just as Merry’s investigation into the Emery claim had raised unexpected questions about the company’s motives, given the near exhaustion of its timber resource and the absence of a railroad, Knox too was unsettled by what his inquiries revealed. Following George Emery’s death in January 1909, it appeared that Americans no longer held a controlling interest in the company.49 Finding that a British citizen owned a controlling interest in the Emery company, Knox wondered whether the Emery case “should be supported by Department or withdrawn from consideration.” A State Department lawyer argued that the company was American-owned when the concession was annulled and when the dispute had first begun. He concluded that the State Department could “intervene on behalf of the corporation to the extent of the present American interest” in order to “not only secure the reparation for an injury suffered to American interests, but protect the Department from criticism of intervention on behalf of foreign stockholder.” But with four-fifths of the firm in British hands, this person cautioned Knox against the use of force: counter-claim, see Noyes, Emery Counsel, to Secretary of State Knox, Memorandum about Emery Damages (n.d., but likely March 1909), in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130. When he appeared before the Senate Committee on Foreign Relations in July 1914, Spellman, Emery’s manager, faced a barrage of questions as to why the Emery company claimed $2,000,000 in damages; see Hearing before the Committee on Foreign Relations, United States Senate, Sixty-third Congress Second Session, on Convention between the United States and Nicaragua (Washington: Government Printing Office, 1914), pp. 481-484. 48 “Nicaragua Agent to Settle Claim,” New York Herald, 4 May 1909. 49 “Recent Deaths [obituary of George D. Emery],” Boston Evening Transcript, 9 January 1909, p. 4. The American consul in Bluefields, Michael J. Clancy, had raised the ownership issue in late 1908. Emery’s lawyer insisted that the company remained in American hands and that the change was simply a stock shuffle forced on the company because of losses caused by the Nicaraguan situation; see Penfield to Elihu Root, 28 December 1908, “Re: Segar owner of Emery,” and the attached correspondence. Note also the comments in note 42, above.


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Technically the citizenship of the American corporation (Emery) is unaffected by foreign ownership, but the presence of the fact complicates the question to such a degree as to preclude the suggestion of force. The foreign interest, however, would not seem to preclude the Secretary from securing, either an arbitration or other adjustment. . . .50

The Emery case never went to arbitration. On 26 April 1909, the Emery Company’s Chelsea operations caught fire and the flames destroyed much of the plant.51 Meanwhile in Nicaragua, two other American concessions, for gold mining and steamship services, exploded into controversy. Under growing pressure from Knox and the State Department, Zelaya appointed a respected Nicaraguan lawyer to negotiate a settlement of the Emery claim.52 The two sides finally signed an agreement on 18 September 1909. Its terms stipulated that the concession, the plant, and the equipment would revert to Nicaragua, while Emery would receive $600,000 in compensation.53 When he was interviewed some years later by an American journalist, Zelaya explained that “The Nicaraguan Government decided to pay the American company, as it wanted to keep on friendly terms with the United States Government.”54 The first compensation payment of $50,000 came from the Nicaraguan president’s personal bank account.55 The controversy surrounding the Emery claim was far from over, however. 50 Scott, Office of Solicitor, to Knox, 13 April 1909, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130. Worried that perhaps the State Department might drop out of the picture, Emery’s new lawyer (Mr. Noyes) wrote to the Secretary of State, providing an outline of the history of the company’s ownership; see Noyes to Secretary of State, n.d., “Brief History of the Stockholdings of the Geo. D. Emery Firm,” in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130. 51 “Chelsea Loses Emery Plant,” Boston Evening Transcript, April 26, 1909, p.1. 52 See Olivares to Secretary of State, 18 April 1909, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130, and “La misión del doctor González,” El Comercio, 16 Abril 1909. Merry regarded Gonzalez as “one of the most competent and cautious counsellors at Law in Central America” and felt that his appointment meant “that the time for evasion in the Emery case has passed,” since Gonzalez could be made to see “that a settlement must be made” (Merry to Knox, 6 May 1908, in Numerical and Minor Files of the Department of State, 1906-1910, M862, microfilm roll 130). A putative settlement was negotiated several weeks later. The New York Times reported that “A protocol for submission to arbitration of the Emery claim was signed at 8:30 o’clock tonight [May 25] with representatives of the Nicaraguan Government at the home of Secretary of State Knox.”—“Nicaragua to Arbitrate,” New York Times, 26 May 1909, p. 2. The story carried the sub-title, “Knox Forces a Conclusion to the Long-Standing Emery Claim.” 53 “Emery Claim Settled,” The American (Bluefields), 3 October 1909; “Emery Claim Settled,” New York Times, 19 September 1909, pt. 3, 4; “Emery to Get More Than $600,000,” Boston Evening Transcript, 21 September 1909, part 2, p. 16. The agreement was reproduced as an appendix to the Hearing before the Committee on Foreign Relations, United States Senate, Sixty-third Congress Second Session, on Convention between the United States and Nicaragua (Washington: Government Printing Office, 1914), pp. 600-602. 54 “Zelaya Blames Dollar Diplomacy for his Troubles,” New York Times 23 Nov. 1913, II: 4: 2. 55 José Maria Castellón, La Famosa Nota Knox (Managua: Ed. Atenas, 1968), p. 8. Castellón, Zelaya’s advisor, claimed that by paying the debt out of his own pocket, Zelaya was “consumando con esa cable la ruina de su familia.”

