AP U.S. History Notes

Taft and Wilson

Dollar Diplomacy

William Howard Taft was easily elected in 1908, because a majority of Americans believed that he would continue the popular Republican policies laid out by President Roosevelt. Taft was susceptible to outside pressure, and he often submitted to the desires of Congress and special interest groups. Roosevelt and many Americans were angry and dismayed when Taft began to stray from the Republican platform. However, one area in which Taft consistently pursued Roosevelt’s aims was in expanding America’s influence abroad.

Taft used America’s growing economic power as a diplomatic tool. He urged Wall Street investors to invest money in foreign markets in order to increase American influence abroad. Investors were especially encouraged to invest their money in foreign markets in which the U.S. had strategic interests, such as the Far East and the Panama Canal region. Many people were critical of Taft’s plan and his critics denounced this strategy as “dollar diplomacy.” In fact, the senate refused to sign several treaties, but the president encouraged private banks and Wall Street investors to act independently.

One goal of dollar diplomacy was to preempt foreign powers from gaining or enlarging an investment foothold in key markets. Many European countries had been imperial powers for decades and held a significant advantage over the U.S. in several global markets. The administration believed that if American investors were firmly situated in these markets economic rivals such as Germany would be unable to continue their dominance. Taft believed that the increased investment would not only benefit the U.S. but its trade partners as well, creating better foreign relations. Taft also assumed that the expenditure of money in foreign markets would increase American influence abroad and would help further its foreign policies. Of course, the overriding belief was that foreign investments would enhance American businesses, which in turn would grow the economy and enrich the government.

A primary focus of dollar diplomacy was the Manchurian region of China. Japan and Russia controlled a large portion of Manchurian resources including the railroads. Taft, like many people of the era, believed that whoever controlled the railroads also controlled the economy. He believed that without an interest in the Manchurian railroad system, the U.S. would be frozen out of the emerging Chinese markets and the Unite States’ “open door” policy in China would be undermined. Taft personally sent a telegram to the Chinese Government on behalf of American investors interested in railroads in the Yangtze Valley. In 1909, Secretary of State Philander C. Knox offered the Japanese and Russians a deal. He proposed that American bankers and industrialists would purchase the Manchurian railroads from Japan and Russia and return them to Chinese control. Japan and Russia flatly refused the offer, which publicly embarrassed the Taft administration. Taft persevered in his efforts to gain influence in China, and in 1912 the U.S. and five other nations offered the new Chinese Republic a huge loan.

In an extension of the Roosevelt Corollary, Taft encouraged investors to spend money in Latin American countries such as Honduras and Haiti. Adhering to the Monroe Doctrine of 1823, Taft would not allow foreign investors into Latin American markets, so America felt a responsibility to support these financially struggling republics. Many of these nations were constantly on the verge of financial collapse and required foreign investment to strengthen their shaky foundations. Political turmoil in this region later required U.S. troops to protect the substantial American investment. In 1912, a group of 2,500 marines landed in Nicaragua to suppress a rebellion, and they remained for 13 years due to continued instability. This was another action that increased distrust of America among many Latin American nations.

Central America and the Caribbean

The Spanish-American War, the Panama Canal project, and the Roosevelt Corollary ensured extensive U.S. involvement in Latin America. Many Caribbean and Latin American countries seemed to be in a perpetual state of revolution and political upheaval. Due to its close geographic proximity, the U.S. felt compelled to get involved and exert influence in these conflicts. The significant financial investment that resulted from “dollar diplomacy” also required the U.S. to intervene repeatedly in order to protect its citizens and investments. Taft continued Roosevelt’s imperialist policies and increased America’s economic and political empire throughout the world.

Disorder and rebellion in Cuba, Honduras, and the Dominican Republic were causes for alarm in the United States. Most Caribbean countries at the time were politically unstable and desperately impoverished. The U.S. adopted a policy of “non-colonial imperial expansion” in an attempt to bring stability and order to the region. Essentially, this unilateral policy enabled the U.S. to intervene in the region without actually taking control of any of these countries. The decision to intervene was at the discretion of President, although some countries requested U.S. assistance. People on both sides of the imperialism issue were critical of non-colonial imperial expansion. Imperialists believed that this policy was limiting and contrary to American interests. Anti-imperialists believed the strategy was too vague and would allow America to intervene in any situation it wanted.

A key element of this new imperialistic movement was the promotion of financial security for the U.S. and other countries in the western hemisphere. The U.S. stepped in and advised Caribbean countries on ways to more efficiently manage their economic affairs. However, many of these countries were rife with corruption and their resources were badly mismanaged, so the U.S. took a more active role to ensure that their revenues were properly handled. In many cases, the U.S. took control of a country’s customshouses and made certain that revenues were appropriately controlled and distributed. In the short run, this strategy was successful. For example, U.S. control of the Dominican Republic’s customshouses helped bring short-term financial security to the nation. However, when the U.S. returned control to the Dominicans, the mismanagement resumed and the Dominican Republic was no better off than before. Another unfortunate result of U.S. involvement was that feelings of resentment and distrust toward America continued to grow throughout Latin America.

