William Howard Taft succeeded Roosevelt in 1909 in the White House. He had been Roosevelt’s secretary of war and had gained extensive knowledge of inter-national relations in heading the commission that governed the Philippines and travelling the Far East. But he decided not to intervene personally as much in State Department affairs as Roosevelt had done, but rather shift the interest to domestic issues.[124]

   Despite his foreign affairs background, the heavily-overweight president and his secretary of state Philander C. Knox - both former lawyers - considered that foreign relations were to work just as law practice did; but they neglected to respect the drive for power that stood behind many nations’ policies.[125]

   Dollar Diplomacy is a good description for the new approach to foreign affairs that the Taft administration conceived. Their basic idea was that dollars would be a more effective means of achieving national goals than bullets. Assistant secretary of state Fred M. Huntington Wilson described this approach at the Third National Peace Conference in 1911:

„Commerce means contact, contact means understanding (...), international commerce conduces powerfully to international sympathy. [Dollar Diplomacy] means the creation of a prosperity which will be preferred to predatory strife.“[126] 

   The emphasis of foreign policy had apparently shifted from geostra-tegic thinking to more universalistic concepts, the underlying view of the world was one that was integrated through the unifying forces of economic interests.

   In Asia Taft soon had to recognize that these interests were not necessarily unify-ing. Russia and Japan had laid down their rivalry and split control over Manchuria along their railroads.
Knox saw the Open Door being effectively shut in Northern China. In 1910 he pro-posed ‘neutralizing’ the railroads by operating all foreign railroads in China coope-ratively. France and Britain who had just entered into friendly relations with Russia and Japan did not want to anger their allies and refused. Japan and Russia only got more determined and signed a treaty of friendship, Japan then went on and formally annexed the Korean peninsula.[127]

   The Taft administration had anyway refocused on the China heartland whose in-dustrial development it wanted to foster to create more potent markets for Ameri-can products. As he told the American Association in China, Taft was convinced that „a trade which depends for its profits  on the backwardness of a people in develo-ping their own resources (...) it is not one which can be counted upon as stable or permanent.“[128]  For currency reform, the United States negotiated a loan between China and American banks such as J.P. Morgan. Again, the railroads were consi-dered most important. The State Department demanded that a German, French and British railroad project was opened to include American financiers that Knox had
assembled. China reluctantly agreed. But not only the United States, Japan and Russia as well pushed into the venture. The evident exploitation and partition of China by the great powers infuriated the Chinese. Anti-foreign riots broke out anew and soon the Chinese Revolution had commenced.[129]

   In Latin America, Taft proved that the Dollar Diplomacy could be just as interven-tionist as Roosevelt’s overt imperialism. In the case of Taft’s Dollar Diplomacy, intervention could be justified for political and economic stability to avoid negative effects on the interdependent economy. In some countries the economic approach worked out. In Costa Rica and Honduras the United Fruit Company had a tight grip on just about every sector of the economy. To prevent disadvantages for its business, the company tried to avoid turmoil before it could hurt them. The two countries enjoyed stability and more or less democracy. In Haiti, a U.S. loan helped to appease the mounting discontent temporarily. But Nicaraguan dictator Zelaya demanded the United States' attention. He continuously attacked the neighboring countries Honduras and Costa Rica and was thinking of granting a European power the right to built a canal through his country. The United States were clearly challen-ged. In 1909 the marine corps was dispatched to support a Nicaraguan revolutiona-ry movement. When Zelaya had captured two Americans and executed them, he had to resign after heavy pressure from Knox and the U.S. Navy. Meanwhile Ame-rican money flooded into the country to acquire railroads and banks.
In 1912 pro-American President Adolfo Díaz proposed that the U.S. cast a protec-torate over the country for desperately needed loans. A revolt broke out over this humiliation and Taft had U.S. troops sent to Nicaragua to support the president. They had to remain until 1926.[130]

   For the first time the U.S. foreign policy tried to integrate the Middle East into its foreign policy concept. American advisers administered the Persian treasury and with State Department support, American companies attempted to get railroad contracts in Turkey but had to withdraw because of German objections.[131]

   Although being basically an economic and political internationalism, the Dollar Diplomacy had failed to bring results that contributed to world peace. Instead, it had even added to disorder.