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“LA ENOJOSA CUESTIÓN DE EMERY” FROM UNPAID CLAIM TO IMAGINARY DEBT

On 1 December 1909, the U.S. Secretary of State broke off diplomatic relations with Nicaragua, contemptuously describing Zelaya as “a blot upon the history of Nicaragua.” Zelaya responded by resigning, although his doing so did not bring stability to Nicaragua nor did it improve the country’s troubled relationship with the United States. However, it did stop any further payments toward settling the Emery claim: Zelaya’s initial payment was the only one that was made. The claim’s status was about to change dramatically. A New York banking firm acquired the unpaid debt of the Emery claim, thereby giving it a reason to become interested in the financial affairs of Nicaragua. The Emery claim would gradually become subsumed within a complex system of foreign debt, dollar diplomacy, and international treaties. This process began when Samuel Segar, the Emery Company’s British owner, decided to sell; the continuing uncertainty surrounding the company’s claim was likely a factor in his decision. Segar approached the New York banking firm of Brown Brothers and Company. The company’s lawyer later recalled that Segar “was anxious to retire from business and he offered to sell the business out to Brown Bros.” They did not care to buy it for themselves, but they interested two gentlemen in New York by the name of Williams, who were lumber merchants, and they were brought into the negotiations. The Williamses were willing to buy the lumber business as a going business, but they did not care to have anything to do with what they called the dead assets of the company, which were the claim against Nicaragua under the protocol and the real estate in Massachusetts. These had no direct relation to the business of the company, and so in order to put that deal through Brown Bros. & Co. bought the real estate in Massachusetts and the company’s claim under the Nicaragua protocol, and the Williamses bought the rest of the company.56

Having acquired the Emery claim, Brown Brothers began to investigate its status and history. The firm’s lawyer made several trips to Washington to go through the State Department’s files and in the course of this research, he learned that the U.S. government was considering a Nicaraguan loan. One purpose of the loan would be to enable Nicaragua to pay out the Emery 56 Testimony of Mallet-Prevost, lawyer for Brown Bros and Co., before the Hearing before the Committee on Foreign Relations, United States Senate, Sixty-third Congress Second Session, on Convention between the United States and Nicaragua (Washington: Government Printing Office, 1914), p. 169. The following quotation in the text is also from this source, p. 171.


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claim. Shortly afterwards, in February 1911, the company wrote to the Secretary of State, offering to assist with the Nicaraguan loan: “we are interested in the George D. Emery Co.’s claim against Nicaragua, under the protocol of September 18, 1909, and that we have, therefore, a peculiar interest in the readjustment of that country’s finances.” Rumours of Brown Brothers’ interest in Nicaragua had already reached Washington. Eight months earlier, Senator Stone publicly voiced his suspicions about the American role in Nicaragua: So far as I am concerned . . . I am inclined to believe the principal American interests concerned in this controversy relate to speculative advances made by certain Americans on a speculative basis to the revolutionary forces under General Estrada, and still more to the point, the interest of a syndicate of American financiers and bankers, organized or provisionally organized, as I am advised, with a view to exploiting and funding the public debt of Nicaragua.57

The basis for Stone’s comments is unclear although Brown Brothers, working with another banking firm, J. & W. Seligman, did ultimately assume a key role in financing the Nicaraguan debt. In June 1911, President Taft introduced a bill in the Senate that would have provided a loan to Nicaragua but the Senate refused to ratify it.58 The rebuff only encouraged Taft and Knox to change tactics. As Emily Rosenberg has shown, the two men “never considered abandoning dollar diplomacy; instead, they bypassed congressional assent.”59 Three months later, in September, Brown Brothers and J. & W. Seligman & Company signed an agreement, the Treasury Bills Agreement, with the Nicaraguan government, the effect of which was to hand over re-structuring the country’s finances to the two New York banks. The document also stipulated that the Nicaraguan gov57 “Senatorial Inquiry Asked on Nicaragua,” New York Times, 26 June 1910, p. 3; note also Stone’s speech in the Senate, Congressional Record: Containing the Proceedings and Debates of the Sixty-First Congress, Second Session 45 (25 June 1910), pp. 9058-9059. When US Marine Smedley Butler—stationed in Nicaragua—read Stone’s statement in the press, he told his father that “Senator Stone . . . puts the case of these American citizens (?) very well but much too mildly. . . . The whole attitude of our State Department is beyond me, but of course I am simply a hired policeman and am not supposed to understand affairs of state. I can see, with my untrained eyes, however, that were we not living in this town the revolution would be over in a few minutes.” Smedley Butler to Thomas S. Butler, Bluefields, 14 July 1910, reprinted in Anne Cipriano Venzon, ed., General Smedley Darlington Butler: The Letters of a Leatherneck, 1898-1931 (New York: Praeger, 1992), pp. 87-88. 58 See “Dollar Diplomacy Put up to Senate,” New York Times, 7 June 1911, p. 3; “Taft Urges Treaties,” New York Times, 30 June 1911, p. 5; “Taft Again Urges Treaties,” New York Times, 18 July 1911, p. 2. 59 Rosenberg, Financial Missionaries to the World, p. 70.

