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*** START OF THE PROJECT GUTENBERG EBOOK 76272 ***





                         THE FIVE REPUBLICS OF
                            CENTRAL AMERICA

                    [Illustration: CENTRAL AMERICA]




                       UNIVERSITY OF PENNSYLVANIA

                           THE FIVE REPUBLICS

                                   OF

                            CENTRAL AMERICA

                      THEIR POLITICAL AND ECONOMIC
                    DEVELOPMENT AND THEIR RELATIONS
                         WITH THE UNITED STATES

                            BY DANA G. MUNRO

                                A THESIS

       Presented to the Faculty of the Graduate School in partial
       fulfillment of the requirements of the degree of Doctor of
                              Philosophy.

                                NEW YORK
                        OXFORD UNIVERSITY PRESS
                  AMERICAN BRANCH: 35 WEST 32ND STREET
                 LONDON, TORONTO, MELBOURNE, AND BOMBAY
                                  1918




                             COPYRIGHT 1918
                                 BY THE
              CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE,
                           WASHINGTON, D. C.

                      THE QUINN & BODEN CO. PRESS
                             RAHWAY, N. J.




                           AUTHOR’S PREFACE


By many persons in the United States, Central America is conceived of
chiefly as a land of revolutions, bankrupt governments, and absconding
presidents, and a haven for fugitives from justice from more settled
countries. The progress of the people of the Isthmus since their
declaration of independence, and the significance of this progress
in view of the difficulties with which they have had to contend, are
rarely recognized. The fact is too frequently overlooked that the
greater part of the people of the five republics, except in Costa
Rica, are descendants of the semi-civilized aboriginal tribes whom the
_Conquistadores_ enslaved in the sixteenth century, and that these
Indians still remain, for the most part, in a condition of dense
ignorance and economic dependence. Even the white upper classes were
prevented for three centuries from making any advance in civilization
by the restriction of intercourse with other countries and the
centralization of authority in the hands of foreign officials under
the Spanish colonial system; and they were unable to set up a stable
political system when they obtained their independence, because of
their lack of experience in self-government, and because of the absence
of political institutions upon which a stable system of government
could be based.

When we take these facts into consideration, and when we see the
advances which some of the Central American Republics have been able
to make despite these handicaps, we shall be less ready to conclude
that their people are inherently unfit for self-government. Our own
race is removed from the disorderly conditions which characterize the
more turbulent parts of the Isthmus only by a few hundred years, and
in the United States we are not unfamiliar today with evils similar to
some of the worst evils of Central American political life. There is no
reason to suppose that all of the five republics will not eventually
develop stable governments, as some of them have already done. Although
conditions in many parts of the Isthmus are still very bad, they are
gradually being overcome by the efforts of the better elements among
the ruling classes and by the gradual progress of the common people.
Since the Washington Conference of 1907, moreover, the preservation of
internal and international peace in the Isthmus has been powerfully
aided by the influence of the United States.

That the economic and political conditions of Central America and the
other countries of the Caribbean should be understood by the American
government and the American people is of the utmost importance. The
policy of the United States, more perhaps than any other factor either
external or internal, will determine the course of the development of
the five republics during the next few decades, and if this policy is
to be beneficial, it must be based on knowledge and must be controlled
by an intelligent public opinion. Only injustice can result from the
publication of works like many of the recent superficial descriptions
of Central America, whether they portray the five countries as foci
of continual disorder, constitutionally incapable of self-government,
and hence destined to absorption by a stronger power, or paint a
ridiculously laudatory picture, based on official reports and on the
utterances of the authorities rather than on critical observation. It
is the purpose of this study to describe conditions simply as they
appeared to the author during a sojourn of two years in the Isthmus,
with the object of setting forth what the people of Central America
have achieved since their declaration of independence and what problems
confront them in their present stage of development.

The difficulties in the way of a careful study of the history and
the economic and political conditions of the five republics are very
great, because there is so little trustworthy written material.
Historical works are especially unsatisfactory. The colonial period
is ably treated in two or three books by Central American authors,
but the development of the community since its separation from Spain,
and the far-reaching economic and political changes which have taken
place during the last century, have apparently never been studied by
anyone who was equipped by historical training and by a knowledge of
the country to interpret them. In attempting to obtain material for
sketching the historical development of the Isthmus, therefore, I have
been forced to rely on the very inadequate histories which do exist,
which are little more than lists of presidents and revolutions, and
upon a large number of political pamphlets, government documents, and
memoirs of Central American leaders and of early travelers in the
Isthmus. Much of this material is all but worthless because of the
ignorance or the ulterior motives of the writers, but there is enough
of value to reveal certain broad tendencies of economic and political
development.

It is equally difficult to secure data concerning the condition of the
country at present. Official publications can rarely be accepted as
reliable because of the carelessness with which records are kept and
statistical data are gathered by most of the departments, and because
official statements about the material progress of the country and the
activities of the authorities too often represent patriotic aspirations
rather than accomplished facts. The differences in the use of terms
and in standards of public service, moreover, are so great that it is
difficult for a foreigner to obtain an idea of the actual situation in
one of the countries merely by conversation with the authorities and
other persons in the capital. The writer found it extremely helpful
to supplement such conversations with trips to the provincial towns
and through the rural districts. An acquaintance with the life and
the character of the people outside the somewhat Europeanized cities,
and an observation of the actual working of the political machinery,
did much to make clear many things which otherwise might have been
difficult to understand.

The courtesy of the officials of the five governments, and the
hospitality extended to the traveler by all classes of the people,
make a journey through Central America an experience upon which one
can always look back with keen pleasure. It would be impossible here
to thank individually the many friends who helped to make my stay in
the Isthmus both pleasant and profitable. Nevertheless, I wish to
express especially my appreciation of the assistance which I have
received from Dr. L. S. Rowe, Mr. John M. Keith, Señor Luís Anderson,
Señor Manuel Aragón, Mr. Boaz Long, Mr. and Mrs. Arthur Jones, General
Luís Mena, Mr. and Mrs. William Owen, Professor Philip M. Brown, Señor
Francisco Castro and Doña Fidelina de Castro, Dr. Escolástico Lara, Dr.
Juan B. Sacasa, Dr. Louis Schapiro, and General José María Moncada.
Without their assistance, it would have been impossible to secure the
information upon which this study is based.




                               CONTENTS


CHAPTER                                                             PAGE

I. THE COUNTRY AND THE PEOPLE                                          1

II. CENTRAL AMERICAN POLITICAL INSTITUTIONS                           24

III. GUATEMALA                                                        50

IV. NICARAGUA                                                         72

V. SALVADOR                                                           99

VI. HONDURAS                                                         119

VII. COSTA RICA                                                      138

VIII. THE ESTABLISHMENT OF A CENTRAL AMERICAN FEDERATION             164

IX. THE CAUSES OF CENTRAL AMERICAN REVOLUTIONS                       185

X. THE WASHINGTON CONFERENCE OF 1907                                 204

XI. THE INTERVENTION OF THE UNITED STATES IN NICARAGUA               227

XII. COMMERCE                                                        265

XIII. CENTRAL AMERICAN PUBLIC FINANCE                                284

XIV. THE INFLUENCE OF THE UNITED STATES IN CENTRAL AMERICA           303

BIBLIOGRAPHY                                                         321

INDEX                                                                327




                               CHAPTER I

                      THE COUNTRY AND THE PEOPLE

 Physical Features--Character of the Population--The
 Land-owning and Laboring Classes: Their Mode of Life and
 Personal Characteristics--Factors Which Have Retarded Economic
 Development--Agricultural Products--Foreign Immigration and
 Investments.


Guatemala, Salvador, Nicaragua, Honduras, and Costa Rica, the five
Republics of Central America, occupy a narrow strip of land between
the Atlantic and Pacific Oceans, extending East and South from Mexico
to the Isthmus of Panama. Although their combined area is smaller
than that of the state of California,[1] they comprise many regions
of strikingly different climatic conditions, for the mountains which
occupy the greater part of their territory cause variations in the
distribution of rainfall, and also provide plateaus and high valleys
where the tropical heat is less intense because of the altitude. Along
the shore of the Caribbean Sea there is a broad strip of country
but little above sea level. This has remained almost uninhabited
until recently because of its intense humidity and suffocating
temperature, but within the last twenty-five years it has become of
great economic importance, at least to the outside world, through its
exports of bananas. The lowlands extend inland to the Central American
_Cordillera_, a series of ranges which grow higher and higher as they
approach the Pacific Ocean, until they culminate in a great chain of
volcanic peaks which traverses the Isthmus from the Mexican boundary
to that of Panama. It is near these peaks, where the decomposed lava
from past eruptions has created a marvelously fertile soil, and where
the climate, with copious but not excessive rains during six months of
the year, is healthful and favorable to agriculture, that the great
majority of the people of Central America live. Almost all of the
more important cities and towns are situated either in the mountain
valleys, at an altitude of from two to seven thousand feet, where the
temperature rarely exceeds eighty degrees Fahrenheit, or in the hot,
but dry and therefore comparatively healthful plain between the base of
the volcanoes and the Pacific Ocean.

Populous and partially civilized Indian communities had existed in this
part of America for centuries before the Spanish conquest, and their
descendants form the bulk of the population of the five republics.
Although the original inhabitants were almost exterminated in many
districts by the oppression and mistreatment of the early colonists,
enough remained to become the predominant racial element in the
conglomerate population, Spanish in language and religion but Indian
in civilization and standards of living, which arose from the fusion
of the invaders, the aborigines, and the negroes who were brought in
as slaves or escaped to the mainland from the West Indies. This was
especially true of the three central countries of the Isthmus, and the
development of these has therefore been somewhat different from that of
Costa Rica, where the white stock predominates even among the common
people, and from that of Guatemala, where the pure-blooded Indians are
still a distinct and separate race.

Although the Central American countries are theoretically democracies,
there is in each a small, powerful upper class, consisting of
the so-called “principal families.” These are for the most part
descendants of the prominent creole[2] families of colonial days, and
are therefore in many cases of pure or almost pure Spanish descent. A
large proportion,--perhaps the majority,--however, have more or less
Indian and even negro blood in their veins. This class has been able
to maintain its dominant position in the community, partly because of
its command of the government, which it assumed when the republican
institutions which the Isthmian patriots attempted to introduce after
the declaration of independence were found to be unworkable because of
the ignorance of the mass of the people, but more especially because
of its control over agriculture. At the time of the conquest, the
land, like everything else in the invaded territory, was treated as
the property of the crown, and that in the neighborhood of the Spanish
settlements was divided among the colonists by the royal governors.
Further large allotments were made from time to time during the
colonial period. After the declaration of independence, the governments
of the several republics continued to regard as state property all
land not already specifically granted, and sold or gave away large
tracts of it to rich natives or foreigners, notwithstanding the fact
that much of the public domain was already occupied by peasants who
had always considered the patches which they cultivated as their own.
The number of large holdings has been further increased in some of the
republics by the division of the common lands formerly held by each
village among the village’s inhabitants; for the beneficiaries have
often sold their shares to their wealthier neighbors. At the present
time a comparatively small number of persons own a very large amount of
agricultural property, and employ the majority of the other inhabitants
of the Isthmus as workmen on their plantations. The economic and
political power of this class would manifestly be very great even
if it were not supported by their prestige as the descendants of the
conquering race.

Although their wealth is entirely agricultural, the “principal
families” invariably reside in the cities. They make frequent visits
to their plantations, which they intrust to the care of overseers, but
the majority of them show a marked aversion both to country life and
to rural pursuits. As a whole they are neither very enterprising nor
very energetic. Those who do not inherit a plantation which produces
an income sufficient to support them turn to one of the already
overcrowded learned professions rather than to the development of the
natural resources of their countries, in the exploitation of which
foreigners are daily making fortunes before their eyes. Nearly every
member of the upper class, moreover, is actively engaged in politics,
often to the exclusion or to the detriment of his other occupations.

The wealthier families live in one or two story houses of adobe or
concrete, which cover a surprisingly large extent of ground but
have little pretension to architectural beauty or to comfort. These
are built around two, and often three, courtyards or _patios_.
The front _patio_, upon which open the _sala_, or parlor, and the
bedrooms, generally contains an attractive garden surrounded by an
open _corredor_, which serves as living room and dining room. At the
rear are the kitchen, stable, and servants’ quarters. The standard of
living, especially in the less advanced countries, is still rather
primitive. Furniture and food are of a very simple character, and the
servants, of whom each family employs a large number, are untrained
and inefficient. The band concerts three or four times a week, the
cinematographs, and occasional cheap operettas offer almost the only
opportunity for diversion, except on the very unusual occasions
when a government subsidy makes possible a short season of opera
or drama. Social events are comparatively few. In every city there
are two or three civic _fiestas_ during the year, when the native
society abandons itself to a round of dancing, horse-racing, and other
gayeties, but at other times the capitals of the Isthmus are decidedly
dull. Life in them has, however, a peculiar charm for the foreigner,
because of the kindliness and friendliness of the people.

Since the building of the railways and the increase of commerce have
brought the Central American countries into closer touch with the
outside world, there has been a great change in customs and ways of
living in such places as Guatemala, San Salvador, and San José de
Costa Rica. The high price of coffee during the last decade of the
nineteenth century brought about an era of prosperity such as the
rather backward communities of the Isthmus had never before known.
Elaborate private residences and costly public buildings were erected
in the national capitals, and pianos, window glass, modern furniture,
and other articles which had formerly been little used, were imported
from Europe in great quantities. After the reaction which set in when
the value of coffee in the world’s markets declined, the new standard
of living remained, and even the poorer members of the upper classes
now enjoy most of the comforts and many of the luxuries of modern
civilization. The tendency to adopt European and North American customs
is greatly furthered by the young people, who in increasing numbers are
sent abroad to school and college, for they return with new tastes and
new ways of thinking even when they do not acquire a great amount of
learning.

Although the members of the upper class are for the most part
descendants of the _conquistadores_, social and political prominence
is today no longer entirely a matter of birth. The old creole families
formed a narrow and exclusive circle until the latter part of the
nineteenth century, but as a result of factional wars among themselves
and against other portions of the community, they have now become
generally impoverished and almost exterminated. A new element,
recruited from the more intelligent and ambitious members of the lower
classes, has meanwhile achieved a large amount of political power,
and has perforce been admitted to a position almost of equality with
the old aristocracy. At the present time, humble birth in itself is
no obstacle to advancement, although educational opportunities are so
limited, and the part played by family influence and favoritism is so
great, that only the most capable and energetic boys from the lower
classes can hold their own with those to whom the accident of birth has
given powerful friends and greater opportunities for study.

The half-breeds, known as _ladinos_ or _mestizos_, occupy an
intermediate position between the white aristocracy and the great mass
of the laboring population, in which the Indian blood predominates.
For the most part these are artisans, or skilled laborers, in the
towns. They are generally clever workmen, enterprising and quick to
learn, but without the capacity to work steadily and diligently for any
one object. They occupy practically all of the positions which call
for manual dexterity or special training. Many become more prominent
than the persons of pure Spanish descent in the public schools and
universities, and not a few rise to high positions in the government or
in the learned professions.

In each of the five republics there are some small farmers, who are
for the most part descendants of the early Spanish colonists. These
are the leading citizens of the smaller towns and villages. They do
not always have property of their own, but often cultivate fields
allotted to them by the municipalities of which they are citizens.
The new settlements which were founded from time to time during the
colonial period were given tracts of land, usually a league square, to
be used in common by their inhabitants, one part as pasture, another as
forest, and a third to be apportioned each year among the members of
the community. Similar grants were made to many of the Indian villages
and tribes, which in some cases received a title to much larger tracts
than their white neighbors. These common lands still exist in all of
the republics, but the number of villages which hold them has been
greatly reduced because some of the governments, as in Costa Rica and
Guatemala, have enacted laws dividing them among the inhabitants,
in the hope of stimulating private enterprise. The property thus
apportioned, as we have stated above, was frequently sold to the rich
planters, especially in the districts where the climate was suited
to the cultivation of coffee, and the former owners became part of
the class of landless laborers. Even where this has not occurred, the
smaller villages have in most places decayed because of the emigration
of their inhabitants to the cities and to the coffee-growing centers.
The small-scale agriculturist has ceased to be an economic factor of
importance, except in Costa Rica and in some parts of Salvador; and
today there are few places more lifeless and more depressing than the
once prosperous settlements in the more remote country districts.

The household servants and the common laborers, who form the poorest
classes, are descendants of the native tribes whom the _conquistadores_
overcame and enslaved early in the sixteenth century. The first
settlers everywhere forced the Indians to work for them, either
by declaring them slaves, as a punishment for rebellion, or by
establishing the _encomienda_ system, under which influential Spaniards
were intrusted with the religious instruction of the inhabitants of
certain villages, and in return for the benefits thus conferred were
allowed to demand a certain amount of labor from their spiritual
charges. These _encomiendas_, or _repartimientos_, were the principal
source of income among the early colonists. The unfortunate aborigines
were compelled to work in mines or plantations or to bring in tribute
to their masters, and they were treated with the most revolting cruelty
when they failed to do so. After the Spanish government became aware of
the grave abuses which the system involved, it ordered its suppression,
but the _encomiendas_ were finally abolished only after a long struggle
with the colonists, who were secretly aided by the royal governors in
maintaining their privileges. The Indians never entirely regained their
economic independence, for their descendants, with the exception of a
few thousands who live an isolated, half-savage life in clearings in
the forest, are to the present day dependent upon employment on the
plantations of the white families.

Whether in the cities or in the country, the laboring classes live in
one or two room huts of adobe or wood, with dirt floors and thatched
roofs. A crude table and two or three chairs, one or more beds of
rawhide or wood, and often a shrine, with a small image of the Virgin
or of some saint, comprise the entire furniture. The walls are
decorated with colored prints and advertisements, which are much prized
by those fortunate enough to secure them from some passing traveler
or from friends in the city. There is usually a loft in one end of
the hut, in which the stock of corn and beans, if there is any, and
a few of the more bulky family possessions are kept, while the small
tools and utensils and the contents of the larder are suspended from
the walls. Water, which is often brought by the women on their heads
from some little distance, is contained in large earthenware jars and
dipped out in gourds, which serve not only as cups but as washbasins.
Cooking is performed over an open fire on a brick platform, where there
is sometimes a primitive oven. The family livestock is represented by
a few pigs and chickens, which associate on friendly terms, inside and
outside of the house, with the lean dogs and naked children.

Under such conditions, the Central American laborer lives contentedly
and without worry, for he requires few clothes and but a small amount
of inexpensive food. Corn, prepared in the form of _tortillas_, beans
and rice cooked with lard, and coffee form the diet of the average
family day after day. Plantains are also eaten in great quantities in
some parts of the Isthmus, and eggs can frequently be secured. Meat
can be had only occasionally outside of the cities, and vegetables,
although easily grown, are little cultivated. The same is true of the
innumerable and delicious tropical fruits, which grow up where accident
dictates, without care or protection.

Because of the primitive living conditions, there is a considerable
amount of disease and a high death rate, especially among the children.
Malarial fever and typhoid are common, and intestinal parasites are
omnipresent. The hookworm, especially, has done incalculable harm.
The eradication of this disease has recently been undertaken by
the governments of several of the five republics, with the aid of
the International Health Commission of the Rockefeller Foundation,
which has contributed large sums of money and lent trained men for
the prosecution of the work. The prevalence of the hookworm, which
perhaps contributes as much as any other factor to the poor physical
condition of most tropical races, is indicated by the fact that of
the persons examined by the representatives of the Commission in
1915, 60.1 per cent were found to be infected in Costa Rica, 58.6 per
cent in Guatemala, and 49.4 per cent in Nicaragua.[3] Notable results
have already been obtained, not only in curing sufferers, but in
educating the people and their governments to appreciate the need for
improvements in sanitation and the need for closer attention to the
public health in general. When the principles of hygiene are better
understood in the Isthmus, and when better systems of sewers and
water supply are provided, the Central American cities should be as
healthful as any in the temperate zones, for their moderate climate and
the porousness of the volcanic soil upon which they are situated should
do much to prevent the diseases common in other parts of the tropics.

In the country villages, life is extremely uneventful and deadening.
The women spend a large amount of time in visiting one another and in
attending church services or prayer meetings. The men work, where there
is work, on week days, and get drunk on _aguardiente_, or sugar-cane
rum, on Sunday. The fiestas and fairs, which are held at least once
a year in every village, are mainly an occasion for gambling and
debauchery, so far as the common people are concerned. There are few
other recreations. The monotony of such an existence, which leads
the rural laborers to embark on any adventure offering promise of
excitement and prospects for loot, is one of the factors which makes
it easy to raise a revolutionary army in many of the Central American
States.

Except in Guatemala, where there exists a peonage system which will
be described later, the wages of the working man are not very low,
considering the fact that his services are of far less value to
the employer than would be those of one who was more energetic and
intelligent. They range in general from the equivalent of fifteen cents
United States currency a day with food and lodging to thirty, forty, or
even fifty cents a day without it, and in some places are still higher.
The workmen are neither conscientious nor physically strong, and the
amount which they accomplish in a day is small. On many plantations,
payment is made by the task, and the employees work intermittently,
frequently failing to appear for days at a time. This is in part due
to the prevalence of drunkenness and disease, and in part simply to
an indisposition to work more than is necessary to provide a bare
subsistence.

There is little pretense of equality in the treatment by the government
of the upper and lower classes. The laborers and country people
are forced to bear the entire burden of the military service which
is theoretically required of all, and to perform work on the roads
and other public undertakings from which the wealthy families are
practically exempt; and they are everywhere taxed heavily, although by
indirect means, for the benefit of the professional politicians who
occupy posts in the government. The petty local officials exercise an
almost irresponsible authority over them, and frequently use their
power for their own personal advantage or for that of their friends.
The poor man enjoys little security in his personal or property rights,
and thus has little incentive to better his position.

Education, however, has done much in the last twenty-five years to
improve the situation of the masses in the more advanced republics,
for the laboring man who learns to read and write has in his hands a
powerful weapon both for his own protection and for the advancement
of his political and economic interests. In Costa Rica, where public
schools have been established everywhere and the percentage of
illiteracy is comparatively insignificant, the peasants are assuming
a more influential place in the community. Salvador, Nicaragua, and
Honduras have been prevented by internal disorder and lack of resources
from raising their educational systems to the level of that of their
more tranquil neighbor, but their rulers have taken a very real
interest in popular instruction, and have made it possible for a very
large part of the people to acquire a knowledge of reading and writing.
In Guatemala alone the great majority of the inhabitants are at present
illiterate. This is not entirely the fault of the government, which
has instituted a large number of schools and has legislated for the
establishment of others by the owners of plantations, but is due rather
to the indifference of the Indians themselves, who as a rule do not
care even to learn to speak Spanish.

Public and private morality have been rather disastrously affected by
the social conditions arising from the conquest of a half-civilized
race by adventurers who in too many cases belonged to the lowest and
worst classes in Spain. The Indians who continued to form the bulk of
the population were deprived of their own religious and moral customs,
and were given in their place a Christianity which was imposed upon
them by force, and of which, because of the cruelty and licentiousness
of their conquerors, they saw only the worst side. The oppression and
violence which characterized the communities of the Isthmus during
their early history long prevented their social life from acquiring
stability, and made brute force, rather than conscience or public
opinion, the ruling principle in private as well as in public affairs.
Even at present, in some of the five countries, political and social
conditions tend to militate against public spirit and altruism in
public life and personal honesty in private life. Social conditions
also leave much to be desired. With the men of the upper classes, ideas
of morality are generally rather loose, and it is not unusual to see a
respected citizen bringing up a number of children by other women side
by side with those of his lawful wife. The community not only does not
censure his careless observance of the marital tie, but even receives
the illegitimate offspring on practically the same footing as the
legitimate. With the half-breed laborers, marriage is an institution
which finds little favor, not, as is sometimes said, because of the
expense which the ceremony involves, but because both the men and the
women dislike the obligations and ties which a formal union creates,
and prefer a relation which, although generally fairly permanent, can
be broken off by either party at will.

This low morality is to a very great extent due to the lack of
religious restraints. At one time, the Catholic Church, to which all
of the people nominally belong, was very powerful throughout the
Isthmus, and the clergy and the numerous monasteries exercised a strong
social and political influence. A few years after the declaration
of independence, however, the Liberal leaders, who had been opposed
by the clerical party in their struggle to regain power during the
years 1826-29, expelled the archbishop and many of the other priests,
and suppressed all of the convents. The religious orders were never
revived, except in Guatemala after the Conservative victory of 1839.
There they continued to exercise a dominant influence until the
revolution of 1871, after which the government again suppressed them
and took radical measures to destroy the influence of the secular
clergy. In the other countries, the priests continued to play a small
part in politics, usually as the allies of the Conservative party,
but at present their influence can hardly be said to be important. In
spiritual as well as in temporal affairs the Church has now almost
entirely lost its hold on the people. Many of the women are still very
devout, but the men, especially among the upper classes, are for the
most part frankly irreligious. In the country districts, few of the
churches can support a priest, and religious observances are confined
to prayer meetings, led and participated in by the women, and to the
rather licentious celebration of holy days. Among the priests, many of
whom are foreigners, there are some who lead an irreproachable life,
but many others, especially in the poorer countries, do much to harm
the Church by their scandalous conduct. There are a few missionaries
from England and the United States, but Protestantism is so utterly
unsuited to the temperament of the people that they have made few
converts.

The Central American has, nevertheless, many good qualities. He is
good-natured, affable, profoundly attached to his friends and the
members of his family, and deeply susceptible to lofty ideals and
patriotic impulses. In every city there are a number of men who are
distinguished for their personal integrity and their scrupulous
honesty, whose influence and example do much to offset the demoralizing
effects of conspicuous political corruption and commercial dishonesty.
Even among the most brutal and the most ignorant of the men who have
been in power in the various republics, there have been few who have
not done what they could, in spite of the difficulties presented by
armed opposition and administrative disorganization, to promote the
social and economic progress of their countries.

The backwardness of the five republics is in large part due to the
isolation in which they were kept by Spain during the three centuries
of their existence as colonies. Their development was restricted
until the beginning of the nineteenth century by a misguided policy
which made progress almost impossible. Agriculture and industry were
hampered by burdensome regulations and taxes which not only prevented
the cultivation of many products for which the country was admirably
suited, but also made difficult, if not impossible, the exportation of
those which could be grown. The prohibition of commercial intercourse
with foreign countries and the restriction of that with Spain, combined
with other obstacles to transportation to and from Europe, practically
shut off Central America from the rest of the world during the entire
colonial period. Even the declaration of independence in 1821 made
little immediate change in this respect, for the new republics had
still no direct means of communication with Europe and North America.
They all faced the Pacific rather than the Atlantic Ocean. Guatemala
City, San Salvador, and the other capitals were not only nearer to the
West than to the East Coast, but they were separated from the latter by
mountainous country and pestiferous jungles through which traveling
was difficult and dangerous. It was not until the construction of the
Panama and Tehuantepec Railways brought the West Coast ports within
comparatively easy reach of the centers of the world’s trade that they
could export their products profitably. More recently the construction
of railways across Guatemala and Costa Rica has given those countries
an outlet upon the Atlantic.

Even after the main obstacles to communication with the outside world
had been removed, the economic development of the five republics was
held back by internal conditions, for the political disturbances which
characterized their first half century under republican institutions,
and which are still prevalent in some of them, made large scale
agriculture difficult and unprofitable, and discouraged commerce.
The civil wars often drew the laborers away from the plantations at
the time when their services were most needed, and caused a periodic
destruction of property and a laying waste of planted fields. In
Guatemala, Costa Rica, and Salvador, where revolutions have been less
common during the last generation, the wealthier classes have become
very prosperous through the production and exportation of coffee, but
Honduras and Nicaragua, because of the almost continuous fighting
between rival factions, are today but little better off than in 1821.

All of the five Central American countries are still purely
agricultural communities. Manufacturing has never advanced beyond the
point of providing a few primitive articles for home consumption, and
the native industries have declined since the increase of commercial
relations with the outside world has made it more profitable to import
many things, such as textiles, furniture, and leather goods, than to
make them with the crude tools of the local craftsman. There are a few
small factories in each city which produce _aguardiente_, cigars and
cigarettes, cloth, candles, and other articles, but in none of them is
there employed a great amount of capital or a great number of laborers.
The most important agricultural products, from the native point of
view, are the staple food crops, among which corn, which is cultivated
by every farmer in every part of the Isthmus, holds first place. Beans,
rice, sugar cane, and plantains are also found everywhere where they
will grow. Potatoes, cacao, and countless varieties of fruits and
vegetables from the temperate zone as well as from the tropics are
raised here and there in the climates suited to them, but comparatively
little interest is shown in their cultivation, and they are
surprisingly hard to obtain except in the markets of the larger towns.
Agricultural methods have changed little since the Spanish conquest.
Except in the most thickly settled regions, the old Indian system of
planting is still employed. A patch of forest is cleared by cutting
down the larger trees and burning off the undergrowth and branches, and
the seed is sown among the charred trunks in holes made with a pointed
stick. After being used for one year, the land is planted with grass
for pasture or allowed to return to its original condition, and is not
cultivated again for from three to five seasons. In the regions where
the density of the population makes it necessary to plant the fields
year after year, a crude form of wooden plow is used, but fertilizers
and modern agricultural implements are little known. The _machete_, a
long heavy knife which each laborer carries at his belt, serves as axe,
hoe, and trowel. The soil is so rich, however, that it produces two and
in some places even three crops each season without apparently becoming
impoverished.

In Nicaragua and Honduras, and in the low country along the Pacific
Coast of the other republics, a large part of the land is devoted to
cattle _haciendas_. The stock as a rule is not of a very fine type.
Except on a few ranches no attempt has been made to improve the race
of the herds by the importation of animals from abroad, and the native
stock seems to have degenerated somewhat as the result of centuries of
life in a hot climate. The cattle receive little attention from their
owners, and in some regions die by thousands in dry years for lack of
food and water. Practically all of the meat is consumed in Central
America, for the surplus product of Honduras and Nicaragua is bought
by their more densely populated neighbors. The hides and horns are
exported to the United States and Europe, but the occasional attempts
which have been made in recent years to do the same with a few thousand
head of live cattle have not been very successful. Dairy products play
but a small part in Central American domestic economy. The native cows
produce little milk, and the cheese which is made in large quantities
is commonly of a very inferior quality.

Until several years after the declaration of independence practically
the only exports of Central America were the forest products of the
East Coast and small amounts of indigo, cochineal, and cacao from the
communities on the Pacific side of the Isthmus. The five republics had
very little commerce, and for this reason had little intercourse with
the outside world. This state of affairs was completely changed when
the coffee plant was introduced from the West Indies in the second
quarter of the last century. As the soil and climate on the slopes
of the volcanoes along the western coast were found to be admirably
suited to this valuable crop, and the product of Central America from
the first commanded a high price in the European markets, the number
of plantations increased rapidly, and the new industry soon became the
chief interest of the landed proprietors in Guatemala, Costa Rica,
and Salvador, and to a less extent in Nicaragua. The cultivation of
coffee was in fact carried to a point where it seriously affected the
production of the staple food crops, for land formerly planted with
corn and beans was turned into _cafetales_, and the inhabitants of the
rural districts, who formerly raised enough food to supply their own
wants and to sell a small amount in the cities, were led by the greater
earnings or were forced by official pressure to become laborers on the
coffee plantations. Food prices have consequently risen, and it has
become necessary to import flour, rice, and sometimes even beans and
corn from other countries. When land has once been planted with coffee
trees, which require from three to five years to come into bearing and
thus represent a large amount of fixed capital, it is difficult to
return it to its original uses, or to release the laborers from the
plantation to engage in other occupations, even though in eras of low
coffee prices the production of other crops might be more profitable.

Coffee is most advantageously grown on a large scale, as its
preparation for the market requires the removal of the pulp of the
berry and of the two skins of the bean itself by rather expensive
and complicated machinery. The better plantations in Central America
produce from 200,000 to 1,000,000 pounds of cleaned coffee each
year,[4] and have their own _beneficios_, or cleaning mills. The
farmers who operate on a smaller scale, or who for some reason have not
found it profitable to install a cleaning mill, send their coffee to
_beneficios_ in important shipping centers, where the work is performed
at so much per bag. Before the war the greater part of the product was
exported to Germany, England, or France, but the partial closing of the
market in Europe has caused increasing amounts to be sent to the United
States since 1914.[5]

The rapid development of the export trade and the corresponding
increase in the imports of the five republics would not have been
possible without the improvement in means of transportation which has
taken place during the last half century. There has been a remarkable
betterment, especially in the facilities for travel between Central
America and the United States. On the Atlantic side, the United
Fruit Company, and, in times of peace, the Hamburg-American line, as
well as a number of smaller companies, provide an ample freight and
passenger service between all of the important ports and New Orleans
and New York. From Puerto Barrios and Puerto Limon, the termini of
the transisthmian railroads, there are several boats each week. The
conditions on the West Coast are much less satisfactory, for the
Pacific Mail Steamship Company, which has almost a monopoly since the
German Cosmos Line was forced to withdraw by the war, provides a very
irregular and rather expensive service. Even there, however, conditions
are immeasurably better than at the time of the opening of the Panama
Railway in 1855.

