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U.S. History

22.5 Taft’s “Dollar Diplomacy”

U.S. History22.5 Taft’s “Dollar Diplomacy”
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  1. Preface
  2. 1 The Americas, Europe, and Africa Before 1492
    1. Introduction
    2. 1.1 The Americas
    3. 1.2 Europe on the Brink of Change
    4. 1.3 West Africa and the Role of Slavery
    5. Key Terms
    6. Summary
    7. Review Questions
    8. Critical Thinking Questions
  3. 2 Early Globalization: The Atlantic World, 1492–1650
    1. Introduction
    2. 2.1 Portuguese Exploration and Spanish Conquest
    3. 2.2 Religious Upheavals in the Developing Atlantic World
    4. 2.3 Challenges to Spain’s Supremacy
    5. 2.4 New Worlds in the Americas: Labor, Commerce, and the Columbian Exchange
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  4. 3 Creating New Social Orders: Colonial Societies, 1500–1700
    1. Introduction
    2. 3.1 Spanish Exploration and Colonial Society
    3. 3.2 Colonial Rivalries: Dutch and French Colonial Ambitions
    4. 3.3 English Settlements in America
    5. 3.4 The Impact of Colonization
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  5. 4 Rule Britannia! The English Empire, 1660–1763
    1. Introduction
    2. 4.1 Charles II and the Restoration Colonies
    3. 4.2 The Glorious Revolution and the English Empire
    4. 4.3 An Empire of Slavery and the Consumer Revolution
    5. 4.4 Great Awakening and Enlightenment
    6. 4.5 Wars for Empire
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  6. 5 Imperial Reforms and Colonial Protests, 1763-1774
    1. Introduction
    2. 5.1 Confronting the National Debt: The Aftermath of the French and Indian War
    3. 5.2 The Stamp Act and the Sons and Daughters of Liberty
    4. 5.3 The Townshend Acts and Colonial Protest
    5. 5.4 The Destruction of the Tea and the Coercive Acts
    6. 5.5 Disaffection: The First Continental Congress and American Identity
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  7. 6 America's War for Independence, 1775-1783
    1. Introduction
    2. 6.1 Britain’s Law-and-Order Strategy and Its Consequences
    3. 6.2 The Early Years of the Revolution
    4. 6.3 War in the South
    5. 6.4 Identity during the American Revolution
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  8. 7 Creating Republican Governments, 1776–1790
    1. Introduction
    2. 7.1 Common Sense: From Monarchy to an American Republic
    3. 7.2 How Much Revolutionary Change?
    4. 7.3 Debating Democracy
    5. 7.4 The Constitutional Convention and Federal Constitution
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  9. 8 Growing Pains: The New Republic, 1790–1820
    1. Introduction
    2. 8.1 Competing Visions: Federalists and Democratic-Republicans
    3. 8.2 The New American Republic
    4. 8.3 Partisan Politics
    5. 8.4 The United States Goes Back to War
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  10. 9 Industrial Transformation in the North, 1800–1850
    1. Introduction
    2. 9.1 Early Industrialization in the Northeast
    3. 9.2 A Vibrant Capitalist Republic
    4. 9.3 On the Move: The Transportation Revolution
    5. 9.4 A New Social Order: Class Divisions
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  11. 10 Jacksonian Democracy, 1820–1840
    1. Introduction
    2. 10.1 A New Political Style: From John Quincy Adams to Andrew Jackson
    3. 10.2 The Rise of American Democracy
    4. 10.3 The Nullification Crisis and the Bank War
    5. 10.4 Indian Removal
    6. 10.5 The Tyranny and Triumph of the Majority
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  12. 11 A Nation on the Move: Westward Expansion, 1800–1860
    1. Introduction
    2. 11.1 Lewis and Clark
    3. 11.2 The Missouri Crisis
    4. 11.3 Independence for Texas
    5. 11.4 The Mexican-American War, 1846–1848
    6. 11.5 Free Soil or Slave? The Dilemma of the West
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  13. 12 Cotton is King: The Antebellum South, 1800–1860
    1. Introduction
    2. 12.1 The Economics of Cotton
    3. 12.2 African Americans in the Antebellum United States
    4. 12.3 Wealth and Culture in the South
    5. 12.4 The Filibuster and the Quest for New Slave States
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  14. 13 Antebellum Idealism and Reform Impulses, 1820–1860
    1. Introduction
    2. 13.1 An Awakening of Religion and Individualism
    3. 13.2 Antebellum Communal Experiments
    4. 13.3 Reforms to Human Health
    5. 13.4 Addressing Slavery
    6. 13.5 Women’s Rights
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  15. 14 Troubled Times: the Tumultuous 1850s
    1. Introduction
    2. 14.1 The Compromise of 1850
    3. 14.2 The Kansas-Nebraska Act and the Republican Party
    4. 14.3 The Dred Scott Decision and Sectional Strife
    5. 14.4 John Brown and the Election of 1860
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  16. 15 The Civil War, 1860–1865
    1. Introduction
    2. 15.1 The Origins and Outbreak of the Civil War
    3. 15.2 Early Mobilization and War
    4. 15.3 1863: The Changing Nature of the War
    5. 15.4 The Union Triumphant
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  17. 16 The Era of Reconstruction, 1865–1877
    1. Introduction
    2. 16.1 Restoring the Union
    3. 16.2 Congress and the Remaking of the South, 1865–1866
    4. 16.3 Radical Reconstruction, 1867–1872
    5. 16.4 The Collapse of Reconstruction
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  18. 17 Go West Young Man! Westward Expansion, 1840-1900
    1. Introduction
    2. 17.1 The Westward Spirit
    3. 17.2 Homesteading: Dreams and Realities
    4. 17.3 Making a Living in Gold and Cattle
    5. 17.4 The Loss of American Indian Life and Culture