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ernment could not alter the terms of the agreement. In the event of any dispute, however, there was provision for arbitration, although the U.S. Secretary of State would appoint the third arbitrator. The Knox-Castrillo agreement was appended to the document, suggesting the accuracy of Rosenberg’s analysis; the point of this private agreement was to bring the Knox-Castrillo agreement into effect without the need for the U.S. Senate’s approval.60 The Treasury Bills Agreement stipulated that two “money doctors,” Charles A. Conant and F. C. Harrison, would visit Nicaragua and develop an effective way “to replace a depreciated, inconvertible paper currency by a sound monetary system.”61 As a consequence of their visit, Nicaragua’s National Assembly passed an act on 12 March 1912 “with the object of bringing about stability of exchange.”62 These agreements and actions effectively pre-empted the prior claims of the Council of Foreign Bondholders, which held the bonds of the 1909 Ethelburga loan. A series of private negotiations culminated in an agreement between the Council of Foreign Bondholders and Brown Brothers and J. & W. Seligman, in which the two banks guaranteed the repayment of the interest and principal of the Ethelburga Loan. Zelaya negotiated the Ethelburga loan in 1909 to consolidate outstanding Nicaraguan debts as well as to assist in financing an alternative canal 60 The agreement opens by stating that it is between the bankers and the government of Nicaragua, and follows from the convention of 6 June 1911 between the US and Nicaragua. A copy of the agreement survives in the records of the Corporation of Foreign Bondholders, held at the Guildhall Library in London (see Folder 2, Manuscript Number Ms 34742). It is entitled Treasury Bills Agreement, and is dated 1 September 1911. It was printed by the Evening Post Job Printing Office, New York. 61 Monetary Reform for Nicaragua: Report Presenting a Plan of Monetary Reform for Nicaragua (New York: William R. Ficke, Printers, 1912?), p. 2. “Submitted to Messrs. Brown Brothers & Company and Messrs. J. & W. Seligman & Company by Messrs. F. C. Harrison and Charles A. Conant, 23 April 1912.” Copy in Folder 2, Manuscript Number Ms 34742, Guildhall Library. Conant had set up currency reform in the Philippines, the Mexican Monetary Commissions and introduced Panama currency, while Harrison had earlier worked in India, where he had been Comptroller General of Accounts. For detail on the two men and their role as financial advisors, note the references in Emily S. Rosenberg, “Foundations of United States International Financial Power: Gold Standard Diplomacy, 1900-1905,” Business History Review 59:2 (Summer 1985): pp. 169-202; Emily S. Rosenberg and Norman L. Rosenberg, “From Colonialism to Professionalism: The Public-Private Dynamic in United States Foreign Financial Advising, 1898-1929,” Journal of American History 74:1 (June 1987): pp. 59-82; Martin J. Sklar, The United States as a Developing Country: Studies in U.S. History in the Progressive Era and the 1920s (New York: Cambridge University Press, 1992), esp. the chapter, “Dollar Diplomacy according to Dollar Diplomats: American development and world development,” pp. 78-101; Carl Parrini, “Charles A. Conant, Economic Crises and Foreign Policy, 1896-1903,” in Thomas J. McCormick and Walter LaFeber, eds., Behind the Throne: Servants of Power to Imperial Presidents, 1898-1968 (Madison: University of Wisconsin Press, 1993), pp. 35-66; and Rosenberg, Financial Missionaries to the World, passim. 62 Monetary Reform for Nicaragua, pp. 2-3. The text of the 20 March 1912 law is appended to this document in both English and Spanish, pp. 71-80. Evidence that this law is a response to Harrison and Conant’s Monetary Plan can be found in a letter from Harrison and Conant to President Diaz, dated 15 February 1912, reprinted on pp. 69-70.


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route. The European money markets regarded Nicaraguan credit as excellent—for example, in its business section, the London Times described the loan as “an attractive security of a speculative character”—and the loan was well-subscribed.63 On the other hand, the U.S. government saw the loan as a threat, claiming that its successful floatation would “enable President Zelaya to buy munitions of war for the purpose of further disturbing the peace of C[entral] America.” It urged both the French and British governments to block the loan, although this request came too late to be effective. When the British Foreign Office investigated the matter, Lord Avebury “pointed out that it [the money raised from the loan] was to be applied to the conversion of the English and U.S. External Debts and construction of a r[ai]l[wa]y., leaving very little over for the [Nicaraguan] Gov’t.”64 It is worth noting that the Ethelburga loan was the last attempt by Nicaraguans to stabilize and control their country’s finances before American capital took over this task. Some have argued that the 1909 loan was the catalyst that led Knox to seek Zelaya’s overthrow in 1909 and that it also explains the former’s opposition to the lawyer Madriz (who had designed Central American peace accords and Central American Court) as Zelaya’s successor. 65 Surviving evidence demonstrates that the State Department was deeply involved in setting up the financial arrangements which displaced the Ethelburga loan, as well as revealing the considerable lengths to which State Department staff were prepared to go to erase their involvement from official loan documents (a loan they always insisted was a private bank initiative).66 Notwithstanding these efforts, the State Department did not escape criticism for its role in all of this. In the summer of 1914, the Senate Committee 63 “City Intelligence,” The Times, 26 May 1909, p. 15, col B; according to Seligman Brothers, Nicaragua had the best credit in the Americas. 64 This and the preceding quotation are from an internal Foreign Office Minute on the Ethelburga loan; see FO 371/835—Political—Central America File 286, p. 244. (References to the Ethelburga Syndicate & its Loan occur in the file on pp. 244-45, 246-251, 387-390, 391, 409-414.) The Foreign Office records are held at the (British) National Archives, Kew, London. 65 See Yann Kerevel, “Re-examining the Politics of U.S. Intervention in Early 20th Century Nicaragua: José Madriz and the Conservative Restoration,” Research Paper No. 43, Dept. of Political Science, University of New Mexico, 2006. Relying on Mexican diplomatic sources, Harim B. Gutiérrez’s Una alianza fallida: México y Nicaragua contra Estados Unidos, 1909-1910 (Mexico: Instituto Mora, 2000) describes that country’s support of Madriz, tracing the appeals of Mexican diplomats to Knox and others in the State Department. They characterized Madriz as the civilized alternative to Zelaya, but Knox opted to support the Bluefields rebels. 66 For evidence of the State Department’s role, see Albert Strauss to Fred Seligman, 9 August 1911, Book #11, p. 94; Strauss to Fred Seligman, 15 August 1911, Book #11, p. 156; Strauss to Isaac Seligman, 30 August 1911, Book #11, p. 204 (all in Albert Strauss Correspondence, J. & W. Seligman Papers, the Harry W. Bass Business History Collection, University of Oklahoma).