Internal communications have also been improved. Fifty years ago,
there were practically no railways in the entire Isthmus, but at the
present time each of the national capitals, except Tegucigalpa, is
connected with one or more seaports by daily train service. Other
forms of transportation and travel, however, are still in a rather
primitive state. Some of the republics have spent large amounts of
money in constructing roads for bringing the products of the country to
the cities or to the railway stations, but as a rule the impecunious
governments have not been able to make much headway against the
difficulties presented by the mountainous character of the country and
the torrential rains of the wet season. There are few highways which
are suitable for any vehicle more elaborate than the slow-going oxcart,
and in many places even these have to give way to the pack mule.

One of the forces which has been most potent in bringing Central
America into closer contact with the outside world has been the
cultivation of bananas by North American enterprise along the low,
densely wooded Atlantic Coast. Until recently almost the only
inhabitants of this region were scattered, uncivilized tribes descended
from Indians and runaway West Indian negroes, who lived in an extremely
primitive way in clearings along the shore or on the banks of the
rivers. There were one or two struggling ports and a few settlements
of woodcutters who traded in mahogany, logwood, and Spanish cedar, but
these had little intercourse with the civilized communities of the
interior. Within little more than a quarter century, this unpleasant
and unhealthful but marvelously fertile region has been transformed.
Great banana farms have been created in the formerly impassable jungle,
and a net of railways has been built to carry the perishable fruit to
the ports, from which it is shipped in fast steamers to the United
States and Europe. This is the work of one American corporation, the
United Fruit Company, which controls the banana trade not only of
Central America, but of the West Indies as well. As the plantations and
the transportation lines are managed principally by North Americans and
the manual labor is performed by negroes from the British West Indies,
English is the predominant language of the new towns which have sprung
up. To the native Central American, the Coast is almost a foreign
country. The Caribbean ports of Honduras and Nicaragua are in fact
for all practical purposes farther from Tegucigalpa and Managua than
from New Orleans, and even in those countries where there are better
means of transportation from the interior to the fruit ports the banana
country has developed in its own way, influenced little, economically
or politically, by the communities of the interior. The interior towns,
however, have been profoundly affected by the changes on the East
Coast. The fruit trade is mainly responsible for the improvement of the
steamship service; and in Guatemala and Costa Rica the railways built
originally for the transportation of bananas have been extended to the
capitals of the two republics, so that the journey from Europe and
North America to those cities, and through them to other parts of the
Isthmus, has been shortened by several days.

In the interior of several of the republics, the last fifty years have
seen a considerable immigration of foreign business men and planters,
among whom Germans and North Americans have been the most numerous,
although there have also been many Frenchmen, Englishmen, and Italians.
The newcomers have obtained almost complete control over the foreign
trade of the Isthmus, and even the retail trade at the present time is
largely in the hands of Spanish, Chinese, and Armenian shopkeepers.
Mercantile pursuits were at one time one of the chief occupations
of the creole families, but most of the easy-going Central American
merchants, accustomed to the routine created by three centuries of
isolation, have been unable to hold their own under changed conditions.
The same is true, though to a less extent, in agriculture. Many of the
finest plantations were developed in the first place by foreigners,
and others are constantly passing into their hands. The majority of
those still belonging to natives are heavily mortgaged, for the Central
American planter apparently cannot resist the temptation to borrow
money, notwithstanding the high rates of interest and the ruinous
conditions on which he secures it. There are several European firms
whose business it is to make loans secured by plantations and crops.
These eventually take over the properties which fall under their
control, either reselling them or operating them on their own account.

There are also several small and not very scrupulous banks, of which
the majority have been established, in part at least, with foreign
capital. In some of the republics these have co-operated effectively
with the officials in the disorganization of the currency and of the
government finances. Large investments have been made by North American
interests in railways and mines. The total amount of foreign capital
in the country is, however, comparatively small, because internal
disorders and the slowness with which the country has been opened up
have until lately discouraged investments. There is still an immense
field for foreign enterprise in the exploitation of Central America’s
natural resources, which include not only land suitable for the
production of almost every kind of agricultural product, but also great
forests of valuable woods and as yet untouched mineral deposits.

In some respects, the relations between Central America and the outside
world have not been entirely beneficial to the communities of the
Isthmus. Many of the foreigners, especially among the Americans, have
been fugitives from justice in their own countries who have used their
talents to the disadvantage of the natives, or adventurers who have
mixed in the politics of the country for their own profit. Unscrupulous
corporations or individuals have exploited the inexperience or cupidity
of the local governments to obtain valuable concessions without
making any adequate return for the favors received, and have not even
hesitated to incite or to assist revolutions when they thought that
their interests would be furthered by doing so. Too many of the foreign
business men have done what they could to make worse the already
low standards of commercial morality and have shown themselves more
unprincipled than their native competitors. In spite of the distrust
generated by hard experiences, however, the Central Americans do not
seem to dislike the newcomers or greatly to resent their intrusion.
Many North Americans and Europeans have become respected and
influential residents of the communities in which they have settled,
and marriages between foreigners and natives of the better class, which
have been generally welcomed by the creole families, are gradually
giving rise to a half-foreign element which is becoming more and more
prominent in each of the five republics.

Closer contact with the outside world has thus brought about entirely
new conditions throughout the Isthmus. What the final result of the
present changes will be, it is difficult to say. The native families
are now more and more losing their hold on the economic life of
the country, for commerce, banking, mining, and to an increasingly
greater extent agriculture, are controlled by foreigners. They are
therefore being forced into the learned professions, which afford a
very poor livelihood for any but the most able, and into politics.
Their influence is becoming less and less, and the time seems not far
distant when the dominant place in the community will be assumed by the
foreigners and their descendants, who will probably be assimilated to
a great extent into the native population. Some of the more energetic
and intelligent native families will doubtless be able to maintain
their present wealth and influence, although they will be forced to
change their customs and habits completely, as many of them are already
doing in the more advanced countries. Whether political and social
conditions will be improved or made worse by these developments it is
still too early to say, but it is inevitable that both the character of
the governments and the conditions of the people as a whole should be
profoundly affected.


FOOTNOTES:

[1] The estimated area and population of the five countries, as given
in the Statesman’s Year Book for 1916, are:

                     _Area._              _Population._
Guatemala     48,290 square miles.  2,003,579. (1915)
El Salvador    7,225    ”    ”      1,225,835. (1914)
Nicaragua     49,200    ”    ”        703,540. (1914)
Honduras      44,275    ”    ”        562,000. (1914)
Costa Rica    23,000    ”    ”        420,179. (1915)
              ------                ---------
             171,990                4,915,133


[2] The word creole is used in the Spanish-American sense, to signify a
person of Spanish descent born in America.

[3] These figures are compiled from the Second Annual Report of the
International Health Commission, 1915.

[4] In Guatemala there are three or four plantations which produce much
more than this.

[5] For a more complete account of the coffee trade, see Chapter XII.




                              CHAPTER II

                CENTRAL AMERICAN POLITICAL INSTITUTIONS

 Early Political History of the Isthmus--Difficulty of Establishing a
 Stable Government--Annexation to Mexico--Establishment and Dissolution
 of the Central American Federal Republic--Strife Between Liberals
 and Conservatives--Description of Central American Governments at
 Present--Importance of the President--Political Parties, Patronage,
 and Graft--Revolutions.


On September 15, 1821, the principal civil and ecclesiastical
personages of Guatemala City, with many of the royal authorities
and the more prominent creoles, met in convention to proclaim the
independence of the five provinces of the Viceroyalty of Guatemala,
which had until that time been a dependency of the Spanish crown. The
existing administrative machinery was not for the moment abolished,
for many of the officials had approved of and had taken a prominent
part in the action of the separatist party. The Governor General,
Brigadier Gainza, continued to exercise the executive power, and the
local governors in Salvador, Honduras, Nicaragua, and Costa Rica were
instructed to do the same. In the capital, a committee of influential
natives, called the _Junta Consultiva_, was appointed to assist the
former royal authorities until a new form of government should be
decided upon. There was no armed resistance to this action on the part
of the mother country, for the latter, engaged in a prolonged struggle
with her more important colonies in the South, was in no position to
send troops to subjugate the inaccessible and relatively insignificant
communities of Central America.

The prospect which confronted the provinces thus thrown upon their own
resources was far from bright. They were ill equipped for existence
as an independent nation. The creole aristocrats, who had led the
movement for separation from Spain, and who now assumed control of
the government, had had little training to fit them for the exercise
of their new responsibilities, for few had received more than the
most rudimentary education at home, and fewer still had traveled in
foreign countries. None had had any practical experience in political
affairs, for it had always been the policy of the royal authorities
to fill official positions exclusively with Peninsular Spaniards,[6]
thus excluding the natives of the colonies from all share in the
administration. There were a half-score of brilliant leaders in the
councils of the new nation, but they were notable rather for their
exalted but impractical ideals than for any grasp of the concrete
situation with which they had to deal at home. Their patriotism was of
a high order, but their statesmanship left much to be desired. Among
the common people, the great majority were ignorant and superstitious
Indians, with a small admixture of Spanish blood and a thin veneer
of Spanish civilization. They were scattered through a strip of land
eight hundred miles in length, in isolated valleys, separated from
one another by mountain ranges and pestilential jungles, where rough
mule trails afforded the only means of communication. Throughout the
greater part of the Isthmus, the people of each village, having little
commerce with their neighbors or with the outside world, depended for
subsistence almost entirely upon their own products. A few favored
sections produced indigo, cochineal, or precious metals for export, but
the expense of shipping these articles from the Pacific Coast to Spain,
the only country with which the colonists were allowed to trade, was so
great that the planters derived little profit from them. Standards of
living were therefore little higher, even in the cities, than they had
been three hundred years before.

The Central American nation was divided within itself from the very
first. In Guatemala there was a bitter jealousy, created by the special
privileges and the pretensions of the more favored classes, between
the Peninsular officials and the creole great families on the one hand
and between the latter and the merchants and professional men of less
aristocratic origin on the other; and this feeling was intensified by
radical differences of opinion about religious and economic questions.
Besides the dissensions within the group which assumed the control of
political affairs in the capital, there were factional conflicts and
local civil wars in almost every part of the Isthmus. The provinces,
which had long felt that their interests were sacrificed by the royal
authorities to those of Guatemala, showed an inclination to dispute
the authority of the new central government, and their insubordination
was encouraged by the ambitious local governors, who desired to enjoy
independent authority, and by the not inconsiderable party which still
remained loyal to Spain. San Salvador, Comayagua, Leon, and Cartago,
the seats of the provincial governments, were soon the centers of more
or less open revolts against Gainza and the _Junta Consultiva_, while
other towns, actuated on their side by jealousy of the local capitals,
allied themselves to the party in control in Guatemala. The result was
a condition of anarchy which throttled agriculture and commerce, and
almost put an end to all semblance of organized government.

The inexperience of the creole leaders, and the conflicts between
jealous social classes and rival towns, were the more disastrous
because the Central American communities possessed no political
institutions which could be used as the basis for the establishment of
an independent government. In this respect they were in a situation
very different from that of the United States in 1783, for in that
country the state and local organizations had remained almost unchanged
despite the revolution, and the creation of a new central authority
had been made comparatively easy by the inherent political capacity
derived from centuries of racial experience in self-government. In
Central America, the country had been ruled for three hundred years by
officials and laws imposed by an outside force, and when this force
was withdrawn the old order fell to pieces, leaving nothing to take
its place. The self-appointed revolutionary committees had little hold
on the loyalty of the people, and little power to make their commands
respected. The only political institution which may be said to have
survived the change was the municipality. Even in colonial times,
the wealthier creoles had been able to purchase positions in the
_ayuntamientos_, or governing boards of the cities, and had thus had
a voice in the management of certain purely local affairs. After the
declaration of independence, the _ayuntamientos_ were in many places
almost the only respected authority, and they played a large part both
in maintaining order and in organizing the _juntas_ which took charge
of provincial affairs. But they never formed a real basis for the
formation of state and national governments, because their independence
and authority, which had been small under Spanish rule, was taken
from them early in the revolutionary era by the military despots who
obtained control of affairs. Their prominence during the transitional
period after 1821 contributed little to the establishment of orderly
government, for they were the foci of the local jealousies which did
more than anything else to keep the country in a state of anarchy.

The organization of a permanent government, to take the place of
the provisional revolutionary committees, consequently presented a
difficult problem. There was from the first a strong party which
favored the establishment of a federal republic, but the majority of
the wealthy classes, who had supported the declaration of independence
only because of their jealousy of the Peninsular Spaniards who
monopolized the official positions and because they realized that the
mother country was no longer in a position to protect her colonies from
outside aggression and internal disorder, doubted the ability of the
people of the Isthmus to rule themselves under republican institutions,
and advocated the union of the five provinces with Iturbide’s Mexican
empire. This party soon grew very strong as the result of disorders
which broke out in Honduras and Nicaragua, and on January 25, 1822, the
_Junta Consultiva_ voted in favor of the annexation. General Filísola,
the representative of the Emperor, reached the capital a few months
later, and proceeded at once with an army against the people of San
Salvador, who had refused to recognize his authority. He had barely
overcome the resistance of the republicans there when news arrived that
Iturbide had fallen.

Filísola, returning to the capital, called together a congress of
representatives from each of the five provinces, to which he turned
over his power. This body, assuming the title of National Constituent
Assembly, declared the former Central American colonies a federal
republic, and appointed a provisional executive committee of three men,
who exercised a precarious authority, subject to constant interference
by the Assembly, for two years. During this time, the Assembly framed
an elaborate constitution, modeled on that of the United States,
establishing a federal government in Guatemala City, and state
governments in each of the five provinces. A president and five _Jefes
de Estado_, chosen by the people through electoral colleges, took the
place of the Captain General and the royal provincial governors, and
the law-making power was placed in the hands of a Congress of one
chamber. The system of checks and balances in the American constitution
was taken over and made more intricate by elaborate provisions for
the maintenance of the independence of the legislative, executive, and
judicial departments and for the prevention of abuses of power.

The Assembly also adopted much progressive legislation, which did away
with many of the worst features of the Spanish regime. From the first,
however, its sessions were disturbed by irreconcilable differences of
opinion between the radical members, who were in the majority, and the
clergy and many of the rich landowners and merchants, who disapproved
of the proposed reforms. As a result of this conflict, two parties
were formed, which called themselves “Liberals” and “Conservatives.”
The Liberals controlled the first constitutional congress, which met
in 1825, and elected their candidate, Manuel José Arce, President
of the Republic. The latter, however, soon quarreled with his own
party, dissolved the congress, and even overthrew and reorganized the
state government of Guatemala, with the aid of the Conservatives.
These arbitrary acts caused revolts in many parts of the Isthmus,
and especially in Salvador. The people of that state had always been
peculiarly jealous of the control of their affairs from Guatemala,
and their hostility towards the capital had been increased by the
opposition of the federal authorities to the creation of a new diocese
in their territory. Under the leadership of Father Delgado, who aspired
to the bishopric, they united with the disaffected party in Honduras
and Guatemala in a two years’ war against Arce, and finally succeeded
in overthrowing him (1829).

Francisco Morazán of Honduras, the leader of the victorious army, was
proclaimed President of the Federation in 1830. The Guatemala state
authorities who had been expelled by Arce were reinstated, and Liberal
supremacy was established by force of arms throughout the Isthmus.
There were frequent Conservative revolts, however, and even the people
of Salvador, who had played the principal part in Morazán’s triumph,
showed their former jealousy of domination from Guatemala by turning
against him. Their resistance was overcome by force in 1831, but it was
thought politic to transfer the seat of the federal government to San
Salvador. After this, Morazán’s prestige waned rapidly. His efforts
to repress disorder were unavailing, and the Conservatives gradually
regained control of many of the state governments. The last federal
congress, which adjourned in 1838, declared the states free to govern
themselves independently; and in 1839, when Morazán’s second term came
to an end, his authority was recognized nowhere outside of Salvador. He
was expelled from Central America in the following year by an army from
Honduras, Nicaragua, and Guatemala.

The breakdown of the federal system was inevitable. Even those
responsible for the adoption of the constitution of the United States
as a model had little idea how that constitution really worked, and
had no conception of the spirit of compromise and of mutual respect
for legal rights which alone made the existence of a government such
as they wished to establish possible. Many of the state governors
refused to obey the federal officials, and were overthrown by the
latter and replaced by adherents of the faction in power in the
capital. The Congress, attempting to tie the hands of the executive,
was reduced to impotence by the use of the army. The President himself
succumbed before the end of his term to a revolution in which all of
the disaffected elements took part. Even a better organized government
would probably have been unable long to maintain order in a country
where distances were so great, means of communication so inadequate,
and sectional jealousies so intense as in Central America.

Equally inevitable was the breakdown of the democratic institutions
which the leaders of the constituent assembly had sought to create.
The elections soon became a farce because of the ignorance and
indifference of the great mass of the people. The history of the
Central Americans had never taught them respect for the will of the
majority, and there was consequently little inclination from the first
to accept an unsatisfactory verdict at the polls in good faith. The
authorities gradually learned to bring pressure to bear upon the voters
in the interests of the party in power, and as time went on assumed
a more and more complete control of the balloting, until candidates
opposed by the government ceased to have any chance of success. At
the same time the members of the opposition party were restrained or
expelled from the country, to prevent their intriguing or revolting
against the government. Within a few years authority established
and upheld by force was the only authority which was recognized or
respected, and there was no means of changing the officials in power,
and consequently no recourse against bad government, except revolution.
Civil war had thus become an indispensable part of the political system.

For some years after 1839, there was intermittent internal and
international strife, with hardly an interval of real peace, in
nearly every state of the Isthmus. Costa Rica alone, because of her
peculiar social conditions, which will be described in a subsequent
chapter, led a comparatively tranquil existence in her isolated valley.
Elsewhere the establishment of stable governments seemed impossible.
Conflicting ambitions, mutual persecutions, and sectional jealousy,
as well as differences over religious and economic questions, divided
the political leaders of the community into vindictively hostile
factions, which had no means of settling their disputes except by an
appeal to arms. The state governments, resting upon the outcome of
revolutions, had little claim to legality or to the respect of the
community, and they were compelled to maintain their position, where
they maintained it at all, by force and by tyrannical repression of
attempts to overthrow them. Besides the opposition of disaffected
classes at home, they faced also the constant danger of intervention by
neighboring state governments which were in the hands of the opposite
party, for the solidarity created by mutual action in federal affairs
led the Conservatives and Liberals in each state to assist their former
brothers in arms in other states even after all formal political
connection had been broken. This solidarity was strengthened by the
ambition of a large section of the Liberal party to re-establish the
old federal union by force, under the leadership of the followers
of Morazán, and by the opposition to this plan on the part of the
Conservatives.

During the greater part of the period from 1839 to 1871, the
Conservatives, under the leadership of the aristocratic-clerical party
in Guatemala, were dominant throughout the Isthmus. The Liberals
secured control for short terms at different times in Salvador,
Honduras, and Nicaragua, but in almost every case they were overthrown
by the intervention of Rafael Carrera, the President of Guatemala.
These Conservative governments, although usually controlled by the
wealthiest and most respectable classes in the community, did little
to improve the desperate political and economic situation into which
the continual civil war had plunged the new republics, partly because
of frequent changes in the personnel of the governments and frequent
dissensions within the ruling class, and partly because of the inherent
weakness of administrations established and upheld by the force of a
foreign government.

In 1871-72 the Liberals returned to power as the result of a concerted
movement in Guatemala, Honduras, and Salvador. This revolution effected
far more than a mere change of presidents; it marked the destruction of
the old aristocratic-clerical party as the dominant force in politics.
In Guatemala, where the Conservative leaders were exiled or imprisoned,
and both the great families and the Church were deprived of a great
part of their property and influence, the old regime has never been
restored. Its disappearance greatly weakened the position of its allies
in Honduras and Salvador. A very similar though almost bloodless
revolution occurred in Costa Rica in 1870, when General Tomás Guardia
overthrew the “principal families” which had hitherto controlled the
government. In Nicaragua, where party divisions were based rather on
local rivalries than on class distinctions, the change from the old
order to the new was neither so sudden nor so complete, and the Granada
aristocracy was able to maintain itself in power until 1893.

The Conservative party continued, indeed, to exist as a political
force, but it was no longer a social group which stood for definite
principles and points of view so much as mere organization of
professional politicians. The influence of the great families became
less and less, and the leadership in the party was assumed by military
chiefs whose objects and ambitions were little different from those
of their opponents. Since 1871, party lines have tended to disappear,
and it has made little difference in political conditions whether an
administration was controlled by one faction or the other. In Honduras
and Salvador, in fact, even the party names have almost ceased to
be used, and in Nicaragua they denote merely the adherents of rival
cities. It is difficult to say how strong the old aristocracy still is
in Guatemala because of the ruthless suppression of all manifestations
of political opinion by the government.

Since 1871, the republics of the Isthmus have been governed for the
most part by strong, absolute rulers, who have concentrated all power
in their own hands and who have on the whole been more successful in
maintaining order than the frequently changing and less centralized
administrations controlled by the Conservative oligarchy. Revolutions
and revolts still occur, but they are less often victorious than
formerly, for the relative power of the government has greatly
increased. The agricultural development of recent years has made
the wealthy classes, who have capital invested in coffee and sugar
plantations, inclined to frown on attempts to plunge the country into
civil war; and the improvement and the increased cost of artillery
and other military material have made it more difficult to equip a
revolution strong enough to overcome the regular army. Individual
presidents, supported by strong military forces, have thus been able to
hold the supreme authority for long terms of years, and to establish
highly centralized, comparatively efficient administrations, which
have done much to encourage the development of the country. Whatever
may be the disadvantages of the exercise of irresponsible power by one
man, there can be no doubt that the Central American countries have
made more progress under governments of this kind than they did under
the constantly changing administrations of their early history, which
had neither the prestige nor the military power necessary to maintain
order. Until the other departments, and especially the legislatures,
had been reduced to subjection by the executive, the action of the
latter was often almost completely paralyzed, and more than one
president was forced to resign by petty disputes arising purely from
personal jealousy. Under such conditions it was of course impossible to
pursue any definite and coherent policy.

The majority of the Central American governments at the present time
are republican only on paper, although the forms of the various
constitutions are still observed. Elections are held regularly in all
of the five republics, but they are controlled by the administration,
which almost invariably secures the triumph of the official ticket.
The extent to which this control is exercised varies with the
character and the strength of the President. In most cases, opposition
candidacies are simply not permitted, and anyone engaging in propaganda
unfavorable to the government’s party is severely dealt with. At
other times, only known adherents of the President are allowed to cast
their votes, and the ballots, if necessary, are fraudulently counted.
Even in Costa Rica, where comparative freedom prevails, the citizens
are sometimes intimidated or coerced, and the authorities are able to
bring pressure to bear in many ways, by promises of favors or by petty
persecutions. Such practices are made easier by the fact that the
voting is open and public, as the Australian ballot is unknown. One
or two real elections, in which the government has not desired or has
not dared to impose its will on the country, have been held in each of
the five republics, but they have usually not been participated in by
a large part of the people outside of the cities, and they are looked
back upon for generations as events far out of the ordinary. As a rule
changes in the presidency come about only when the chief magistrate
voluntarily relinquishes his office to a member of his own party, or
when the opposition is victorious in a civil war.

So long as he can maintain himself in office and suppress revolts
against his authority, a Central American president is an absolute
ruler, who dominates all other departments of the government. He
appoints and removes every administrative official, and through his
ministers directly supervises every branch of the public service. The
revenues are collected and expended under his orders with a more or
less perfunctory regard for the budget voted by the legislature, and
with little pretense of making an accounting for them. He not only
executes, but also makes and unmakes the laws, either through his
control of the Congress, or simply by executive decree. The army and
the police are under his absolute command. Even the courts usually
decide the more important cases which come before them in accordance
with his wishes. His power is curbed only by the fear of losing the
support of his followers or of being overthrown by a popular revolt,
and neither of these dangers is ordinarily very great so long as he
retains the loyalty of his friends by gifts of offices and money, and
prevents political agitation by an effective use of the army and police.

The national legislatures, in spite of the constitutional provisions
aiming to make them independent and co-ordinate departments of the
government, have in practice little authority of their own. Except
in Nicaragua, where the bi-cameral system now prevails, each of
the republics has a Congress of one chamber. The members of these
are theoretically elected by the people for a term of two or four
years, but they are in reality chosen by the administration like
other officials, and are therefore little more than a mouthpiece of
the president. Any attempt on the part of the Congress to oppose
the wishes of the executive, in fact, is discouraged by the use of
force or by minor persecutions, such as the withholding of salaries
or the molestation of the delegates by the police. Not infrequently
differences of opinion arise in regard to matters of little
significance, but in matters of serious importance the Congress rarely
attempts to assert its own will.

With the judicial department, the case is much the same. The Supreme
Court, elected for a fixed term either by the Congress or by the
people, usually appoints and removes all minor judges and judicial
employees. This system has worked well in Costa Rica, where the
tribunals are generally independent and honest, but in the other
republics political considerations are apt to play a large part
not only in the selection of judges but in the decision of cases.
The courts are subjected to much the same kind of pressure as the
legislature, and there are few of them which would dare to oppose
themselves to the expressed wishes of the president. They therefore do
little or nothing to protect private citizens against abuses of power
by the executive authorities or by the minor officials.

The president is assisted by ministers whom he appoints and who are
responsible to him alone. The most important portfolios are those for
War, Public Works, Finance and Public Credit, and Government. The
minor departments--Justice, Public Instruction, Charities, etc.--are
generally placed in charge of subsecretaries. The heads of the
departments are rarely more than advisors and aids to the president,
who directs their policy and passes on practically all of their acts.
They have no independent authority, and as a rule no real influence
over the conduct of affairs when the chief executive is a man of strong
character.

The local administration is under the direction of the Department
of Government, which has a representative subject to the orders
of the minister, and through him responsible to the president, in
every town and village throughout the country. Each republic is
divided into from seven to twenty-three departments, under governors
who are at the same time military commanders, “_jefes políticos y
comandantes de armas_.”[7] These officials, who are appointed by
the president, enforce the laws, collect the taxes, and control
the expenditure of government funds in their jurisdictions, and
for these purposes have under their orders practically all of the
subordinate national authorities. The departments are subdivided into
“municipalities”--districts which include a town or village with
the surrounding country--where the central authority is represented
by a minor official commonly called _comandante_,[8] who commands a
few soldiers and is intrusted with the duty of maintaining order and
enforcing the laws. These departmental and local authorities are too
frequently petty tyrants, who show little respect for the private
rights or the property of the inhabitants of the districts under their
jurisdiction. As they are subject to little real restraint in their
own sphere of action, they are able to exploit the people of the lower
classes practically as they please, and even persons of wealth and
social position are not free from their persecutions unless they can
protect themselves by the exercise of political influence. Redress
against abuses of power is difficult to secure, because the courts
usually cannot or dare not interfere, and the higher authorities, more
concerned with the loyalty than with the official virtue of their
subordinates, take little interest in protecting the rights of common
citizens.

In each municipal district, there is a local government, or
_municipalidad_, consisting of one or more _alcaldes_, or executive
officers, and a board of _regidores_, or aldermen. This body, which has
wide jurisdiction over matters of purely local interest, such as the
repairing and lighting of streets, the building of roads and bridges,
and the enforcement of sanitary regulations, is elected by popular
vote and is theoretically independent of the local representatives
of the department of government. In practice, however, the latter
dominate its actions, and prevent the _alcaldes_ from carrying
out any action of which they do not approve. The members of the
_municipalidad_ themselves, moreover, are in most places nominated by
the central government, which controls their election as it does that
of other officials. In any event they are prevented from playing a
very prominent part in the promotion of local interests by the lack
of funds. Their revenues, which are derived mainly from taxes on
business establishments and fees for water and other public services,
rarely suffice to carry out any very important improvements, and their
credit is very poor. As a result, the central government is forced to
construct and administer all of the more expensive public works, and to
exercise many of the other functions which are assigned to the local
boards by law.

It can be readily seen that in a political organization such as has
just been described the character of the administration will depend
almost entirely upon the capacity and disposition of the man at its
head. An able president, in a Caribbean Republic, exercises an absolute
power for which it would be difficult to find a parallel anywhere
in the civilized world.[9] He is not restrained, like the absolute
monarchs of Europe and Asia, by dynastic traditions or religious
considerations, and he has little need to consider public opinion so
long as he retains the good will of the army and of the office holders
who owe their positions to him. He can often re-elect himself for term
after term, and he is responsible to no one for the exercise of his
authority or for his management of the public revenues. The country is
so small that he can, and does, extend his control to matters of minor
and purely local importance, even interfering with his fellow-citizens’
personal affairs and family relations, without regard for the most
sacred rights of the individual. It is in his power to exile, imprison,
or put to death his enemies, and to confiscate their property, while at
the same time he can enrich and advance his friends. The ever-present
possibility of revolution, it is true, prevents too great an abuse of
power in some of the more enlightened republics, but in the others
centuries of misgovernment and of the oppression of one class by
another have done away with respect for individual rights to such
an extent that the cruelest and most arbitrary rulers are tolerated
because the people feel that they would only risk their lives and
property, without improving their condition, by revolt.

Only an exceptionally able man, however, can exercise such despotic
power for a long period. A chief executive of less force of character
will generally find it impossible to maintain his position or will
be dominated by his political associates. Often a military leader or
a powerful minister is the real ruler. It is frequently said that a
strong, autocratic government is that which is best suited to the
peculiar conditions of tropical America, because it affords the
greatest security to agriculture and commerce and the best protection
to foreign investments. Many Central American presidents, however,
inspired by patriotism and by republican ideals, have refused to
exercise dictatorial powers, allowing the other departments of the
government a measure of independence, and relinquishing their offices
to a more or less freely elected successor at the end of their legal
term. These have not always been so successful in maintaining order
and in carrying out public improvements as their less scrupulous
contemporaries, because they have been unable to act with the same
decisiveness and effectiveness which are possible where all authority
is concentrated in the hands of one man; but such administrations at
least provide an opportunity for the people to gain some experience in
self-government, and make for a more healthy national political life
than can be found where the expression of opinion in the press and even
in conversation is curbed by a military despotism. When a long-standing
and strongly established dictatorship breaks down, moreover, there is
too frequently a period of disorder which destroys all of the advances
made during years of peace. The entire organization of the government,
built around one commanding figure, goes to pieces when the leader,
either through death or incapacity, is compelled to relax his hold; and
it is very rarely that a new man is at once found who is capable of
keeping the administrative machine together. In those countries, such
as Costa Rica, where the presidency is a position of less influence
and profit, and where the custom of rotation in office prevails, it is
comparatively easy to settle the question of the succession peaceably,
in accordance with the law or by an agreement between the political
leaders; but where all parties have been subjected for years to the
autocratic rule of one man, and compelled humbly to obey his commands,
none of the factional chiefs can tolerate the thought that a personal
rival may succeed to the same position. For this reason, the fall of
a Central American dictator is generally followed by a more or less
prolonged civil war, which only ends when one group of men succeed in
imposing their will upon the others.

It would be impossible for a single individual, who can rely neither
upon the loyalty due to an hereditary sovereign nor upon the prestige
enjoyed by a chief magistrate chosen by a majority of the people, to
impose his absolute authority upon the whole nation, were it not for
the peculiar political conditions existing in Central America. In
all of the five republics, the common people show little hostility
to despotism as such and little disposition to attempt to influence
the selection or to guide the policy of their rulers. Neither the
illiterate and oppressed Indian _mozo_ of Guatemala nor the prosperous
and conservative _concho_ of Costa Rica has any real conception of
the meaning or of the possibilities of democratic institutions, and
both are willing to leave the conduct of political affairs to their
superiors. For them, the government, with the forced military service
and the compulsory labor on public works which it demands, is simply
a necessary evil, and attempts to change its personnel by civil war
arouse more dismay than enthusiasm. Few among the lower classes enter
into revolutionary uprisings voluntarily. The upper classes, on the
other hand, are interested in politics not so much for the sake of
principles or policies, as because they wish to secure a share of
the offices and spoils which provide many of them with a comfortable
living at the expense of the rest of the community. There are among
them many professional politicians and military leaders who have no
other lucrative occupation, and the number of these has been swelled
considerably in recent years by the fact that the commerce and to a
less extent the large scale agriculture of the five republics have
fallen under the control of foreigners, leaving many formerly wealthy
native families impoverished. By the use of offices and money,
therefore, the government can always secure adherents and build up a
strong following, the members of which are deeply interested in its
remaining in power because their positions depend upon it. It is upon
a political organization of this kind, and upon the army, that the
president must rely for holding in subjection his personal enemies and
the mass of the ignorant and indifferent common people.

