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According to Google.... "the use of a country's financial power to extend its international influence."

According to our textbook.... " the use of private funds to serve American diplomatic goals and garner profits for American financiers, and at the same time bring reform to less-developed countries."

According to ash, it is basically using economics for diplomatic means; literally using dollars for diplomacy.

Essentially, Dollar Diplomacy does this: uses financial opportunities to stabilize US foreign relations which then leads to security in investments and control over specific areas.

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According to sources, Dollar Diplomacy was used to promote commercial interests since the early years of the Republic. But, the policy grew in activity during President William Howard Taft's presidential term, specifically in 1912.

Taft and his Secretary of State Philander C. Knox shared the view of supporting Dollar Diplomacy and Knox himself secured investments in China.

They both shared the idea that the goal of diplomacy should be to create stability in foreign countries  and with it, increase financial opportunities.

However, the actually policy of Dollar Diplomacy was initiated by President William Taft himself.

When Woodrow Wilson became President in March 1913, he cancelled all form of support for Dollar Diplomacy.

TLDR; Main "president" for Dollar Diplomacy was William Howard Taft

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In reality, Dollar Diplomacy was not a sole policy and was used in combination with the other foreign policies at the time (Monroe Doctrine, Big Stick, and Moral Diplomacy). However, there are a few key instances of the policy being used.

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Overall, the term "dollar diplomacy" is now used with a negative connotation, specifically in Latin America where the phrase is used to show disapproval of the role the U.S. Government and Corporations held in economic, diplomatic, and military powers whiling opening foreign markets.

Overall, Dollar Diplomacy is considered a failure.

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(socially, politically. economically)

As a result of US meddling in Latin America through Dollar Diplomacy, each country faced a significant social upheaving and instability. It failed to put an end to waves of revolutions in places such as Haiti, the Dominican Republic, and Nicaragua. It also failed to prevent revolutions in countries such as China and Mexico.

It also failed to counteract majority of economic and political instability in the targeted countries as US had to send in troops to protect American investments and failed to gain profits for American businesses.

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Impacts on US relations with Latin America 

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Impacts on US relations with Latin America 

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In result, Latin America became wary of economic control by the US. It also created a growing tide of anti-imperialism, both within the United States and within Latin America as well.

One big example of this hatred for imperialism and economic control evidently comes from Castro's Cuba.
(Which if you don't remember, led to Castro declaring Cuba as Communist in spite of America and also eliminating a large amount of corporations from the island nation.)

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Taft's Dollar Diplomacy in Nicaragua guaranteed loans to their government and supported the overthrow of the current leader Jose Santos Zelaya in favor of Adolfo Diaz in his place. The primary reason being Diaz was more in favor for US economic relations and would allow the US to grow future investments.

In response, the Nicaraguan people were resentful and US military intervention had to be sent in when Civil War broke out, leading to US occupation continuously from 1912-1933.

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In 1912, Mexico had plans to allow Japanese corporations to purchase land, which included Magdalena Bay. Taft feared Japan might use Magdalena Bay as a naval base and so he objected, using his economic position to reinforce his statement. Faced with this economic threat, Mexico abandoned the plans for a Japanese purchase.

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In China, Taft aimed to strengthen the Open Door Policy first implemented by Roosevelt and encouraging the free trade initiated following the Boxer Rebellion. Prior to this rebellion, CHina remained isolationist in its economics, so this proposed a good opportunity to open up its borders for trade.

This was achieved through an alliance of American, British, French, and German investors who put in their interest and investment towards building a railroad in China. Russia and Japan were excluded from this western alliance and Taft secured the American financing (through the J.P. Morgan corporation) for construction of a railroad from Huguang to Canton. However, the railroad project collapsed in 1910, embolding Japan to solidify and extend holdings in China to the point where internal discourse led to the overthrowing of the Qing dynasty in 1911.

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Three American multinational companies (the United Fruit Company, the Standard Fruit Company, and the Cuyamel Fruit Company) dominated the banana industry and therefore controlled the road, rail, and port infrastructure of Honduras.

By the 1930s the United Fruit Company owned 3.5 million acres of land in Central America and the Caribbean which gave it control of the economic situations in these countries and therefore, power over the governments, establishing the phrase "banana republic."

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Taft's Dollar Diplomacy in Honduras was in response to the massive debts owed by the country to British investors. The political situation concerned investors and fear of a British invasion arose.