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on Foreign Relations held hearings into the finances of Nicaragua, after Michigan’s Senator Smith called for an inquiry into Brown Brothers and Seligman’s purchase of the Ethelburga loan. In the course of the subsequent hearings, the New York Times reported that “Senator William Alden Smith of Michigan took the Secretary [of State] to task for the interest alleged to have been displayed by the State Department in promoting the financial operations in Nicaragua of Brown Brothers & Co. and J. & W. Seligman & Co. of New York.”67 The outbreak of the World War One deflected public scrutiny in the United States from Nicaragua, although negotiations continued between the banks, the Department of State, and the government of Nicaragua. Just prior to the war, the United States and Nicaragua signed the BryanChamorro Treaty. This gave the U.S. the right to build a canal through Nicaragua, in exchange for which the Nicaraguan government would receive three million dollars. Most of the money was destined to repay earlier loans and other debts, including the Emery claim. In keeping with the claim’s troubled history, this did not happen without controversy. The treaty was not ratified until 1916, at which point discussions began in earnest between Nicaragua, the State Department, and the bankers over how the three million dollars would be distributed. Chamorro, the new president of Nicaragua, expressed the hope that he could scale down “as much as possible the debts already recognized by [his government] including [the] Emery claim.”68 The State Department dismissed this suggestion, although seven months later Chamorro again raised the possibility of renegotiating the Emery claim. The Secretary of State rejected the idea once more, pointing out that “the financial plan will fail totally if the Government of Nicaragua insists that the so-called “Emery claim” be treated as indicated.” In his lengthy telegram to the American minister in Managua, he continued: There is, properly speaking, no longer any such claim. There exists only a protocol to which the Governments of Nicaragua and the United States are the sole parties. This protocol has already been carried out in part but certain definite payments remain to be made by Nicaragua to the United States. The Depart67 The quotation is from “Bryan Hectored over His Treaties,” New York Times, 18 June 1914, p. 2; see also “Bryan and Bankers Assailed in Senate,” New York Times, 17 June 1914, p. 4. For the text of the resolution authorizing the Senate Committee on Foreign Relations to look into the finances of Nicaragua, see “Affairs in Nicaragua,” Congressional Record—Senate, Vol. 51, 16 June 1914, p. 10514 (63rd Congress, 2nd Session). 68 Telegram, Minister Jefferson, Managua, to the Secretary of State, 31 December 1916, reprinted in United States Department of State, Papers Relating to the Foreign Relations of the United States . . . 1916 (Washington, D.C.: U.S. Government Printing Office, 1917), p. 917.


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ment does not understand that Nicaragua can now desire to go behind this protocol thereby assuming that this formal and carefully considered instrument was improperly or inadvisedly entered into by the two Governments. . . . You will informally utilize the foregoing information to make clear to President Chamorro the attitude of the Department of State and you will point out to him that insistence on further concession from those interested in the Emery protocol will doubtless result in a complete failure of the financial plan and the consequent deduction of the Emery protocol payments in full with interest from the Treaty funds.69

Two months later, the Secretary of State again telegraphed the American Minister in Managua, letting him know that the bankers had presented the State Department with a blueprint for the way in which the three million dollars of the treaty fund should be distributed. He added that Brown Brothers had been asked to waive or reduce the interest now owing on the Emery claim but this they had refused to do. Sensitive to the controversy surrounding the claim, the Secretary outlined a plan whereby its payment would be spread between two sources of revenue. The bulk of the principal owing on the claim would be paid out of the treaty fund, but the remainder of the principal and the interest due would be covered by deferred Treasury bills. He pointed out that this creative accounting “would obviate criticism that interest on this claim was paid directly from Treaty funds.”70 Nicaragua’s other creditors looked on with some irritation. British diplomats kept up a running commentary, expressing frustration that the Emery claim received special treatment. Since the British had claims of their own, they had an interest in how the canal treaty funds were dispersed. But one can also detect a note of resignation in their analysis: It is useless to carry opposition to concession gained by American Bankers over Emery Claim very far. 69 Telegram from Secretary of State Lansing to Minister Jefferson, Managua, 9 August 1917, reprinted in Papers Relating to the Foreign Relations of the United States . . . 1917, p. 1135. A British diplomat watching these events in Managua wrote that “I understand from President of the Republic that New York Bankers backed by State Department refuse to submit Emery claim to Claims Commission on the ground that protected [illegible] differentiate this claim from all others. . . . President made personal appeal to Mr. Lansing without result to allow this claim to be submitted to Claims Commission or at least for interest to be waived. . .” (two page telegram, received in London, 25 September 1917; received in Washington 20 September 1917, copy in New York Consulate files, p. 235, in FO 115/2293, (UK) National Archives. 70 Telegram from Secretary of State Lansing to Minister Jefferson in Managua, 6 October 1917, reprinted in Papers Relating to the Foreign Relations of the United States . . . 1917, p. 1142. For further detail of the canal fund settlement, see Roscoe Hill, Fiscal Intervention in Nicaragua (New York: Paul Maisel, 1933), pp. 33-34, & 36, and Rosenberg, Financial Missionaries to the World, pp. 85-86.