The military force is the chief support of the government. The highest
officers in this are usually influential and trusted members of the
president’s party, for the very existence of the administration
depends upon their loyalty. The standing army itself is composed of a
few thousands of ragged, barefooted conscripts of the most ignorant
type, commanded by professional soldiers of little education or social
position, who have in many cases risen from the ranks themselves.
Theoretically every male citizen is liable to military service, but
in practice all but the poorest classes secure exemption in one way
or another. There is little fairness or system in recruiting. When
additional soldiers are needed, the required number of peasants or
laborers are simply seized, taken to the _cuartels_, and forced to
enlist for a longer or shorter period, whether they have already
performed their legal service or not. When news is received that troops
are being raised in a given vicinity, every able-bodied man goes into
hiding; and in certain capitals, one frequently sees small parties of
“volunteers,” bound with rope and under a heavy guard, being brought in
from the country to augment the garrison. Since soldiers of this type
think little for themselves, and follow blindly the commands of their
leaders, it is the latter who really control the army. In spite of
the immense power which they might exert, however, these officers are
usually merely the tools of the civilian politicians, who secure their
support by giving them money and conferring military honors upon them.
Although each republic has been governed at times during its history
by men who were professional soldiers, the number of real military
dictators has been surprisingly small.

Although the great historic political parties have disintegrated,
and in some states have disappeared altogether, there is always a
more or less open and organized opposition to the government, made up
of the rivals of the men in power and of the discontented elements
which have not received their share of the offices and spoils. These
factions, in the main, simply represent personal and local jealousies
and ambitions. Their members are held together by ties of blood and of
friendship, always potent in a Latin American country, but especially
so in these little republics, whose people have until recently had
comparatively little intercourse with the outside world and have become
closely related by continual intermarriage. Enmities between prominent
families become especially bitter in such communities, as does also
the jealousy between different towns and villages, which, though but a
few miles apart, have little commercial or social intercourse with one
another. Questions of national policy, and plans for the development
of the national resources play a small part in political contests. The
prominent leaders are not so much the representatives of theories or
tendencies as men who have won the confidence and loyalty of the people
of their towns and villages, or who are the heads of powerful family
connections, and the intrigues and the struggles for power between such
men and their followings are the principal motive of the civil wars
which are still so frequent in many of the five republics. The factions
which dispute the control of the government in the four northern
republics still call themselves Liberals and Conservatives, but there
is at the present time little difference in their policies or in the
character of their membership. They are in reality mere combinations
between the ambitious leaders of smaller groups, each of whom is
striving to advance his own fortunes and those of his friends.

The animosities created by former civil wars, however, as well as the
bitterness of the struggles for office at the present time, still
make the feeling between the different factions very intense. In some
of the republics, each group of men which has secured control of the
government has endeavored to consolidate its power, and to avenge
its members for past injuries at the hands of the party which it has
overthrown, by severe and often utterly unjustifiable treatment of
its defeated enemies. The latter are frequently reduced to a point
where they find life in their own country almost intolerable. The
more influential leaders of the opposition are exiled or imprisoned,
and sometimes deprived of their property by confiscation or forced
loans, and the rank and file of the party are subjected to all of
the persecutions which the greed or the vindictiveness of the new
authorities may suggest. Many of the measures taken are really
necessary, especially when there is danger of a counter revolution; but
they do much to keep alive a bitter personal hatred between the rival
groups of politicians. Within the last few years, the realization of
this fact has led the governments of many of the republics to adopt
a more humane and civilized policy, but the customs formed during a
century of civil war have made the execution of such a policy very
difficult.

The fact that the control of the government is seized and held by each
succeeding administration by force naturally inclines the victorious
party to treat it as the spoils of war. A sweeping change of employees,
from cabinet ministers to janitors, takes place upon the accession
of each new president, and causes a demoralization of the public
service which can easily be imagined. Not only are inexperienced and
inefficient men given official positions, but the pay roll is loaded
down with salaries to useless or purely ornamental functionaries,
appointed as a reward for political services. The schools and certain
other governmental activities, such as the telegraphs, are to a
slight extent saved from the general disorganization by the fact that
the small salaries paid and the special abilities required in them
make the positions unattractive to the sinecure-hunting professional
politicians; but even in these, the experienced and faithful employee
has no chance against the man who has powerful friends.

Favoritism in appointments is not, however, so grave an evil as the
graft which is more or less prevalent in the governments of all of the
five republics. This corruption is due partly to the tendency to regard
official positions as the fruits of a temporary victory, from which
as much profit as possible is to be secured while the domination of
the party in power lasts, and partly to the fact that it is impossible
for many of the employees to live on their ridiculously inadequate
and often irregularly paid salaries. In some of the countries, where
there have been long periods of despotic government by one man, who
has subordinated every other consideration to the maintenance of his
personal following and the consolidation of his power, conditions are
almost incredibly bad. From the postal clerk who steals illustrated
reviews out of the mail boxes, to the high official who mysteriously
becomes the owner of large amounts of property during his tenure of
office, the servants of the nation rob their fellow-citizens by an
infinite variety of methods. The President and the ministers derive
profits from the granting of concessions and contracts; the local
officials exact tribute from those who depend on them for protection;
and every other employee who has regulations to enforce or favors to
dispense endeavors to secure small sums from those who are affected by
his performance of his duties. Under these military dictatorships, the
irresponsible authority enjoyed by the officials, and their continual
abuse of their position, result eventually in a deplorable vitiation
of political ideals and official morality among the members of all
parties, for the opponents of such an administration, on coming into
power in their turn, are too often unable to resist the temptation to
follow the example of their predecessors, and to avenge and indemnify
themselves for their sufferings at the hands of their enemies.

The most harmful corruption is that which exists in the courts.
Cases are too often decided with regard only to the influence of
the persons involved or to the inducements which they hold out, and
political considerations play a very large part wherever they arise.
In some countries, in fact, the President has often intervened openly
in judicial questions, forcing the magistrates to decide them as he
desired. Where the evidence makes impossible or ridiculous the verdict
which the court would like to render, cases are very likely to be held
up indefinitely by the loss of necessary documents, or the decision is
purposely made invalid by allowing technical defects in the procedure.
A magistrate who attempts to perform his work conscientiously
frequently has his decisions reversed by the upper courts or left
unexecuted by administrative officials, and is himself not unlikely to
be deprived of his position.

Such corruption, however, has reached its extreme development only in a
few cases, where particularly unscrupulous men have obtained absolute
control of the government. In the majority of the five republics,
graft flourishes to an alarming extent, but is neither so universal
nor so disastrous to the public morals. Ideas of official virtue are
rather lax among most of the professional politicians, but there are
nevertheless comparatively few who do not show a sincere desire to
carry out the duties of their offices faithfully and efficiently, even
though profiting at the same time from their position in ways which an
Anglo-Saxon official would consider illegitimate. In Costa Rica, as
we shall see, the employees of the government receive fairly adequate
salaries, which under normal conditions are regularly paid, and, in
consequence perhaps of this fact, perform their duties as honestly
and efficiently as the officials of the average North American state.
In each of the other governments, there are officials whose integrity
is above suspicion. These, however, are the exception rather than the
rule, and graft will apparently always be one of the most salient
characteristics of Central American administration so long as the moral
standards and political conditions of the Isthmus remain what they are.

The execution of the criminal laws is usually lax and sometimes
corrupt. The members of the upper classes can generally evade
punishment, or at least escape with light penalties, even when
they have committed a serious offense, provided the offense be not
political. There is none of the five countries in which atrocious
murders have not been committed with impunity, and frauds of a
disgraceful character carried out without fear of justice, by persons
of social prominence, within very recent years. Where the lower classes
are involved, the laws are enforced rather more severely, but in an
irregular manner, and criminals frequently escape punishment through
the venality or the carelessness of the courts or of their jailers,
when there are no special circumstances to make the government anxious
to hold them. Those who are convicted and sentenced are usually
employed under a heavy guard on public works, and receive in return
for their labor a small amount of money with which they can buy food.
The death penalty is very rarely enforced for any non-political crime,
although it is said that it is the custom of the military officials in
some of the countries to shoot suspects at the time of their arrest, in
order to avoid the trouble and expense of trying them. Notwithstanding
the inactivity of the officials, however, there is not a large amount
of brigandage in Central America, and deeds of personal violence, if
we except the bloody encounters which occur every Sunday under the
influence of _aguardiente_, are comparatively few. The people seem to
be peaceable and law-abiding by nature, even in places where there is
no organized force to hold criminals in check.

The worst features of the Central American governments are due chiefly
to the fact that the officials are subject to so little control by
public opinion. Those who benefit by the acts of the administration
support it whatever its defects, while those who do not, oppose it
regardless of its merits. The sentiment of the ruling class as a
whole may influence the government in non-political matters, but in
taking measures to strengthen their own position the president and his
advisors are rarely deterred by considerations of legality, popularity,
or morality. An administration does not weaken itself so much by the
violation of rights guaranteed by the constitution as by failing to
provide offices and other rewards for its own supporters. The press, as
a means for shaping public opinion, has little political importance,
for even in those countries where it is not subject to a close
censorship, the majority of the newspapers are too partisan or too
venal to command general respect.

The only remedy against bad government is revolution. This,
unfortunately, almost invariably proves worse than the evil which it
seeks to cure. The civil wars of the last ninety-six years have wrought
incalculable harm in all of the five republics except Costa Rica, not
only by the destruction of lives and property, but by making force the
only basis of authority, and by placing men of military ability rather
than constructive statesmen in positions of power. The numerous Central
American patriots who have worked with all their will and energy for
the establishment of efficient administration and the economic progress
of their countries have found their efforts nullified by the continual
disorder which has made peaceful evolution impossible. Time after time,
by an outbreak of civil war, all classes of the population have been
forced to suspend their regular occupations, and crops, livestock, and
other property have been carried off for provisions or for loot. Under
such conditions there is little incentive for the natives to develop
their agricultural properties or for foreigners to invest money in
railways or in mines. The resources and energies of the governments,
wasted in maintaining their military supremacy over their enemies,
have not been available for the construction of the much needed roads
and railways or for the execution of the sanitary measures which are
all but indispensable in a tropical country. As the result of these
conditions some of the republics of the Isthmus have made little
progress since their declaration of independence, although those which
have enjoyed comparative peace have advanced rapidly in prosperity and
civilization. The first requisite for the improvement of the economic
and political conditions of Central America is the substitution of some
peaceful means of changing the personnel of the governments for the
costly and destructive method of revolution.


FOOTNOTES:

[6] By Peninsular Spaniard is meant a native of European Spain.

[7] In Costa Rica, the departments are called provinces, and their
administrative heads, _gobernadores_.

[8] This is not the official designation, which differs from country
to country. In Guatemala, they are called _comisionado político y
comandante militar_, in Nicaragua, _agente de policía_, in Costa Rica,
_jefe político_, etc.

[9] It should be stated that the description of Central American
governments in this chapter does not apply in all its details to Costa
Rica. In that country, although the written constitution and the
framework of the government are the same as in the other countries,
political conditions are, in fact, very different. The President comes
into office, in most cases at least, by a free election rather than a
revolution, and exercises a far less absolute power than elsewhere on
the Isthmus. The peculiar conditions existing in Costa Rica will be
described in a subsequent chapter.




                              CHAPTER III

                               GUATEMALA

 Political History--The Government--The Indian Population--The Contract
 Labor System--Production of Coffee and Other Crops on the South
 Coast--Means of Transportation--Outlying Sections of the Country.


Guatemala is the most important of the five Central American republics.
Her two millions of people form about forty per cent of the entire
population of the Isthmus, and her commerce is greater than that of any
of the other four countries. Although in many respects less advanced
than Costa Rica and Salvador, her wealth and her strongly organized
government, supported by a formidable army, have always enabled her
rulers to play the leading part in the international politics of the
Isthmus, and even to exert a decisive influence in the internal affairs
of her neighbors.

The people of the Republic live for the most part on the plateaus along
the Pacific Coast, not far from a chain of lofty volcanic peaks which
fringe the interior tableland on the south, and on their farther side
slope abruptly down to the low coastal plain. Of the many populous
towns in this region, by far the greater number were prosperous
and rather highly civilized communities centuries before Columbus
discovered America. They are still inhabited mainly by Indians,
although in each place there is now an upper class of white merchants,
planters, and professional men.

For several years after the declaration of independence, the history
of Guatemala, as we have seen, was closely connected with that of the
federal government. The Liberal state administration, which Morazán had
installed, maintained itself in office until 1838. It was overthrown
by a revolt among the bigoted and ignorant _ladinos_ east of the
capital, who were persuaded by the priests that an outbreak of cholera
in the preceding year was due to the poisoning of the rivers by the
authorities. The Liberals retired to the western city of Quezaltenango,
where they attempted to set up an independent state, but they were
completely defeated by the Conservative army in 1840. Rafael Carrera,
a half-breed peasant who had led the popular uprising, was for a
generation the most powerful personage of Central America. Becoming
president in 1844, he retained this office during the greater part of
the period from then until his death in 1865, although the difficulties
arising from renewed Liberal revolts caused him to resign twice for
short intervals. In 1854, he was made president for life. Carrera was
an absolute despot, fond of the trappings of supreme power, but in
political matters somewhat subject to the control of the leaders of the
Conservative party and the ecclesiastical authorities. The policy of
his government was therefore shaped by the great families and by the
Church, and the more liberal and progressive elements in the community
were not allowed to express their opinions or to take part in public
affairs.

One of the early acts of the Conservative administration was the
repudiation of the federal union. The wealthy classes of the capital
had suffered so much from the disturbances attending that ill-starred
experiment, and had been put to so much expense in organizing
expeditions to uphold the authority of the federation in the other
states and in defending the central authorities against attacks from
outside, that it is not surprising that they preferred to sever all
connection with their turbulent neighbors. During their entire tenure
of power, it was their policy to discourage the restoration of the
union, not only by refusing to accede to any proposals tending to this
end, but also by intervening by intrigue and even by force in the
internal affairs of their neighbors when the plans of the unionist
party could not be frustrated in any other way.

After the death of Carrera, and during the administration of Vicente
Cerna, his successor, the Liberals renewed their activities in
opposition to the government, and finally succeeded in 1871 in
overthrowing it by revolution. The first president under the new regime
was Miguel García Granados. He was succeeded in 1873 by the real leader
of the party, General Justo Rufino Barrios, under whose masterful
leadership the Conservatives were completely crushed. The religious
orders, which had been very powerful, were expelled from the country
and deprived of their property, and a similar fate overtook the heads
of the old aristocratic families. Liberal reforms of all kinds were
introduced in theory if not always in practice, and provision was made
for the building of railways, the encouragement of agriculture, and the
establishment of schools. Barrios’ great ambition was the restoration
of the Central American union, but his efforts to secure the
co-operation of the other governments of the Isthmus for this purpose
met with little success. It was in an attempt to accomplish this object
by force that he met his death, for he was killed in a battle against
the army of Salvador in 1885.

Manuel Lisandro Barillas, one of the _designados_, or vice-presidents,
succeeded Barrios and held office until 1892. At the expiration of
his term, not having the strength nor the desire to remain in power,
Barillas held the only comparatively free election in the history of
the Republic, and José María Reyna Barrios, a young nephew of the great
Liberal leader, became President. Although capable and energetic, this
ruler was so extravagant in his expenditure of the public revenues that
his death by assassination in 1898 left the Republic in a very serious
financial condition. This was intensified by the political difficulties
which confronted the first _designado_, Manuel Estrada Cabrera, when
the latter took control of the administration. After a few months of
tension, however, the new chief executive succeeded in establishing the
legal authority and in overcoming some of the problems confronting the
national treasury. He is still at the head of the state, after nineteen
years of service.

The dense ignorance and the oppressed condition of the masses of the
people, combined with the bitter factional strife among the upper
classes, where party hatred has probably been stronger than in any
of the other Central American countries, have caused the government
of Guatemala to became a military despotism, more absolute than
any other on the Isthmus. The administration firmly maintains its
authority by means of a large standing army and police force, and
promptly and mercilessly checks the slightest manifestation of popular
dissatisfaction. An elaborate secret service attempts, with a large
measure of success, to inform itself fully of everything which occurs
in the Republic. Supposed enemies of the party in power are closely
watched, through their neighbors, their servants, and even through
the members of their own families, and foreigners coming to the
country often find themselves shadowed until the details of their
business are discovered. It is dangerous to express an opinion on
political matters even in private conversation. Much of the mail,
and especially that coming from abroad, is opened and read in the
post office. The formation of social clubs is discouraged because of
possible political results, and it is impossible for a man prominent
in official circles to have many friends without arousing distrust.
Persons who fall under suspicion are imprisoned or restricted in their
liberty, or even mysteriously disappear. The ruthless execution of
large numbers of persons, many of whom were probably innocent, have
followed attempts to revolt or to assassinate the President. This
reign of terror is approved by many influential natives and by the
majority of the foreigners in the country on the ground that only a
very strong government can prevent revolution and maintain order; and
there is no doubt that the life and property of foreigners, at least,
has been safer in Guatemala than in some of the other Central American
countries. The omnipresent spy system, however, and the cruel treatment
meted out to those who incur the displeasure of the authorities, have
created an atmosphere of mutual suspicion and fear, especially in the
capital, which has noticeably sapped the spirit and the self-respect of
the people. Patriotism and national pride have to a great extent been
destroyed by the ban on the discussion of important national questions,
and the country has thus probably become less rather than more fit for
self-government during the last two decades.

Although the presidents, almost without exception, have shown great
force of character and marked administrative ability, the subordinate
officials are very frequently inefficient and corrupt. Official
morality seems to be growing worse rather than better, apparently
as a direct result of the depreciation of the currency, which has
not been accompanied by a corresponding increase in salaries. The
highest employees, such as the ministers and the judges of the Supreme
Court, receive the equivalent of about fifty dollars a month, and the
remuneration of minor functionaries varies from one dollar to twenty
dollars. Posts in the government, consequently, have little attraction
except for those who desire them because of the opportunities which
they afford for graft, and respectable persons, who are often appointed
to professorships in the schools or to other positions requiring
special knowledge and experience, accept only because they are
practically compelled to. The great majority of the administrative and
judicial officials are men of a rather low type, and bribery, theft,
and oppression are consequently very prevalent. The fact that the
superior authorities do not punish or discourage even the most flagrant
corruption gives rise to the suspicion that they are willing to have
their subordinates recompense themselves in this way, in order not to
be forced to pay them salaries out of the national treasury adequate
for their support.

Notwithstanding the corruption in the government and the exploitation
of the people for the benefit of the official class, there is at least
a pretense of public-spirited administration. Humanitarian laws are
put on the statute books and praised in the newspapers; the cities are
beautified by laying out parks and erecting monuments; magnificent
buildings for schools, hospitals, and other public institutions
are constructed; and the progressiveness and benevolence of the
administration are heralded by subsidized writers, not only in Central
America, but even in the United States and Europe. The motives of the
government are no doubt praiseworthy, but the actual good accomplished
has not been great. The execution of the reforms has been left to
officials who had no understanding of their spirit and who were in
many cases deterred by their own interests from carrying out their
provisions; and the schools and other public institutions have never
been properly equipped or provided with adequate teaching staffs
because of the failure to appropriate money for these purposes.

Although all power is centered in the hands of one man, the forms of
the constitution are still observed and elections are held regularly in
accordance with the law. They are, moreover, participated in, not by a
few chosen voters, as in some other Central American countries, but by
the entire body of citizens. In a presidential election, especially,
all classes of the population are rounded up by the military and taken
to the polls, where they exercise a right of suffrage restricted
only by the fact that they are not permitted to vote for any but the
official candidates. The number of votes for the re-election of the
president thus equals, when it does not exceed, the total number of
adult males in the Republic.

Since the breakdown of the Central American federation, Guatemala
has suffered from fewer successful revolutions than any other state
of the Isthmus. The Republic has been by no means free from internal
disorder, but at least it has not been subjected to the continual
demoralizing changes of regime which have occurred so frequently
in its neighbors. This comparative stability has been in part due
to the strong organization which the government inherited from its
Spanish predecessors. The Captain General and the royal _audiencia_ in
Guatemala City had naturally enjoyed more prestige and had possessed
more means of making their authority respected than had the subordinate
governors in the provinces in colonial days, and the old administrative
machinery and traditions were maintained to some extent after the
declaration of independence. Moreover, the country has had a series of
able rulers, holding office generally for life, who have crushed all
opposition with little regard for constitutional provisions or public
opinion, and who have almost always been able to defeat attempts at
revolution and to arrange for the succession of a president of their
own choosing. There are, of course, turbulent elements which make
occasional attempts to overthrow the government, but their influence
has been much less than in Honduras, Nicaragua, or Salvador because of
Guatemala’s racial and economic conditions.

Among the upper classes, although they are divided among themselves by
bitter political feuds, and although there are many powerful families
which have suffered indescribable outrages at the hands of governments
of opposite political faith, the revolutionary spirit seems at present
to be conspicuously absent. The majority of the white families who own
plantations upon which they employ Indian labor are more interested
in the maintenance of peace than in obtaining offices for themselves
by a revolt which would cause their workmen to be recruited into the
army and would perhaps lead to the destruction of their properties.
The difficulty of overthrowing the government, with its large standing
army and its superior military equipment, and the terrible consequences
which follow an unsuccessful attempt to do so, deter those who have
anything to lose from engaging in political agitation.

The half-breed middle class, which is usually a cause of disturbance
in the neighboring republics, plays but a small part in politics.
The _ladinos_, as they are called, occupy an economic and social
position between that of the Indian laboring population and the landed
proprietors, being employed as artisans, small tradesmen, and minor
public officials in the towns, and as carpenters, mule drivers, and
skilled laborers in the country. In the districts east of the capital,
where there are few full-blooded Indians, the _ladinos_ work on the
plantations or on their own small patches of ground. Many of the
more intelligent rise from humble origins to high positions, but the
majority are ignorant, dishonest, and vicious, and form one of the
least desirable elements in the community. Their importance, however,
is small, as compared with that of the other classes.

The great majority of the inhabitants of the Republic are docile and
ignorant pure-blooded Indians. These have never shown any liking or
capacity for war since the first small force of Spanish invaders
conquered their populous kingdoms at the beginning of the sixteenth
century. Political agitators have rarely been able to incite them to
resistance to the authorities, for whom they have a deep-rooted respect
and fear; and for this reason the organization of a revolutionary army
among them is more difficult than among the turbulent half-breeds of
the other Central American countries. For the government, on the
other hand, they make patient and obedient, if not very intelligent,
soldiers. Many of them are raised to high military offices, for their
lack of interest in political affairs makes them more dependable than
the white or _ladino_ officials. They are on the whole, therefore, an
influence on the side of peace.

Guatemala is the only one of the Central American countries where
the aboriginal population still maintains its identity as a distinct
race. In other parts of the Isthmus the Indians were exterminated by
thousands during the first century of Spanish rule, and those who
survived were assimilated into the European communities to such an
extent that they adopted the language and customs of their conquerors
everywhere except in a few outlying districts. In Guatemala this did
not take place, partly because the population was more compact and more
civilized at the time of the conquest, and partly because the natives
received more protection in their rights from the Spanish authorities
in the capital than in the provinces. The Indians were of course
subjected to the _encomienda_ system just as were those of Honduras and
Nicaragua, but the _repartimientos_ worked less harm among them than
in those countries because their great number made the exploitation of
the whole population by the small groups of Spaniards impossible. The
Indians are still sharply set apart as a class from the half-breed and
white population. In many places they are almost entirely unacquainted
with Spanish, although their native languages, of which it is said
that there are nineteen spoken in the Republic, are becoming more and
more contaminated by Castilian words and phrases. The inhabitants
of each village still maintain the distinctive costumes and in some
places retain traces of the religious observances of pre-Spanish days;
and wherever they have been left to themselves they still carry on
agriculture and their primitive household industries in much the same
way as before the conquest.

The failure of the Indians to assimilate with the white population
caused them to remain in the position of a subject race. Even after the
abolition of the _encomiendas_ they were still compelled to labor for
little or no remuneration on the plantations of the white landowners,
for it became the practice for the authorities to recruit a number
of them by force and to send them anywhere where their services were
needed, either as a special favor to the beneficiary or for a money
consideration paid into the treasury. These _mandamientos_, as they
were called, were the chief means by which agricultural laborers were
secured until nearly the end of the nineteenth century. After the
establishment of the large coffee plantations, however, they were found
to be entirely inadequate for providing the large and regular supply of
labor which was necessary for the new industry, and the system has been
to a great extent superseded, although not entirely done away with by
the present _Ley de Trabajadores_, enacted in 1894.

This law defines two classes of laborers or _mozos_: _colonos_, who
reside permanently on the plantation, and _jornaleros_, who sell
their services for a longer or shorter period by contract. The former
usually work for the employer only a part of each month in return for
the land which he allows them to cultivate. This system is most common
in the Alta Verapaz, where the plantations have great amounts of land
unsuitable for coffee cultivation, and where the Indians, who until
a short time ago had lived a life of complete freedom in the forest,
are less amenable to control than on the South Coast. The laborers
there are for the most part natives who lived upon the land before it
was purchased by the present owner, and who had no recourse, after
the establishment of the plantation, but to accept their new status
or to leave their homes. They are on the whole better off than the
_jornaleros_ because they enjoy more independence and are able to work
part of the time for themselves.

The _jornaleros_, or day laborers, are held on the plantations under a
peonage system. Theoretically the Indian is perfectly free to contract
himself or not as he pleases, but when he has once done so, he may
not leave his employer’s service until he has completed the time for
which he agreed to work and has repaid any money which the _patron_
may have lent him. If he attempts to escape, he is hunted down by the
authorities and returned to the plantation; and the entire expense of
capturing him and bringing him back is debited in his account. If, on
the other hand, he refuses to work, he may be imprisoned until he is
in a more reasonable frame of mind. Those who still prove obstinate,
after fifteen days in jail, may be sent at the request of the employer
to the convict labor squads, where fifty per cent of the returns of
their labor are set aside for the benefit of their creditors. The whole
system depends upon keeping the _mozo_ in debt. For this purpose, he
is allowed a limited amount of credit at the plantation store and is
even loaned small sums of money from time to time if necessary. Few are
sufficiently energetic or ambitious to make a serious effort to free
themselves from these obligations. They have in fact little incentive
to do so, for those who leave the plantation can only look forward to
similar employment elsewhere, or what is much worse, to impressment
into the army, from which _mozos_ working on large coffee, sugar-cane,
banana, or cacao plantations are legally exempt.

The law imposes on the employers certain obligations which are more or
less faithfully observed. In most cases, huts are provided for _mozos_
of both classes, and food is dealt out to them when the supplies of
food which they themselves raise are exhausted. The _jornaleros_, in
fact, are fed almost entirely by their employers, although they are
frequently given small patches of ground for gardens and are allowed
three or four weeks during the year in which to cultivate them. The
planter distributes medicines and even furnishes amateur medical advice
when it is needed. Free schools, required on all by law, are maintained
on some plantations, although as a rule they are attended only by
the children of the _ladino_ employees, for the Indians do not care
about educating their children and are generally not compelled to do
so. The owner of the plantation is responsible for the maintenance of
order, and is empowered to imprison criminals and fugitives from labor
until the local authorities can take charge of them. In these duties
he is assisted on the larger plantations by an _alcalde auxiliar_, an
official appointed by the municipal _alcalde_ from a list of names
submitted by the owner. This functionary, who nominally represents
the authority of the government, but is in reality an employee of the
planter, is an invaluable aid to the latter in maintaining his control
over the laborers.

The wages paid to laborers are at the present time extremely low,
for they have risen little in spite of the rapid depreciation of
the national currency. The _jornalero_ or _colono_ on the average
plantation, in addition to a limited amount of very simple food,
receives from two to three _pesos_ (from five to eight cents in United
States currency) a day, whereas voluntary laborers, upon whom the
planter has no hold, receive from five to seven _pesos_ for precisely
the same work. It is customary in most places to pay by the task, so
that those who are most efficient may earn slightly more than this sum,
while those who are weak or incapable will receive less. Considering
that the Indian enters the service of the planter owing the fifty or
one hundred _pesos_ which it is customary to advance to him when he is
contracted, it is not surprising that he is unable to free himself
from debt, especially as the few articles which he must buy--clothes,
tools, and candles for the church or chapel--are relatively very
expensive. The combined earnings of the whole family, for the women and
children are usually given tasks as well as the men, are in fact hardly
sufficient to supply the necessities of life without an occasional
extra loan from the employer.

This peonage system, in itself pernicious, is subject to the gravest
abuses. The short-sighted and improvident Indians are easily persuaded
to accept advances of money when they have some immediate occasion,
such as a baptism or a funeral, for spending it, without realizing
apparently the onerous conditions under which they must make repayment.
The professional _habilitadores_, or contractors of labor, and the
agents whom many of the planters maintain in the native villages, take
advantage of this fact and of the other weaknesses of the Indians’
character to obtain a hold upon them. This is made much easier by the
aborigines’ fondness for liquor and by their helplessness when drunk.
The Indians are often induced to sign contracts by misrepresentations
or even actual violence, for the corrupt and unscrupulous local
authorities not infrequently bring pressure to bear upon them by
threats of arbitrary imprisonment or of impressment into the army. Many
of the representatives of the government derive a large income from
considerations paid them for service of this kind and from tributes
which they exact every month or every year from the planters in their
districts as the price of official support in disputes with their
laborers. That the contracts are rarely entered into voluntarily and
with a full appreciation of their terms is evident from the great
difference in the wages received by those who work under them and the
wages earned by the so-called voluntary laborers. The government has
made half-hearted attempts to check the worst features of the system,
but its decrees enjoining strict respect for personal liberty and
stipulating minimum wages for contracts made in the future have for the
most part been left unexecuted by the local officials.

The contract labor system is defended in Guatemala on the ground
that the cultivation of coffee, upon which the prosperity and the
commerce of the country depend, could not be carried on without it.
The Indian, it is said, would never work for more than a few days in
the year unless he were compelled to, as he is perfectly contented
with a few possessions which he can obtain for himself by cultivating
a small patch of ground in the woods. The planters complain of a
scarcity of labor even at the present time, and often find it difficult
to cultivate their properties and harvest the crops. This argument
explains, but hardly justifies, the system. An institution which
subjects the masses of the people to a degrading bondage, and which
prevents these masses from progressing or becoming more fit for the
self-government which they are nominally supposed to exercise, must
in the long run be extremely harmful to the country as a whole. The
development of agriculture and commerce, which has been beneficial
chiefly to foreign investors, can hardly be said to be desirable
if it has made social and political conditions within the country
worse. While the Indians are practically serfs, living under the most
primitive conditions and deprived of any opportunity to better their
position, it will be impossible to educate them or to raise their
standard of living.

There is, moreover, no conclusive proof that the Indians would refuse
to work if they were not forced to by the labor laws and the tyranny
of the officials. They naturally do everything they can to escape
employment under the present conditions, where they receive in return
for their labor nothing but the bare necessities of life. These they
could obtain for themselves, almost without working, if they were
left in their original condition in the forest. There is no reason to
suppose, however, that they would refuse employment at wages which
were really worth their while. They are certainly not a more lazy race
than their half-breed neighbors, and they would doubtless improve
their standards of living, which are today no lower than those of the
_ladinos_ in the more backward parts of Honduras and Nicaragua, if
they were given an opportunity to do so. Nor would the cost of coffee
growing be so increased as to make it prohibitive. In Costa Rica and
Salvador, where the wages are from four to eight hundred per cent
higher than in Guatemala, the planters are prosperous and make large
profits. Under the present system, the underfed and ill-treated Indians
are unwilling and inefficient workers, and their services involve a
great extra expense to the employer in the form of sums to be paid to
_habilitadores_ and local officials in return for aid in contracting
them. This money would be saved, and the value of the Indians as
laborers would certainly be greatly increased, if the peonage system
were done away with and the workers were freely employed at fair wages.

There are some thousands of Indians, especially in the less developed
parts of the Republic, who still cultivate their own properties or a
share in the common lands of their villages, raising not only the corn
and beans with which they feed their families, but also a small surplus
which they carry long distances to sell in the markets in the towns.
They seem to delight in the free life of the mountain trails, where the
traveler continually passes long lines of them, in their picturesque
local costumes, carrying vegetables, home-made cloth, baskets, and
grass mats--the men with heavy burdens in the peculiar square frames
on their backs, and the women with baskets or bundles poised on their
heads. Many of them come to the capital from places several days’
journey distant, camping by the side of the road at night, and reach
their destination nearly as quickly as more aristocratic travelers do
on mule back. Besides those who market their own products in this way,
there are large numbers of professional _cargadores_, who spend their
lives on the roads, taking goods from one place to another for hire or
as a commercial speculation. They are said to cover as much as thirty
miles a day with a load of one hundred pounds, and they form one of the
most important factors in the internal transportation of the country.