In response, the Taft administration sent in American bankers to help improve economic stability and injected American funds to help fix the debts. This averted the immediate crisis and the American bankers stayed in Honduras to manage the financial affairs of the country, establishing American control over their economy.

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The primary motive for Taft's relationship with Liberia was to guard the American population within the country. The two countries shared very close diplomatic, economic, and military ties since 1819. As a part of Taft's Dollar Diplomacy, the US arranged an international loan of $1.7 million over 40 years toward Liberia.

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Some fun resources and videos I found helpful 

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Some fun resources and videos I found helpful 

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Obviously, I have to include the wiki.

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Dollar diplomacy of the United States-particularly during President William Howard Taft's presidential term-was a form of American foreign policy to minimize the use or threat of military force and instead further its aims in Latin America and East Asia through the use of its economic power by guaranteeing loans made to foreign countries. In his message to Congress on 3 December 1912, Taft summarized the policy of Dollar Diplomacy:

The diplomacy of the present administration has sought to respond to modern ideas of commercial intercourse. This policy has been characterized as substituting dollars for bullets. It is one that appeals alike to idealistic humanitarian sentiments, to the dictates of sound policy and strategy, and to legitimate commercial aims.

Dollar diplomacy was not 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.

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. When Woodrow Wilson became president in March 1913, he immediately canceled all support for Dollar diplomacy. Historians agree that Taft's Dollar diplomacy was a failure everywhere. In the Far East, it alienated Japan and Russia and created a deep suspicion among the other powers hostile to American motives.

The outgoing President Theodore Roosevelt laid the foundation for this approach in 1904 with his Roosevelt Corollary to the Monroe Doctrine (under which United States Marines were frequently sent to Central America) maintaining that if any nation in the Western Hemisphere appeared politically and financially unstable so as to be vulnerable to European control, the United States had the right and obligation to intervene. Taft continued and expanded the policy, starting in Central America, where he justified it as a means of protecting the Panama Canal. In March 1909, he attempted unsuccessfully to establish control over Honduras by buying up its debt to British bankers.

Another dangerous new trouble spot was the revolution-riddled Caribbean-now largely dominated by U.S. interests. Hoping to head off trouble, Washington urged U.S. bankers to pump dollars into the financial vacuum in Honduras and Haiti to keep out foreign funds. The United States would not permit foreign nations to intervene, and consequently felt obligated to prevent economic and political instability. The State Department persuaded four U.S. banks to refinance Haiti's national debt, setting the stage for further intervention in the future.

From 1909 to 1913, President William Howard Taft and Secretary of State Philander C. Knox followed a foreign policy characterized as "dollar diplomacy". Taft shared the view held by Knox (a corporate lawyer who had founded the giant conglomerate U.S. Steel) that the goal of diplomacy should be to create stability abroad and through this stability promote American commercial interests. Knox felt that not only was the goal of diplomacy to improve financial opportunities, but also to use private capital to further U.S. interests overseas. "Dollar diplomacy" was evident in extensive U.S. interventions in Venezuela, Cuba, and Central America, especially in measures undertaken to safeguard American financial interests and from the United States government in the region. In China, Knox secured the entry of an American banking conglomerate, headed by J.P. Morgan, into a European-financed consortium financing the construction of a railway from Huguang to Canton. In spite of successes, "dollar diplomacy" failed to counteract economic instability and the tide of revolution in places like Mexico, the Dominican Republic, Nicaragua, and China.

Dollar diplomacy, known as "[a] policy aimed at furthering the interests of the United States abroad by encouraging the investment of U.S. capital in foreign countries", was initiated by President William Taft. The United States felt obligated, through dollar diplomacy, to uphold economic and political stability. Taft's dollar diplomacy not only allowed the United States to gain financially from countries but also restrained other foreign countries from reaping any sort of financial gain. Consequently, when the United States benefited from other countries, other world powers could not reap those same benefits. Overall the "dollar diplomacy" was to encourage and protect trade within Latin America and Asia.

"Taft maintained an activist approach to foreign policy. On one hand, he was the initiator of what became known as dollar diplomacy, in which the United States used its military might to promote American business interests abroad. Taft, defended his dollar diplomacy as an extension of the Monroe Doctrine. Taft was a major supporter of arbitration as the most viable method of settling international disputes" Quickly becoming a world power, America sought to further her influence abroad. President Taft realized that by instituting dollar diplomacy, it would be pernicious to the financial gain of other countries. Thus the United States would benefit greatly.