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But in return for accommodating attitude towards above transaction we must press for (one) substantial guarantee for bonds in general and (two) good treatment for British legation claim, that is[,] minimum reduction if any.71

The fate of Nicaragua’s debt arising from the Emery claim has often been seen as a minor chapter in the dispute, but its resolution in the carefully orchestrated re-organization of the Nicaraguan debt and Nicaragua’s banking, currency, and customs systems by New York bankers underscores the linkages that crossed continents and joined regions.72 THE “MUNRO DOCTRINE” U.S. warships and land forces intervened in Nicaragua during the Estrada uprisings against Zelaya and his successor Madriz in 1909-10, and again in 1912 at the behest of then Conservative President Adolfo Diaz. The American intervention in Nicaragua and the ongoing presence of its troops there, as well as its role in “re-constructing” the country’s finances—what Roscoe Hill would call an “American experiment”—proved controversial at home.73 The role that American troops played in maintaining the Nicaraguan government was no secret. For example, when a Brown Brothers official testified before the Senate Foreign Relations Committee in July 1914, he was asked how long he thought the government could survive without the presence of American Marines. His answer was unequivocal: “Just long enough to catch the last car of the first train out of the capital.”74 In Nicaragua, the man who commanded the American naval forces there in 1910 wrote that “[T]he con71 Nicaragua telegram no. 7, received 25 September 1917, New York Consulate files, p. 236, in FO 115/2293, (UK) National Archives. Note also the comments in the Corporation of Foreign Bondholders, Thirty-eighth Annual Report, 1911, p. 13, quoted in J. Fred Rippy, “The British Bondholders and the Roosevelt Corollary of the Monroe Doctrine,” Political Science Quarterly 49:2 (June 1934), p. 205. 72 Note the analysis in Rodolfo Huete Abella, Los banqueros y la intervención en Nicaragua (Managua: Tipografía Pérez, 1931), pp. 55-63, and in Carlos Quijano, Nicaragua: ensayo sobre el imperialismo de los Estados Unidos (Managua: Editorial Vanguardia, 1987), pp. 73-74. 73 See Hill, Fiscal Intervention in Nicaragua, p. v. For examples of the way in which Nicaraguan issues were before the public during this period, see “Honduran Treaty Lost. Senate Committee Fails to Favor Dollar Diplomacy Plan,” New York Times, 9 May 1912, p. 3; “To Sift Congress Record of Sulzer,” New York Times, 24 August 1913, pp. 1-2; “Sulzer’s Guatemala Deal,” New York Times, 17 November 1913, p. 4; “Zelaya Would Aid Concession Inquiry,” New York Times, 15 November 1913, p. 13; “Zelaya Blames Dollar Diplomacy For His Troubles,” New York Times, 23 November 1913, II: 4: p. 2; “Bryan and Bankers Assailed in Senate,” New York Times, 17 June 1914, p. 4; “Bryan Hectored over His Treaties,” New York Times, 18 June 1914, p. 2; “Bryan and Bankers Face Rigid Inquiry,” New York Times, 19 June 1914, p. 14; “Presses Nicaragua Inquiry,” New York Times, 20 June 1914, p. 13; and Lincoln G. Valentine, “Meddling with Our Neighbors,” The Century 90:6 (1915), pp. 801-808. As a number of these references suggest, Nicaragua was frequently discussed by the US Senate. 74 “Nicaraguan Weakness,” New York Times, 15 July 1914, p. 3.