These free Indians work only part of the time or not at all on the
plantations. When they do work, it is usually as “volunteers” at the
time of the harvest. Their number, however, is constantly diminishing.
As the extension of the coffee plantations has made the demand for
laborers more and more insistent, it has become increasingly difficult
for the Indians to escape from the snares of the _habilitadores_ and
the pressure exerted by the local officials, so that those in the
more developed agricultural districts have with few exceptions been
persuaded or forced into service on the plantations. Many of the
Indians who lived on the public domain have been forced to work for the
foreigners who purchased from the government the land which they had
formerly cultivated, for it has been the regular practice in some parts
of the country to secure new _mozos_ in this way. Even those who once
owned land of their own have often sold it to their wealthier neighbors.

At the present time the situation of the Indians is probably worse than
it was fifty years ago, and it is certainly worse than that of the
lowest classes in the other republics. The development of the peonage
system has deprived them of even the small measure of economic and
political liberty which they once enjoyed, and by taking them away from
their homes has almost entirely destroyed their old community life.
The native municipalities, which exist side by side with the _ladino_
municipal boards in many of the towns, and which formerly managed
the internal affairs of the native community, have been powerless
to protect the members of the latter from the operations of the
_habilitadores_ and the tyranny of the representatives of the central
government. Many of the Indian villages which once enjoyed a sort of
independence of their white neighbors are now completely at the mercy
of brutal local officials, who are not content to exact money from the
people under them by every conceivable pretext, but even make a regular
practice of virtually selling into slavery those who are intrusted to
their government.

Their own vices, meanwhile, have reduced the native race to a pitiable
condition in those districts where they have longest been in contact
with civilization. The cheap and poisonous _aguardiente_, the sale of
which is encouraged by the government because of the revenue which it
produces, is consumed in great quantities by the laboring classes,
and there are drinking places everywhere, not only in the towns and
villages, but even along the country roads. The liquor is much inferior
to that produced in the other Central American countries, and is sold
at a price equivalent to less than ten cents a quart. Its effects are
appalling. To it are due the greater part of the crimes committed
in the country, for drunkenness makes the usually peaceable Indians
quarrelsome and unruly, and causes Sundays and holidays to be marked
everywhere by a great number of murders and robberies. There is a very
evident degeneration, due to this one vice, among the Indians in the
southern part of the country.

The coffee plantations, which have within fifty years become the most
important enterprises in the country, are for the most part situated on
the southern slopes of the volcanoes along the Pacific Coast, not far
from the populous towns and villages of the interior plateau. They are
on the average larger than in the other countries of the Isthmus, and
as a rule have their own cleaning mills. The coffee of Guatemala is the
best in Central America, with the possible exception of that of Costa
Rica, and is hardly excelled in any part of the world. The largest
and best plantations are owned and managed by Germans, who either set
them out in the first place or acquired them from their former native
owners; and many of those which still belong to citizens of Guatemala
are for all practical purposes under the control of foreign concerns
which hold mortgages on them. Not only production, but also marketing,
which is mainly in the hands of German export firms, have been highly
systematized.

The production of coffee overshadows all other agricultural enterprises
on the South Coast, but there are nevertheless many other crops which
deserve to be mentioned because of their local importance. In the
plateau above the coffee plantations, not only the typical Central
American foods, like corn and beans, but also many temperate zone
fruits and vegetables, and even wheat, are cultivated successfully.
On the coastal plain to the South, there are large cattle ranches and
cane plantations, which, in part at least, supply the home demand for
meat, sugar, and _aguardiente_. Sheep in the highlands, and cotton in
the lowlands, supply the raw material for the clothes still woven by
the Indians on hand looms in their huts. There is a regular exchange
of foodstuffs, carried for the most part on the backs of men, between
the settlements in the plateau and the more tropical districts of
the coast plain. The traveler cannot fail to be impressed with the
great variety of products which differences in the altitude and in
the distribution of rainfall make possible, for in the markets of the
capital one can see almost every kind of temperate and tropical zone
fruits and vegetables, brought from one point or another of the steep
slope between the plateau and the coast. Little attempt has been made,
however, to cultivate for export any of the valuable native plants,
with the exception of coffee, or even, in the case of some of them,
to raise enough to supply the local demand. Flour, for instance, is
brought from the United States in large amounts, although there is no
apparent reason why a quantity of wheat sufficient to supply the whole
country should not be harvested on the plateaus west of the capital.
Cotton also flourishes, but most of the cloth used is imported or
is manufactured in the country from imported yarn. As in the other
countries of the Isthmus, the production of the one great export has
consumed the capital and energies of the inhabitants of the Republic
to such an extent that other forms of agriculture have been seriously
neglected.

The economic development of the southern part of the country has
been greatly accelerated in recent years by the improvement in means
of transportation. The Northern Railway, which connects the capital
and the South Coast with Puerto Barrios on the Caribbean Sea, was
completed in 1908 after great expense and many difficulties. Another
road runs from Guatemala City to the Pacific ports of San José,
Champerico, and Ocós, crossing the southern part of the country to the
Mexican frontier, where it is separated by only a few hundred yards
from the Pan American Railway of that Republic. With the exception
of the capital, however, most of the important towns still depend
upon more primitive forms of transportation, as they are situated in
the high plateaus, several miles above the railway line which runs
along the South Coast. The same is true of the majority of the coffee
plantations. The highways which connect the towns and _fincas_ with the
stations and with each other are chiefly mule paths, although there
are cart roads, and even in some cases carriage and automobile roads,
between the largest cities.

The railway system is under the control of an American-owned
corporation which is closely allied to the United Fruit Company.
The freight rates are high and very inequitable, as they have been
arranged with a view to giving Puerto Barrios, which is served by the
Fruit Company steamers, every possible advantage over the Pacific
Coast ports, through which a large part of the foreign commerce of the
country is still carried on. According to the schedule in force in the
fall of 1915, for example, the company charged $0.70 gold[10] to haul
a bag of coffee from the station of Candelaria to Barrios, a distance
of 331 miles; $1.48 from Guatemala City to Barrios, or 196 miles; and
$0.64 from Los Amates to Barrios, which is sixty miles. To the Pacific
ports, on the other hand, the rates were proportionately much higher,
for that from Candelaria to Champerico, twenty-two miles away, was
$0.22, and that for the seventy-five mile haul from Guatemala to San
José was $1.00.

The policy of the railway company has to a great extent counteracted
the benefits which the Republic might have received from the opening of
the Panama Canal, because it has discouraged the shipping of imports
and exports by way of the Pacific Coast. The western departments
have profited somewhat by receiving lower rates to Barrios, but it
still costs them more to send their coffee by that route than if
they had a fair rate to the southern ports. In other parts of the
country, the railroad is forced to charge higher rates than would
otherwise be necessary, in order to maintain its total revenues. The
loss to the country as a whole from having its commerce deflected
to a more expensive route than that which it would otherwise have
taken is considerable. Although the Pacific Coast ports are mere open
roadsteads, where the irregular steamship service cannot be compared
with that provided by the Fruit Company at the safe harbor of Puerto
Barrios, they are nevertheless the logical outlet for the commerce of
the more populous part of Guatemala, because they are so much nearer
to the coffee plantations. The difference in the ocean freights from
Barrios to New York and from the Pacific ports via Tehuantepec or
Panama to New York--between forty and fifty cents on each one-hundred
pound bag of coffee--is not in reality enough to offset the actual cost
of the long railroad haul across the mountains.

Although it is on the South Coast that the great majority of the people
of Guatemala live, there are several other districts of economic
importance. The exploitation of the natural resources of these has been
left almost entirely to foreigners. Beyond the arid and unproductive
interior districts immediately north of the volcanic region, there is
another coffee belt in the Department of Alta Verapaz, the product of
which, known to the trade by the name of the departmental capital,
“Coban,” is of an unusually fine quality. The owners of the plantations
are for the most part Germans. The coffee, which amounts to about ten
per cent of the total exported from the Republic, is shipped from the
port of Livingston, with which the plantations are connected by a short
railway and a regular line of launches on Lake Izabal and the Rio
Dulce. East of the Alta Verapaz, along the lower part of the railway
line from the capital to Puerto Barrios, the United Fruit Company has
established a number of banana plantations. These are not so extensive
as those of Costa Rica or Honduras, but they furnish a continually
increasing export, which is now second in value only to that of coffee.
The low, unhealthful plain of Peten in the North, which comprises
almost a third of the area of the Republic, is rich in mahogany,
Spanish cedar, and other valuable trees, but the lack of means of
transportation and the deadly climate have so far prevented the
increase of the population there and have discouraged the development
of the natural resources.

Guatemala has been gifted by nature with a delightful and healthful
climate and a marvelously fertile soil which ought to make her one of
the richest countries in tropical America. She can never attain real
prosperity, however, until her rulers make a determined effort to
improve the situation of the masses of the people by doing away with
the worst features of her social organization. Among the lower classes,
the contract labor system and the unrestricted sale of _aguardiente_
are today causing a steady degeneration, which eventually, if not
checked, will cause the community as a whole to sink farther and
farther into a condition of semi-barbarism. These evils will be very
difficult to remedy. Legislative action to secure the independence of
the Indians will be obstructed by the interest which the ruling classes
have in the _status quo_, and the education of the laborers to a point
where they will be able to protect their own interests will be a matter
of generations and perhaps of centuries. Upon a gradual raising of the
social and economic status of the aborigines, however, rather than upon
the development of agriculture and the exploitation of the natural
resources of the country, the future of Guatemala depends.


FOOTNOTES:

[10] When the expression “gold” is used in regard to sums of money,
United States currency is meant.




                              CHAPTER IV

                               NICARAGUA

 Points of Resemblance Between Nicaragua, Salvador, and
 Honduras--Peculiar Geographical Situation of Nicaragua--Factors
 Which Have Caused Disorder There--Rivalry Between Leon and
 Granada--History of the Republic--Economic Conditions--Means of
 Transportation--Relations with the United States.


Nicaragua, Salvador, and Honduras strongly resemble one another in many
of their characteristics. They differ from the two other republics of
the Isthmus in that there has been more mixture of races among their
people than in those countries. The Indians did not remain a distinct
ethnic entity, as in Guatemala, and were not exterminated, as in Costa
Rica, but fused with the invaders into a fairly homogeneous half-breed
population which adopted the language and religion of the Spaniards
but in most places retained the Indian ways of living and cultivating
the soil. The upper classes, especially in Nicaragua and Salvador, are
for the most part of European ancestry, and the laboring population,
although there is but a small part of it which does not also show
an admixture of Spanish blood, is distinctly Indian in features and
customs; but only in a few places is there a sharp line between either
of these classes and the half-breed, or _mestizo_, element, which is
perhaps the most numerous of the three. Social distinctions seem to
some extent to coincide with, but they can hardly be said to depend
upon, racial lines.

There is thus more homogeneity in the population and less inequality
between the classes than there is in Guatemala. Although the greater
part of the people are laborers on the plantations of the aristocracy
which owns all of the best agricultural properties, they are free
laborers, who receive fair wages and are not compelled to work unless
they wish to. There is, furthermore, a somewhat wider distribution of
land than in the northern Republic, and the rights of the small farmer
are better protected than are those of the Guatemalan Indian.

The government, although in no sense democratic, is nevertheless
dependent to some extent upon public opinion, for the lower classes
are all too prone to revolt and overthrow a president with whom they
are discontented. The political parties are led and directed by a
wealthy and educated minority, but their sanguinary contests with one
another are usually decided by the support of the common people, and
especially of the people of the cities. Several causes lead artisans
and laborers who otherwise have no interest in politics to take part
in these civil wars. One of the most important is the rivalry between
different towns and villages, the spirit of _localismo_, and another,
which, however, is rapidly becoming less prominent, is the traditional
division, based on no real opposition in principles or policy, into
“Conservatives” and “Liberals.” Still a third is the disposition to
be “against the government,” whatever its merits--a disposition which
is by no means peculiar to the Hispano-Indian race. It is upon these
factors that the political parties are built up. Each chief endeavors
to secure a following among the artisans and laborers of his district
by cultivating friendly personal relations with them and by playing on
their prejudices, and to carry his followers with him in whatever line
of action best suits his personal interests. The groups thus formed
consequently represent petty prejudices and loyalty to individuals
rather than political principles.

The presidents of these countries are therefore less absolute rulers
than the chief executive of Guatemala usually is. Instead of an easily
controlled army of ignorant Indians, who have little disposition to
do anything but obey the commands of their officers, the government
must depend on soldiers who, to some extent at any rate, think for
themselves and take an interest in political affairs. It must not
only retain the good will of its followers, but it must refrain from
arousing hostility in the community at large, where the opposition is
usually too numerous and too well-organized to be rendered harmless by
killing or exiling its leaders and repressing its agitation. There is
no public opinion sufficiently strong to prevent the party in power
from dealing severely with its most conspicuous enemies, or from
misusing its control of the machinery of the administration for the
benefit of the officials and their friends, but there is at least an
ever-present danger of revolution to make it cautious about alienating
the sympathies of too large a proportion of the people at large.

Republican institutions cannot be said to flourish in any of the
central republics, but there is a far more hopeful prospect of their
eventually becoming a reality there than in Guatemala. It would be
impossible, among the factious half-breeds of the Nicaraguan towns,
to round up all classes of the population by military action and
lead them to the polls to vote for the president, as was done when
President Estrada Cabrera was unanimously re-elected in 1916, but it
is not very difficult to control the election by other means. Under
ordinary circumstances, there is no chance for any but the official
ticket. The opponents of the government, and even those who are
suspected of being lukewarm in their support of it, are excluded from
the official lists of voters, with or without a perfunctory excuse,
and opposition candidacies are discouraged by the imprisonment or
the expulsion from the country of the rival leaders and of their
chief supporters. Fraud and intimidation are generously employed to
increase the government’s majority. The measures taken are usually
sufficient to secure a result satisfactory to the faction in power,
but occasionally they are unavailing because the opposition is strong
enough to wring a compromise from the administration or to overthrow it
by revolution. Elections, therefore, are often accompanied by more or
less disorder and uncertainty, and a too violent attempt to impose an
unpopular candidate on the people has not infrequently been followed
by civil war. With the spread of popular education at the present
time, there are grounds for hoping that elections will in the not very
distant future become more nearly a real expression of the will of the
people--a character which they have already assumed in Costa Rica.

The political and economic development of Nicaragua has been determined
by forces similar to, but more marked than, those which have affected
Salvador and Honduras, and a study of her history and institutions will
therefore make it easier to understand the situation of the other two
republics.

Nicaragua has always been an object of interest to the outside world
because of her geographical situation. In her territory, the Central
American _Cordillera_ is broken by a depression which extends across
the Isthmus, forming the basin of the two great lakes and of the San
Juan River, their outlet to the Atlantic. Lake Nicaragua, which is
only 110 feet higher than the ocean, is separated from the Pacific
by a range of small hills, the lowest passes of which are said to be
but twenty-five or twenty-six feet above its surface and thus only
135 above that of the sea.[11] At the narrowest place this strip of
land is less than thirteen miles wide. North of Lake Nicaragua, and
connected with it by a small river, is Lake Managua, between which
and the Pacific there is a distance of about thirty miles across the
low plain of Leon. In colonial times, the route across the Isthmus
through Leon to Granada on Lake Nicaragua, and from thence by water,
was commonly used for the transportation of products from all parts
of Central America to Spain; and much more recently it was one of the
most popular ways of reaching California from the East Coast of the
United States. It early attracted the attention of those who were
interested in transisthmian canal projects, and came to be considered
by many as the most practicable route for an interoceanic waterway.
Diplomatic controversies for the control of the proposed canal, and the
machinations of corporations desiring to secure concessions for its
construction, which it would be impossible even to sketch here, have
played a large part in the international relations of the Republic,
and at times have not been without effect on her internal political
conditions.

The people of Nicaragua, more than those of any of the other countries
of the Isthmus, are dwellers in cities. About a fourth of all her
inhabitants live in six important towns in the lake plains.[12] The
Spaniards established their principal settlements in this region at
the time of the conquest, in spite of the hot climate, in order the
more easily to hold in subjection and to utilize the labor of the
large Indian communities which had long since grown up there because
of the fertility of the soil and the plentiful water supply. The
concentration of the population in a few centers has intensified all
of the conditions which have worked against peace in Central America,
and has made Nicaragua the most turbulent of the five republics. The
inhabitants of cities, since the beginning of history, have been
more inclined to disorder and revolt than their brothers in the
country, and this is especially true in Central America, because both
_personalismo_ and _localismo_, with all their attendant evils, reach
their most complete development in large communities, where the contact
between individuals is closer and the number of persons interested in
politics is greater than in rural districts. The _mestizo_ artisans,
who are relatively more numerous and more influential in Nicaragua than
anywhere else in the Isthmus, are always ready to drop their work and
take up arms in the interests of their faction or of their _patron_,
and even the ordinary laborers, in the towns at least, are Liberals or
Conservatives, and followers of this or that chief. The common people
are but little interested in the principles involved in the contests
between the two great traditional political parties, but they follow
their leaders partly from personal devotion and partly because they are
united to them by the old local hatreds which have kept these parties
alive in Nicaragua after they have become little more than names in
other parts of the Isthmus. This rivalry between different towns
has caused bloodshed at one time or another in each of the Central
American republics, but in all except Nicaragua it has to a great
extent died out at the present time, because the capitals have become
more important than any of their rivals, and have drawn to themselves
many of the wealthier and more influential provincial families. In
Nicaragua, neither of the two cities established by the Spaniards at
the beginning of the sixteenth century has been able to establish its
supremacy, and the history of the country from the very beginning has
been one long struggle, made more bitter by radical differences in the
ideals and interests of their people, for the control of the government
and the direction of the affairs of the nation.

Granada, at the western end of the Great Lake, has always been
primarily a commercial center, since the days when it was the chief
port for the trade between Central America and Spain by way of the San
Juan River. Her leading citizens are not only landed proprietors, but
merchants, who sell goods in person over the counters of their stores.
Her great families form a coherent and powerful group, which has
always been able, because of its wealth and social prestige, to exert
an influence far out of proportion to its numbers, not only in its
own city but in the country at large. The greater part of the fifteen
or twenty thousand other inhabitants depend upon them as servants or
employees, for the artisan class is small and relatively unimportant.
There are few professional men of social prominence and few small
landholders, for the rural districts roundabout are mostly given over
to large, carelessly managed cattle ranches. The Chamorros, Lacayos,
and Cuadras, with their relatives, have always considered themselves
a sort of creole aristocracy, and even in colonial times they were
restive under the control of the Spanish authorities at Leon. After the
declaration of independence, they naturally joined the great families
of Guatemala in the Conservative party, and they have since retained
the name, if not the principles, of that organization.

The Liberal party, on the other hand, has its center in Leon, the
capital of the province in colonial times, and today, with sixty or
seventy thousand inhabitants, the largest city of the Republic. There,
the domination of political and social affairs until 1821 by officials
sent over from Spain prevented the rise of a strong creole aristocracy,
and the constant infusion of Spanish blood during colonial times,
as well as the presence of many Peninsular Spaniards even after the
declaration of independence, somewhat retarded the changes wrought in
the white stock in other places by nearly four centuries of life in the
torrid climate of the lake plains. The people of Leon have always shown
an inclination towards intellectual and professional pursuits which is
noticeably absent in Granada, and take great pride in their schools
and their university. The most prominent lawyers and physicians of the
Republic, even in Managua and the other cities, are for the most part
_Leoneses_, just as the majority of the leading native merchants are
related to the Granada families. Leon has a large and aggressive body
of artisans and many small landholders, for the wide plain around the
city is divided into a large number of little properties, worked either
by the owner in person or under his immediate supervision. There are
few families of great wealth. It was inevitable that such a community
should take the side of the Liberals in the struggles which marked
the early years of the Central American federation, for the character
of its population made it radical just as the position of the great
families of Granada made them conservative.

The other towns of the Republic, none of which until within recent
years could compare in wealth or population with either of the two
chief cities, are divided between these in their sympathies. Those
which are dependent geographically upon one of the rivals have
naturally followed it in politics. Others are split within themselves
by feuds between their leading citizens and between different elements
in their population. Since the development of the coffee industry has
caused a great increase in the importance of Managua, Matagalpa, and
some of the other towns, these places have of course acquired much
political influence, but the various groups among their people have
rather allied themselves to the already existing factions than formed
new ones of their own. The Conservative and Liberal leaders in Granada
and Leon still dominate the party councils, although their authority is
sometimes questioned by their allies in the newer centers.

The jealousy between Granada and Leon found expression in armed
conflict as soon as the authority of the mother country was removed.
After the declaration of independence, the Spanish governor in
Leon, like the authorities in many of the other provinces, refused
to recognize the authority of Gainza, while the Granadinos joyfully
accepted the new central government in Guatemala in preference to that
of the mother country. As the result of this situation, an intermittent
war began which lasted until General Morazán, on becoming president
of the Federation, sent Dionisio de Herrera, as _jefe de estado_, to
restore order. Under him the Liberal party was firmly intrenched in
power. He was succeeded by a series of _jefes_ of the same faction,
most of them under the control of a military leader named Casto
Fonseca, who was _comandante de armas_. The destruction of the Liberal
governments in the other republics, however, made the position of the
authorities in Nicaragua precarious; and in 1845 their administration
was overthrown by a Conservative uprising aided by armies from Honduras
and Salvador, which wished to punish Leon for the asylum afforded there
to the defeated followers of Morazán. After sacking the capital and
slaughtering a large part of its inhabitants, the invaders moved the
capital to Masaya and later to Managua, both small towns near Granada.
A Conservative government, made up of the great families of the latter
city, endeavored to establish order and repair the damage wrought by
the civil wars which had continued almost without interruption ever
since the federal government had grown too weak to maintain peace, but
their efforts were of little avail. The new _comandante de armas_,
Trinidad Muñoz, kept the country in a state of continual disturbance,
by intrigue and conspiracy, in order to increase his own influence,
and finally betrayed the party which had placed him in office and used
the force intrusted to him to bring about the re-establishment of the
capital at Leon. A new Conservative uprising aided by Honduras and
Costa Rica overthrew him in 1851, and the seat of the government was
again transferred to Managua. The Conservatives made a sincere effort
to establish harmony between the two parties, but after their attempts
to conciliate their opponents by giving them a place in the cabinet had
proved a failure, they endeavored equally unsuccessfully to maintain
order by severe measures which only made the Liberals the more bitter.

In 1854, the people of Leon, under the lead of Máximo Jeréz and
Francisco Castellón, drove the forces of the government out of their
city and attacked Granada. The Conservatives, who received timely aid
from Guatemala, resisted determinedly. By the end of the year they were
apparently gaining the upper hand, when the Liberals, in their attempts
to turn the tide, called in the support of a band of North American
filibusters. This was the origin of the “National War,” one of the most
remarkable and most romantic events in the history of the Isthmus.

On June 16, 1855, William Walker landed at the port of Realejo, with
fifty-seven other adventurers, ostensibly for the purpose of aiding the
Liberal government at Leon, which had invited him to come to Nicaragua,
but in reality with the intention of obtaining control of the entire
country for himself. This he succeeded within a few months in doing.
Carrying his force to San Juan del Sur by sea, he evaded a Conservative
army sent to attack him there, sailed up the lake to Granada, and on
October 13 occupied that city with little resistance. The force of the
Conservative leaders was unimpaired, but they feared to attack the
foreigners, who held their families as hostages. Corral, the head of
the government forces, agreed therefore to a treaty of peace, signed on
October 23, by which Patricio Rivas, a moderate Conservative, became
president, Corral himself secretary of war, and Walker commander of
the army. The native troops were for the most part disbanded, and the
filibusters, or the “American Phalanx,” as they called themselves, were
practically the only military force in the Republic.

Walker desired to establish a coalition government, under his own
control, in which the leaders of both great parties should be
represented. This proved impossible, because the native chiefs from the
first showed signs of disaffection. Corral was discovered to be holding
treasonable correspondence with the presidents of the other Central
American republics, and was shot only a short time after the signature
of the treaty of peace. Rivas, the new president, and Jeréz, the leader
of the Liberals, deserted Walker in the following June, and began a
revolution against him in Leon and the western departments. Walker
thereupon had himself elected President of the Republic (June 29, 1856).

The adventure of the filibusters had meanwhile attracted much interest
and sympathy in the United States, where the control of Nicaragua by
an American was regarded as an offset to the encroachments of Great
Britain on the eastern end of the proposed route of the interoceanic
canal. The control exercised by that power over Greytown, at the
mouth of the San Juan River, had not yet been given up, in spite of
the provisions of the Clayton-Bulwer Treaty. The people of the South,
moreover, who favored expansion in tropical countries in order to
maintain the relative influence of the slave states in the Union,
believed that they saw in the measures which Walker adopted early in
his administration to aid Americans in acquiring land in Nicaragua,
and to open the way for the introduction there of negro slavery,
indications that his ultimate object was the annexation of the country
to the United States as a new slave-holding commonwealth. This belief
appears to have been erroneous, for Walker himself more than once
expressed the intention of creating an independent nation, with
himself at its head as military dictator;[13] but it at least gained
for the adventurer a large amount of assistance.

It was therefore easy for Walker’s friends to secure large amounts of
supplies and many recruits for his cause in the United States. The
original force of fifty-eight was soon increased to several hundred,
and the immense losses caused by disease and by fighting were made
up with little difficulty. It is said that 2,500 men in all joined
the “phalanx,” of whom more than one thousand died of wounds or of
disease.[14] The government of the United States attempted to stop
the recruiting of men and the fitting out of expeditions within its
jurisdiction, but it was able to accomplish very little because of the
deficiencies of its neutrality laws and the strong popular feeling in
favor of the filibusters, which often prevented the federal officials
from carrying out the orders of their superiors. The President and the
Department of State themselves were by no means unfriendly to Walker’s
enterprise while it still offered a prospect of success. The American
minister in Nicaragua had throughout exerted his influence in favor of
Walker, although in so doing he had greatly exceeded his instructions,
and the Rivas government had been officially recognized by President
Pierce on May 14, 1856. This recognition was not, however, extended to
Walker after the latter had become president.

The most useful friends and the most dangerous enemies of Walker’s
regime were the American financiers interested in the Accessory
Transit Company, a concern which was at that time transporting many
thousands of Americans each month from New York to San Francisco
by way of the San Juan River, crossing from the Great Lake to the
Pacific by a macadamized road from La Virgen to San Juan del Sur.
When the filibusters arrived in Nicaragua, a contest was in progress
in this company in which Morgan and Garrison, the agents at New York
and San Francisco respectively, were striving to wrest the control
from Cornelius Vanderbilt. Failing to achieve their purpose, Morgan
and Garrison determined to make use of Walker to turn the tables upon
their successful rival. They did much to aid him in securing control
of the Nicaraguan government by supplying him with money and arms and
by bringing him large numbers of recruits in their steamers from New
York and San Francisco; and in return for these favors they prevailed
upon him to revoke the concession of the old company and to grant a
new concession to them. This action brought Walker into a conflict
with Vanderbilt, who from that time on used every means to compass the
filibuster’s destruction.

In July, 1856, Walker was practically supreme in southwestern
Nicaragua, and had complete control of the Transit route. An army
sent against him by Costa Rica a few months before had won two or
three battles, but had soon been forced to withdraw by an epidemic of
cholera. The hostile elements in Nicaragua itself, and the armies of
Guatemala, Salvador, and Honduras, were however gathering at Leon, for
all Central America had risen in arms against the foreign invader. In
September the allies advanced on Masaya, where they inflicted a heavy
defeat on a small force of Americans. In November they took Granada,
the seat of Walker’s government, which the filibusters evacuated and
destroyed on their approach. Walker then moved his army by water to the
Transit road, which was the chief avenue by which he received supplies
and recruits from the outside world.

The allies had thus far been unable to inflict a decisive defeat on
the American leader. Although they had faced him for five months
with forces which must have outnumbered his little command at least
three to one, the quarrels between their leaders had made effective
action impossible, and the diseases which had decimated both camps had
disheartened them far more than they had the intrepid “phalanx.” It
is probable that they would soon have abandoned the campaign had not
Costa Rica, instigated by Vanderbilt and encouraged by the government
of Great Britain, again taken the field and struck Walker a decisive
blow at his weakest point. In December a force from that country,
directed by one of Vanderbilt’s agents, had descended the San Carlos
River and seized the steamers on the San Juan and the Great Lake,
thus cutting off Walker’s communications with New York, whence he had
received the greatest part of his reinforcements. They then joined the
allies who were confronting the filibuster force at Rivas. Walker was
now no longer able to replenish his supplies or to fill the gaps in his
ranks with new recruits. Although in desperate straits, he held out for
several months, beating off the attacks of the Central American troops
with great loss. The melting away of his small force through disease
and desertion, however, finally made his position untenable. On May 1,
1857, he surrendered to Commander Davis of the U. S. S. St. Mary’s, who
had interposed his mediation to put an end to the hostilities.

At the conclusion of the war there were six armies in Nicaragua,
representing the four other Central American republics and the two
factions in the country itself. Most of the foreign contingents
were withdrawn by their respective governments, after some slight
difficulties, but neither the Conservatives under General Tomás
Martínez nor the Liberals under Jeréz were willing to allow the other
party to take possession of the government. Another civil war would
probably have been the result, had not the Republic suddenly been
menaced by a new danger from without. Costa Rica, attempting to take
advantage of the exhaustion of her neighbor, declined to evacuate the
territory which she had occupied on the south bank of the San Juan
River, and demanded the surrender of certain military posts there which
would give her control of the greater part of the route of the proposed
canal. As soon as the intentions of President Mora became evident,
Jeréz and Martínez assumed a joint dictatorship and prepared for war.
Hostilities were only averted by the sudden return of Walker, which
forced the two countries to settle their differences and to prepare to
resist a new invasion. Costa Rica had already withdrawn her claims when
news arrived that the filibuster had been taken prisoner by the captain
of an American warship on the East Coast before he had had time to
reach the interior.[15]

Meanwhile the capital had been definitely and permanently established
at Managua, and Tomás Martínez had taken charge of the presidency
as the result of an election. With his accession began the first,
and up to the present time the only, era of relatively stable and
comparatively efficient government in the history of the Republic.
Martínez held office until 1867, suppressing a Liberal revolt led by
Jeréz in 1863, and was succeeded by a series of capable and honorable
presidents belonging to the Conservative party.[16] These men were
the leaders of a strongly organized and homogeneous group, which was
able to maintain itself in office until 1893 because of its unity and
its moderate and sagacious policy. Although thoroughly conservative
in ideas as well as in name, striving to maintain the existing social
order and the influence of the Church, the administrations of the
“thirty years” nevertheless did much to promote the economic and
social progress of the country. A railway was built from the Pacific
port of Corinto to Leon and Lake Managua, and another from the city
of Managua to Granada; agriculture was encouraged in many ways; and
even the school system was enlarged and improved. Their most important
achievement was the maintenance of peace during so long a period. There
were few revolts of importance, and not one successful revolution
between 1863 and 1893, notwithstanding the fact that the prolonged
tenure of power by one political group, which allowed no real freedom
of elections, was naturally distasteful to the opposition.

The methods by which the Conservatives were able to sustain their
authority for so long should afford a valuable lesson for their
successors. In the first place, the government was that of a group
of men, rather than that of one absolute ruler. As each president
at the end of his term turned over his office to one of his
associates, instead of bringing about his own re-election, there
was little jealousy between the leaders, and each in turn had the
support of a united party. So long as there was no treachery within
the administration itself, and so long as friendly relations were
cultivated with the neighboring states, the government, with its
control of the army and the forts, had little to fear from its enemies.
The Liberals, on their side, showed little inclination to recommence
the civil wars which had devastated the country from 1821 to 1863,
for they profited by the maintenance of order, and were treated with
far more fairness and generosity than usually falls to the lot of the
opposition party in Central America. At the present time, after a
quarter century of renewed party strife and mutual persecution, many
members of both parties look back on the “thirty years” as the happiest
period of the Republic’s history.

There were, however, dissatisfied elements which only awaited an
opportunity to overthrow the Conservative regime. The Leon leaders were
far from accepting the rule of their traditional rivals complacently,
and they could rely upon the support of increasingly numerous groups
of young men of the middle and lower classes in other parts of the
country, who were beginning to take a prominent part in political
agitation. The “Principal Families” were losing their prestige as they
had already lost it in Guatemala and Costa Rica, and their political
power was destroyed when the first serious dissension appeared in their
ranks. In 1889 President Carazo died in the middle of his term, and was
succeeded by Roberto Sacasa, one of the few Conservatives from Leon.
When the new president attempted to give the people of his own city
some of the more important public offices, the extreme partisans of
Granada overthrew him in 1893. This act, which broke the unity of the
Conservative party and thus weakened the government, was followed by a
successful Liberal uprising in Leon some months later.

