The correct answer to this open question is the following.
The economic and political conditions that had to exist for President Taft's "Dollar Diplomacy" to be effective were the following.
There had to be a special United States interest in strategic decisions that could affect the economic and political interest of the United States in the region.
For instance, that was the case of the money Central American countries such as Nicaragua owned to European nations. Taft decided to pay that debt but the result was that Nicaragua was in deep debt to the United States, and other kinds of problems aroused.
The foreign policy of "Dollar Diplomacy" was not so effective. It did not pressure countries through a military threat but it created severe differences between the US and Latin America.