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cession hunter . . . sacrifices the interests of the United States or uses them in trade for his own advantage and then upon occasion howls long and loud for the protection by the United States of interests so acquired. Oftener than not he gets it.”75 Both comments indicate that well-informed contemporaries were not particularly optimistic about the American presence in Nicaragua. Journalists, academics, and others began to write about events in Nicaragua, although a number of these accounts were by people who were also actors in the events that they described. Their narratives helped to construct and reinforce interpretations that would subsequently dominate the scholarly literature, notwithstanding, or perhaps because of, their implicit partisan nature. Even in the historical literature, these narratives came to exert a powerful influence. The major interpretive slant in this work is best characterized as the “Munro doctrine,” after Dana Munro, a State Department official who subsequently became the leading American scholar of the region. Munro was at pains to insist that the American government was only interested in protecting its strategic interests in the region, not in safeguarding the commercial interests of various American businesses. We have challenged Munro’s approach elsewhere,76 and here only wish to draw attention to the significant narratives written by government officials and other Americans directly involved in the region. Consider, for example, John Parke Young’s book, Central American Currency and Finance, published by Princeton University Press in 1925. In his preface, Young acknowledged the help of a number of people, including his brother, “Dr. Arthur N. Young, Economic Advisor of the Department of State and formerly Financial Advisor to the Government of Honduras.” He also extended “Grateful acknowledgement . . . to Dr. Dana G. Munro, Assistant Chief of the Latin American Division in the Department of State, for many helpful suggestions and criticisms.” In addition Young noted that he was “especially indebted to . . . Clifford D. Ham, Collector of Customs in Nicaragua, and to Roscoe R. Hill, American High Commissioner in Nicaragua” and he singled out for special thanks “Judge Otto Schoenrich of 75 See Rear Admiral Kimball to Navy Department, Washington, “Report of Nicaraguan Expeditionary Squadron,” 25 May 1910, in US State Department Papers, microfilm roll 5, Frame 223 (6367/985). Four years later, a letter that Kimball had written to President Madriz in April 1910 made headlines when it was released to the press; see “Admiral Deplored Knox’s Orders,” New York Times, 23 January 1914, p. 7. 76 Gismondi and Mouat, “Merchants, Mining, and Concessions on Nicaragua’s Mosquito Coast”; see also the critical assessment of Munro’s work in Mark T. Berger, Under Northern Eyes: Latin American Studies and US Hegemony in the Americas 1898-1990 (Bloomington & Indianapolis: Indiana University Press, 1995), pp. 36-39, 43 & 255-256. Cf. Dana Gardner Munro, A Student in Central America, 19141916 (New Orleans: Middle American Research Institute, Tulane University, 1983).

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[the law firm] Curtis, Mallet Prevost and Colt.”77 Schoenrich had chaired the Nicaraguan Mixed Claims Commission which had spent three and a half years adjudicating claims made against the Nicaraguan government. His autobiography recorded how, during his time as head of the Mixed Claims commission, he “had talks in New York with the bankers interested in Nicaragua, Messrs. Brown Brothers, and for the first time met their distinguished counsel, Severo Mallet-Prevost, a specialist in Latin American law and particularly in Mexican affairs, with whose firm I was later to become associated.”78 (Mallet Prevost also assisted Brown Brothers and J. & W. Seligmans with their initial loan arrangements.) Roscoe Hill, another whose help Young acknowledged, went on to complete his PhD at Columbia in 1933 on “Fiscal Intervention in Nicaragua,” and later published several articles in academic journals on the topic.79 Clifford Ham and others actively involved in the enforced re-structuring of Nicaraguan finances all contributed journal articles extolling the “advances” that this re-structuring was bringing to the country. The title of a piece Ham contributed to the American Review of Reviews suggests the sunny tone taken by these authors: “Americanizing Nicaragua: How Yankee Marines, Financial Oversight and Baseball Are Stabilizing Central America.”80 The phrase, “Americanizing Nicaragua,” is freighted with several meanings, but, in the context of the Emery claim, perhaps the most significant was the way in which the dispute simply affirmed the State Department’s understanding of Latin American affairs. As Derek Gregory argued recently in The Colonial Present, it “produces the effects that it names.”81 Thus the State Department could view the circumstances surrounding the Emery claim as an example of a volatile and unpredictable Central American dictator compromising legitimate American business interests and assumes that its own role was to act an impartial arbiter in such disputes. 77 These quotations are all from John Parke Young, Central American Currency and Finance (Princeton: Princeton University Press, 1925), pp. vi-vii. 78 Otto Schoenrich, Reminiscences of an Itinerant Lawyer (Baltimore: Printed by J. H. Furst Co., 1967), p. 285. 79 See for example Roscoe R. Hill, “American Marines in Nicaragua, 1912-1925,” in A. Curtis Wilgus, ed., Hispanic American Essays: A Memorial to James Alexander Robertson (Chapel Hill: University of North Carolina Press, 1942), pp. 341-360, and Hill, “The Nicaraguan Canal Idea to 1913,” Hispanic American Historical Review 28:2 (May 1948), pp. 197-211. 80 Clifford D. Ham, “Americanizing Nicaragua: How Yankee Marines, Financial Oversight and Baseball Are Stabilizing Central America,” The American Review of Reviews 53:2 (February 1916), pp. 185-191. Cf. A. F. Lindberg, “How Nicaragua Brought Order Out of Financial Chaos,” The Annalist (New York), 15 (12 April 1920), p. 504, an account of what happened in the wake of Schoenrich’s Mixed Claims Commission (Lindberg was on the Commission of Public Credit, which resolved the various claims), and Charles A. Conant, “Our Mission in Nicaragua,” The North American Review 196 (July 1912), pp. 63-71 (a detailed justification for the overthrow of Zelaya). 81 Gregory, The Colonial Present, p. 18. Gregory is here recounting insights drawn from Edward W. Said’s Orientalism (New York: Pantheon Books, 1978).