    6. 17.5 The Impact of Expansion on Chinese Immigrants and Hispanic Citizens
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  19. 18 Industrialization and the Rise of Big Business, 1870-1900
    1. Introduction
    2. 18.1 Inventors of the Age
    3. 18.2 From Invention to Industrial Growth
    4. 18.3 Building Industrial America on the Backs of Labor
    5. 18.4 A New American Consumer Culture
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  20. 19 The Growing Pains of Urbanization, 1870-1900
    1. Introduction
    2. 19.1 Urbanization and Its Challenges
    3. 19.2 The African American “Great Migration” and New European Immigration
    4. 19.3 Relief from the Chaos of Urban Life
    5. 19.4 Change Reflected in Thought and Writing
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  21. 20 Politics in the Gilded Age, 1870-1900
    1. Introduction
    2. 20.1 Political Corruption in Postbellum America
    3. 20.2 The Key Political Issues: Patronage, Tariffs, and Gold
    4. 20.3 Farmers Revolt in the Populist Era
    5. 20.4 Social and Labor Unrest in the 1890s
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  22. 21 Leading the Way: The Progressive Movement, 1890-1920
    1. Introduction
    2. 21.1 The Origins of the Progressive Spirit in America
    3. 21.2 Progressivism at the Grassroots Level
    4. 21.3 New Voices for Women and African Americans
    5. 21.4 Progressivism in the White House
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  23. 22 Age of Empire: American Foreign Policy, 1890-1914
    1. Introduction
    2. 22.1 Turner, Mahan, and the Roots of Empire
    3. 22.2 The Spanish-American War and Overseas Empire
    4. 22.3 Economic Imperialism in East Asia
    5. 22.4 Roosevelt’s “Big Stick” Foreign Policy
    6. 22.5 Taft’s “Dollar Diplomacy”
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  24. 23 Americans and the Great War, 1914-1919
    1. Introduction
    2. 23.1 American Isolationism and the European Origins of War
    3. 23.2 The United States Prepares for War
    4. 23.3 A New Home Front
    5. 23.4 From War to Peace
    6. 23.5 Demobilization and Its Difficult Aftermath
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  25. 24 The Jazz Age: Redefining the Nation, 1919-1929
    1. Introduction
    2. 24.1 Prosperity and the Production of Popular Entertainment
    3. 24.2 Transformation and Backlash
    4. 24.3 A New Generation
    5. 24.4 Republican Ascendancy: Politics in the 1920s
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  26. 25 Brother, Can You Spare a Dime? The Great Depression, 1929-1932
    1. Introduction
    2. 25.1 The Stock Market Crash of 1929
    3. 25.2 President Hoover’s Response
    4. 25.3 The Depths of the Great Depression
    5. 25.4 Assessing the Hoover Years on the Eve of the New Deal
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  27. 26 Franklin Roosevelt and the New Deal, 1932-1941
    1. Introduction
    2. 26.1 The Rise of Franklin Roosevelt
    3. 26.2 The First New Deal
    4. 26.3 The Second New Deal
    5. Key Terms
    6. Summary
    7. Review Questions
    8. Critical Thinking Questions
  28. 27 Fighting the Good Fight in World War II, 1941-1945
    1. Introduction
    2. 27.1 The Origins of War: Europe, Asia, and the United States
    3. 27.2 The Home Front
    4. 27.3 Victory in the European Theater
    5. 27.4 The Pacific Theater and the Atomic Bomb
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  29. 28 Post-War Prosperity and Cold War Fears, 1945-1960
    1. Introduction
    2. 28.1 The Challenges of Peacetime
    3. 28.2 The Cold War
    4. 28.3 The American Dream
    5. 28.4 Popular Culture and Mass Media
    6. 28.5 The African American Struggle for Civil Rights
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  30. 29 Contesting Futures: America in the 1960s
    1. Introduction
    2. 29.1 The Kennedy Promise
    3. 29.2 Lyndon Johnson and the Great Society
    4. 29.3 The Civil Rights Movement Marches On
    5. 29.4 Challenging the Status Quo
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  31. 30 Political Storms at Home and Abroad, 1968-1980
    1. Introduction
    2. 30.1 Identity Politics in a Fractured Society
    3. 30.2 Coming Apart, Coming Together
    4. 30.3 Vietnam: The Downward Spiral
    5. 30.4 Watergate: Nixon’s Domestic Nightmare
    6. 30.5 Jimmy Carter in the Aftermath of the Storm
    7. Key Terms
    8. Summary
    9. Review Questions
    10. Critical Thinking Questions
  32. 31 From Cold War to Culture Wars, 1980-2000
    1. Introduction
    2. 31.1 The Reagan Revolution
    3. 31.2 Political and Cultural Fusions
    4. 31.3 A New World Order
    5. 31.4 Bill Clinton and the New Economy
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  33. 32 The Challenges of the Twenty-First Century
    1. Introduction
    2. 32.1 The War on Terror
    3. 32.2 The Domestic Mission
    4. 32.3 New Century, Old Disputes
    5. 32.4 Hope and Change
    6. Key Terms
    7. Summary
    8. Review Questions
    9. Critical Thinking Questions
  34. A | The Declaration of Independence
  35. B | The Constitution of the United States
  36. C | Presidents of the United States of America
  37. D | U.S. Political Map
  38. E | U.S. Topographical Map
  39. F | United States Population Chart
  40. G | Further Reading
  41. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
    14. Chapter 14
    15. Chapter 15
    16. Chapter 16
    17. Chapter 17
    18. Chapter 18
    19. Chapter 19
    20. Chapter 20
    21. Chapter 21
    22. Chapter 22
    23. Chapter 23
    24. Chapter 24
    25. Chapter 25
    26. Chapter 26
    27. Chapter 27
    28. Chapter 28
    29. Chapter 29
    30. Chapter 30
    31. Chapter 31
    32. Chapter 32
  42. Index