In East Asia, Dollar diplomacy was the policy of the Taft administration to use American banking power to create a tangible American interest in China that would limit the scope of the other powers, increase the opportunity for American trade and investment, and help maintain the Open Door of trading opportunities of all nations. Whereas Theodore Roosevelt wanted to conciliate Japan and help it neutralize Russia, Taft and his Secretary of State Philander Knox ignored Roosevelt's policy and his advice. Dollar diplomacy was based on the false assumption that American financial interests could mobilize their potential power, and wanted to do so in East Asia. However, the American financial system was not geared to handle international finance, such as loans and large investments, and had to depend primarily on London. The British also wanted an open door in China but were not prepared to support American financial maneuvers. Finally, the other powers held territorial interests, including naval bases and designated geographical areas which they dominated inside China, while the United States refused anything of the kind. Bankers were reluctant, but Taft and Knox kept pushing them. Most efforts were failures until finally, the United States forced its way into the Hukuang international railway loan. The loan was finally made by an international consortium in 1911 and helped spark a widespread " Railway Protection Movement" revolt against foreign investment that overthrew the Chinese government. The bonds caused no end of disappointment and trouble. As late as 1983, over 300 American investors tried, unsuccessfully, to force the government of China to redeem the worthless Hukuang bonds. When Woodrow Wilson became president in March 1913, he immediately canceled all support for Dollar diplomacy. Historians agree that Taft's Dollar diplomacy was a failure everywhere, In the Far East alienated Japan and Russia, and created a deep suspicion among the other powers hostile to American motives.

Challener, Richard D. Admirals, Generals, and American Foreign Policy, 1898-1914 (1973) pp 265-363. online at many schools

Cohen, Naomi W. "Ambassador Straus in Turkey, 1909-1910: A Note on Dollar Diplomacy." Mississippi Valley Historical Review 45.4 (1959): 632-642.

Coletta, Paolo E. The Presidency of William Howard Taft (1973) pp 183-200.

Finch, George A. "American Diplomacy and the Financing of China." American Journal of International Law 16.1 (1922): 25-42. online

Gould, Lewis L. The William Howard Taft Presidency (U Press of Kansas, 2009), pp 79-92.

Rosenberg, Emily S. Financial missionaries to the world: The politics and culture of dollar diplomacy, 1900-1930 (Duke UP, 2003).

Rosenberg, Emily S. "Revisiting Dollar Diplomacy: Narratives of Money and Manliness." Diplomatic History 22.2 (1998): 155-176.

Scholes, Walter Vinton, and Marie V.Scholes, The Foreign Policies of the Taft Administration (1970)

Veeser, Cyrus. A World Safe For Capitalism. Dollar Diplomacy and America's Rise to Global Power. (Columbia University Press, 2002). online

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Dollar diplomacy of the United States-particularly during President William Howard Taft's presidential term-was a form of American foreign policy to minimize the use or threat of military force and instead further its aims in Latin America and East Asia through the use of its economic power by guaranteeing loans made to foreign countries.

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Dollar Diplomacy | History & Significance | Britannica

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Dollar Diplomacy, foreign policy created by U.S. President William Howard and Secretary of State Philander C. Knox to ensure the financial stability of a region while advancing U.S. commercial and financial interests there. It grew out of President Theodore Roosevelt’s peaceful intervention in the Dominican Republic.

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This website highlights the key takeaways and such really well

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Dollar diplomacy is the term applied to American foreign policy under President William Howard Taft and his secretary of state, Philander C. Knox, to ensure the financial stability of Latin American and East Asian countries, while also expanding U.S. commercial interests in those regions.

In his State of the Union Address on December 3, 1912, Taft characterized his policy as "substituting dollars for bullets." Despite some successes, dollar diplomacy failed to prevent economic instability and revolution in countries like Mexico, the Dominican Republic, Nicaragua, and China. Today the term is used disparagingly to refer to the reckless manipulation of foreign affairs for protectionist financial purposes.