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A series of relevant facts, or at least, alternative understandings, can be juxtaposed to the State Department’s reading of the Emery claim. Its own inquiries revealed that the Emery Company had largely exhausted the timber resource, and the company had plainly failed to fulfill its contract. It failed to carry out promised reforestation; it failed to build the railroad that it had contracted to build; it dodged payment of export duties; in fact, it was no longer even an American business. In addition, the State Department and the bankers colluded in secret to restructure Nicaraguan finances in ways that guaranteed significant profits for the bankers (and in so doing agreed to bypass public scrutiny and congressional approval), while the British privately registered their disapproval. Yet the dominant metaphors of a civilizing mission, of unruly Latin American states, of bountiful tropical resources; these were sufficiently powerful to silence alternative readings of the dispute. CONCLUSION The government believed in the good faith of América del Norte and made things easy for concessionaires, who presented themselves as the founders of companies that would give the country new elements of wealth. But the Emery case demonstrated to me the danger of entering into relationships with these elements. . . . My government had to struggle against, and later necessarily succumb to, these obligations adorned with words of civilization and progress.82

As these pages have shown, much ambiguity surrounded the Emery claim. Contemporaries offered competing versions of the same events or assigned different meanings to them. Behind these disagreements lay alternative understandings of geography, of sovereignty, of value, and finally, of memory. Certain interpretations came to matter more than others. By the 1910s, the dominant American paradigm was of a world of fiscal propriety, what Veeser calls A World Safe for Capitalism, one overseen by U.S. financial advisors, representatives of American financial institutions whose narrow vision eclipsed earlier Nicaraguan imaginings of cosmopolitanism, independence, and Pan Americanism. This view also tended to dominate professional knowledge and historiography in North America, displacing alternative readings of U.S. imperialism and empire.83

82 José Santos Zelaya, Refutación al presidente Taft (Paris: Waltener, 1911). The text has been translated from the original Spanish by the authors. 83 It is noteworthy that even such a careful scholar as Richard Tucker can provide an inaccurate account of the Emery claim; see Tucker, Insatiable Appetite, pp. 351-352.

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Our account has sought to convey the diverse threads of what we see as an important, if little-studied tale (at least in North America), in order to suggest the complexities of the American presence in Nicaragua. Those involved in the Emery claim comprised an unlikely group that included British bondholders and American financial money doctors, politicians and lawyers, academics and business people, journalists and soldiers. The tale of lengthy wrangling over the legitimacy of a mahogany concession may seem somewhat limited in scope, but we would point to the links that led ultimately to Nicaragua’s financial re-structuring as well as the way in which the story underscores the analysis of such scholars as Citino and Rosenberg.84 The Emery claim is more well-known in Nicaragua, but that reflects the fact that for much of the twentieth century a robust anti-Americanism flourished in Latin America, a region where critical interpretations of American actions were more common. Such criticism was heard only rarely in North America, at least until relatively recently.85 However, Nicaraguan perspectives on the issues were available. In 1912, for example, a number of Nicaraguan Liberals living in exile in Costa Rica submitted a booklet in English to the U.S. Congress denouncing the Knox-Castrillo agreements, the bankers, and the “dreadful spectre of the American Loan.” Four years later, Pio Bolaños, the former Secretary of the Nicaraguan Mixed Claims Commission, produced a fifty-page pamphlet in English outlining the negative results of the loans and American intervention in Nicaraguan banking, currency, finances, and political affairs. Some 5,000 copies were published in the U.S. “with the object of placing before the people, the press and the Government of the United States, the true status of business conditions in Nicaragua.”86 84 At least one recent book on Nicaragua has been criticized for its over-simplification of the US; see Joseph S. Tulchin’s review of Michel Gobat, Confronting the American Dream: Nicaragua under U.S. Imperial Rule (Durham: Duke University Press, 2005), in Hispanic American Historical Review, 87:2 (May 2007), pp. 425-426. 85 In his review of Gobat’s book, Tulchin commented that “Our understanding of U.S. imperialism has come a long way in the past 50 years. . . . Despite critical voices such as Scott Nearing, the field was dominated by apologists. . .” (Hispanic American Historical Review, 87:2 (May 2007), p. 425). For a telling example of the distance between Latin American and North American scholars, see the description in J. Fred Rippy’s autobiography, of his exchange with a bitter Nicaraguan in Mexico during the summer of 1929: Rippy, Bygones I Cannot Help Recalling (Austin, Texas: Steck-Vaughn Co., 1966), p. 156. 86 Julián Irias and Rodolfo Espinoza, Nicaraguan Affairs: Memorial to the Senate of the United States of America. From the land of exile to Nicaraguans (San Jose, Costa Rica: Alsina Press, 1912); Pio Bolaños, The economical situation of Nicaragua. Intervention of North America and its results, the procedures of the government of Adolfo Diaz (New Orleans, 1916), translated by Miss Amelia Babin. Representative Spanish-language accounts include Abella, Los banqueros y la intervención en Nicaragua; Quijano, Nicaragua: ensayo sobre el imperialismo de los Estados Unidos; William Lau, “Proceso de la Intervención Norteamericana en Nicaragua, 1909–1913,” Encuentro (Managua) 36 (Jan.–June 1989), pp. 31–60; Amalia Chamorro, “El poder político del estado y la intervención extranjera (1909–1933),”