As the result of this revolution, the presidency was given to a young
man from Managua, who was prominent among the younger generation of
Liberals. José Santos Zelaya was the absolute ruler of Nicaragua for
sixteen years. He was supported at first by the leaders at Leon,
but in 1896, when it became evident that he intended to force his
re-election for a second term, the western city rose against him.
The administration was saved only by the intervention of the allied
government of Honduras and by the aid of the Conservatives of Granada,
who were willing to support even a Liberal president against their
traditional enemies. This episode illustrates one of the chief sources
of Zelaya’s power--his skill in playing off the members of the
different factions against one another. When it became evident that
it was impossible to overthrow him, the Leon chiefs again associated
themselves with him, and even some of the wealthy _Granadinos_ accepted
positions and favors from him.

During the Liberal administration, the railway system and the steamer
service on the lakes were extended and improved, the development of the
coffee districts was stimulated by generous subsidies, and the capital,
Zelaya’s birthplace, was transformed from a rather primitive small town
to the most progressive city of the Republic, which at the present
time is ahead of Granada, and but little behind Leon, in population.
Marked progress was made in the matter of public instruction, for
schools were opened in all parts of the country, and many young men of
special ability were sent abroad to study. It is to be regretted that
the Conservative administrations which succeeded Zelaya have fallen far
behind the Liberal dictator in this respect, and have abandoned many of
the educational institutions which he opened.

Despite his progressive policy, however, Zelaya was a brutal and
unscrupulous tyrant, who exploited the country for his own personal
profit on a scale unprecedented in the history of the Isthmus. He and
his ministers established monopolies of all sorts, and sold valuable
concessions to foreigners or acquired them themselves, until there
were few forms of agriculture or industry which did not pay a heavy
tribute to some favored person. The silver currency disappeared before
large issues of irredeemable paper money, and the requisitions of the
government were paid for, not with cash, but with receipts which could
be negotiated only at a loss and through the aid of persons having
influence with the treasury department. Private persons enjoyed little
protection in their property and personal liberty against abuses of
power by the local and military officials, and the enemies of the
government suffered not only exile and the confiscation of their
property, but even torture and sometimes death in the prisons. The
rich families of Granada, who were with some reason held responsible
for the revolts which occurred almost every year, were treated with
great brutality. The avarice and cruelty of the men in power, however,
were felt most severely only by their irreconcilable enemies. The
friends of the government prospered, and the people as a whole suffered
comparatively little. In the country at large, in fact, the inflow of
money resulting from the reckless sale of concessions created a sort of
prosperity, for which the country has had to pay since Zelaya’s fall.

Zelaya raised Nicaragua to a position of influence in Central America
which she had never before enjoyed. He fomented revolutions in all
of the other four republics, and even in countries so far distant as
Colombia and Ecuador, until by 1909 the only one of his neighbors
who did not hate and fear him was the president of Honduras, whom he
himself had placed in office by his invasion of that state in 1907.
During the last three years of his administration, his attempts to
re-establish the old federal union, with himself at its head, plunged
all Central America into turmoil. His warlike activities and his
systematic opposition to American influence in the Isthmus finally
brought about an open rupture with the government of the United States,
and did much to cause his downfall. The history of the revolution of
1909, and the history of the Republic since that date will be treated
in Chapter XI.

Ninety-five years of rarely interrupted civil strife have left
Nicaragua in a condition which offers little hope for the early
re-establishment of peace and good government. The advances made along
these lines between 1863 and 1893 were to a great extent nullified
during the Liberal regime, when the continual attempts at revolution,
followed usually by barbarous treatment of the people of Granada and
other Conservative centers, not only revived and intensified the old
localistic spirit, but aroused a turbulent spirit and a strong taste
for factional strife among the people of all classes. Within a few
years after 1893, it would have been impossible for either party to
acquiesce in the rule of the other as the Liberals had acquiesced in
the Conservative regime of the “thirty years,” for the subordination
of any sense of justice to political considerations in the conduct of
the government and in the courts made the opponents of the party in
power so insecure in their property and in their personal liberty that
they were ready to support almost any revolutionary movement which
promised an alleviation of their condition. The only creed of public
officials and professional politicians seemed to be the promotion of
the interests of their faction and the abuse and subjugation of their
political enemies. These conditions were little changed by the advent
of the Conservatives to power in 1910, because the new authorities, who
had grown up under the oppression of Zelaya, with the worst features of
his administration constantly before their eyes, apparently could not
resist the temptation to avenge themselves upon their former rulers on
the one hand and to attempt to recoup their losses at the expense of
the nation on the other. The political morality of all parties had been
so debased that a restoration of the clean and moderate regime of the
“thirty years,” of which many of the older generation in Granada had
dreamed, was no longer possible.

The fertile lake plains, laid waste time after time by revolutionary
armies, are no longer the “Mahomet’s Paradise” which travelers had
described in glowing terms in colonial times. After the declaration of
independence, the energies of the ruling class in each section of the
country were entirely occupied in endeavors to maintain themselves in
power or to overthrow administrations controlled by their enemies. The
harassed landholders continued to cultivate their plantations as well
as they could in the intervals between civil wars, but the political
situation of the country soon became so hopeless that there was little
incentive for them to attempt to repair the damage wrought by each
successive outbreak or to engage in new agricultural enterprises. The
indigo plantations which had made the people of the province wealthy
under the rule of Spain were abandoned some time before the invention
of aniline dyes made them unprofitable in the other states, and the
famous cacao of Nicaragua, which was formerly an important export,
is now grown in quantities little more than sufficient to supply the
local demand. The only important products of the lake basin today are
plantains, corn, beans, sugar, and cacao, which are planted for local
consumption, and cattle, which are still raised in large numbers,
notwithstanding the losses inflicted on ranch owners by foraging
parties and bandits.

Outside of the hot plains of the interior, there have until recently
been few settlements of importance. The climate of the mountains to
the northwest and southeast of the lakes is much more suitable to
European colonization than that of Granada and Leon, but the latter
cities, situated as they are on what was formerly the transisthmian
commercial route, have always been preferred as a place of residence by
the creole families. The majority of the towns which were established
in the sixteenth and seventeenth centuries in the regions of Matagalpa,
Jinotega, and Segovia were soon destroyed by the fierce mountain
Indians or by pirates who came up the rivers from their bases of
operations on the East Coast; and those which survived, with few
exceptions, are today but little more than straggling villages. In
the _sierras_ between the lakes and the Pacific, there were at the
time of the conquest a number of Indian villages, but their growth
was discouraged by the fact that the lack of rivers and springs made
it difficult to secure even drinking water in the dry season. Neither
district received much attention from the government until the latter
part of the nineteenth century.

During the last twenty-five years, however, a number of coffee
plantations have been established both in the departments of Matagalpa
and Jinotega, and in the mountains near Managua and Granada. These
are not so large nor so well equipped as those in other countries of
the Isthmus, and their product is much less than that of Guatemala or
Salvador, but their development has nevertheless greatly increased the
commerce of the country. It has not, however, affected general economic
and political conditions so much as it would have if the majority of
the plantations were not owned and managed by foreigners. Nicaraguan
citizens hold only a part of the properties in the southwestern
_sierras_, and those in the North are almost entirely in the hands of
Germans, Englishmen, and Americans. The natives have participated less
in the prosperity due to the new conditions than in any of the other
countries where coffee has become the principal national product.

The Matagalpa and Jinotega districts have a large Indian population,
living in little settlements scattered through the mountains. These
tribes were not subjugated by the colonial authorities until nearly two
centuries after the establishment of Leon and Granada, and even at the
present time, when most of them have adopted the Spanish language and
religion, they show little admixture of white blood. At the time of
their pacification they received large tracts of land from the crown,
which they still hold in common and apportion at regular intervals
among their members. As the extent and the exact boundaries of these
grants have never been definitely settled, they have been a cause
of constant friction between the native communities and the white
planters. The officials of the central government have often carelessly
sold land belonging to the Indians to the coffee growers as a part of
the public domain, and the planters themselves have in some instances
taken possession of the property of the aboriginal communities without
any right to do so. Projects for the surveying of the Indian lands and
for the sale of those which their owners do not need to the coffee
planters have for some time occupied the attention of the authorities
at Managua.

The labor situation in the northern coffee belt presents considerable
difficulties. The Indians, who see little advantage in exchanging their
free life in their own villages for one of toil on the plantations,
do not furnish the regular and dependable supply of workmen which are
indispensable for the proper cultivation of the plantations, although
they do not refuse to work for a few days when they have need for a
small sum of ready money. Under Zelaya, an attempt was made to solve
the problem by the passage of a peonage law similar to the _Ley de
Trabajadores_ in Guatemala. This system seems never to have borne so
heavily upon the Indians as in the latter republic, but it at least
gave the planters a means for securing a regular force with which to
work their properties. Further aid was furnished by the recruiting
of laborers by force during the harvest time, when many Indians from
Matagalpa were even forced to travel for many days on foot across the
hot plains of the interior to work for friends of the administration
in the _sierras_ south of the lakes. The labor laws were abolished by
the Conservative administration, however, and since 1910 the planters,
unable to enforce contracts which they make with the Indians, have
often had difficulties in harvesting their crops. Their position has
been alleviated somewhat by the fact that the local authorities have
in many cases illegally enforced the old law; but the uncertainty of
the labor situation has greatly discouraged the extension of the
plantations and the introduction of new capital.[17]

The East Coast, which is for all practical purposes farther from the
cities of the interior than it is from New Orleans, has only within
the last quarter century become an integral part of Nicaragua, for
until 1894 it enjoyed a sort of independent existence under British
protection as the “Mosquito Kingdom.” This was a fictitious state of
half-breed Indians and negroes, who had from early times maintained
commercial and to some extent political relations with the nearby
settlements of English pirates and woodcutters, and through them with
the governor of Jamaica. In the middle of the nineteenth century, when
the attention of the world was first called to the possibility of
constructing an interoceanic canal by way of the San Juan River, these
relations were made the pretext for the establishment of a protectorate
over the entire eastern portion of Nicaragua and for the seizure of
Greytown, at the mouth of the San Juan, which had never even been in
the domain claimed by the Indians. The territory which was thus brought
under British control was in reality governed, not by the savage and
degenerate native chiefs, but by the British and other foreigners who
had settled along the Coast. The United States from the first refused
to recognize the protectorate, and protested vigorously and in the
end successfully against the violation of Nicaragua’s sovereignty.
The Clayton-Bulwer Treaty, signed in 1850, bound both powers not to
colonize, occupy, or exercise dominion over any part of Nicaragua or
Central America, but the British government refused to admit that
this obliged it to withdraw its protection from the Mosquitos, and
the continued occupation of Greytown, as we have seen, was one of
the causes which led the people of the United States to support the
filibustering expeditions of Walker. In 1860, Great Britain agreed to
abandon the protectorate on condition that Greytown should be made a
free port, and that the Indians should be given a reservation in which
they were to be free to govern themselves in accordance with their own
usages. This meant that the foreigners on the Coast were practically to
be at liberty to manage their own affairs without interference by the
native authorities. The arrangement was unsatisfactory from the first,
for the residents of Greytown and Bluefields objected to every exercise
of Nicaraguan sovereignty, and Great Britain upheld them in their
attitude, and thus in fact continued to exercise a protectorate over
them.

Matters came to a crisis in 1893, when Zelaya made a war with Honduras
the pretext for sending an army into the reservation and seizing the
control of the government. The Indians and the foreigners on the Coast
protested strongly against this action, but Great Britain, wearied of
the difficult and equivocal position in which her relations with the
Mosquitos had placed her, refused to uphold them. They had, therefore,
no choice but to submit. In 1894 a convention called by the Nicaraguan
commander and dominated by him voted for the complete incorporation of
the reservation into the Republic as the Department of “Zelaya,” and
the Republic has ever since exercised complete jurisdiction over the
former “sambo” kingdom.

Like other sections of the Caribbean litoral, the East Coast of
Nicaragua is inhabited chiefly by Americans and English-speaking
negroes. Its principal product is the banana. Bluefields, which is the
administrative center and the seaport, is connected with New Orleans
by a regular line of small steamers, and has far more commercial and
financial relations with the United States than with the interior.
During the Liberal regime, many important concessions were granted for
enterprises in the newly incorporated territory, which later became
a source of no little embarrassment to the government. In some cases
the higher officials made grants which were actually harmful to the
community as a whole, for their own personal profit, while in others
large tracts of land were ceded or special privileges were granted to
unscrupulous promoters who had little intention of carrying out in
good faith the obligations which they assumed, but who appealed to
their own governments for aid whenever they became involved in disputes
with the native authorities. Some of the monopolies established, and
particularly the exclusive right which one company received to operate
steamers on the Bluefields River, caused great discontent on the Coast
itself, and led the foreign colony there to take a prominent part in
organizing and supporting the revolution of 1909, by which Zelaya was
overthrown.

The means of transportation between the various sections of Nicaragua
are as yet very primitive. In the interior, they are by no means bad,
for it was comparatively easy to build a railroad from Corinto, the
chief port on the Pacific, to all of the important cities of the lake
region and to the coffee district west of it; and the lakes themselves
afford a cheap means of transportation to the regions around their
shores. Matagalpa and the northern departments, however, depend upon
the rudest kind of cart roads, and are almost inaccessible in the rainy
season. Communication with the Atlantic Coast is still more difficult,
especially at present, for the steamer service which formerly existed
on the San Juan River has been allowed to deteriorate, and the overland
route to Bluefields involves several days of traveling through a
sparsely settled tropical forest on mule back. Preparations are now
well advanced for the construction by American capital of a railway
from Bluefields to Lake Nicaragua, which would make travel from the
East to the West Coast comparatively easy. Another road is planned
from the main line of the Pacific Railway to Matagalpa, and it seems
not improbable that this and the Bluefields line may eventually be
connected, so that it will be possible to cross the Republic from one
ocean to the other.

The execution of these projects, and in fact Nicaragua’s whole prospect
for the immediate future, depend upon her relations with the United
States. Since 1911, both the political affairs and the economic
development of the country have not been entirely in the hands of her
own citizens, for the government at Washington, in its efforts to
promote peace in Nicaragua and in Central America, has entered upon a
course which has forced it on several occasions to intervene decisively
in the internal politics of the country, and two firms of American
bankers, as a result of their financial assistance to the government,
have gradually assumed control of the customs houses, of the railways,
of the currency system, and even of the internal revenues of the
Republic. The course of events which has brought this to pass will be
described in Chapter XI.


FOOTNOTES:

[11] Elisée Reclus, _North America_, Vol. II, pp. 274, 279.

[12] There are no very reliable figures for the population of the
cities or for the total population of the Republic, but the best
estimates agree that the Republic has about 600,000 inhabitants, while
the population of the cities mentioned may be stated approximately as
follows: Leon, 62,000; Managua, 35,000; Granada, 17,000; Chinandega,
10,000; Masaya, 13,000; Rivas, 8,000.

[13] See William O. Scroggs, _Filibusters and Financiers_, which
gives a very complete account of Walker’s career, and upon-which the
foregoing sketch is to a great extent based. Walker himself wrote a
book about his campaigns, entitled _The War in Nicaragua_, and many of
his followers also left accounts of their adventures.

[14] Scroggs, op. cit. p. 305.

[15] Walker was eventually captured and shot while attempting a third
invasion of Central America on the North Coast of Honduras in 1860.

[16] These were: Fernando Guzmán, 1867-71; Vicente Cuadra, 1871-75;
Pedro Joaquín Chamorro, 1875-79; Joaquín Zavala, 1879-83; Adán
Cárdenas, 1883-87; Evaristo Carazo, 1887-89; David Osorno, 1889; and
Roberto Sacasa, 1889-93.

[17] In a previous chapter, the author has stated it to be his opinion
that the plantations of Guatemala could be operated successfully
without a peonage system. The effect of the repeal of the labor laws in
Nicaragua would seem to prove the contrary, were it not for the great
difference between the Indians of the two countries. In Guatemala, the
Indians depend upon the planters for a living, as they have little land
of their own. They were, moreover, almost wholly an agricultural people
before the Spanish conquest, whereas the Indians of Matagalpa have
always secured at least a portion of their food by hunting, and have
never been accustomed to any but spasmodic and irregular agricultural
labor. They have also great tracts of land of their own, of which,
unlike the tribes in Guatemala, they have never been dispossessed.




                               CHAPTER V

                               SALVADOR

 Geographical Description--History--Improvement of Political Conditions
 in Recent Years--Activities of the Government--Agricultural
 Products--Social Conditions--Means of Transportation--Relations with
 the United States--Prospect for the Future.


Salvador is the most important of the Central American republics,
after Guatemala, although she has a far smaller territory than any of
her neighbors. Almost all of her total area of 7,225 square miles is
suitable for cultivation, and there are few parts of it which are not
inhabited by a dense population. Notwithstanding the fact that she has
no coast line on the Atlantic and has thus been deprived of direct
communication with Europe and the Eastern United States, her foreign
trade is far greater than that of Honduras and Nicaragua, and but
little behind that of Guatemala and Costa Rica, while her upper classes
are more closely in touch with the outside world, and have shown a
greater tendency to adopt foreign customs and practices than those of
the majority of the other countries. Her capital, San Salvador, is a
busy, up-to-date commercial center, which impresses the traveler as one
of the most progressive cities of the Isthmus.

Extending from Guatemala on the west to the Gulf of Fonseca on the
east,[18] the Republic occupies a section of the broad plain along the
Pacific Coast of the Isthmus, and like the similarly situated section
of Guatemala, is traversed by a chain of volcanic peaks, many of which
are still active or have been active within very recent times. The
soil, consisting mainly of decomposed lava, is extremely fertile. The
slopes of the mountains are excellently adapted for the cultivation
of coffee, and in the lower altitudes, although much of the country
is rough and broken, nearly all of the other characteristic Central
American products can be grown. There is a plentiful rainfall from
May to October, and an abundant water supply for the dense population
is provided by several lakes and by a number of streams which do
not dry up during the rainless season. The Lempa, which divides the
eastern from the western half of the country, after flowing through
the northern departments from its source near the Guatemalan frontier,
is by far the largest river on the Pacific side of the Isthmus. As
the more important cities are situated in the valleys at the foot of
the volcanoes, or in the low plains along the coast and on the banks
of the Lempa, few of them are more than two thousand feet above sea
level, and their climate is consequently less agreeable than that of
the most densely populated parts of Guatemala and Costa Rica. Except
in the lower Lempa Valley, however, the people are fairly healthy,
probably because the porousness of the soil discourages the breeding of
mosquitoes and thus holds in check some of the diseases most prevalent
in other parts of the tropics.

The people are of much the same racial character as those of Nicaragua
and Honduras, although there seems to be rather more Spanish blood in
their veins, and less admixture of negro, than in those countries.
The majority are in part at least of Indian ancestry, but all speak
Spanish, and there are only a few communities where the aborigines have
maintained their individuality and their primitive customs. Among the
upper classes, the greater number are of pure or nearly pure European
descent, but Indian blood is no bar to social or political prominence.
The people as a whole are fairly industrious, considering the climate
and the prevalence of hookworm and other intestinal parasites, and the
standard of living among the laboring classes is considerably higher
than in Guatemala or Nicaragua. The landowning class is perhaps the
wealthiest and the most enterprising in the Isthmus.

The early history of Salvador was as turbulent as that of her
neighbors. For many years after the declaration of independence she
was almost continuously in a state of civil war, partly because of the
rivalry between the political leaders and the jealousy between the
cities within the state itself, and partly because of the incessant
quarrels between the state authorities and those of Guatemala. As
we have seen, her people played a prominent part in the struggles
which accompanied the first attempt to establish a Central American
federation. The prolonged war in which the citizens of Salvador and
of one section of Honduras overthrew the Conservative government in
Guatemala in 1829 was followed within three years by new difficulties
which led President Morazán in his turn to remove the state authorities
in San Salvador and to transfer to that city the seat of the federal
administration. From then until the final fall of the great unionist
leader, Salvador was frequently involved with one or another and at
times with all of her neighbors, because of the opposition of the
latter to the federal authorities. She was the last of the five states
to admit the dissolution of the union, and at the present time she is
the chief center of the party which favors its restoration.

The Liberal party, which had supported Morazán, was driven from power
by the intervention of President Carrera of Guatemala in 1840, and for
five years the government was under the control of Francisco Malespín,
one of Carrera’s friends, who used his position as _comandante de
armas_ to make and unmake presidents and to dominate the policy of the
civil authorities. The Liberals were able to return to power in 1845,
after a bloody struggle in which Malespín, although now estranged from
Carrera, was assisted by the government of Honduras. They were again
driven out in 1852 by Carrera, and four Conservative leaders occupied
the presidency for short terms. The Liberals, under the leadership of
Gerardo Barrios, regained power in 1860, but were forced to relinquish
it two years later as the result of another war with Carrera. In 1863,
the Conservative leader, Francisco Dueñas, became president, and
conducted the government efficiently and successfully until 1871, when
the Liberal party, which was at the same time carrying on successful
revolutions in Guatemala and Honduras, defeated him and placed at the
head of the state Santiago González, who remained in office until
1876. His successor, Andrés Valle, became involved in another war with
Guatemala, arising from an intervention by both states in the internal
affairs of Honduras, and was replaced by Rafael Zaldívar, one of the
leading followers of the former president Dueñas. This able ruler
remained in office until 1885, maintaining the friendliest relations
with President Barrios of Guatemala, despite the fact that one belonged
to the Conservative and the other to the Liberal party. When Barrios
attempted to renew the Central American Union by force, and entered
upon the campaign which ended so disastrously for him at Chalchuapa,
however, Zaldívar took the field against him. A short time after this
war, Zaldívar was forced to resign by a revolution headed by Francisco
Menéndez, and the latter was president until his death in 1890. After
him, the Republic was ruled by the Ezeta brothers, two military
leaders who seized the presidency by a _coup d’état_ and maintained
themselves in office by despotic and rather barbarous methods until
they were overthrown by an uprising in the city of Santa Ana in 1894.
Rafael Gutiérrez, who became president in that year, was an able and
patriotic executive, but some features of his administration caused
considerable discontent, and his participation in the Treaty of
Amapala, by which Salvador entered into a loose union with Honduras and
Nicaragua, caused his fall in 1898.

The new president, General Tomás Regalado, served his full term and
passed on the chief magistracy in an orderly manner to Pedro José
Escalón in 1903. From that time there has not been a successful
revolution in Salvador, although discontented political leaders have
occasionally made ineffectual attempts to overthrow the government. In
1906, General Regalado, who was very influential in the administration
of President Escalón, brought about a short and purposeless war with
Guatemala, which ended with the death of its author on the battlefield.
In 1907 there was another war, between Salvador and Nicaragua,
about the presidency of Honduras, and in that and the following
year President Zelaya of Nicaragua attempted several times, without
success, to promote revolutions against the governments of Escalón
and of Fernando Figueroa, who succeeded him. The Government of the
United States exerted its good offices to put an end to the hostilities
between the two countries, and finally threatened to use force if
necessary to put an end to Zelaya’s attacks on his neighbor, but peace
was not entirely re-established until the Nicaraguan president was
overthrown in 1909. Figueroa was succeeded by Manuel Enrique Araujo in
1911. This president was assassinated in 1913, and the vice-president,
Don Carlos Meléndez, completed the unexpired term and was re-elected to
the chief magistracy in 1915.

In the confused political history of Salvador, two important facts
stand out: first, that the revolutions which occurred so frequently
during the seventy-five years following the declaration of independence
were due more to the interference of the other countries, and
especially of Guatemala, than to the strife of factions at home;
and second, that in recent times, when this kind of interference is
no longer so frequent, there has been a remarkably rapid progress
towards the establishment of a more stable form of government. For
three-quarters of a century after 1821, the internal tranquillity of
the country may be said to have been almost entirely dependent upon its
relations with its neighbors. The parties which were formed during the
turbulent years of the Central American Union continued to act together
long after the states which made up the Union had become independent
nations, and Conservative governments in Guatemala continued to regard
themselves as the natural enemies of Liberal administrations in
Nicaragua and Salvador, largely because of the bitter animosity between
the leaders, which had been engendered by the events of the years
1821-40. Discontented factions in Salvador never hesitated to call in
assistance from other countries to overthrow a hostile government at
home, and the presidents of the other countries on their side were
always ready to intervene to secure the establishment of a friendly
administration in Salvador, in order to increase their own influence
and to make more secure their own position. As the leaders who had
participated in the wars under the Federation died, however, and the
parties lost their fundamental economic and social characteristics, so
that there was little real difference in principles or point of view
between the Liberals of one country and the Conservatives of another,
factional politics ceased to a great extent to be international.
Intervention to overthrow a government of opposite political complexion
was then no longer so necessary as a measure of self-preservation, as
it had been when every Liberal or Conservative who came into power
in one of the states felt it his duty to use all of the resources at
his command to secure the domination of his own party in the others.
Guatemala has not played a decisive part in overthrowing a president
of Salvador since the battle of Chalchuapa in 1885, and Honduras and
Nicaragua have now fallen so far behind their neighbor in population
and resources that their intervention is no longer seriously to
be feared. The attempts of the president of the latter country to
encourage revolutions in Salvador in 1907 and 1908 were failures,
although they caused the government considerable uneasiness and expense.

Since 1908, moreover, international wars between the Central American
states have been made practically impossible by the fact that the
United States has employed diplomatic pressure and sometimes actual
force to secure the observance of the Washington Conventions of
1907, by which the five countries pledged themselves to abstain from
interfering in each other’s internal affairs. At the present time
it is not probable that an army from one state would be allowed to
invade one of the others for the purpose of bringing about a change
of government. The prevention of this kind of aggression, of which
there were instances almost every year before 1907, has done much to
discourage revolutions in Central America, because there is little
chance, except in cases where there is a very general and very violent
popular discontent with the government in power, for a revolt to
succeed without active assistance from outside.

Since the character of her international relations has changed so
that external influences no longer make the establishment of internal
peace impossible, Salvador has become one of the most orderly and best
governed of the Central American republics. Her political affairs are
almost entirely in the hands of a small educated class, among whom
landed proprietors are more powerful and professional politicians and
revolutionists on the whole less numerous and less influential than
elsewhere in the Isthmus. This class was for many years divided within
itself into hostile factions, which were kept alive, long after the
disappearance of their original sources of difference, by the intrigues
and interventions of the neighboring governments. After the violent
animosities created by the wars during the first Central American
Union died out, however, and after the cultivation of coffee and the
development of commerce had opened up greater opportunities for the
acquisition of wealth and power than were offered by the contest for
public offices, the ruling class as a whole turned its attention from
politics to agriculture. The damage inflicted by the frequent civil
wars was severely felt by the proprietors of the plantations, who were
realizing for the first time the possibilities of the new life which
the importation of foreign luxuries and the ability to travel abroad
placed before them, and they consequently became almost a unit in
their desire for peace and a stable government. An attempt to start an
old-fashioned revolution at the present time, unless there were some
strong reason for desiring to overthrow the government, would probably
meet with determined hostility among the greater part of the wealthier
and more intelligent classes.

It cannot be said, however, that Salvador is inherently a peaceful
country in the same sense in which this is true of Costa Rica. The
lower classes have no more inborn respect for authority and love of
peace than have those of Nicaragua and Honduras, whom they strongly
resemble in their racial characteristics and customs, and a large
element among them have always taken part in wars and revolutions with
the same gusto that is shown by the _mestizos_ of the more turbulent
countries. If they are on the whole less prone to revolt, this is due
to the fact that they are fairly contented under present conditions,
and that they are held under control by a much stronger and better
organized military power than in those countries. The government is
maintained in office, not by popular respect for authority or by the
will of the people, but by force, for there are always elements, even
among the upper classes, which are awaiting an opportunity to overthrow
it.

There is at present, however, no organized opposition, as the old
historical parties have nearly died out and the formation of new ones
has been discouraged by the policy of the government, which generally
either wins over discontented political leaders by the gift of offices
or money, or forcibly prevents them from carrying on propaganda hostile
to it. In former times, opponents of the group in power were exiled
or even murdered, but recent administrations have attempted rather to
conciliate their opponents and to maintain the good will of the common
people, and there has been little of the severity towards defeated
rivals which has helped to keep alive factional hatred in Guatemala
and Nicaragua. Nevertheless, opposition to the government is still
suppressed with a firm hand, and murders for political purposes are by
no means unknown.

The political institutions are no more democratic than those of the
neighboring countries. Except where a successful revolution intervenes,
the presidency is passed on by each incumbent to a successor of his own
choosing, and all of the other nominally elective offices are filled in
accordance with the wishes of the administration, since the authorities
control the elections by preventing the nomination of opposition
candidates and by exerting pressure on the voters. Every department
is under the absolute personal control of the president, so far as he
wishes to exercise his authority, and the responsibility for everything
which occurs during the administration rests upon his shoulders. The
Congress has at the present time some degree of independence, and the
judiciary is not subjected to the same dictation by the executive
as in some of the other countries, but neither is in any real sense
co-ordinate with the latter, nor would be able to resist it if a
serious difference of opinion arose.

Of late years, however, the presidents of Salvador have made little
attempt to exercise the absolute and arbitrary authority which some
of the recent rulers of Guatemala and Nicaragua have enjoyed, for
they have generally been content to abide so far as possible by the
provisions of the constitution and to relinquish their office to one
of their supporters at the end of their legal term. Since 1898, with a
single exception, changes of administration have taken place without
the intervention of force, and the one president who was assassinated
was followed by the constitutionally elected vice-president, without
disorder or further bloodshed.

The chief support of the government is the army, which is better
trained and better equipped than that of any other Central American
country. A large proportion of the soldiers, apparently, serve
voluntarily. Moreover, many remain with the colors for long periods,
and learn to take a certain amount of pride in their calling. The
officers are of an unusually high type, because the comparatively good
salaries and the education offered by the Polytechnic School have
induced many young men of the better classes to adopt the military
profession as a career. Both officers and men seem on the whole to
be loyal to the government and show little tendency to political
intrigue,--a statement which cannot be made with regard to the forces
of some of the other republics. The army is far larger than the wealth
or the actual necessities of the country would seem to justify, and
heavy expenditures upon it have been a source of some discontent; but
the existence of a well-organized and well-trained body of troops has
undoubtedly been a strong factor in favor of stable government and a
valuable protection against attack from without.

The civil police is also efficient and well equipped compared with
that of the neighboring countries. Besides the usual city forces, there
is an organization called the _Guardia Civil_ in the rural districts
near the capital which patrols the roads and does much to protect life
and property. Crimes of violence, however, are by no means uncommon,
and are very frequently allowed to go unpunished, for the activity of
the army and the police, as in the other Central American countries,
is directed more towards the maintenance of the authority of the
government than towards the prevention of wrongdoing. The suppression
of revolts and the control of all parts of the Republic by military
force is easier than in any of the neighboring countries, because of
the small area to be policed and the denseness and compactness of the
population.

The chief functions performed by the government are the preservation
of order, the management of the customs houses and the other sources
of income, and the operation of such fundamentally necessary public
services as the postal and telegraph systems. A comparatively small
amount of money, considering the wealth of the country, is available
for other purposes, because of the heavy cost of the military
establishment and the losses due to inefficiency and peculation in
the collection and expenditure of the revenues. Sanitary measures and
public instruction have not received the attention which might be
expected among so progressive a people and little has been done, except
by private initiative, to develop the resources of the country or to
stimulate foreign commerce. Although abortive attempts have been made
from time to time to establish agricultural and industrial schools,
the government has little interest in such institutions, and has never
given them sufficient funds to accomplish anything of great value. The
system of highways, which is of especial importance because of the
lively internal commerce, leaves much to be desired, but its defects
are due more to almost insurmountable difficulties arising from heavy
rainfall and from the physical formation of the country than to lack of
interest. There are, however, cart roads, which are fairly good in the
dry season, in all parts of the Republic, and near the capital there
are several roads suitable for automobiles, which are owned by many of
the wealthy people of the city.

