Eleanor Finch
Between 1909 and 1933, the United States employed various diplomatic strategies in Nicaragua, including Dollar Diplomacy, Missionary Diplomacy, and military intervention. Dollar Diplomacy, associated with the Taft administration, aimed to promote American business interests and financial gains in Latin America and East Asia through economic power and loans to foreign countries. This policy, however, failed to bring about economic stability in Nicaragua and was met with disapproval from Latin American countries. The Wilson administration continued Dollar Diplomacy in Nicaragua, signing the Bryan-Chamorro Treaty in 1914, which granted the United States certain concessions in exchange for financial support. Additionally, the United States engaged in Missionary Diplomacy in Nicaragua, which ultimately failed due to questions about American business interests and protests from Central American countries. The United States also intervened militarily in Nicaragua, occupying the country from 1912 to 1933, to protect American investments and prevent other nations from building a Nicaraguan Canal.
| Characteristics | Values |
|---|---|
| Date of diplomatic relations established | 1824 |
| Date of independence | 1849 |
| Date of first U.S. diplomatic mission | 1851 |
| U.S. policy type | Dollar diplomacy |
| Dollar diplomacy definition | Use of economic power to further aims in Latin America and East Asia |
| Dollar diplomacy goals | Stability and financial opportunities |
| Dollar diplomacy success | Mixed, failed to counteract economic instability |
| Military intervention | Yes |
| Occupation dates | 4 August 1912 – 2 January 1933 |
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What You'll Learn
Dollar diplomacy
In Nicaragua, dollar diplomacy was initiated by President Taft and Secretary of State Philander C. Knox in 1912. This policy was a continuation of the Roosevelt Corollary, which had been implemented in the Dominican Republic. Dollar diplomacy in Nicaragua involved the use of diplomacy to advance and protect American business interests, as well as the use of American dollars to promote the needs of American diplomacy.
One example of dollar diplomacy in Nicaragua was the landing of US Marines in 1912 to suppress a rebellion against President Adolfo Díaz, who was cooperative with the United States. Another example was the signing of the Knox-Castrillo Convention in 1911, which provided for a large loan from US bankers to refund Nicaraguan debt and establish US administration of customs services. However, this plan was rejected by the US Senate.
Overall, dollar diplomacy in Nicaragua was part of a broader US policy to encourage and protect trade within Latin America and Asia, while also restraining other foreign countries from reaping financial gains.
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US occupation of Nicaragua
The United States occupation of Nicaragua, from August 4, 1912, to January 2, 1933, was part of the Banana Wars, when the U.S. military invaded various Latin American countries from 1898 to 1934. The U.S. invasion of Nicaragua birthed both a dictatorship and one of Latin America's most important revolutionary heroes: Augusto Sandino.
In the late 19th and early 20th centuries, the U.S. government pursued economic and geopolitical interests in Nicaragua, particularly related to the construction of a Nicaraguan Canal. This led to interventions in the country's internal affairs, including support for conservative factions opposing the Liberal Party government of President José Santos Zelaya. In 1909, the U.S. broke relations with Zelaya, who had mortgaged his country to European interests, and encouraged his enemies to revolt. Zelaya resigned in December 1909, and his hand-picked successor, Jose Madriz, was elected by a unanimous vote of the Liberal Nicaraguan National Assembly. However, the U.S. Secretary of State, Philander C. Knox, refused to resume diplomatic relations, stating that the U.S. would not recognise the new government until Madriz demonstrated that it was a "responsible government."
The political conflict in Nicaragua continued between the liberal and conservative factions, threatening U.S. investments under President William Howard Taft's Dollar Diplomacy, which included substantial loans to the fragile coalition government of conservative President Juan José Estrada. When Minister of War General Luis Mena forced Estrada to resign and replaced him with his vice president, Adolfo Díaz, nationalistic sentiments arose in the Nicaraguan military, with Mena accusing Díaz of "selling out the nation to New York bankers." Díaz appealed to the U.S. government for help as Mena's opposition turned into a rebellion. In 1911, the two countries signed the Knox-Castrillo Convention, which provided for a large loan from U.S. bankers to refinance Nicaraguan debt and U.S. administration of customs services. However, the U.S. Senate rejected this plan.
In 1912, the political conflict in Nicaragua escalated, and the U.S. intervened with military force, marking the beginning of the formal occupation. By March, the U.S. had 2,000 troops in Nicaragua under the command of General Logan Feland. U.S. forces engaged in combat with Nicaraguan insurgents, including the capture of Granada and the bombardment of Barranca and Coyotepe, two hills overlooking a critical railway line. Despite the presence of U.S. troops, the revolutionary leader Augusto César Sandino continued to wage a guerrilla insurgency against the conservative government. In 1928, U.S.-supervised elections were held, but Sandino and his forces, numbering over 5,000 men by 1930, continued to resist.
Finally, on January 2, 1933, President Herbert Hoover, who had opposed the U.S. intervention in Nicaragua, ended the American occupation. The U.S. withdrawal set the stage for dictatorship and, later, revolution, with Sandino celebrated as a Nicaraguan revolutionary and liberator.
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US intervention in Nicaragua
The United States' intervention in Nicaragua can be traced back to the early 20th century, specifically the presidency of William Howard Taft (1909-1913). During this period, the US employed "dollar diplomacy" in Nicaragua, aiming to exert American influence through economic means and the use of loans to foreign countries. This policy, driven by Secretary of State Philander C. Knox, sought to create stability in Nicaragua to promote American commercial interests and restrain other countries from gaining financial benefits.