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If the English language historiography of Nicaragua has largely ignored the Emery claim, contemporary newspaper accounts acknowledged its importance. In 1913, for example, the New York Times discussed both the Emery claim and Zelaya’s resignation in some detail. In the summer of that year, it printed a series of incriminating telegrams that dated from 1909. These had passed between the individual who then chaired the Senate Foreign Relations Committee and a person from whom he hoped to secure a mining concession in Guatemala. The telegrams implied that the Senator (who on 6 December 1909 moved a joint resolution of the House “authorizing and directing the President of the United States to restore order, maintain peace, and protect life and property in Nicaragua”) may have sought to curry favor with the Guatemalan president by attacking Zelaya.87 Three months after the New York Times published the telegrams, Zelaya himself arrived in New York. He assured a journalist that the telegrams were “among the most important documents he had ever seen touching on the relations of the United States and Latin America.”88 A week later, the New York Times featured a second interview with Zelaya, giving the former president a chance to describe the events that had forced him from office. Speaking through an interpreter, Zelaya claimed that his downfall was caused by increasing tensions over foreign concessions in Nicaragua: “The final trouble over the concessions that the Americans wanted came about in this way. The company that had the biggest concession of all, that of cutting down timber on the Atlantic coast, did not accomplish what they had agreed to, and furthermore they violated the laws of Nicaragua by importing contraband. The case [i.e., the Emery claim] was carried to court and the Encuentro 36 (Jan.–June 1989), pp. 61–88; Oscar-René Vargas, La intervención norteamericana en Nicaragua y sus consecuencias, 1910-1925 (Managua: Centro de Investigaciones de la Realidad en América Latina, 1989); Alvaro H. Argüello, “Incidencias del imperialismo en el proceso político de Nicaragua,” Revista del Pensamiento Centroamericano, 159 (1978), pp. 32–37; Humberto Belli, “Un ensayo de interpretación sobre las luchas políticas nicaragüenses,” Revista del Pensamiento Centroamericano 157 (1977), pp. 50-59; A. Barahona Portocarrero, “Estudio sobre la historia de Nicaragua,” in Pablo González Casanova, ed., América Latina: historia de medio siglo (Mexico: Siglo Veintiuno Editores, 1981), vol. 2, pp. 377–423; and Héctor Pérez Brignoli, Breve historia de Centroamérica (Madrid: Alianza Editorial, 1985). Note the mention of the Emery claim in Jaime Wheelock Roman, Imperialismo y Dictatura (Mexico, D.F.: Siglo Veintuno Editores, 1978), p. 107. 87 “To Sift Congress Record of Sulzer,” New York Times, 24 August 1913, pp. 1-2. See also “Sulzer’s Guatemala Deal,” New York Times, 17 November 1913, p. 4. See also Robert F. Wesser, “The Impeachment of a Governor: William Sulzer and the Politics of Excess,” New York History 60:4 (October 1979), pp. 407-438 (esp. pp. 430-436). The quotation is from a speech by Sulzer, Congressional Record: Containing the Proceedings and Debates of the Sixty-First Congress, Second Session, Vol. 45, Part 1, p. 11. 88 “Zelaya Would Aid Concession Inquiry,” New York Times, 15 November 1913, p. 13.

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This portrait of Zelaya was featured prominently in the New York Times article, “Zelaya Blames Dollar Diplomacy For His Troubles,” referred to in the text. The reporter described Zelaya in favorable if heavily-gendered language, noting that “it takes no second glance, no scrutiny, to see that he is a man of courage, a man of action, a man who has been commissioned by Nature a leader of men.” American company was condemned by every tribunal. In spite of this decision of our courts, it was then agreed to submit the matter to arbitration, one American and one Englishman being chosen as arbitrators. Both gave their verdict in keeping with the findings of the Nicaraguan courts.”

Gen. Zelaya then took up the story himself. “Mr. Knox, your Secretary of State,” he said, speaking slowly and emphatically, “created the difficulty in this way. He said the matter must be referred to The Hague Tribunal. That meant great expense for Nicaragua, and besides the question was not an international matter. The Nicaraguan Government decided to pay the American company, as it wanted to keep on friendly terms with the United States Government.” “It was Gen. Zelaya,” interjected Mr. Macias, “who paid this money. It was paid from his own resources.”89 89

p. 2.

“Zelaya Blames Dollar Diplomacy For His Troubles,” New York Times, 23 November 1913, II,


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Three days later, the Nicaraguan government began extradition proceedings against Zelaya, resulting in his arrest. After eight days in jail, the charges against him were dropped and he was allowed to go free. He spent several more weeks in New York, trying to recover the payment that he had made in 1909 in a vain attempt to resolve the Emery claim, and then left for Europe.90 The New York Times, which had provided considerable coverage of Zelaya’s visit, offered a cryptic editorial comment on Zelaya’s departure, entitled “All’s Well That Ends Well.” Its enigmatic conclusion “Thus, very pleasantly, a most puzzling episode closes—and some sleeping dogs that had begun to twitch restlessly can quiet down again,” hints at the shroud of mystery that has obscured the convoluted history of the Emery claim.91 Athabasca University Athabasca, Alberta, Canada University of Alberta, Augustana Camrose, Alberta, Canada

MICHAEL GISMONDI

JEREMY MOUAT

90 “Zelaya Released, Seeks Cash on Bonds; Deposed President Will Depart When He Recovers Money He Advanced to Soothe Us; He Paid Emery Claims; Ex-Ruler of Nicaragua, Friends Say, Paid $1,600,00 to Ward Off Our Intervention,” New York Times, 4 December 1913, p. 1; “Gen. Zelaya Sails, Warns Financiers,” New York Times, 25 December 1913, p. 8. Zelaya returned to New York three years later, where he remained until his death in 1919 (see “Back From Spain,” New York Times, 11 June 1916, p. 18; “Zelaya Dies After Long Exile,” New York Times, 19 May 1919, p. 1). 91 “All’s Well That Ends Well,” New York Times, 26 December 1913, p. 10.