22.5 Tafts Dollar Diplomacy - U.S. History | OpenStax

Key Learning Objective

Understand how President William Howard Taft used American economic power to protect U.S. interests.

William Howard Taft became president in 1909, succeeding Theodore Roosevelt.
Taft adapted Roosevelt's foreign policy to emphasize U.S. economic power known as "dollar diplomacy."
Objective: Use economic influence instead of military force to secure markets for American businesses.

Central America:
- Taft focused on Central American debt to European nations.
- Paid off debts using U.S. funds to prevent European military intervention.
- Example: Nicaragua was pressured into accepting U.S. loans, using military force when resisted.
Mexico:
- Prevented Japanese corporate influence by passing the Lodge Corollary, ensuring only American corporations could acquire strategic land.
Asia:
- Continued Roosevelt’s strategies in Asia, particularly in China.
- Attempted to develop railroads in China for economic leverage.
- Faced resistance in expanding the Open Door policy, especially in Manchuria due to Russian and Japanese opposition.
- Reorganized U.S. State Department to have geographic divisions for better diplomacy.

Short-term gains:
- Strengthened U.S. position in Central America and Asia.
- Established U.S. as a predominant Western Hemisphere power.
Long-term consequences:
- Economic indebtedness in Central America led to future resentment and nationalist movements.
- Increased tensions with Japan due to U.S. interference.
- Did not successfully create a balance of power in Asia.

Taft’s presidency entrenched the U.S. in a path towards empire.
Influence extended across Western Hemisphere and Asia.
Set precedents for future foreign policy between military intervention and economic pressure.

Taft's policies laid groundwork for U.S. international relations but also highlighted limitations and complexities.
The approach shifted as the world moved towards World War I under President Woodrow Wilson’s leadership.