Controlling Another Country's Money

 I was reading through Lars Schoultz's In Their Own Best Interest and found a fun citation in the Foreign Relations of the United States documents. It is Secretary of State Philander Knox speaking to the Senate Committee on Foreign Relations in 1911. The topic is Honduras but it could be Venezuela today.

We can not blink the fact that there is no hope for peace and prosperity for Honduras except through the United States. All she now asks is, Will you assist us to make the security good which we offer for the debt we are incurring, at a reasonable rate of interest, by helping us to secure an honest collection of our revenues, or will you, by withholding that assistance, drive us back upon the usurers and plunderers who have brought us to our present stagnation?

How will this be done?

The convention has been drawn for the purpose of giving security. That is, for the purpose of assuring the regular payment of interest and sinking fund upon the debt. Its provisions, briefly, are:

1. Honduras engages to place the loan in the United States.

2. Honduras pledges her customs receipts for the payment of the interest and sinking fund.

3. Honduras agrees to appoint a receiver from a list of names prepared by the fiscal agent and approved by the President of the United States.

4. Honduras agrees to afford protection to the receiver and that if necessary the United States may give such protection.

5. The receiver is under obligation to report to the fiscal agent of the loan and to either Government regarding the discharge of his duties.

6. Honduras further agrees not to alter the customs receipts during the existence of the loan.

In essence, Honduras hands its economy over to U.S. officials.

The convention would have the effect of affording security to the bondholders; of assuring to Honduras the punctual and complete discharge of her obligations practically without cost to the Government; the enjoyment of continued peace, and the consequent internal development; and to the United States the saving in expense to this Government would alone seem to be a sufficient inducement.

Good for everyone. Except Hondurans.