The public schools have received less attention than in some of the
other countries. The Department of Public Instruction, which possesses
many well-informed and able officials, has done what it could with the
scanty resources at its command, but the government has not supported
it with adequate appropriations, and has not always shown care or
impartiality in the appointment of teachers. Only about one-fourth
of the children between six and fourteen years of age are receiving
instruction.[19] The schools in the capital and in the larger cities,
although badly equipped and very badly housed, do excellent work, and
the visitor cannot fail to be impressed by the enthusiasm shown by the
children and by the teachers. The latter are generally inadequately
trained, but they appear to have a natural gift for arousing the
interest and holding the attention of their pupils. In the country,
educational opportunities are much more limited, for the rural schools
have but three regular grades, with a complementary year in which
instruction in some trade is given, and there is little opportunity
for the children to receive a secondary education unless they can
afford to spend five years completing their primary course in one of
the cities. The education of the lower classes has been purposely
restricted to a few fundamentals, because the authorities have desired
to discourage the tendency, so harmful in all parts of Central America,
towards the adoption of the learned professions at the expense of
agricultural pursuits. No government aid is now granted to poor
children for advanced study either at home or in foreign countries, and
every effort is made rather to encourage those who have completed their
primary course to fit themselves for the cultivation of the soil or for
some trade. In the capital, schools have just been inaugurated where
practical instruction for this purpose is given. There are a number of
secondary institutions in the larger cities which compare favorably
with those in other parts of Central America, although they also suffer
from lack of funds and from the absence of well-trained teachers. The
same is true of the University, where law, engineering, pharmacy, and
other professions are taught. The wealthier families educate their
children in private institutions rather than in the public schools,
and more and more young people at the present time are being sent to
complete their studies in foreign countries, and especially in the
United States.

The administration of public affairs is considerably less corrupt and
somewhat more efficient than in Guatemala, Nicaragua, or Honduras.
The integrity of many of the higher officials is above suspicion, and
theft is apparently not practiced on a large scale in any department
of the government. The judiciary is neither so hopelessly venal nor
so inefficient as in some of the other countries, and the Supreme
Court is a body which commands general respect. The administration of
the postal and telegraph systems is fairly reliable, although it is
typically Central American in its methods and in its spirit. Conditions
are nevertheless very far from what they should be. Even at the present
time, under a president whose honesty and whose progressive ideals are
doubted by no one, public officials are too often appointed for purely
personal reasons rather than with any regard to their fitness, and
graft is practiced more or less openly in all of the departments, with
the knowledge, if not with the consent, of the higher authorities.
Large amounts of money are paid from the public treasury on different
pretexts to political leaders whom the administration desires to
conciliate, and men of little ability or patriotism are given positions
of responsibility and authority for which they are not at all fitted,
and in which their conduct is not infrequently scandalous. These
conditions are to a great extent beyond the control of the government,
for an administration which failed to consolidate its power by such
methods probably could not maintain itself very long in office. The
old-style professional revolutionists, many of whom have a considerable
following among the lower and middle classes, are still too powerful to
be disregarded, and the idea that offices and graft are the legitimate
rewards of political activity is no less paramount than formerly. There
is every prospect, however, that political conditions will improve as
the government becomes more stable, and as public opinion, already a
powerful influence for good, becomes more enlightened and exerts more
control over the factional leaders.

Economically, Salvador is one of the most prosperous countries of the
Isthmus. Her principal product is coffee, grown on the slopes of all
the higher volcanoes and hills, which is exported to the amount of
from sixty to seventy million pounds annually to France, the United
States, and other countries. In the lower parts of the country, there
are many large cattle ranches and cane plantations, which produce meat
and sugar for local consumption. Corn is raised everywhere, even more
than in other parts of Central America, because of the denseness of
the population and because of the large _per capita_ consumption. One
small section of the Pacific Coast, called _La Costa del Bálsamo_, is
notable for its exports of balsam of Peru, a forest product which is
found in its wild state only in this one spot.[20] The trees from
which this medicinal gum is extracted have within recent years been
brought under systematic care in large plantations, and have proved a
source of considerable wealth to the native capitalists, as well as to
the Indians who collect the balsam in the forest by primitive methods.

The upper classes are as enterprising and progressive as any social
group in Central America. A large proportion of them have traveled
abroad and have adopted foreign ways of living at home, and as a
whole they have shown a responsiveness to new ideas and an energy and
patriotism which promises much for the future of their country. The
owners of the large plantations live in the cities, but they take a
deep interest in the management and development of their properties,
and usually spend a portion of the year upon them. Few are free from
the Central American tendency to extravagance and improvidence, but
they have nevertheless been sufficiently enterprising and progressive
to maintain their dominant position in the economic life of the country
while the resources of the other republics have been falling more and
more into the hands of Europeans and North Americans. There are some
rich agriculturalists who are foreigners, but they are relatively few
as compared with those in Guatemala and Nicaragua. The great majority
of the more valuable plantations still belong to citizens of Salvador,
and much of the stock in the banks and in the more important industrial
enterprises is controlled by native capital. This fact is of great
significance, because it indicates that the people of the Republic have
adapted themselves to modern conditions more readily than have their
neighbors. The preservation of the class which furnishes the natural
leaders and rulers of the community cannot but have a beneficial social
and political effect.

The lower classes, housed in dirt-floored thatched huts, and subsisting
on a diet in which the corn _tortilla_ is the chief feature, offer
a striking contrast to their wealthy and Europeanized superiors,
but they are nevertheless somewhat better off than in any of the
neighboring republics except Costa Rica. The majority of them have
regular work on the plantations, where they are supplied with homes
and food and receive wages which compare favorably with those paid in
Honduras and Nicaragua. Their standard of living is somewhat higher
than in those countries, and they are in general better treated both
by their employers and by the authorities. A large proportion of
the laborers on the bigger plantations are given patches of land to
cultivate for themselves. In the central part of the country there are
many small landholders, who find a ready market for their products in
the cities, and are enabled by the possession of a regular money income
to enjoy many little luxuries which are unknown in the more backward
parts of the Isthmus.

In the cities, and especially in the capital, small-scale commerce
and manufacturing are very active. Great quantities of vegetables,
milk, firewood, and other country products are daily brought into town
in ox-carts by the peasants, who exchange them for the manufactured
articles which they need, and the market and the countless small stores
in the vicinity are always a scene of great animation. There are a
number of little manufacturing establishments, where candles, shoes,
soap, and cigarettes are made, chiefly by hand labor, and the products
of these are bought by the lower classes in surprisingly large amounts.
Only a few of the smaller commercial establishments, however, belong to
natives of the country, for the greater part of the retail trade is in
the hands of foreigners.

External commerce has attained large proportions, despite the fact that
the Republic has no access to the Atlantic. As in the other countries
of the Isthmus, there are few North American merchants; and English,
German, and Dutch houses control the import and wholesale trade.
Until the outbreak of the European war, Salvador purchased a smaller
proportion of her imports from the United States than did any of the
other republics of the Isthmus, but this condition has necessarily
changed within the last two years. Of the exports, the coffee, which
is the only item of first importance, is shipped to some extent to San
Francisco, but more to France and Germany.

Both external and internal commerce have been greatly aided by the fact
that the territory of the Republic is so small, and that all parts of
it are so close to the Pacific Coast. The problem of transportation has
not been nearly so difficult as in some of the other countries. There
are now few important towns which have no railway connection. The most
important line is that of the Salvador Railway Company, an English
corporation which provides a cheap, rapid, and in every way excellent
service from the capital and Santa Ana to Sonsonate and Acajutla. Over
this passes the greater part of the freight and passenger traffic,
for Acajutla, although merely an open roadstead, where loading and
unloading is difficult and expensive, is the principal port of the
Republic. Another line is being built by the International Railways
of Central America, the American concern which operates the Guatemala
system, from La Union on the Gulf of Fonseca to San Salvador. This
passes through many important cities in the eastern departments, and
has now reached San Vicente, about forty miles from the capital.
The service is not so good, and the rates are higher than on the
Salvador Railway Company’s line, and the usefulness of the road is
greatly diminished by the fact that its builders have as yet failed
to construct a permanent bridge over the Lempa River, to cross which
freight and passengers must submit to a disagreeable and hazardous
transfer in scows during the rainy season. It is, however, of immense
importance to the rich sections through which it passes, and when it
is completed, connecting the capital with the land-locked harbor of
La Union, it will not only provide a new outlet for the commerce of
Salvador, but will also open a much more rapid and convenient route
to Honduras and Nicaragua, which are reached in a few hours by water
from La Union. The same company plans to build a line from Santa Ana
to Zacapa, on the Guatemala Railway, which will make both San Salvador
and La Union accessible directly by railway from Puerto Barrios on the
Atlantic. When this is done, the journey from the United States to each
of the three central republics of the Isthmus will be shortened by
several days.

Besides the ports mentioned, Salvador possesses two others. La
Libertad, immediately south of the capital but separated from it by a
steep range of hills, is an open roadstead from which a large amount of
coffee produced in the neighborhood is shipped. El Triunfo, on a rather
shallow bay east of the Lempa River, is close to another coffee-growing
district, but it will have to be greatly improved before it can be made
a regular port of call for large steamers. Both of these are connected
with their tributary country by cart roads, which are good in the dry
season, but become very bad when it rains.

As elsewhere on the Pacific Coast of Central America, there has been
hardly any steamship service at these ports since the beginning of the
European war except that of the Pacific Mail, whose ships touch there
at irregular intervals and afford expensive and rather unsatisfactory
accommodations for freight and passengers. The Pacific Steam Navigation
Company also operates one small steamer, formerly the property of the
Salvador Railway Company, between Panama and Salina Cruz, stopping at
most of the ports on the way, and the government of Salvador owns a
still smaller vessel which plies between the ports of the Republic and
San José, Guatemala. Salvador suffers far more from the inadequacy of
the West Coast steamship service than do any of the other countries,
for Guatemala and Costa Rica have excellent connections with the United
States and Europe by way of their Atlantic ports, and Nicaragua and
Honduras have comparatively a small amount of foreign commerce. The
Republic will not be able to develop as it should until its connections
with the outside world are greatly improved.

The relations between Salvador and the United States have never been
so close as in the case of those republics where more American capital
has been invested and where regular and direct steamer communications
have encouraged commerce and travel; and in recent years the friendship
between the two countries has been endangered, although it has by no
means been destroyed, by political questions. The influence exerted
by the United States in the internal politics of some of the nearby
countries, especially in the case of Nicaragua, and the proposal
to establish an American naval base in the Gulf of Fonseca, close
to the port of La Union, have greatly alarmed public sentiment in
Salvador, and have called forth strong but ineffectual protests from
her government. This fear of what the people of the Republic regard
as American tendencies towards expansion has caused a rather marked
distrust and dislike of the United States among certain classes,--a
feeling which can be dispelled only by the most careful regard for
Central American rights and susceptibilities in the future. With
frankness and fair treatment on both sides, however, the relations
between the two republics are bound to grow more friendly as they grow
closer; for the influence of the increasingly large number of natives
of Salvador who travel and study in North America, and of the Americans
who are now in Salvador, should do much to bring about a better
understanding.

The prospect for the future of Salvador seems very bright. Political
and social conditions are improving steadily, and the prosperity of
the Republic, with its fertile soil and industrious population,
seems secure. The progressive spirit of the ruling classes and their
rapid absorption of foreign ideas afford reason to believe that the
control of the economic life of the country by foreign interests,
which is becoming more and more marked elsewhere in the Isthmus, may
here be avoided. The introduction of foreign capital is of course very
necessary for the development of the country, as is the immigration of
foreigners of the better class, but it is to be hoped that this may
take place without resulting in the impoverishment and the decay of
the leading native families. If the best people of the Republic can
continue in the future to play the part which they play at present in
politics and agriculture, the little country promises to remain one of
the most prosperous and most civilized states in tropical America.


FOOTNOTES:

[18] It should be noted that the Isthmus is bounded by the Atlantic
on the north and the Pacific on the south in Guatemala, Salvador, and
Honduras, whereas the former ocean lies east and the latter west of
Nicaragua and Costa Rica.

[19] According to figures furnished to me by Sr. Juan Lainez, Director
of Primary Instruction, there are 245,251 children between the ages of
six and fourteen in Salvador, of whom 60,860 are enrolled in public and
private schools. The average attendance is considerably less than the
number enrolled. The budget for Public Instruction for the year 1916
was $1,205,074.44, or approximately $408,000 in U. S. currency.

[20] It has been introduced into Ceylon. _Encyclopædia Brittanica_,
article on “Balsam.”




                              CHAPTER VI

                               HONDURAS

 General Description--History--Effects of Continual Civil War--Lack of
 Means of Communication--Backwardness of the People--The North Coast.


The territory of Honduras may be roughly described as a triangle, the
base of which is formed by the shore of the Caribbean Sea, and the
other sides by the Guatemala-Salvador boundary on the southwest and
by that of Nicaragua on the southeast. At the apex, on the south,
there are a few miles of coast on the Gulf of Fonseca which give
the Republic its only outlet on the Pacific. The country is very
mountainous, but, unlike its neighbors, is in no part of volcanic
origin, for the chain of craters which elsewhere traverses the Isthmus
several miles inland from the coast passes by Honduras through the
conical islands of the Gulf of Fonseca, leaving the mainland entirely
outside of the belt of decomposed tufas which forms the most fertile
agricultural districts of other parts of Central America. There are
thus none of the rich eruptive plains and gently sloping mountainsides
which have encouraged the establishment of the great coffee and sugar
plantations of Guatemala and Salvador and have made it possible for
the regions near the Pacific Coast in all of the other countries to
support dense populations. The southern portion of Honduras is occupied
by a series of rugged mountain chains, where only small amounts of
land in the valleys are suitable for cultivation and the rainfall is
scanty and irregular. The first Spanish settlements were established
in this district, notwithstanding the difficulties of raising food
and transporting supplies from the outside world, because of the
gold and silver mines, which in colonial times made Honduras one of
the most important provinces of the Isthmus; and when the mines were
abandoned, during the years of anarchy which followed the declaration
of independence, the inhabitants still clung to their decayed villages
and supported themselves as well as they could by agriculture. North of
the continental divide, the mountains are lower and less precipitous,
and there are great stretches of open savannahs and pine-covered
hills, where the rainfall is plentiful and the grass is green at all
seasons of the year. The soil is not very fertile, except in the river
bottoms, but the region is admirably adapted for the raising of cattle.
The cities of the south and of the interior are still the center of
the political life of the country, but since the development of the
banana trade they have been rapidly outstripped in economic importance
by the newer towns created by foreign enterprise on the North Coast.
The region near the Caribbean Sea is a low plain, extending for many
miles into the interior, traversed by scattered mountain ranges and by
several large, slow-flowing rivers. Here there are many settlements of
North Americans, West Indian negroes, and natives, who are occupied
chiefly with the cultivation of bananas.

The people are a mixed race. Spanish is the only language, and
Catholicism the only religion, but even in the cities there are few
persons who are entirely white, and in the country districts, although
there are almost no pure-blooded Indians except on the uncivilized
Mosquito Coast, the majority of the inhabitants have far more American
and African than European blood. The aborigines of Honduras were never
so numerous or so civilized as those of Guatemala, Salvador, and
Nicaragua, and they were exterminated after the conquest to a somewhat
greater extent than in those countries because of the hard labor in the
mines; but their characteristics are nevertheless those which are most
marked in the half-breed population of today. Negro blood also is very
evident in the people in the regions north of the continental divide,
and in many places, especially near the coast, seems to predominate
over the other racial constituents. It was far easier for runaway West
Indian slaves and other immigrants of the same color to reach the
interior from the Caribbean Coast of Honduras than elsewhere in the
Isthmus, because the country back of the coast line was more open and
more attractive, to them, on account of its warm climate. What effect
this element has had on the development of the Republic it is difficult
to say, but it is possible that it may account in some measure for the
backwardness of most of the regions in which it is found.

The central position of Honduras has forced her, whether she wished to
or not, to take part in nearly every international conflict which has
occurred in the Isthmus; and the continual intervention of her stronger
neighbors in her internal affairs, combined with factional hatred and
greed for the spoils of office on the part of her own citizens, have
kept the Republic in a state of chronic disorder down to the present
time. Because of the economic backwardness and the isolation of her
people, she has been affected comparatively little by the factors
which have in recent years tended to discourage internal disorder and
civil strife in Salvador. Her government has never become so strong
that it was able to repel aggression from without or to hold in check
its enemies at home, and no part of her territory, with the possible
exception of the North Coast, has reached a stage of agricultural or
industrial development sufficiently high to give rise to a class of
plantation owners or capitalists more interested in the maintenance
of peace than in the dominance of one or the other political faction.
She does not enjoy the favorable climate and the fertile soil which
have encouraged the development of the great agricultural enterprises
of the neighboring states, and she has been prevented from using the
very valuable natural resources which she does possess by constant
disturbances promoted both by external and by domestic enemies.

Dissensions within the country broke out soon after the authority
of Spain was thrown off in 1821. The Spanish governor at Comayagua,
who had already repudiated the authority of the Captain General in
Guatemala, was opposed by the people of Tegucigalpa and several
other towns, and his attempts to establish his supremacy were the
beginning of a desultory conflict which lasted with few intermissions
for a number of years. After the establishment of the Federal Union,
Comayagua sided with the Conservatives and Tegucigalpa with the
Liberals, and an army from the latter city, led by Morazán, played
a large part in defending Salvador and in overthrowing the federal
authorities in 1829. The triumph of the revolution in Guatemala led
to the establishment of a Liberal state government in Honduras, but
this fell after the disruption of the Union, when President Carrera
of Guatemala aided the Conservatives to return to power (1840). From
that time until 1911, the Republic was kept in a state of turmoil
by a series of revolutions and civil wars, instigated and often
actively participated in by Guatemala, Salvador, or Nicaragua, and
sometimes by all three. Francisco Ferrer, supported by Carrera, held
the supreme power from 1840 to 1852, first as president and then as
commander-in-chief of the army. His successor was Trinidad Cabañas, a
Liberal, who had been in office only three years when Carrera sent an
army into the country to supplant him by Santos Guardiola. This ruler
was assassinated in 1862. His successor, allying himself to Salvador,
became involved in a war against Guatemala and Nicaragua, and the
victory of the two latter states resulted in the “election” of José
María Medina as president of Honduras. He was overthrown in 1872 by
the intervention of the Liberals who had just returned to power in
Guatemala and Salvador. Ponciano Leíva assumed the chief magistracy
in the following year, but was forced to relinquish it in 1876 by the
intrigues of President Barrios of Guatemala. Marco Aurelio Soto, a
man of ability and great influence, succeeded him, but he was also
forced to resign in 1883 because of the hostile attitude of Barrios,
and was succeeded by Luís Bográn, who held office until 1891. Ponciano
Leíva, who followed Bográn, was again forced to resign in 1893 by a
threatened revolution. His successor, Domingo Vásquez, was overthrown
a year later as the result of a disastrous war with Nicaragua, and
Policarpo Bonilla, an ally of President Zelaya and an ardent Liberal,
became president. After one constitutional term, he turned over his
office to General Terencio Sierra. Sierra was overthrown in 1903 by
Manuel Bonilla, who had started a revolution when the president made an
attempt to impose on the country a successor of his own choosing.

In 1907, as the result of a quarrel between Bonilla and President
Zelaya of Nicaragua, the latter sent an army into Honduras to aid a
revolutionary movement headed by Miguel Dávila. Salvador, fearing the
increase of Zelaya’s influence, came to the aid of Bonilla, but was
unable to prevent the complete victory of the revolution. Zelaya now
threatened to attack Salvador, and the president of that country,
in league with Guatemala, prepared to support a counter revolution
in Honduras. A general Central American war would undoubtedly have
followed, had not the United States and Mexico jointly interposed their
mediation and suggested that all of the republics of the Isthmus send
representatives to Washington to discuss the questions at issue between
them. This was the origin of the celebrated Washington Conference. One
of the most important conventions adopted by the delegates of the five
countries provided for the complete neutralization of Honduras and the
abstention of her government from all participation in the conflicts
between the other governments of the Isthmus.[21]

This treaty had little effect for the time being on the situation of
Honduras, for nearby countries encouraged and materially assisted
a number of uprisings against the government of Dávila during the
four years following 1907. Zelaya helped his ally to suppress these,
but when the Nicaraguan dictator himself fell the fate of the
administration which he had protected in Honduras was sealed. Manuel
Bonilla invaded the Republic from the North Coast in the latter part
of 1910, and decisively defeated Dávila’s troops after a few weeks of
fighting. When it was evident that the revolutionists were gaining
the upper hand, a peace conference was arranged through the mediation
of the United States, and both factions agreed to place the control
of affairs provisionally in the hands of Dr. Francisco Bertrand. In
the election which followed, Bonilla was made president by an almost
unanimous vote. He held office until his death in 1913, when Dr.
Bertrand, the vice-president, succeeded him. The latter is still at the
head of affairs, having been reëlected in 1915.

Today, more than ever before, there seems to be good reason to hope
that Honduras may enjoy a long period of peace. A large part of the
people are wearied of the continual disturbance in which they have
lived, and are beginning to distrust the factional leaders who have
hitherto been able to incite them to revolt at every unpopular or
aggressive action of the authorities. The government of Dr. Bertrand
has pursued a conciliatory policy towards all political elements, and
by treating its enemies with far less severity than has been customary
in the past has given them little excuse for rebellion. The so-called
parties of today have become little more than groups of professional
office-seekers, without programs or permanent organizations. While
many of the causes of discord at home have thus been removed, the
external influences which have hitherto made stable government
impossible have lost much of their importance in the last four years.
The other governments have been prevented from encouraging or allowing
the preparation in their territory of revolutionary expeditions against
Honduras, or from intervening themselves in the internal affairs of
their neighbor, by the attitude of the United States. The decisive
intervention of that Republic in the last revolution in Nicaragua
and the intimation, by a timely show of force, when outbreaks were
threatened elsewhere, that similar action might be taken if it proved
necessary, have had a salutary effect on potential revolutionists in
all of the states of the Isthmus, for there are few Central American
political leaders who desire to see the events of 1912 repeated in
their own countries.

The government of Honduras has always been and is today a military
despotism where all branches of the administration are under the
absolute control of the president. Graft and favoritism are as much
in evidence as in the neighboring countries, and the public offices,
occupied exclusively by the friends of those in power, are swept clean
and refilled after each successful revolution. Nevertheless, the
country has had a series of able and patriotic presidents, who have
done what they could, with the scanty resources at their command and
in the face of very great difficulties, to encourage agriculture and
commerce. Very real progress has been made in the field of education,
and recently in the building of roads, and that more has not been
accomplished has been due to the poverty of the national treasury, the
waste of revenues by civil wars, and the deep-ingrained practice of
graft in the public offices, rather than to any lack of progressive
spirit. The idea of enriching themselves at the expense of the public
is so much a part of the creed of the professional politicians who
form the bulk of each party and the backbone of the revolutions
to which each successive government owes its existence that it is
impossible even for a president of the highest civic ideals to devote
the entire resources of the government to internal improvements.

The effects of the disorder and misrule from which the Republic has
suffered for nearly a century are most clearly evident in the southern
departments and the interior, which are the home of the majority
of the people. The mines, in which many of the inhabitants of the
province had been employed in colonial times, were abandoned soon
after the declaration of independence, and those who were dependent
upon them were left to make a living as best they could. A large
number joined the factional armies, which were hardly disbanded during
the lifetime of the Central American Federation. Others turned their
attention to agriculture or cattle raising, but did little more than
secure a bare subsistence, working under a great disadvantage because
of the impossibility of transporting their products to a market,
and constantly facing ruin from the visits of revolutionary armies.
Those who tilled the soil confined themselves to producing small
amounts of corn, beans, and sugar from year to year for their own
consumption. Conditions were more unfavorable for the establishment of
large plantations than they had been in the other countries, because
revolutions were more continuous and more destructive, and because
there was in Honduras comparatively little land suitable for the
cultivation of coffee, indigo, or sugar for export. The raising of
cattle, which might otherwise have been carried on under very favorable
conditions, especially in the open, grassy valleys of the Olancho, was
made all but impossible by the civil wars, for no one suffers more from
the passing of a Central American army than the herdsman. There are
indeed many ranches in the interior and on the South Coast at present,
but they are run carelessly and with primitive methods. The owners,
who have lost a large part of their stock time after time by military
requisitions or by confiscation, make no effort to introduce animals of
a better breed from abroad or to give their cattle more than the most
elementary care, leaving the herds to wander in an almost wild state
over great stretches of land, and only interesting themselves in them
when they have occasion to drive a few hundred head to market. A slight
change in this respect is even now noticeable, however, for some of
the landowners are beginning to pay more attention to the welfare of
their stock and to fence in and otherwise improve their properties. If
the Republic enjoys a few more years of peace, and if a better market
can be provided abroad for live animals or beef, Honduras might easily
become the most important cattle-raising country of the Isthmus.

Many of the mines were reopened by promoters from the United States
in the last quarter of the nineteenth century, but the majority were
abandoned a few years later because of the decline of the price of
silver, which was the chief product. At the present time there are a
number of companies and individuals extracting the precious metals on
a small scale, but the only plant of real importance is that of the
New York and Honduras Rosario Mining Company at San Juancito, near
Tegucigalpa. The silver shipped by this one firm comprises almost
the only important export of the southern departments, and nearly
twenty-five per cent of the total exports of the Republic. There are
very great undeveloped mineral resources, and many new mines would
doubtless be opened if the difficulty of transporting machinery into
the interior could be overcome, and if the political conditions of the
Republic should be made sufficiently stable to encourage the investment
of foreign capital.

One of the factors which has done most to retard the economic
development of the country is the lack of means of communication.
Tegucigalpa is now the only Central American capital which is not
connected with at least one seaport by railway. Even ox-carts
can be used only in a very few places in the interior, for the
construction of roads between the principal centers of population
has been more difficult than elsewhere in the Isthmus because of
the greater distances to be traversed and the broken character of
the country. The chief towns of the Republic are scattered from the
Guatemalan to the Nicaraguan frontier and from the North Coast to
the South, and the mountain ranges between them, although not so
high as in the neighboring countries, are often so sharp and rugged
that they are difficult to cross even on mule back. As has already
been said, moreover, the expenditure of the energies of the people
and the financial resources of the government on civil war has made
it impossible to devote much attention to internal improvements.
Transportation between the different sections, therefore, is
principally by rough mule trails, but there is nevertheless one
splendid highway, from Tegucigalpa to San Lorenzo on the Gulf of
Fonseca, which has no equal in Central America. The regular services of
motor cars and trucks on this route have greatly reduced the difficulty
of transporting freight and passengers between the capital and its port
of entry at Amapala, although the rates charged are exceedingly high,
even as compared with those charged on Central American railways.[22]
Similar roads are now being constructed, very slowly, from Tegucigalpa
to Comayagua and to the Olancho, but they are so expensive to build and
to maintain that it seems likely to be many years before those sections
of the country will enjoy communication by automobile with the capital.

Tegucigalpa, with the nearby municipality of Comayagüela, is a
prosperous little town, with a thriving commerce and many families
of wealth and culture, but outside of the capital, if we except half
a dozen foreign settlements on the North Coast, there are few places
which show any signs of contact with modern civilization. The majority
of the people reside in the provincial cities, which are decayed
villages of from three to five thousand inhabitants, or in still more
desolate smaller settlements. There are also thousands of families
scattered through the mountains, living in thatched _ranchos_, and
subsisting almost entirely on the produce from their cornfields and
plantain patches. Even the more important towns are almost entirely
isolated economically and socially. A small amount of internal commerce
is carried on by means of mule trains, and the mails are carried to
almost all of the towns and villages with tolerable frequency and
regularity, but the great mass of the people have little interest
in anything outside of the community in which they live, and little
conception of a world beyond the boundaries of their own country.

It is not surprising that people living under such conditions should
have advanced little in civilization beyond their savage ancestors.
Even those who might have risen above their environment, had they had
the opportunity, have been kept down by almost insuperable obstacles.
There is no incentive to improve agricultural properties, or to lay up
a store of products for possible future needs, when all that a man has
is likely to be taken from him at any time, and there is no object in
raising more produce than is required for the support of the farmer’s
family when there is no market in which it can be sold or exchanged
for other goods. It is dangerous and expensive to transport products
from one part of the country to another where they may be needed, and
there are few articles which the peasant can purchase when he does
secure ready money. Little is manufactured in the country, and imports
from abroad, by the time they have borne the heavy freights from North
America and Europe via Panama to Amapala, the exorbitant charges of
boatmen, brokers, and customs officials at that port, and the expense
of transporting them into the interior, are beyond the reach of any but
the rich. In the interior, one may ride in some places for days without
passing a place where articles manufactured abroad can be bought, and
those commercial establishments which do exist, outside of Tegucigalpa,
carry only the most inferior textiles, machetes, and other necessities,
together with a few very cheap articles of personal adornment, at
prices from three to five times those which would be demanded for the
same things in the United States.

Such conditions have inevitably condemned the people to a hand-to-mouth
existence, which has eradicated all tendency to thrift. Improvidence,
which seems to be an inborn characteristic of the Spanish-Negro-Indian
population, has been encouraged by the ease with which the corn and
beans necessary to support even a large family can be produced, for
there is an abundance of unoccupied land in most parts of the country
which can be cultivated with little labor by the primitive methods in
vogue, and which will usually produce at least two crops each year.
It would seem, therefore, that the people should lead an easy, if not
an interesting existence, but the very conditions which have made
it possible for them to secure a living with little difficulty have
contributed to make them in some ways the poorest and most miserable of
the _ladino_ populations of the Isthmus. Unaccustomed to hard work or
to taking thought for the future, they rarely plant more corn during
the rainy season than is barely necessary to last them through the
dry months, so that a drought or other mishap to their crops causes
widespread want and suffering, aggravated by the difficulty of bringing
food from other parts of the country where it may be abundant. There is
no other inhabited part of Central America where the traveler finds it
so hard to secure provender for himself and his mule as he does in most
parts of Honduras during April and May.

As might be supposed, the people are densely ignorant and
unprogressive. Schools have been established in many of the towns
and villages, but the percentage of illiteracy in the community as
a whole seems to be very high. Religion is at a low ebb, although
one section of the Republic, around Comayagua, seems to be the most
fanatically Catholic portion of Central America. Outside of the
larger towns, there are almost no priests, and the people, although
superstitious, pay little attention to the precepts of the Church. It
must not be supposed, however, that the Honduraneans are necessarily
inferior, intellectually or physically, to the inhabitants of the other
republics. They are naturally quick and intelligent, and they are said
to be as efficient laborers as any of the other Central Americans.
Foreign mining corporations in all parts of the Isthmus prefer them
to the inhabitants of any of the other countries as workmen, not only
because of their greater skill, but because of their comparative
trustworthiness. There is every prospect that they will advance rapidly
in civilization when their country is brought into closer contact with
the outside world.

The economic backwardness of the country, which is in itself an effect
of the civil wars, is at the same time one of their causes. The great
majority of the people have little to lose by internal disorders, for
there are few who own more than a cheaply constructed adobe house and
a small corn patch. They welcome a revolution, with its opportunity
for plunder and for living at someone else’s expense, as an agreeable
change from the monotony of their lives and an opportunity temporarily
to improve their condition. Among the upper classes in the cities,
many of whom devote themselves to politics rather than to more useful
occupations because neither large scale agricultural or commercial
enterprises nor the learned professions afford a secure income, there
is always a large number of discontented office-seekers, ready to
engage in any kind of intrigue which offers an opportunity to make a
living at the public’s expense. The organization of a revolutionary
conspiracy is thus an easy matter, and the raising of an army among
the common people is hardly more difficult. Money and arms are secured
from foreign corporations which desire special favors, and material
and moral support can almost always be obtained from one of the other
Central American governments. With so many circumstances in their
favor, it is not remarkable that the party leaders have been able
time after time to plunge the country into civil war, sacrificing its
welfare to their own ambitions and rivalries, and frustrating the
efforts made by their more patriotic and far-sighted fellow-citizens to
improve their country’s economic and social conditions.

Although at least eighty per cent of her people live in the central
and southern departments, the most important portion of Honduras, from
the point of view of the outside world, is the long coast line on the
Caribbean Sea. This region is not only more productive than other parts
of the Republic, because of its fertile soil and heavy rainfall, but
it also has the immense advantage of being close to the Gulf ports of
the United States, with which it is in regular communication by means
of several lines of fast steamers. In recent years, its agricultural
possibilities have been developed on a large scale by immigrants and
capital from that country. Its ports, where English is the language
most generally used and American influence is predominant, have become
prosperous commercial towns, and one of them, La Ceiba, is the most
important city in the Republic, after Tegucigalpa, and has more foreign
commerce than all of the interior districts together.

The native element on the Coast is somewhat larger than in the similar
sections of Guatemala and Costa Rica, because the government has
opposed certain legal obstacles to the free immigration of West Indian
negroes. This policy has enabled other sections to profit to some
degree from the prosperity of the banana farms, because many laborers
from the interior spend longer or shorter periods working there,
earning wages far greater than they could secure at home. There is
little commercial intercourse between the two sections of the country,
however, as the roads which unite them are not suitable to any traffic
other than pack and saddle mules. Travelers frequently make the
journey from the United States to Tegucigalpa by the overland route,
and the mails are brought over regularly from the weekly steamers
which touch at Puerto Cortez, but almost none of the exportations or
importations of the interior are shipped through the Caribbean ports.
The North Coast had until lately little political connection with the
other departments of the Republic, but within the last few years the
government has established civilian officials and military forces
there, and has endeavored to strengthen the feeling of allegiance among
its inhabitants. The people of the banana district, and especially the
foreign residents, have played an important part in recent revolutions,
most of which have had one of the Caribbean ports as a base.