Learning Objectives

By the end of this section, you will be able to:
  • Explain how William Howard Taft used American economic power to protect the nation’s interests in its new empire

When William Howard Taft became president in 1909, he chose to adapt Roosevelt’s foreign policy philosophy to one that reflected American economic power at the time. In what became known as “dollar diplomacy,” Taft announced his decision to “substitute dollars for bullets” in an effort to use foreign policy to secure markets and opportunities for American businessmen (Figure 22.18). Not unlike Roosevelt’s threat of force, Taft used the threat of American economic clout to coerce countries into agreements to benefit the United States.

A photograph of William Howard Taft is shown.
Figure 22.18 Although William Howard Taft was Theodore Roosevelt’s hand-picked successor to the presidency, he was less inclined to use Roosevelt’s “big stick,” choosing instead to use the economic might of the United States to influence foreign affairs.

Of key interest to Taft was the debt that several Central American nations still owed to various countries in Europe. Fearing that the debt holders might use the monies owed as leverage to use military intervention in the Western Hemisphere, Taft moved quickly to pay off these debts with U.S. dollars. Of course, this move made the Central American countries indebted to the United States, a situation that not all nations wanted. When a Central American nation resisted this arrangement, however, Taft responded with military force to achieve the objective. This occurred in Nicaragua when the country refused to accept American loans to pay off its debt to Great Britain. Taft sent a warship with marines to the region to pressure the government to agree. Similarly, when Mexico considered the idea of allowing a Japanese corporation to gain significant land and economic advantages in its country, Taft urged Congress to pass the Lodge Corollary, an addendum to the Roosevelt Corollary, stating that no foreign corporation—other than American ones—could obtain strategic lands in the Western Hemisphere.

In Asia, Taft’s policies also followed those of Theodore Roosevelt. He attempted to bolster China’s ability to withstand Japanese interference and thereby maintain a balance of power in the region. Initially, he experienced tremendous success in working with the Chinese government to further develop the railroad industry in that country through arranging international financing. However, efforts to expand the Open Door policy deeper into Manchuria met with resistance from Russia and Japan, exposing the limits of the American government’s influence and knowledge about the intricacies of diplomacy. As a result, he reorganized the U.S. State Department to create geographical divisions (such as the Far East Division, the Latin American Division, etc.) in order to develop greater foreign policy expertise in each area.

Taft’s policies, although not as based on military aggression as his predecessors, did create difficulties for the United States, both at the time and in the future. Central America’s indebtedness would create economic concerns for decades to come, as well as foster nationalist movements in countries resentful of American’s interference. In Asia, Taft’s efforts to mediate between China and Japan served only to heighten tensions between Japan and the United States. Furthermore, it did not succeed in creating a balance of power, as Japan’s reaction was to further consolidate its power and reach throughout the region.

As Taft’s presidency came to a close in early 1913, the United States was firmly entrenched on its path towards empire. The world perceived the United States as the predominant power of the Western Hemisphere—a perception that few nations would challenge until the Soviet Union during the Cold War era. Likewise, the United States had clearly marked its interests in Asia, although it was still searching for an adequate approach to guard and foster them. The development of an American empire had introduced with it several new approaches to American foreign policy, from military intervention to economic coercion to the mere threat of force.

The playing field would change one year later in 1914 when the United States witnessed the unfolding of World War I, or “the Great War.” A new president would attempt to adopt a new approach to diplomacy—one that was well-intentioned but at times impractical. Despite Woodrow Wilson’s best efforts to the contrary, the United States would be drawn into the conflict and subsequently attempt to reshape the world order as a result.

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Read this brief biography of President Taft to understand his foreign policy in the context of his presidency.

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