In a general sense, dollar diplomacy refers to the practice of obtaining a preferred diplomatic outcome by offering money in exchange for favorable diplomatic decisions. The policy began in the early 20th Century in the United States. President Theodore Roosevelt established a principal, known as the Roosevelt Corollary to the Monroe Doctrine, that empowered the United States to intervene in any country within the Western Hemisphere if the United States determined that its interests would benefit from intervention.

Roosevelt's successor, President William Howard Taft, went on to employ dollar diplomacy widely throughout Latin America. Essentially, Taft's government provided guaranteed loans to governments in exchange for those countries enacting policies that were favorable to the United States. In later years, the United States would employ dollar diplomacy throughout East Asia as well.