Which policy used economic leverage to influence foreign governments?

• A. Dollar Diplomacy
• B. U.S.S. Maine
• C. Panama Canal Zone
• D. Dawes Act

Answer: (A)

Dollar Diplomacy uses economic power to influence foreign governments. This approach, championed during Taft’s presidency, sought to protect and advance American interests abroad by backing and encouraging private investments—banks and investors would fund governments and projects in other countries. When a country depended on those American loans or investments, it became more likely to adopt policies favorable to the United States. The emphasis is on leveraging money to shape foreign policy, rather than relying on military force. The other options point to different ideas: the U.S.S. Maine is about a battleship linked to war with Spain; the Panama Canal Zone concerns sovereignty over a strategic waterway; the Dawes Act deals with U.S. domestic policy toward Native Americans.