The bananas which are the principal product of the coast are raised
and exported by numerous small growers and by a few great fruit
companies, each of which possesses its own line of steamers and
controls the agriculture and commerce of the district in which it
operates. These concerns, nominally independent and competing, are
generally supposed to be closely connected with, if not under the
control of, the United Fruit Company, which itself has plantations
and buys fruit at one or two places. The “United” has for some years
been on unfriendly terms with the Honduranean government, and it is
said that it prefers for this reason to operate through supposedly
unrelated subsidiaries, which are in a better position than it could
be to obtain concessions and privileges at Tegucigalpa. Most of these
fruit companies have obtained concessions from the government under
the terms of which they agree to build a railroad from the North
Coast to some point in the interior, and receive in return the right
to appropriate for their own use amounts of land varying from 250 to
500 hectares (that is, from 617.5 to 1,235 acres) for every kilometer
constructed along the main line and its branches. They are allowed to
improve the ports to which their steamers sail and to build wharves
for the use of which they charge a fee to other exporters. The object
of the government in making these contracts has been to provide means
of communication between the Atlantic ports and the interior towns,
with the idea of extending the railroads eventually to the capital,
but the fruit companies, interested merely in securing land suitable
for the planting of bananas, have usually built only those sections
of their lines which are in low, flat country, and when this has
been accomplished have turned their attention to the construction of
branches through districts of the same kind. Most of them are under
obligations to extend the railways to the interior towns within a
certain term of years, but the government seems so far to have been
unable to find means to give effect to this part of the contracts.
The desire to secure railway communication between the capital and
the North Coast has been so strong that valuable and far-reaching
privileges have often been granted, with little consideration and
with no effective safeguards, to companies which have promised more
than they had any intention of carrying out; and other concessions,
often actually prejudicial to the interests of the Republic, have
been secured occasionally by foreigners who have aided revolutionary
leaders in securing control of the government. Because of the lessons
learned through many hard experiences with unscrupulous promoters,
however, the native authorities are much more cautious of late about
investigating the character and financial standing of persons applying
to them for favors, and the majority of the contracts recently entered
into have been more equitable in their terms and more explicit in their
provisions than those of former years.

The North Coast not only exports bananas, but also small quantities
of lumber, cattle, rubber, and other products. Special concessions
have been granted from time to time for cutting mahogany and cedar,
providing usually that the government shall receive five dollars,
United States currency, for every tree; and contracts have been made
occasionally with foreigners for the development of other natural
resources. Since the beginning of the European war many of the
planters, who have been unable to export their bananas because of the
withdrawal of the steamers which had hitherto carried them to the
United States, have turned their attention to the breeding of cattle
and hogs, which thrive on the otherwise useless fruit, and which are
readily sold either in Honduras itself or in the neighboring countries.
This new industry has saved many of the foreigners along the Coast from
the ruin which in 1914 seemed inevitable, and there is every reason to
suppose that it will become more and more important in the future.

The commercial relations of Honduras with the outside world are small
as compared with some of the neighboring countries. The chief exports,
and almost the only ones which reach large amounts, are the bananas
from the foreign-owned plantations on the North Coast and the silver
from the one large mine already mentioned. The coffee crop, cultivated
by primitive methods on small patches of ground, little more than
suffices to supply the local demand. Other products,--hides, lumber,
cocoanuts, etc.,--are shipped abroad in comparatively small amounts.
The imports differ little in character from those of the other Central
American countries. Their amount is small because the people have no
crop which provides them with money for the purchase of foreign goods.
The imports somewhat exceed the exports at the present time because of
the railway material and mining machinery which is being brought in by
foreign investors, and because a certain amount of goods is undoubtedly
being paid for every year under present conditions by the shipment
abroad of silver coin. By far the largest part of the Republic’s trade
is with the United States, and more than half of it is carried on
through the North Coast ports, which have regular steamer connection
with New Orleans and Mobile. The interior and the South Coast, which
have no outlet at the present time except through Amapala, have few
exports, and can buy little from foreign countries because of their
poverty and because the expense of transporting goods from Amapala to
the capital and from there to the interior towns is so great that most
imported articles are far beyond the reach of the mass of the people.

In spite of the poverty which characterizes Honduras today, her future
is not necessarily less promising than that of other parts of Central
America. Her people are not backward because they are degenerate,
but because they have been prevented from developing the natural
resources of their country by the lack of means of transportation
and by continual civil war. As has already been stated, they are by
no means lacking in intelligence or ability. The country itself,
perhaps, does not enjoy the natural advantages which have brought
about the prosperity of some of its coffee-growing neighbors, but it
nevertheless possesses great fertile tracts which are as yet hardly
explored, and great undeveloped mineral resources, which will be opened
to the world by the building of railways and the investment of foreign
capital, if the present era of peace continues. There is no section
of the Isthmus more favorably situated for banana growing, for cattle
raising, or for mining than are the northern departments of Honduras.
The Caribbean Coast, and the great plains and open valleys tributary
to its ports, which are already more important commercially than the
older settlements of the interior and the southern departments, seem
likely in the near future to become the home of the larger portion of
the Republic’s inhabitants. If this occurs, and if the railways already
under construction are extended through this region into the interior,
there will be no other country of Central America so easily accessible
from the United States and Europe, and none which should enjoy closer
commercial and cultural relations with the outside world.


FOOTNOTES:

[21] For a more complete discussion of the Washington Conference, see
Chapter X.

[22] The rates charged are equivalent to $10 in gold for each
passenger, and $1.20 to $1.60 per hundred pounds for freight. The
distance is eighty-one miles.




                              CHAPTER VII

                              COSTA RICA

 Concentration of the Population in One Small District--Predominance
 of Spanish Blood--Social Conditions Resulting from Absence of Indian
 Laborers--Political Tranquillity--History--Character of the Government
 Today--Foreign Commerce and Means of Transportation.


Although the territory of Costa Rica is approximately 23,000 square
miles in area, nearly all of her four hundred thousand inhabitants,
with the exception of some small groups of Indians and negroes who
take no part in the political life of the country, live on one small
plateau, from three to four thousand feet above sea level, surrounded
by the volcanoes and ranges of the Central American _cordillera_. The
population is so dense in this _meseta central_, as it is called, that
it is seldom possible to walk more than a few minutes without passing
a house. San José, Cartago, Heredia, and Alajuela, the four principal
cities, are connected with one another by a single cart road less than
thirty miles in length, and few of the smaller towns and villages are
more than a day’s walk from the capital. Almost every acre, in the
valley and on the sides of the mountains, is used for agricultural
purposes. The people have never shown any inclination to expand into
the mountainous country to the southward, where communication with
the towns would be rather difficult, or into the hot and insalubrious
regions on the coasts. The Atlantic seaboard, as in the other Central
American countries, is given over to banana plantations, owned and
worked by foreigners; and the provinces bordering on the Pacific are
sparsely inhabited by an unprogressive race who are largely of Indian
descent. Both of these districts, because of their products, are of
importance economically, but the social and political life of the
country has its center in the cool and fertile _meseta central_.

Here there has grown up a nation which is entirely different from any
of the other Central American republics. The Spanish pioneers who
founded the city of Cartago in the latter part of the sixteenth century
were unable from the outset to establish a colony similar to those in
other parts of the Isthmus, because there was no dense agricultural
population to be divided up as laborers among the settlers. Elsewhere
the Indians, already living in large towns and devoting themselves
to agriculture, had been forced with surprisingly little difficulty
to work for their new masters; but in Costa Rica there were only a
few scattered tribes, in a low stage of civilization, who cultivated
the soil in a rude way simply to supplement their natural food supply
obtained by hunting. Unaccustomed to steady labor, they were not
promising material for a serf class like that existing at the time
in Guatemala and Nicaragua. The settlers nevertheless introduced the
_repartimiento_ system immediately after their arrival in their new
home, notwithstanding the royal order forbidding further enslavement
of the Indians, and they are said to have treated those natives who
were within reach with even greater cruelty than had been practiced
in the other colonies.[23] In consequence of this oppression, the
numbers of the aborigines decreased very rapidly, and the settlers
found themselves forced more and more to do their own work, in spite of
their efforts to replenish the supply of slaves with war captives from
Talamanca and other unsubjugated districts. Indian labor seems never to
have been a considerable factor in the economic life of the country.

At the present time there are few remnants of the aboriginal tribes
in the interior, although Indian blood is still very evident in the
people of Guanacaste and other outlying districts. The inhabitants of
the central plateau are distinctly Spanish in race and civilization.
The white families, moreover, do not seem to be of the same type as
those of Guatemala and the other countries. The majority of the people
of Costa Rica, it is commonly said, are descended from _Gallegos_, one
of the most law-abiding and hard-working of the numerous races that
occupy the Iberian Peninsula, while those of the other countries are
predominantly Andalusian. However this may be, the traveler cannot
avoid noticing a certain dissimilarity in appearance and in customs and
personal traits, between the prominent families of San José and those
of other Central American capitals.

The absence of a large Indian population had an economic and social
effect which can hardly be exaggerated. The unfortunate settlers of
Costa Rica, throughout the colonial period, were in a condition which
caused them to be pitied by all of their neighbors. Instead of living
in large towns, supported by tributes brought in by the Indians of
their _encomiendas_, the majority of the creoles found themselves
forced to settle in the country, where each family raised by its own
labor everything that it consumed. The harvests, as Governor Diego de
la Haya reported in 1719, were gathered “with the personal labor of
the poor Spanish settlers, because of there being very few slaves in
all the province.”[24] The colony was so poor that the name Costa Rica
became a standing joke. Although there was plenty of food, clothes and
other articles of European manufacture could be secured only with the
greatest difficulty, because there were no exports with which they
could be purchased. The people were almost completely shut off from the
outside world. As those who could do so left the country, and there was
no immigration, the population grew very slowly. The little community
was, however, spared the problems arising from the presence of a large
class of laborers of another race, and the Spaniards, although they
sank into a state of dense ignorance and were forced to adopt most
primitive ways of living, acquired industrious habits which still
distinguish them from their neighbors. Each settler cultivated a small
amount of land, sufficient for the support of himself and his family,
and was prevented from extending his holdings by his inability to
employ laborers and by the fact that he had no market for his products.
With the growth of the population, the entire _meseta central_
eventually became occupied by little farms. There were a few wealthy
and influential families, who had been given special privileges by the
Spanish government, but they never occupied the dominant position which
the aristocracy of Guatemala and Nicaragua had been able to assume, and
the land which they held never amounted to more than a small portion of
the cultivated area of the colony.

In colonial times, a large part of the land belonged to municipalities
rather than to individuals. As the population expanded, it became
customary to give to the founders of each new village a tract of land
to be held for the common use, part of it to be divided among the
inhabitants from time to time according to their ability to cultivate
it, and part to be held as pasture or forest. In 1841 President Braulio
Carillo ordered that a large portion of these _tierras ejidales_ should
become the property of those who were at the time cultivating them.
This decree was later annulled, but a similar law was passed in 1848,
permitting the cultivators to buy for a small price such parts of the
common lands as they had fenced in and were using.[25] These measures
resulted in a great increase in the number of small holdings.

The large uncultivated tracts owned by the central government have been
sold at low prices to anyone who wished to buy them, or have been given
away as premiums to encourage the planting of coffee or cacao. Many
persons acquired large estates in this manner, especially during the
last years of the nineteenth century, and a class of large landholders
has thus gradually grown up. These have in most cases converted their
properties into coffee plantations or cattle ranches, but many large
tracts have never been brought under cultivation, because their owners
have lacked the enterprise and the capital to do so. When the quantity
of public lands in the more accessible parts of the country began to
grow small, attempts were made to check the reckless sale of them to
persons who did not intend to turn them to account agriculturally, and
to encourage their division into small holdings. The amount sold to
any one purchaser was gradually reduced, and in 1909 a law was passed
giving each head of a family the right to claim fifty hectares of
government land, free of cost, provided that he actually settle upon
it and cultivate it. The greater part of the more favorably situated
districts, however, have now passed into private hands, and the people
show little desire to undertake the conquest of the inaccessible
country outside of the _meseta central_. The establishment of new
plantations and the opening of means of communication require more
money and a larger labor supply than the natives of the country can
provide. For these reasons, the legislation intended to increase the
amount of the Republic’s territory used for agricultural purposes has
not been very successful.

Although there are now many large plantations scattered here and there
through the country, the greater part of the _meseta central_ is still
divided into small farms. In the year 1906, there had been inscribed
in the public land register 110,201 different properties, of which the
average value was less than five hundred dollars American gold.[26]
Even when allowance is made for the fact that there are many foreigners
and rich natives, each of whom possesses a large number of separate
properties, it is evident that an overwhelming proportion of Costa
Rican families own their own homes. There is in fact practically no
landless class, with the exception of a few thousands of laborers in
the cities.

The political development of this compact community of white peasants
has necessarily been very different from that of the neighboring
countries, where a small upper class of Spanish descent had ruled and
exploited many times its number of ignorant Indians and half-breeds.
In Costa Rica the fact that nearly all of the inhabitants were of the
same stock and had inherited the same civilization has always made the
country more democratic, and has forced the class which controlled the
government to consider to some extent the wishes and interests of the
masses. The development of the Republic, unlike that of its neighbors,
has for this reason been toward rather than away from the realization
of the republican ideals held by the framers of the first Central
American constitutions. The small landholders have always exerted a
strong influence on the side of peace and stable government, for they
have rarely joined in attempted revolutions, and have shown themselves
inclined rather to take the part of the constituted authorities when
disaffected politicians endeavored to plunge the country into civil
war. Costa Rica has seen none of the protracted and bloody struggles
which have darkened the history of the other republics, for the violent
changes of government which have occurred from time to time have
been effected rather by military conspiracies in the capital than by
campaigns in the field.

The geographical situation of the Republic, moreover, has enabled it
to escape from the outside influences which until very recent years
made the establishment of stable government almost impossible in other
parts of Central America. At the southern extremity of the Isthmus,
separated from its nearest neighbors by several days’ travel through
practically uninhabited territory, it has been able to hold aloof from
the quarrels between the other republics, and has never been forced
to submit to their intervention in its internal affairs. Costa Rica
separated herself at an early date from the Central American Union,
and has taken little part in the attempts for its restoration, for her
statesmen have been unwilling to yoke their destinies with those of the
turbulent communities north of them.

During the first years of Central American independence, the war
between the imperialist and republican parties in other parts of
the Isthmus had its counterpart in Costa Rica in a short struggle
between Cartago and Heredia, which favored annexation to the Mexican
Empire, and San José and Alajuela, which opposed it. The victory of
the republicans led to the removal of the capital from Cartago to
San José, where it has since remained. For nearly half a century the
government was controlled by a few powerful families, among whom the
most prominent were the Montealegres and the Moras, and the number
of persons who participated in public affairs was very limited. The
first president, Juan Mora, was successful in organizing a fairly
efficient administration and in promoting the almost non-existent
commerce of the country, and Braulio Carillo, who took charge of the
government in 1835, after two years of agitation and disorder, carried
on the policy of his predecessor and laid the basis for the present
prosperity of the country by encouraging the production and exportation
of coffee, which rapidly became the Republic’s chief crop. He also
definitely established the capital at San José, although to do so it
was necessary to put down an armed uprising by the other towns, which
desired that the seat of the government should move from one place to
another. Carillo was defeated for re-election in 1837, but he regained
his position by a _coup d’état_ in 1838 and for four years exercised
dictatorial powers. During this period, the administration was reformed
and made more centralized, the courts were reorganized and a penal
code was drawn up, and Costa Rica’s share of the debt incurred by
the federal government was paid in full. Carillo was overthrown by a
bloodless revolution in 1842, when Francisco Morazán, landing on the
Pacific Coast, won over the chiefs of the army which the president sent
against him, and occupied the capital. The victor had hardly reached
San José when he began to raise troops and money for an attempt to
re-establish the federal union, from the presidency of which he had
recently been ejected by his enemies. Angered by this attempt to force
them into a war of aggression on their neighbors, the people deposed
Morazán and put him to death.

During the seven years which followed this revolution, continual
quarrels between political factions and constant interference by the
military leaders made it impossible for any administration long to
maintain itself in office. In 1849, however, with the election of
Juan Rafael Mora, another era of stable government commenced. The
army was reduced to obedience, and order was restored throughout the
Republic. During this administration, Costa Rica took the leading part
in the war against Walker in Nicaragua. Mora was overthrown in 1859
by a conspiracy in San José, and two military chiefs named Blanco and
Salazar, who were allied to the Montealegre and Tinoco families, came
into power. Through their influence, José María Montealegre was made
president. Mora, who had attempted an unsuccessful counter revolution,
was put to death, and the members of his family were exiled. The
severity of the government’s action aroused much bitter feeling, but
civil war was avoided by a compromise, as the result of which Jesús
Jiménez was elected president in 1863 and José María Castro in 1866.
The latter was deposed by a pronunciamento of Blanco and Salazar in
1868, and Jiménez, as first designate, or vice-president, again took
charge of the government. The new president made a determined effort
to destroy the control which the army had been exercising over the
administration, by removing Blanco and Salazar from their commands and
forcing the other officers to obey the civil authorities. In doing
this, however, he deprived the small group which had controlled the
government for so many years of its chief support.

Jiménez was deposed in 1870. A handful of men boldly entered the
artillery barracks, concealed in an ox-cart under a load of fodder,
and seized them, and with them the control of the city, almost
without bloodshed. The leader of the revolution was Tomás Guardia, an
army officer, who, unlike Blanco and Salazar, had little political
connection with the great families. This man was the real ruler of
Costa Rica from 1870 until his death in 1882, although he did not at
once assume the presidency. His government was a repressive military
dictatorship, in which his own personal followers held all of the
principal offices. The great families, whose leaders were exiled and
deprived of their property, were reduced almost to insignificance as
a political factor, and have never entirely regained their former
influence. Guardia was succeeded after his death by his close
associate, Próspero Fernández, who was at the time in command of the
army. When the latter died in 1885, his son-in-law, Bernardo Soto, took
charge of the administration as first designate, and caused himself to
be elected president for the term beginning in 1886. These two rulers
did much to improve the administration and the government finances,
both of which Guardia had left badly disorganized. The administration
of Soto was especially notable because of the work of Mauro Fernández,
his Minister of Public Instruction, who for the first time established
free and compulsory education throughout the Republic. The small group
which had been in power, however, had made many enemies, among whom
the most powerful were the clergy. The opposition grew so strong, as
the election of 1889 approached, that Soto found himself unable to
impose his own candidate on the nation without incurring serious danger
of revolution. He consequently allowed the first comparatively free
and popular election which the Republic had ever known, in which José
Joaquín Rodríguez, the candidate of the clerical party, was victorious.
Many of the partisans of the government desired to retain control of
the administration by the use of force, but they were prevented from
doing so by the firmness of the president and by the attitude of the
country people, who rose in arms and prepared to march on the capital
to enforce the verdict which they had given at the polls.

Rodríguez severely repressed all opposition, and governed during the
greater part of his term without the aid of Congress. In 1894 he forced
the legislature to elect his friend Rafael Yglesias to succeed him.
During the latter’s administration, the currency was reformed and
placed on a gold basis, and the commercial and agricultural development
of the country was promoted in many other ways. Yglesias was re-elected
in 1898, but in 1902 he turned over the chief magistracy to Ascensión
Esquivel, who had been selected by a compromise between the government
and its opponents.

With the election of Esquivel began an era of republican and
constitutional government which was unprecedented in the history of
Central America. Since 1902, the Republic has enjoyed an almost
complete freedom from internal disorder, with perfect liberty of the
press, and genuine, if somewhat corrupt, elections. Cleto González
Víquez, who followed Esquivel in 1906, and Ricardo Jiménez, president
from 1910 to 1914, were chosen by a majority of the voters in contests
in which practically all of the adult male population of the Republic
took part. Alfredo González, Jiménez’s successor, was placed in office
by Congress in 1914, after no candidate had received a majority of the
popular vote. The legality of his election was considered doubtful,
but he remained at the head of the government until January, 1917. His
advocacy of radical financial reforms, including a direct property tax
and a heavy progressive income tax, aroused much hostility among the
wealthy classes and alienated several of the more influential political
leaders, with the result that he was overthrown by an almost bloodless
_golpe de cuartel_ engineered by Federico Tinoco, the Minister of War.
The latter was formally elected president of the Republic on April
1, 1917. Each of the recent rulers of Costa Rica has devoted himself
with enlightened patriotism to promoting the welfare of the country,
and great advances have been made in reorganizing the finances, in
safeguarding the public health, and in providing for the education of
the masses of the people.

The inhabitants of Costa Rica now enjoy more stable and more nearly
democratic political institutions than any of their Central American
neighbors. Constitutional government works in practice, and the letter
of the law is generally respected, even though its spirit is often
ingeniously circumvented. The president walks through the streets much
like a private citizen, without fear of assassination or of being
captured by his enemies, and the leaders of the opposition carry on
their propaganda in San José without hindrance or persecution, and at
times are even called in to consult with the president on matters of
great importance. The press criticises the administration fearlessly
and at times scurrilously, and animated political discussions may
be heard every day on the principal corner of the main street of
the capital. The elections are participated in by about as large a
proportion of the entire population as in the United States.[27] If one
candidate receives a majority of the votes cast, he becomes president,
and if no absolute choice is made by the people, the question goes
to the Congress, where it is decided by intrigues and deals between
the political leaders. The administration is able to exert a decided
influence in the selection of its successor through its control of the
patronage and the army; but the final decision rests with the people
or the popularly elected deputies, and it is not probable that any
president would resort now to the forceful methods by which official
candidates were placed in office a few decades ago. The only break
in the peaceful development of constitutional government since 1902
was the _coup d’état_ of 1917. That the dissatisfied party should
have chosen violent means for obtaining control of the government,
instead of waiting for the election which would have been held within
a year, must be regretted by every friend of Costa Rica, but this very
event nevertheless gave the people of the Republic an opportunity
to show their capacity for self-government. Nothing could be more
characteristic of Costa Rica than the whole-hearted co-operation of
all political elements in the organization of the new administration,
without either bloodshed or persecution.

Government by the people, however, has not really advanced so far as
the number of votes cast at the elections would seem to indicate, for
the great majority of the Republic’s inhabitants still take little
interest in political affairs. So long as order is maintained and
their property rights are secure, they do not care particularly which
group of politicians is in control and they are guided in voting more
by the inducements held out by the rival candidates than by their
judgments. Personalities rather than questions of national policy are
the issue, for it is rarely that any candidate makes his campaign upon
a definite political or economic platform. Between the elections,
public opinion, although far more influential than in any of the other
Central American countries, exercises little real control over the
policy of the government. The newspapers are very widely read, and the
people as a whole are remarkably well informed about current events,
but the press nevertheless has comparatively little power, because no
one believes in its impartiality or its incorruptibility.

The choice of candidates for public office and the conduct of the
government are left almost entirely to a small number of landed
proprietors, lawyers, physicians, and professional politicians residing
in San José. These owe their influence partly to social position and
wealth, but more especially to education; for although the members
of the old principal families are still prominent, there are also
many influential leaders who have risen from the lower classes by
availing themselves of the educational advantages which the Republic
offers to all its citizens. The ruling class is divided into a number
of small political cliques, each of which professes allegiance to a
party chief. As might be expected in an aristocracy composed chiefly
of the leading people of a town of thirty thousand inhabitants, ties
of blood and personal feeling play a very large part in the formation
of these groups, especially as the prominent families are very large,
and each is closely related with the others by intermarriage. A leader
is often able to derive the major portion of his strength from his
relatives alone, for the aid of ten or fifteen active and popular
sons or sons-in-law, together with that of several score of brothers
and cousins and nephews, is not to be despised in a country where
there are at most only a few hundred active politicians. Besides his
relatives and his intimate friends, however, each party chief has also
a number of followers who are attached to him by the hope of obtaining
employment in one of the government offices, for a very large number
of persons among the upper class have little occupation aside from
politics, and little income beyond that derived from official positions
when their friends are in power.

The various leaders may have different political ideals and economic
theories, which to some extent influence their relations to one
another, but it can hardly be said that any of the present parties have
definite principles or programs. Each desires primarily to win the
elections in order to put its followers in office; and the platforms
and the utterances of the leaders are shaped with this end in view,
with the result that they receive little attention and less credence.
When it is necessary in order to obtain control of the government,
leaders of widely different points of view will join forces without any
suspicion of inconsistency, and it is no very uncommon occurrence for a
prominent member of one party to join another and very different group,
because of a quarrel with his former associates or simply because the
change improves his chances of advancement. Sectional jealousy is no
longer a force in politics, since the capital has so far outstripped
the other towns in population and wealth, and religious questions are
rarely injected into the campaign. Attempts have been made to organize
a popular party among the laborers and peasants, and this party has
achieved some notable successes at the polls, but its policy when
in power is very similar to that of the other factions. There is in
reality little ground for political rivalry between the different
classes of the population.

The so-called parties have so little permanent organization that
they can hardly be said to be in existence during the greater part
of the presidential term. About a year before an election, the heads
of the stronger groups, who are often perennial candidates, begin to
organize their own followers, and to bargain for the support of the
less powerful leaders, with a view to inaugurating their campaigns.
Committees and clubs are organized in each town and village, and
desperate efforts are made to secure the support of influential
citizens who are not permanently affiliated with any party, and to
arouse the interest of the voters in general. Processions and serenades
are organized to show the popularity of each candidate, and orators
are sent to every town and village on Sunday afternoons to entertain
the voters with abuse and denunciation of the rival aspirants. Party
newspapers are established, but they confine themselves to printing
long lists of local committees and adherents and to describing meetings
and ovations. One may search their columns in vain for serious
discussion of the issues of the campaign. Several of the regular
newspapers take sides more or less openly, while others maintain an
ostensible neutrality, but the press as a whole seems to have little
influence over the voters. As the contest progresses, feeling runs
higher and higher among the politicians, and the voters become first
interested and then excited. The meetings and ovations, the continual
political arguments on the streets, resulting in an occasional riot,
and the wholesale treating by the party workers in the drink-shops,
distract the attention of the people from their ordinary occupations,
and temporarily disorganize the entire community. Elections are
therefore looked forward to with a certain amount of dread by the more
respectable classes.

Since the adoption of the law of 1913, the President, the members of
Congress, and the municipal _regidores_ have been chosen by direct
popular vote instead of by electoral colleges. The balloting takes
place on the same day in all parts of the country. Each citizen must
inscribe his choice in a book where all may read it, and every party
has representatives at the polls to secure fair play. This system
prevents fraudulent counting, but it also encourages corruption and
the exercise of improper influence on the individual elector. Bribery
is practiced openly and on a large scale by all parties, and the voter
is often prevented from exercising his own discretion in casting his
ballot by the fear of offending the local authorities or other powerful
personages in his village. The amount of intimidation and coercion,
however, is insignificant as compared with that in the other republics,
and attempts to influence voters by such means are generally condemned
by public opinion. The president is prevented by the constitution from
seeking his own re-election, but one of his associates is usually
frankly supported by the administration as the official candidate,
and thus has an immense advantage over his opponents, even though
recent presidents have refrained from using the army and the police to
interfere with their enemies’ campaigns or to keep the adherents of the
opposition party away from the polls on election day.

The large supplies of money which are perhaps the most important factor
in the campaign are obtained by contributions from members of the
party, who hope to obtain offices for themselves or their friends in
the event of a victory, and from native and foreign business men who
desire special concessions. The banks of San José usually assist one
candidate actively though secretly, and considerable amounts are also
obtained from certain rich speculators, in return for favors contingent
on the election of the candidate whom they support. Consequently a
new administration comes into office bound by numerous more or less
improper pledges, and burdened by a considerable party debt. After
the election of 1913-14, the victorious group liquidated a portion of
its financial obligations by a levy on all office-holders, who were
presumably the chief beneficiaries of the party triumph.

The choice of the voters does not always inspire the respect which
it would in a democracy more conscious of its power and more jealous
of its rights. The people of Costa Rica have more than once shown
that they were ready to compel respect for their will when their
interests were at stake, but as a rule they are disposed to recognize
any administration which controls the capital, regarding civil war,
with its attendant destruction of crops and livestock, as a greater
evil than submission to an illegal government. It is not strange,
therefore, that a defeated faction should occasionally attempt to
seize the barracks in San José by force or by strategy, or that the
president should exact conditions from an opponent victorious in
an election before turning over to him the command of the military
forces. No candidate opposed by the government has ever obtained the
presidency without either making a compromise with his predecessor or
else overcoming the latter’s resistance by force, for even the freely
elected presidents of the last decade have in every case had the
approval, if not the active support, of the previous administration.
The strength of the government, however, in reality rests far less upon
the army than upon the disapproval of the people as a whole of any
attempt to displace the constituted authorities in a disorderly manner,
for the army itself is almost insignificant as a military force. There
are a few troops in the barracks of the capital, but elsewhere order
is maintained entirely by the civil police. It is a proud boast of the
Costa Ricans that their government employs more school teachers than
soldiers.

The President of the Republic has an almost absolute control over the
machinery of the government. He not only appoints all administrative
officers, but also in practice exercises a dominant influence over
the deliberations of the Congress, where his ministers initiate the
most important legislation. Even when his personal followers do not
have a majority in the Chamber, he can usually command one by the
use of patronage or of money from the treasury, which is often paid
to the Deputies in the form of fees for professional services to the
government. As party lines break down soon after an election, the
minor political leaders who make up the legislative body are apt to be
influenced less by hostility to the administration than by a desire
to maintain their following in their own districts by securing public
works for their towns and employment for their constituents. In times
of emergency, moreover, the Congress itself frequently vests the
President with practically absolute power, as it did when the country
was passing through the economic crisis which followed the outbreak of
the European war.

The Judicial Department, however, is far more nearly independent of
the Executive. The Supreme Court, which is elected by the Congress
every four years during the political slack season in the middle
of the presidential term, appoints and removes all subordinate
magistrates throughout the Republic. Politics enters very little into
the composition of this body, partly because of the strong sentiment
in favor of a non-partisan judiciary, and partly because party lines
are almost non-existent at the time when the judges are chosen. The
subordinate positions are also saved from the spoils system which rules
in other departments of the government, although it is inevitable that
purely personal considerations should enter to some extent into the
appointments. The administration of justice is on the whole prompt
and efficient, although the magistrates are not always distinguished
for erudition or ability and those on the supreme bench sometimes
show a human desire to make sure of their re-election as the time for
this draws near, by keeping on good terms with the President and with
the members of Congress. They are generally honest and impartial in
their decisions, however, and their incorruptibility, with hardly any
exceptions, is undoubted. That not only the people themselves but also
the foreigners in the country have confidence in the courts is shown by
the fact that there has been a conspicuous lack of the complaints of
denial of justice which have complicated the relations of some other
Latin American republics.

The local administration is highly centralized, but the people of
each district enjoy a certain amount of local self-government through
their municipalities. The representatives of the central government
are the executive officers of these bodies,[28] and the Department of
_Gobernación_ has a final veto over all their acts, but the _regidores_
are freely elected by the people of each town and village, and have
very wide powers in matters of purely local interest. The lack of
funds, however, arising from the fact that the municipalities have
no source of revenue except certain license fees and fees for public
services, forces them to leave to the central government many of
the functions which are assigned to them by the constitution, and
especially the support and direction of almost all the more costly
public works, and at the same time makes them politically subservient
to the President and the Congress, which can provide or withhold
appropriations for local purposes. President Alfredo González attempted
to make the local units truly autonomous, by authorizing them, in the
fiscal legislation passed just before his fall, to levy direct taxes
upon their inhabitants by adding a percentage to the national direct
taxes.

The central government itself, thanks to a long period of internal
peace and to the patriotism and ability of the men who have been at
its head, has reached a high degree of efficiency and of usefulness to
the community. Private rights are generally well protected, and the
oppression of private citizens by the officials, while not unknown,
is unusual. The security of persons and property is guaranteed by a
well-organized police force, a fairly efficient judiciary, and an
excellent land registry system. In spite of the difficulties presented
by the mountainous character of the country and by six months of heavy
rains every year, the Republic possesses a fair system of highways,
although in this matter there is still room for improvement. The
government-owned and operated railway from San José to the Pacific
Coast compares favorably, at least in the service rendered, with those
controlled by foreign corporations in other parts of Central America.
There are sewers in the larger towns, and aqueducts supply healthful
drinking water even in the small villages. The public health is also
protected by a rigid quarantine service, by a veterinary service which
inspects live cattle and meat, and by the regulation of contagious
diseases and prostitution; and the government employs forty physicians
in various parts of the country who treat the poor in their districts
free of charge. Many of the public services, because of the lack of
experience and training on the part of the officials, and because of
the poverty of the government, are still in an unsatisfactory state,
but they at least show an earnest desire on the part of the authorities
to promote the welfare of the country.

