Dollar Diplomacy is the effort of the United States—particularly over President William Howard Taft—to further its aims in Latin America and East Asia through use of its economic power by guaranteeing loans made to foreign countries. Historian Thomas A. Bailey argues that Dollar Diplomacy was nothing new, as the use of diplomacy to promote commercial interest dates from the early years of the Republic. However, under Taft, the State Department was more active than ever in encouraging and supporting American bankers and industrialists in securing new opportunities abroad. Bailey finds that Dollar Diplomacy was designed to make both people in foreign lands and the American investors prosper.[1] The term was originally coined by President Theodore Roosevelt. Roosevelt didn't want to intervene between him and his secretary.[2]
The concept is relevant to both Liberia, where American loans were given in 1913, and Latin America. Latin Americans tend to use the term "Dollar Diplomacy" disparagingly to show their disapproval of the role that the U.S. government and U.S. corporations have played in using economic, diplomatic and military power to open up foreign markets.