In 1909, the US broke relations with Nicaraguan President José Santos Zelaya of the Liberal Party, who faced opposition from the Conservative Party led by Juan José Estrada, who received American support. Zelaya resigned in December 1909, and his successor, Jose Madriz, was elected by the Liberal Nicaraguan National Assembly. The US refused to resume diplomatic ties with Nicaragua until Madriz demonstrated "responsible government." This marked the beginning of a pattern of American involvement in Nicaraguan politics, often taking sides in internal conflicts and using economic and political tools to exert influence.
In 1911, the US and Nicaragua signed the Knox-Castrillo Convention, which provided for a large loan from American bankers to refinance Nicaraguan debt and US administration of customs services. However, the US Senate rejected this plan. The following year, in 1912, the US formally occupied Nicaragua, sending in US Marines to support the conservative Adolfo Díaz's government, which faced a revolt led by the Secretary of War, Luis Mena. This intervention was justified by the need to protect American interests, including the Nicaraguan railway from Corinto to Granada. The US occupation lasted from 1912 to 1933 and was part of the "Banana Wars," a series of US invasions of Latin American countries. During this time, Nicaragua assumed a quasi-protectorate status under the 1916 Bryan-Chamorro Treaty, which gave the US the option of a canal route and naval base rights.
In 1927, US forces were again deployed to Nicaragua, following a request from Adolfo Diaz, who had been selected as designated leader by the Nicaraguan Congress. This intervention led to the defeat of government forces and the occupation of strategic locations by US Marines. A peace deal was brokered in 1928, but the Liberal commander Augusto César Sandino continued the revolution, seizing the San Albino gold mine and attracting recruits. The final major engagement of the US intervention was the Battle of El Sauce, and by 1932, US forces had largely withdrawn from the country.
Throughout the early 20th century, the US intervention in Nicaragua was driven by a desire to protect American citizens and economic interests, particularly the construction of a Nicaraguan canal and the preservation of stability in the region. However, it also led to accusations of dealing with puppet regimes and protests from other Central American countries, highlighting the complex and often controversial nature of US diplomacy in the region.
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US severed diplomatic relations
The United States first recognised independent Nicaragua in 1849 and established diplomatic relations with the country in 1851. However, the US severed diplomatic ties with Nicaragua on December 1, 1909, when Secretary of State Philander Chase Knox returned the passport of the Nicaraguan Chargé d’Affaires. This was due to Nicaraguan President José Santos Zelaya ordering the execution of US citizens Leonard Croce and Lee Roy Cannon, who had aided the revolutionaries led by Liberal General Juan J. Estrada.
Following this, the US occupied Nicaragua from 1912 to 1933, marking a period of military intervention in the country. This intervention was influenced by President William Howard Taft's "dollar diplomacy", which aimed to exert American influence through financial institutions and diplomats. This policy was intended to minimise the use of military force and instead further economic goals, particularly in Latin America and East Asia.
During this time, the US provided substantial loans to the Nicaraguan government and interfered in the country's political conflicts. In 1911, the two countries signed the Knox-Castrillo Convention, which included a large loan from US bankers to refinance Nicaraguan debt. However, this plan was rejected by the US Senate. Despite this, the US continued to pursue its economic interests in Nicaragua, and in 1913, US firms provided the country with more than $2.5 million through various financial transactions.
In 1933, President Herbert Hoover ended the American intervention in Nicaragua, marking a shift in diplomatic relations between the two countries. However, tensions continued to arise, and in 1988, the Nicaraguan government expelled the American Ambassador, Richard Melton, along with seven other members of the American Embassy. More recently, the US has imposed sanctions on key Nicaraguan officials and economic sectors, such as gold and precious metals, in response to anti-government protests and concerns about democratic principles.
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US support for Adolfo Díaz
The US support for Adolfo Díaz, the conservative vice president who replaced Juan José Estrada as Nicaragua's president, was part of President William Howard Taft's "dollar diplomacy". This policy, pursued from 1909 to 1913, aimed to exert American influence primarily through banks and financial interests, backed by diplomats and the threat of military force.
In Nicaragua, this took the form of substantial loans to the fragile coalition government of Estrada, Díaz's predecessor. When Díaz himself faced a revolt in 1912, Taft sent in US marines, who remained in the country when Woodrow Wilson became president. In 1911, the two countries signed the Knox-Castrillo Convention, which provided for a large loan from US bankers to refinance Nicaraguan debt and US administration of the country's customs services. The US Senate rejected this plan, but a new treaty signed in 1913 gave the US an option on a canal route and naval base rights.
The US occupation of Nicaragua, from 1912 to 1933, was part of the Banana Wars, when the US military invaded various Latin American countries. These interventions were designed to stop any nation other than the US from building a Nicaraguan Canal. Nicaragua assumed a quasi-protectorate status under the 1916 Bryan–Chamorro Treaty.
Dollar diplomacy was also evident in extensive US interventions in Venezuela, Cuba, and other parts of Central America, especially in measures to safeguard American financial interests. In China, Knox secured the entry of an American banking conglomerate, headed by J.P. Morgan, into a consortium financing the construction of a railway from Huguang to Canton.
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Frequently asked questions
Dollar diplomacy was a foreign policy of the United States, used during the presidency of William Howard Taft, to further its aims in Latin America and East Asia through economic power, rather than military force.
Dollar diplomacy was used in Nicaragua to advance and protect American business interests and to promote the needs of American diplomacy. This was done by reducing and simplifying the country's debt and setting up a customs receivership.
The Knox-Castrillo Convention was a treaty signed between the United States and Nicaragua in 1911. It provided for a large loan from U.S. bankers to refund Nicaraguan debt and allowed for U.S. administration of the country's customs services.
No, the U.S. Senate rejected the plan. However, a new treaty signed in 1913 gave the United States the option of a canal route and naval base rights in Nicaragua.
Yes, in 1912, President Taft sent 2,000 U.S. marines to Nicaragua to suppress a rebellion against President Adolfo Díaz.