Key Takeaways

American Foreign Policy in the Early 1900s

During the early 1900s, the U.S. government largely abandoned its isolationist policies of the 1800s in favor of using its growing military and economic power to pursue its foreign policy goals. In the 1899 Spanish-American War, the U.S. took control of the former Spanish colonies of Puerto Rico and the Philippines, and also increased its influence over Cuba.

Taking office in 1901, President Theodore Roosevelt saw no conflict between what his critics called American imperialism and demands by political progressives for social reform at home. In fact, to Roosevelt, control of new colonies represented a way to advance the American progressive agenda throughout the Western Hemisphere.

In 1901, Roosevelt moved to build-and control-the Panama Canal. To gain control of needed land, Roosevelt supported an "independence movement" in Panama resulting in the reorganization of the government under a pro-canal American sympathizer.

In 1904, the Dominican Republic was unable to pay back loans from several European countries. To prevent possible European military action, Roosevelt toughened the Monroe Doctrine of 1824 with his " Corollary to the Monroe Doctrine," which stated that the United States would use military force in order to restore order, stability, and economic prosperity in other nations of the Western Hemisphere. Along with weakening European influence in Latin America, Roosevelt's corollary further established the U.S. as the world's "policeman."

Roosevelt's foreign policy of "confident intervention" was not limited to Latin America. In 1905, he won the Nobel Peace Prize for leading negotiations that ended the first Russo-Japanese War. Despite these apparent successes, the backlash from the anti-American violence of the Philippine-American War drove Roosevelt's progressive critics to oppose U.S. military intervention in foreign affairs.

Taft Introduces His Dollar Diplomacy

In 1910, President Taft's first year in office, the Mexican Revolution threatened U.S. business interests. It was in this atmosphere that Taft-with less of Roosevelt's militaristic " carry a big stick " bluster, proposed his "dollar diplomacy" in an attempt to protect U.S. corporate interests around the globe.

While he stressed peaceful intervention, Taft did not hesitate to use military force when a Central American nation resisted his dollar diplomacy. When Nicaraguan rebels attempted to overthrow the American-friendly government of President Adolfo Díaz, Taft sent warships carrying 2,000 U.S. Marines to the region to put down the insurrection. The rebellion was suppressed, its leaders were deported, and a contingent of Marines remained in Nicaragua until 1925 to "stabilize" the government.

In 1912, Mexico planned to allow Japanese corporations to purchase land in the Mexican state of Baja California, which included Magdalena Bay. Fearing that Japan might use Magdalena Bay as a naval base, Taft objected. U.S. Senator Henry Cabot Lodge secured passage of the Lodge Corollary to the Monroe Doctrine, stating that the U.S. would prevent any foreign government-or business-from acquiring territory anywhere in the Western Hemisphere that might give that government "practical power of control." Faced with the Lodge Corollary, Mexico abandoned its plans.

Taft then tried to help China withstand Japan's increasing military presence. At first, he succeeded by helping China secure international loans to expand its railroad system. However, when he tried to help American businesses become involved in Manchuria, Japan and Russia-having won shared control of the area in the Russo-Japanese War -were outraged and Taft's plan collapsed. This failure of dollar diplomacy exposed the limitations of the U.S. government's global influence and knowledge of international diplomacy.

Impact and Legacy

While it was less dependent on military intervention than Theodore Roosevelt's foreign policy, Taft's dollar diplomacy did the United States more harm than good. Still plagued by foreign debt, the Central American countries came to resent U.S. interference, fostering anti-American nationalist movements. In Asia, Taft's failure to resolve the conflict between China and Japan over Manchuria further heightened tensions between Japan and the United States, while allowing Japan to build its military power throughout the region.

Aware of the failure of the dollar diplomacy, the Taft administration had abandoned it by the time President Woodrow Wilson, took office in March 1913. While he attempted to maintain U.S. supremacy in Central America, Wilson repudiated dollar diplomacy, replacing it with his "moral diplomacy," which offered U.S. support only to countries that shared American ideals.

Sources and Further Reference

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What Is Dollar Diplomacy? Definition and Examples

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Dollar diplomacy is the term applied to American foreign policy under President William Howard Taft and his secretary of state, Philander C. Knox, to ensure the financial stability of Latin American and East Asian countries, while also expanding U.S. commercial interests in those regions.

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I recommend this one for a good example, because it really illustrates how economic position can hold political power

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Here's Why President Taft's Dollar Diplomacy Was a Failure | History