In 1912, within one week of taking office, Woodrow Wilson removed governmental support for American businesses operating in the Caribbean and China. Wilson was an intense critic of imperialism and his goal was to reverse Roosevelt’s “big stick” policies and Taft’s “dollar diplomacy.” His vision for U.S. foreign policy was based on morality. He strongly believed that his immediate predecessors had pursued a policy that would breed dislike of the U.S. and often sacrifice goodwill for short-term gain. For this reason, Wilson’s foreign policy has sometimes been called “missionary diplomacy” or “moral diplomacy.”

After Wilson’s policies were instated, American bankers withdrew their support for Taft’s six-nation loan to China, which caused the loan to collapse. Wilson also immediately repealed the Panama Canal Tolls Act that exempted U.S. vessels from paying tolls at the Canal. The repeal of this act pleased England who was angry at paying tolls that U.S. ships were exempt from. Another of Wilson’s anti-imperialist actions was the signing of the Jones Act of 1916. The Jones Act promised the Philippines independence as soon as they were able to demonstrate that they had a stable government. However, this act proved to be less than successful, as the Philippines were not granted independence until 30 years later on July 4, 1946.

Haiti had been a key target of Taft’s “dollar diplomacy.” It was an exceptionally poor nation even by Caribbean standards and Taft tried to improve the Haitian economy through the influx of American investment. Wilson began withdrawing some of America’s involvement and influence when he took office, although many Americans continued to live and own property in Haiti. In 1914 and 1915, the Haitian people were outraged by the oppressive nature of their President, so they rebelled, literally tearing him to pieces during a bloody revolution. In response, Wilson reluctantly sent troops to Haiti to protect American citizens and investments. He agreed to a treaty with Haiti in which the U.S. would help police the nation and supervise its finances. Due to continued Haitian instability, U.S. troops remained in Haiti for 19 years. Despite Wilson’s intentions, the U.S. continued to exert influence throughout the Caribbean.

For the United States, another key area of concern in Central America was Nicaragua. Its close proximity to the Panama Canal made Nicaragua’s stability crucial to American interests in the region. Nicaragua asked the U.S. for help, and in 1911 American bankers and investors reorganized the Nicaraguan financial structure and began to manage its customs service. They were successful in bringing some stability to the country, but in 1912 a violent political revolution began. This revolution greatly concerned the U.S., since an armed insurrection in the region threatened the security and the prosperity of the burgeoning Panama Canal. The U.S. responded by sending 2,500 troops to the nation. Although the troops were rarely involved in combat, they remained in Nicaragua for 13 years.

Wilson’s “moral diplomacy” achieved mixed results. One of his primary goals was to stabilize the Caribbean and Latin America during the onset of World War I, with a minimal amount of American involvement. Also, he wanted to completely reverse Roosevelt’s “big stick” policies and remove all elements of Taft’s “dollar diplomacy.” However, Wilson faced a great deal of pressure from imperialists as well as American industrialists. Despite Wilson’s intentions to limit U.S. involvement in the region, he sent troops to Nicaragua, Haiti, and the Dominican Republic, which ensured a U.S. military presence in the Caribbean and Central America for decades. Ironically, regardless of his sincere intentions to halt the spread of imperialism, Wilson intervened in Latin American affairs more than any other president.

The Mexican Revolution

The Latin American country most important to the well-being of the U.S. was its neighbor to the south, Mexico. Mexico is a nation rich in resources, but its ineffective and corrupt governments had exploited the Mexican people for years. A series of brutal dictators had controlled the country for decades, and many of them mismanaged Mexico’s resources, making themselves rich while the majority of Mexicans were desperately poor. Tension had been high for years, and there had been several attempts at revolt, but the dictators were successful at suppressing any significant revolution.

Mexican leaders sold the country’s resources to foreign investors, often at the expense of Mexican citizens. Americans owned 43 percent of the land in Mexico, while foreigners from other countries owned 25 percent. By 1913, American investment in Mexico was well over a billion dollars, including significant ownership in railroads, oil resources, and mines. Porfirio Diaz, the leader at that time, was particularly ruthless and oppressive. Eventually, the number of foreigners profiting from Mexican resources and Diaz’s cruelty helped promote a strong surge of nationalism in Mexico.

The first Mexican Revolution began in 1910. The people were led by the radical Francisco Madero. Madero and his followers staged a successful campaign, and in 1911 they gained control of Mexico and appointed Madero president. He was very popular and viewed as a president of the people, but in 1913 another revolutionary group assassinated Madero. The leader of the coup, General Victoriano Huerta,thenthen then assumed the presidency.

