Which policy used economic power to influence other countries?

• A. Roosevelt Corollary
• B. Moral imperialism
• C. Dollar Diplomacy
• D. Panama Canal Zone

Answer: (C)

Using economic power to influence other countries is the idea behind Dollar Diplomacy. Under Taft, the goal was to protect American interests by backing loans and investments from U.S. banks in foreign nations, especially in Latin America, and using financial leverage to secure favorable policies and stable governments. This approach aimed to substitute money for military force—encouraging economic stability and profitable conditions for American businesses as a means of shaping foreign policy.

This differs from the Roosevelt Corollary, which leaned on military intervention to manage instability, and from moral diplomacy, which emphasized promoting democratic values rather than economic leverage. The Panama Canal Zone is not a policy for influencing governments; it’s a strategic territory acquisition linked to a canal project rather than an approach to diplomacy.