During the last three years, remarkable progress has been made in
improving sanitary conditions. The campaign against the hookworm,
inaugurated in 1914 with the aid of the International Health Commission
of the Rockefeller Foundation, already promises to effect an
incalculable change in the condition of the country people, an immense
number of whom suffer from this disease. The representative of the
International Health Commission has been made the head of an official
department under the Ministry of Police, and all local health officers
and police officials have been placed under his orders to assist him
in the examination and treatment of patients and the execution of
sanitary measures designed to check further spread of the disease. At
the same time, he has been made Director of the School Medical Corps,
in which capacity he has done much to secure proper care for the health
of the children and to improve hygienic conditions in the schools.
With the earnest co-operation of the government, notable results have
been obtained even in the short time which has elapsed since the work
was begun. It is impossible to estimate what the final effect of work
such as this will be, for the extinction of the hookworm alone, to
say nothing of the other results of the campaign of medical education
and sanitary improvement which has been undertaken, cannot but have a
lasting effect on the happiness of the people and on their capacity for
labor.

The field of activity in which the rulers of Costa Rica have perhaps
shown the most interest has been that of education. Its school system
gives the Republic one of its strongest claims to be ranked among the
progressive communities of the world. The nation which a century ago
was so illiterate that it was difficult to find enough men who could
read and write to fill the public offices, now provides free and
obligatory instruction for all of its citizens, with a primary school
in every settlement where there are thirty children to attend it. In
1915, there were 1,108 teachers and 34,703 children in the public
schools.[29] New buildings and equipment are being secured as fast
as possible, and new courses of technical and agricultural training
are being introduced everywhere. There are five institutions for the
secondary education of both sexes, two in San José, and one each in
Cartago, Heredia, and Alajuela, offering instruction similar to that
given in American schools. These have somewhat over eight hundred
students in all. The latter are chiefly from the middle classes in
the towns, but the brighter children from the country schools are
also encouraged and financially aided in continuing their education
after they complete the primary course. A national normal school has
recently been established in Heredia to provide teachers for the entire
system. Besides the government institutions, there are schools of
law, pharmacy, music, fine arts, textiles, agriculture, and domestic
science, most of them in San José, which receive some aid from the
treasury. How high the percentage of literacy is, is attested by the
large circulation of newspapers in the country districts.

An examination of the work of the government shows that the men who
control the destinies of the Republic, however regrettable their
political methods sometimes are, do not seek power solely for their own
profit. If there is a large amount of favoritism and graft in official
circles, there is also much progressive spirit and true patriotism.
Most of the government employees are appointed for political reasons,
but they ordinarily perform their duties with as much energy and zeal
as can be expected in tropical America. Public money is often misused,
and improper considerations sometimes govern the letting of contracts,
but public works are nevertheless well executed. Wholesale theft from
the treasury, which is too often regarded with cynical indifference in
other parts of the Isthmus, would not be tolerated by public opinion in
Costa Rica.

Costa Rica’s freedom from internal disorder has enabled her to
attain a prosperity which has entirely transformed the backward and
poverty-stricken community of colonial days. In 1821, her people had
almost no means of communication with the outside world. They produced
nothing which they could export, and they were separated from either
coast by several days of difficult and dangerous traveling. Commerce
with the outside world, however, began soon after the declaration of
independence with the development of the growing of coffee, which was
exported for the first time in 1835.[30] The importance of this crop
increased rapidly, especially after the construction of a cart road,
which was completed in 1846, to the Pacific port of Puntarenas. The
Costa Rica berry soon acquired and still holds a high reputation in the
European markets.

The exporters at first encountered great difficulty and expense in
shipping their product, which they had to send around Cape Horn, or
later by the expensive route of the Panama Railway. The government,
therefore, early endeavored to provide more adequate means of
transportation. In 1871, work on a line from Puerto Limón on the
Caribbean Sea to the capital was begun by Mr. Minor C. Keith. After
difficulties which seemed almost insuperable had been overcome and
thousands of lives had been sacrificed in the deadly lowlands of the
East Coast, through train service to San José was finally opened in
1890, and the Republic found itself for the first time in direct
communication with the United States and Europe. The railway, which
still carries the greater part of the imports and exports, was leased
in 1905 for a period of ninety-five years to the Northern Railway of
Costa Rica, a concern owned by the United Fruit Company.

It was while building this road that Mr. Keith began to plant the
banana farms which later developed into the enormous Caribbean
properties of the United Fruit Company. Costa Rica still leads the
Central American republics in the production of this fruit. Almost
the entire East Coast has now been brought under cultivation, and
English-speaking communities of Americans and Jamaica negroes have
grown up everywhere along the railroad and its numerous branches.
In spite of the ravages of the disease which has attacked the older
plantations, more than eleven million bunches of bananas were exported
from Limón and its tributary ports in 1913,[31]--a quantity the
immensity of which can only be grasped when we realize that it would
provide approximately a dozen bananas for every man, woman, and child
in the United States. The Fruit Company is of course very powerful in
this region, where even the police duties of the central government are
to a great extent exercised through its agents. In the interior, the
“United” has less influence. It has many friends as well as enemies
among the party leaders, and it has not encountered so intense a spirit
of jealousy and hostility towards foreign enterprises as is found in
certain of the other republics; but whatever efforts it has made to
influence the outcome of presidential and congressional elections, in
order to be in a more advantageous position to ask concessions from the
government, have usually been conspicuously unsuccessful.

In addition to the Northern Railway, the Republic has another line,
owned and operated by the government, from San José to Puntarenas on
the Pacific Coast. This also was commenced during the administration
of General Guardia, but it was not completed until 1910. Being shorter
and on the whole less expensive to operate than the Atlantic road, it
should eventually become a formidable competitor of the latter when
adequate transportation is provided by way of the Panama Canal.

In the last decade of the nineteenth century, when the price of
coffee in the world’s markets was high, the Republic enjoyed an era
of great prosperity. The wealthier families were able to travel and
to study abroad as they had never done before, and both society and
the government entered on a period of extravagance, of which the
magnificent national theater in San José is an enduring memorial.
When the coffee prices fell, there was a reaction which checked
the development of the country’s natural resources. The area under
cultivation in the interior has now remained practically the same for
many years, and the exports of coffee, which have declined in value,
have increased little or not at all in quantity.[32] During this time,
many of the more prominent native families have become impoverished,
and the upper classes as a whole have hardly shown either the energy
or the adaptability necessary to maintain their political and economic
leadership under modern conditions. They devote themselves to politics
and to the learned professions, but there are now comparatively few
of the wealthy landholders who form the most influential class in the
other Central American republics.

Banking, commerce, and mining are almost entirely in the hands of
foreigners, although the majority of the coffee plantations are still
owned by citizens of the country. These immigrants have identified
themselves more completely with the community than in any of the other
republics, often intermarrying with the natives and taking a prominent
part in local affairs. San José, although not so large or so wealthy as
Guatemala or San Salvador, is more like a European city than any other
capital in the Isthmus.

The industrious, sturdily independent peasant class in the country
districts has been little affected by the changes which have taken
place in the cities. Throughout the _meseta central_ there are
countless small farms, which not only supply their owners with corn,
beans, and sugar cane for food, but at the same time frequently produce
a small amount of coffee, which is sold to the proprietors of the
large cleaning mills to be prepared for export. The farmers not only
cultivate their own properties, but also work for several days in each
week on the larger plantations. As wages are fairly high, they thus
have a money income which enables them to live far better than their
brothers in the neighboring countries. Most of them can read and write,
and they are able to give their children educational advantages little
inferior to those enjoyed by country people in any other part of the
world. During the last few years, as we have seen, they have even
acquired a not inconsiderable political power, which will become more
important as they become more experienced in its use. It is these small
landholders who have made Costa Rica what she is today, and who offer
the strongest guarantee for her future.


FOOTNOTES:

[23] See L. Fernández, _Historia de Costa Rica durante la Dominación
Española_.

[24] Quoted by Fernández, _op. cit._ p. 316.

[25] Costa Rica, _Colección de Leyes_, VI, 133; IX, 453.

[26] For these figures, I am indebted to the kindness of Mr. Manuel
Aragón, formerly director of the Costa Rican statistical office.

[27] In the election of 1913, 64,056 votes were cast. The total
population in that year was estimated at 410,981.

[28] In this Costa Rica differs from the other republics, where the
_alcalde_ and the local representative of the central government are
two distinct persons, theoretically independent of one another.

[29] Costa Rica, _Anuario Estadístico_, 1915.

[30] Bancroft, _History of Central America_, Vol. III, p. 653.

[31] Costa Rica, _Anuario Estadístico_, 1913, p. xxxvii.

[32] The annual exports of coffee averaged 13,478,941 kilos, valued at
8,835,726 colones for the ten years 1891-1900; and 14,478,605 kilos,
valued at 6,709,767 colones for the ten years 1901-1910. (Costa Rica,
_Resúmenes Estadísticos_, 1883-1910.)

The exportations in the years 1912-1915, according to the _Anuario
Estadístico_ for 1913 and for 1915, were as follows:

                                 Value in
  Year.         Kilos.           colones.
  1912        12,237,875         7,623,561
  1913        13,019,059         7,752,750
  1914        17,717,068        10,028,731
  1915        12,206,357         8,022,166

It should be noted that the value of the colon in 1915, and during a
part of 1914, was approximately 20 per cent less than under normal
conditions.




                             CHAPTER VIII

          THE ESTABLISHMENT OF A CENTRAL AMERICAN FEDERATION

 Strength of the Unionist Idea--Breakdown of the First
 Federation--Attempts to Establish a New Union--Obstacles to the
 Formation of such a Union at Present--Advantages which would be
 Derived from Federation--The Attitude of the United States.


The ideal of uniting Central America under one government has been
one of the strongest forces which have influenced internal politics
and international relations in the Isthmus from the declaration of
independence down to the present day. Realizing that the five countries
can never be really independent of one another, and that the interests
of all would be best served by joining forces for their common ends,
the majority of their statesmen have always been, and are today,
perhaps more than ever, desirous of seeing them transformed from a
group of small, disorderly republics into one strong nation, able to
promote the interests of its people and to command respect from foreign
powers. Such a nation, with its five millions of inhabitants, its
fertile soil, and its great natural resources, would, they believe,
be able to assume a position of importance in the councils of Latin
America and to make great strides towards better government and towards
a more complete realization of economic opportunities at home. In the
last five years especially, increasing contact and occasional friction
with other powers have drawn the five states closer together than ever
before, for the problems created by the invasion of foreign financial
interests and by the intervention of foreign governments in their
internal affairs have made them realize more than ever the dangers to
which their divided condition and their quarrels among themselves
expose them. The pressure from outside has given rise to a stronger
sentiment of their common nationality and to a fuller realization of
the identity of their interests than could exist while they were still
almost shut off from intercourse with other countries.

There are many influences which make the relations between the five
countries closer than those which ordinarily exist between neighboring
independent states. Their administrative union during the three
centuries of Spanish rule and their entry together into the family
of nations not only created a strong sentimental tie between them,
but also gave rise to political problems common to them all, and
to political parties which regarded not individual states but the
Isthmus as a whole as their theater of activity. The factions which
arose during the years of the Federation kept up an international
organization after the dissolution of the central government, and
Conservatives in Guatemala, or Liberals in Salvador and Nicaragua,
interfered from time to time to promote the interests of their
parties in other countries throughout the nineteenth century. Even at
the present time, each state has too much interest in the internal
affairs of its neighbors to remain indifferent when revolutions or
other political changes occur. As a result of this situation, men
of the same way of thinking have been brought into closer relations
with one another, and have been made to feel, by their co-operation
for common political ends, that they were, in fact, citizens of one
Central American nation. This feeling has been strengthened by the
custom of exiling the leaders of the defeated party after revolutions,
which has encouraged travel from one country to another, and by the
fact that many of the prominent families of the Isthmus are related to
one another by intermarriage. The five republics, moreover, are all
confronted with the same economic problems, in developing their natural
resources, improving their agricultural methods, and securing capital
for the construction of railroads and other public works; and they have
much in common in their civilization, and especially in the customs
and ways of thought of the upper classes, despite the wide divergences
between them in racial and social conditions.

In 1821, when the authority of Spain was thrown off, it was supposed as
a matter of course that the provinces of what had been the Viceroyalty
of Guatemala would continue to be united under one government. The
Constituent Assembly which met after the dissolution of the short-lived
union with Mexico was therefore following the logical course laid down
for it by the history and the existing political organization of the
five countries, as well as by the ideas of the political theorists
among its members, when it adopted a constitution providing for a
federal republic. The stormy history of the government thus established
has already been sketched. The Federation fell to pieces partly
because of local jealousies and the conflicts of local interests,
and partly because of faults in its constitution and weaknesses in
its administration. The civil war which existed in almost all of the
states, and the strife between the different departments of the central
government itself, made it impossible for the latter to establish
a constitutional regime or permanently to exercise any real power.
The states, jealous of the control of their affairs from Guatemala,
respected the orders of the federal authorities only when it suited
their convenience to do so; and these authorities, in order to maintain
their position, were forced to intervene in the internal affairs of the
states to establish administrations subservient to their wishes. There
was thus a series of revolutions and counter revolutions, until within
a few years both the national and local governments had become mere
despotisms which depended for support solely upon the federal army. It
was impossible for a centralized military regime to exist very long in
a country where means of communication between the different sections
were so inadequate, and where the centrifugal forces were so strong
as they were in the turbulent, mutually jealous communities of the
Isthmus. The federal government had less and less real power after the
first term of President Morazán, and in 1840 it disappeared entirely
with the expulsion of its representatives from Central America.

The disastrous failure of the federal republic convinced many of the
statesmen of the Isthmus that their countries would be better off
as separate states. This feeling was especially strong among the
Conservatives in Guatemala, who for more than thirty years were the
greatest obstacle to the restoration of the Union. The great families’
opposition to a political connection with the other states seems to
have arisen from the memory of the expense to which they had been
put in supporting the federal authorities before 1829, and of their
sufferings at the hands of the Liberals from Honduras and Salvador,
who overwhelmed and subjugated them in that year. Costa Rica, at the
other extreme of the Isthmus, had also withdrawn formally from the
Federation, inspired by motives much similar to those which actuated
Guatemala. Unlike the latter country, however, she was able because
of her isolated position to remain entirely aloof from the political
struggles elsewhere, and only on one or two occasions was forced to
take notice of the agitation to which the activities of the Unionist
party periodically gave rise.

Salvador, Nicaragua, and Honduras, on the other hand, refused to
accept the dissolution of the first union as a final settlement of the
relation of the states to one another. Many of the leaders in those
countries had taken part in the defeat of Morazán, but they had done
so from personal hostility to the federal president rather than from a
desire for the destruction of the federal government. The restoration
of the Union was championed by the Liberal party, but it was also
favored by many of the Conservatives, despite the influence exerted
upon the latter by their allies in Guatemala. There were a number of
factors which tended to draw the three central republics together.
With their _mestizo_ population, they resembled one another in their
economic and social conditions far more than they resembled Guatemala,
with its primitive Indian tribes, on the one hand, or white Costa Rica
on the other; and thus no one of them was influenced, as were those
countries, by a consciousness that its internal problems were entirely
different from those of its neighbors. Furthermore, their jealousy of
the superior power of Guatemala, and the alarm caused by Carrera’s
repeated interventions in their affairs during his dictatorship in that
country, greatly strengthened their desire to unite their forces for
purposes of mutual defense. Great Britain’s aggressions on the East
Coast of Nicaragua and Honduras had the same result after 1848. Between
1840 and the invasion of Nicaragua by Walker in 1854, hardly a year
passed without the meeting of a congress to discuss plans for forming
a union, at least between these three countries. As a rule these
congresses adjourned without achieving any definite result, finding
their work made hopeless by the intrigues of the separatist party in
Guatemala and by the mutual mistrust of the participating states, but
twice a federal government in which neither Guatemala nor Costa Rica
was represented was actually established. A third attempt to unite
the central republics was made forty years later, at the end of the
nineteenth century.

The history of these abortive unions affords an instructive
illustration of the influences which have kept the five states apart.
In 1842, delegates from Salvador, Honduras, and Nicaragua met at
Chinandega, in the last named republic, and adopted a treaty providing
not so much for a central government as for a confederation, in which
each state was left free to manage its own affairs, even to the extent
of carrying on diplomatic relations and making war. The only common
authority was a council, consisting of one delegate from each republic
and presided over by a Supreme Delegate, and a supreme court chosen by
the state legislatures. This government sent troops to aid Salvador
in a war between that country and Guatemala in 1844, and finally
succeeded in bringing the war to an end through the mediation of Frutos
Chamorro, the Supreme Delegate. The confederation came to an abrupt and
disastrous end in the same year, however, when Salvador and Honduras
attacked Nicaragua because the latter had granted asylum to political
exiles from these countries.[33]

In 1849, the central republics again signed a treaty of confederation
which provided for common action in foreign affairs and a union for
purposes of defense. Their action was inspired by the encroachment
of Great Britain on the territory of Nicaragua and Honduras on the
Mosquito Coast. The council of commissioners to which the management
of the affairs of the confederation was intrusted accomplished little;
but in 1852, in the face of renewed foreign complications, a diet met
at Tegucigalpa to make the union between the three countries closer and
to establish, if possible, a real federal government. The diet elected
a president, and adopted a constitution giving that official power, not
only to represent the three republics in their dealings with foreign
powers, but also to intervene by force in the internal affairs of the
states, when it was necessary to maintain order. Disapproving of this
provision, Salvador and Nicaragua refused to ratify the constitution,
and the diet dissolved.[34]

Although the Conservatives of the central republics had been less
hostile to the restoration of the federation than were the great
families of Guatemala, they took little interest in plans for a
union after these two failures. During their thirty years’ rule in
Nicaragua, therefore, that country did not enter into another attempt
to accomplish what was regarded as primarily the ideal of the opposite
party. With Salvador and Costa Rica, in fact, it opposed and defeated
the projects of Rufino Barrios in 1885. It was not until the accession
of President Zelaya that the Nicaraguan government again showed itself
ready to enter into projects for the restoration of the federation.
In 1895, the representatives of the three central republics, meeting
at Amapala, drew up a treaty establishing a diet, composed of one
member from each country, to which was intrusted the conduct of their
relations with one another and with other nations. This body was to
elaborate a definite plan for a closer, permanent union.[35] The
federation assumed the name “Greater Republic of Central America,”
and at once took steps to enter into diplomatic relations with the
powers.[36] During the next two years a constitution was drawn up, and
in the autumn of 1898 an executive council, with far broader powers
than the old diet, was installed in Amapala. It had scarcely assembled,
however, when the party opposed to the union in Salvador overthrew
the government of that state, and declared the federation at an end.
The council called upon the presidents of Nicaragua and Honduras
to send troops to uphold its authority, but neither executive was
willing to make war upon the new government of Salvador. The union was
consequently dissolved.[37]

The failure of the federations created by the treaties of 1842, 1849,
and 1895 did not indicate that a real union of the five countries
would be impracticable, because a real union was not attempted.
The political leaders who were in control in Salvador, Honduras,
and Nicaragua theoretically favored the establishment of a central
government, but they were loath to surrender to it any real power
or to confer upon it any right of control over themselves. They
insisted upon keeping the management of the state armies, finances,
and administrative machinery in their own hands, and they therefore
conferred upon the federal officials only an indefinite authority,
backed by no military force, which they respected and supported only
so long and in so far as it suited their own interests to do so.
The unions thus established were not nations, but mere leagues of
independent states. Each came to an inglorious end as soon as the rapid
changes of Central American politics brought to the front in one of the
states an administration which was not in sympathy with the men who
controlled the central government.

The apparent impossibility of restoring the federation by the voluntary
action of the five republics convinced many of the strongest advocates
of a union that their ideal could be realized only by the use of force.
It was this belief which led Rufino Barrios, the first great Liberal
president of Guatemala, to embark on the disastrous adventure which
caused his death. Soon after his accession to power, Barrios endeavored
to persuade the presidents of the other republics to agree to some form
of federation. The latter declined to enter into any definite treaty,
although negotiations upon the subject were carried on intermittently
for several years. The United States, when invited to participate in
these efforts, declined to interfere, although warmly approving the
plan for a union.[38] The equivocal attitude of his neighbors, and
their refusal either to agree to or to reject his proposals, finally
convinced Barrios that the people of the Isthmus favored his plans,
but that the governments would consent only if they were compelled
to. On February 28, 1885, therefore, he announced that he had assumed
command of the military forces of the Central American Federation, and
invited the other states to recognize the new government, and to send
delegates to a constituent assembly which was to meet in Guatemala City
in May of the same year. Honduras expressed approval of his action and
placed troops at his disposal, but all of the other countries of the
Isthmus at once began to raise armies to defend their independence.
President Zaldívar of Salvador, upon whose aid Barrios had confidently
counted, yielded to the popular demand for resistance to the aggression
of that republic’s traditional enemy, and sent an army which defeated
the forces of Guatemala at Chalchuapa, on April 2, 1885. The death of
Barrios in this battle disheartened his followers, and put an end to a
war which could not have failed to have involved every section of the
Isthmus if it had continued.

An ambition to place himself at the head of a restored Central American
nation has influenced more than one Central American president in his
dealings with the neighboring countries. Few have actually gone so far
as Barrios did, but the same idea which inspired the Guatemalan leader
has often influenced powerful rulers to intervene openly or covertly in
the internal affairs of the other states, and has thus frequently been
a cause of revolutions and international wars. The most recent attempt
to unite the five countries by force was made in 1907. In that year
President Zelaya of Nicaragua overthrew the government of President
Bonilla in Honduras, and set up a new one, under Miguel Dávila, which
was practically controlled by himself. He then proceeded to attack
Salvador, inspired by the idea of establishing a Central American
union,--an idea which, as he said, was at the time being advocated
with enthusiasm by the press of Central America, the United States,
and Mexico.[39] The war which followed was brought to an end by the
mediation of President Roosevelt and President Porfirio Díaz.

At the Washington Conference, which met a few months later, the
delegates of Honduras, supported by those of Nicaragua, formally
proposed that a treaty of union be signed, and stated that the
presidents of those countries were ready to lay down their offices
if that were necessary to make the execution of the treaty possible.
This motion nearly caused the disruption of the conference, for
the delegates from Guatemala opposed it, and those from Costa Rica
objected even to its being discussed. The representatives from
Salvador, who were at first inclined to favor the plan, voted against
it as inopportune after receiving instructions to do so from their
government, and the matter was finally dropped. The arguments advanced
by the advocates and the opponents of this project give a good idea
of Central American opinion in regard to the establishment of a
union. Señor Fiallos, one of the delegates from Honduras, emphasized
the necessity for a federation to put an end to the wars between the
states. These, he said, were only civil wars which had crossed the
national boundaries, for there were no real antipathies or conflicting
interests between the various countries. He dwelt upon the expense of
keeping up five separate governments and armies,--an expense which
prevented the use of the national revenues for the development of
the country. The majority of the committee appointed to consider the
matter, on the other hand, admitted that the Union was the greatest
and noblest aspiration of Central American patriotism, but affirmed
that it could not be brought about until the economic, moral,
political, and material conditions of the five republics had been
harmonized. It recommended for the present the discussion of measures
which might prepare the way for the Union, such as the improvement
of communications, the encouragement of the coasting trade, the
establishment of uniform fiscal systems and customs duties, the holding
of annual Central American conferences, and the creation of a court of
compulsory arbitration.[40]

There seems little probability that a stable and enduring federal
government could be established in Central America at the present
time. Even a union brought about by the voluntary action of the five
countries would almost inevitably fall to pieces sooner or later,
however patriotic the spirit which presided at its formation. The
centrifugal forces would be no stronger, perhaps, than they were in the
North American states before 1787, but they would be fatal because it
would be impossible to provide political machinery for settling them.
The establishment of a constitutional and orderly administration for
the five states together would be as difficult as it has been for each
state alone, for the mere fact of union could effect little change in
political methods or political morality, and none in the capacity of
the people for self-government. The nature of the economic and social
conditions in the four northern countries makes it inevitable that any
administration under which they were united, if at all centralized,
should be a regime of force, similar to that which already prevails
in each country. Real elections could no more be held throughout the
entire Isthmus than they can be held in any one state today, and in
the absence of elections there would be no means of changing the
authorities of the federation except by revolution or by a compromise,
not between three or four political groups, as in Nicaragua or Honduras
today, but between a large number, few of which could be represented
in the new government. The unfriendly feeling between different
sections, which is still strong among both the upper classes and the
common people, and the inevitable jealousy of the small states towards
the larger ones would sooner or later cause dissatisfaction with
the working of the federal system, and quarrels over such questions
as the distribution of offices and the expenditure of money on
internal improvements. These difficulties would be intensified by the
differences in civilization, and consequently in political requirements
and in points of view between the more and the less advanced republics.
It is hard to see how these conflicting interests could be reconciled
by a government whose officials and subjects have as yet never learned
the value of compromise, or the necessity of respecting the will of the
majority and the rights of the minority.

The obstacles to the formation of a permanent union by the voluntary
action of the five states would be still greater in the case of one
brought about by force. An able leader, supported by the unionist party
in each of the countries, might impose a federal government on the
entire Isthmus for a time, but he would meet with immense difficulties
in upholding his authority against hostile political groups because
of the difficulty of sending troops and supplies from one section to
another. While it endured, his regime could only be a personal one.
The dissatisfied elements might be held in check temporarily, but they
would tear the Union to pieces with the more fury when the ruler who
had founded it was forced by his death or by a defeat at the hands of
his enemies to relinquish his hold upon the supreme power.

The difficulties in the way of uniting the five republics would not be
insuperable if the ruling classes were genuinely ready to co-operate in
realizing the national ideal, but the men who enjoy the high offices
and the control of the revenues of the state governments show a decided
reluctance to giving up any of their power for the common good. The
local political groups and the influential families would necessarily
be reduced to a position of far less importance if the union were
accomplished; and the realization of this fact makes many of those
who are most enthusiastic in their advocacy of a Central American
Federation slow to take any definite steps towards its realization. It
is not difficult for the state authorities to frustrate the endeavors
of the Unionist party, because the common people and even the majority
of the upper classes show little real interest in the measures which
are from time to time proposed for actually bringing the five republics
together. Educated and patriotic people, at least in the four northern
countries, express themselves in favor of union, but they nevertheless
bring little influence to bear on their governments to support projects
aiming to bring nearer the time when a Central American nation can
be established. The international conferences provided for by the
Washington Conventions of 1907, to take a recent example, met regularly
for several years to discuss the common interests of the five republics
and to formulate plans for bringing them closer together, but they were
finally suppressed because the state authorities had failed, apparently
from pure indifference, to carry out any of their excellent and for the
most part perfectly practical recommendations. The realization of the
national ideal will not be possible until this indifference disappears
and a broader patriotism takes the place of the jealousy and mistrust
which influences the relations of the states to one another at the
present time.

Moreover, a permanent union will be all but impossible until a change
has taken place in the political conditions of the Isthmus. No central
government could long endure unless it commanded the active support
of a strong party in every one of the states, and such a party could
hardly exist on the basis of cliques, resting largely on local feeling
and personal and family ties, such as those which today dominate the
political affairs of the five republics. An administration set up under
present conditions could only maintain itself by playing off against
one another the rival factions in the states, thus bringing about a
situation similar to that which caused unbroken turmoil during the
life of the first federation. To secure a solid basis for the creation
of a Central American nation, the control of politics must be taken
out of the hands of the factions as they are at present organized,
through an increased participation in the government by the people at
large. The spread of popular education and the introduction of foreign
ideas throughout the Isthmus makes such a change by no means a distant
probability. When it takes place, questions of personal and purely
local interests, which are now so prominent in affairs of state, will
be relegated to the background, and one of the forces which operates
most strongly to keep the states apart will thus be removed.

The relations between the five republics would be closer if the means
of intercommunication were better. Although each country possesses
railroads and cart roads, which give the majority a comparatively
adequate internal transportation system, they are connected with one
another only by the roughest of mule paths. Very little commerce passes
over these, and journeys overland from one capital to another are beset
by many difficulties. Travelers from one country to another, in fact,
almost invariably prefer to make use of the expensive and not very
comfortable steamers which run at rare and irregular intervals between
the ports of the West Coast. This lack of transportation facilities not
only tends to isolate the five republics from one another, but also
makes much more difficult the problem of establishing a government able
to exercise an effective military control over all of them. The gradual
improvement of interstate communications will overcome this difficulty,
and will also make possible a far greater interchange of products.

The strong unionist sentiment which exists in the four northern
countries is not shared by the people of Costa Rica, who regard the
idea of throwing in their lot with that of the other republics with an
aversion which makes their participation in the re-establishment of the
federation very doubtful. The Costa Ricans, having successfully held
aloof from the disorders in other parts of the Isthmus, have little
desire to accept any plan which might involve them in the quarrels of
their neighbors. They are loath to exchange their free institutions
for the military government which prevails around them, or to give up
their position as an independent nation to become an unimportant part
of a country in which a majority of the inhabitants, and therefore
presumably of the voters, would be backward _mestizos_ or uncivilized
Indians. Rather inclined to be self-centered and self-satisfied,
they show little sympathy with the nationalist aspirations of their
neighbors, and they are perfectly contented, for the present at least,
to continue their peaceful development in their own way.

The free people of Costa Rica could hardly be expected to submit to
such a government as social conditions have made inevitable in some of
the republics. The differences in the internal situation of the five
countries are really the most discouraging obstacle to the realization
of the dream of Central American Union. Guatemala, for instance, with
forty per cent of the inhabitants of the Isthmus, must under any fair
plan of organization have a preponderant influence in the councils of
the federation. Her wealth and her dense Indian population, which is
more pliable in the hands of the officials than are the _ladinos_ of
the other countries, would give those who controlled her administrative
machinery a dangerous power when dissensions arose within the
federation. It is unthinkable that elections there should be anything
but a farce for generations to come, for the Indians, untouched for the
most part by the changes which are improving the position of the common
people in other parts of the Isthmus, must for a period impossible to
calculate remain under the political control of the upper classes. For
the smaller and weaker countries, therefore, the union would present
many very serious dangers. Human ingenuity could hardly devise a form
of government able to maintain itself against disaffected factions, and
to cope with the conditions existing in the less advanced parts of the
Isthmus, which would at the same time be acceptable to the people of
the more enlightened sections.

The realization of this difficulty has led many Central American
leaders to advocate a confederation, in which each state should
be left free to manage its own affairs, rather than a centralized
federal government. As we have seen, however, unions of this kind have
several times been attempted, and have in every case been a failure.
The states which were parties to them showed little respect for the
central authorities, and refused to allow the latter to exercise any
real power. On several occasions, war broke out between the very
states which were parties to the confederation. No Central American
Union, while present political conditions continue, can be permanent
or beneficial unless the government is given real power, not only to
represent the Union in international relations, but also to maintain
order and enforce the law throughout its territory. If the individual
states retained the control of their military forces, or if they were
under administrations which were not in harmony with the national
authorities, the federation could only expect a short and stormy
life. To establish a decentralized administration would be to invite
disaffection and revolution, for each local government would become
almost inevitably a center of intrigues against the _status quo_. It
is only necessary to recall the history of the first Central American
Federation to appreciate the dangers which a half-way measure of union
would involve.

The union of the five republics under a central government strong
enough to maintain order and make itself respected would in many ways
greatly improve their position. One nation of five million inhabitants,
with a rich territory 172,000 square miles in area, would be in a far
better position to deal with the rest of the world commercially and
diplomatically than five petty states whose quarrels make them one
another’s worst enemies. If the peoples of the Isthmus were able to
present a united front, instead of intriguing with foreign governments
against one another’s tranquillity or forcing those governments to
intervene in Central American affairs by inciting revolutions or
engaging in wars against neighboring states, one of the most serious
dangers which today threatens their independence would be done away
with. Other countries would of course rather deal with one central
authority than with five petty ones. The United States especially,
which cannot remain indifferent to the disorders arising from the
dissensions and the rival ambitions of Central American rulers, because
of its immense interests in the Caribbean Sea and the obligations which
it assumed in connection with the Washington conventions of 1907, could
not but welcome any change which promised to make for peace.

The suppression of the present governments, with their heavy
expenditures, would effect an economy which would be of the greatest
importance to countries suffering from so many financial difficulties
as do those of Central America. In the first place, the cost of
maintaining five separate presidents, with their suites, cabinets, and
diplomatic corps, which is one of the heavy burdens upon the national
treasury today, could be eliminated, and many other unnecessary
officials could be dispensed with. