rms of U.S. ability to supply loans and in terms of world reaction. The dismal failure of Dollar Diplomacy--from its simplistic assessment of social unrest to its formulaic application--caused the Taft administration to finally abandon the policy in 1912. The following year President Woodrow Wislon publicly repudiated Dollar Diplomacy, though he acted as vigorously as had his predecessors to maintain U.S. supremacy in Central America and the Caribbean. Dollar diplomacy has come to refer in a disparaging way to the heedless manipulation of foreign affairs for strictly monetary ends.In his first term President Wilson also became embroiled in the Mexican Revolution. An affront to U.S. sailors led to his bombardment of Veracruz (1914), and border raids by Pancho Villa prompted a U.S. expedition into northern Mexico (1916). The Mexican Constitution of 1917 then granted to the state all subsoil resources to prevent their exploitation by U.S. firms. Such revolutionary efforts to nationalize resources, however, only meant that they went undeveloped or were exploited at home by Moen 5corrupt officials, while the United States retaliated by cutting off loans and trade. The Latin-American dilemma of weakness and disunity in proximity to a mighty and united power was thus insoluble through unilateral efforts or a Pan-American movement dominated by Washington. Wilson’s proposed League of Nations seemed to offer Latin America a means of circumventing U.S. influence. But the United States inserted Article 21 to the effect that "Nothing in this Covenant shall be deemed to affect the validity of international engagements, such as treaties of arbitration or regional understandings like the Monroe Doctrine." Secretary of State Hughes later defended U.S. behavior by candidly questioning the ability of some Latin-American states to maintain public order, sound finance, and the rule of law. When the Chaco dispute between Bolivia and Paraguay erupted in...