As a result of the instability and revolution in Mexico, a huge influx of immigrants fled to the United States. Many Mexicans feared Huerta, and fled the country in order to escape his tyranny. The majority of these immigrants settled in the southwestern U.S., where they lived in segregated communities and were used as cheap labor for building railroads. All told, over one million Mexicans migrated to the United States in the early twentieth century.

During this revolutionary era in Mexico, over 50,000 Americans owned property and lived in Mexico. They began to feel legitimately threatened by this newfound Mexican nationalism, and called for protection from the U.S. government. Other Americans not living in Mexico also asked for intervention, including “yellow journalist” William Randolph Hearst. Although Hearst may have truly desired aid for Americans living in Mexico, he was surely influenced by his ownership of a Mexican Ranch larger than the state of Rhode Island. Despite growing pressure, President Wilson was reluctant to intervene in Mexican politics. He had been working to reduce American involvement in Latin America, and was very hesitant to interfere and risk a direct conflict with Mexico.

Although Wilson was unwilling to play an active role in Mexico, he by no means condoned the tyrannical Huerta regime. In fact, Wilson was one of the few foreign leaders who did not accept the legitimacy of Huerta’s leadership and refused to recognize his government. As Huerta’s violence towards his people continued to escalate, Wilson was forced to act more directly. He stated that he would “…teach the South American republics to elect good men,” and in 1914 the U.S. began supplying weapons to Huerta’s rivals. Venustiano Carranza and Francisco “Pancho” Villa, were the leaders of a rebel army created to unseat Huerta.

In April 1914, a group of American sailors on shore leave was arrested in Tampico, Mexico. The U.S. was outraged, and the sailors were quickly released with the apologies of the Mexican government. However, Mexico was unwilling to provide the 21-gun salute demanded by the Americans. Seizing the opportunity to finally remove Huerta and end his tyranny, Wilson asked Congress for permission to use force against Mexico. In the mean time, while still awaiting Congressional approval, Wilson ordered the navy to seize the port of Vera Cruz. This action not only angered Huerta, it also upset the rebel leader Carranza, who viewed this act as exceeding the boundaries of the informal agreement between his group and the United States.

As tensions continued to mount, war with Mexico seemed inevitable until Argentina, Brazil, and Chile intervened. The so-called “ABC Powers” interceded and attempted to reach an agreement between the United States and Mexico. These powerful South American nations helped the U.S. undermine Huerta, and in 1914, after intense internal and external pressure, President Huerta stepped down as ruler of Mexico. The open presidential seat was filled by Venustiano Carranza who still harbored resentment toward America because of the U.S. meddling at Vera Cruz.

Despite his distrust of Carranza, President Wilson reluctantly recognized the legitimacy of Carranza’s presidency. Meanwhile, Carranza’s former general, Pancho Villa, had now emerged as his chief rival. Villa not only defied Carranza’s régime by leading an armed revolution, he directly challenged the extensive U.S. involvement in Mexico. In an effort to rebuild a relationship with Mexico, Wilson supported Carranza against Villa and sent arms to sustain Carranza’s armies. Villa was angered by Wilson’s actions, and retaliated by killing 18 Americans in Mexico and then embarked on a bold raid into Columbus, New Mexico killing 19 Americans.

Americans were stunned and outraged by Pancho Villa’s brash actions. President Wilson ordered General John J. Pershing to lead several thousand troops into Mexico to capture Villa. General Pershing’s army moved quickly into Mexico and engaged Villa’s supporters, who were known as Villistas. The disorganized Mexican rebels were no match for the better-trained and equipped U.S. forces, and Pershing won several convincing victories. However, he was unable to find Pancho Villa, which was the ultimate goal of the mission, and this failure did little to enhance the international reputation of the U.S. military. Finally, as it no longer seemed possible for the U.S. to remain out of WWI, Wilson recalled Pershing and his men in January 1917.

Both Taft’s “dollar diplomacy” and Wilson’s “moral diplomacy” achieved mixed results. Taft’s foreign spending and interventionism gained the U.S. short-term allies, but also created long-term animosity throughout Latin America. It strengthened the U.S. economy through increased American investment abroad and allowed America to gain a position in several emerging global markets. Upon taking office, Woodrow Wilson attempted to reverse most of Taft’s foreign policy. Wilson’s staunch anti-imperialism was a completely new approach for America. He withdrew government support of American investors in foreign markets and attempted to bring America back within its borders. However, his reluctance to intervene militarily in foreign affairs was often seen as hesitant and weak and caused many of his policies to be largely ineffective. Eventually, Wilson’s approach to foreign policy proved too unrealistic for success in the Western Hemisphere, but the true test of his foreign policy would come on the other side of the Atlantic in World War I.

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How to cite this note (MLA)

Aboukhadijeh, Feross. "Taft and Wilson" StudyNotes.org. Study Notes, LLC., 17 Nov. 2012. Web. 30 May. 2024. <https://www.apstudynotes.org/us-history/topics/taft-and-wilson/>.