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Dollar Diplomacy. What is dollar diplomacy?. Dollar diplomacy is the name given to the early 20th-century American foreign policy that sought to use American economic strength rather than military power to guarantee U.S. national security and economic interests.
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What is dollar diplomacy? • Dollar diplomacy is the name given to the early 20th-century American foreign policy that sought to use American economic strength rather than military power to guarantee U.S. national security and economic interests. • It is most associated with the administration of William Howard Taft and its policy toward Latin America.
Here’s how it worked • American banks would be called upon to finance loans to Latin American governments in need of capital • This would create a dependent relationship with the countries, providing a foothold for American interests • Americans would leverage this dependence to remove European influence, a la the Roosevelt Corollary
What was the purpose? • Dollar Diplomacy was Taft’s answer to the question of how to exert influence in foreign countries, particularly Latin America • He preferred economic dependence to military subservience • He figured it would help Latin American countries, while also helping enrich some American businesses
Wilson’s Moral Crusades • Woodrow Wilson sought to establish a more high-minded motive for intervention in foreign lands • He saw it a moral imperative to stand up against countries whose leaders did not have the backing of the people, was undemocratic, or was hostile to US interest • Problems with Mexico (p. 569)
