When William Howard Taft became president in 1909, he chose to adapt Roosevelt’s foreign policy 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. Not unlike Roosevelt’s threat of force, Taft used the threat of American economic pressure to coerce countries into agreements that would benefit the United States.

Figure 1. 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 European countries. Fearing that the debt holders might leverage the monies owed to enable military intervention in the Western Hemisphere, Taft moved quickly to pay off these debts with U.S. dollars. Of course, this 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. Even before becoming president, Taft had played an important role in the Philippines, and as president, he fought to make sure Filipino farmers could sell their goods tax-free in the United States. 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 militarily aggressive as those of his predecessors, did create difficulties for the United States, both during his presidency and in the future. Taft did send troops into Nicaragua in 1912 following a rebellion that threatened to end debt repayment to the United States; U.S. marines were intermittently deployed to the country for the next twenty years. Central America’s indebtedness would create economic concerns for decades to come, as well as foster nationalist movements in countries resentful of America’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 own power and reach throughout the region.

As Taft’s presidency came to a close in 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 in the 1945-1991 Cold War era. Likewise, the United States had clearly marked its interests in Asia, although it was still searching for how to most efficiently defend them.

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 built on the diplomacy practiced by Taft but charted a new course in regards to Europe—marking a significant break from precedent. 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.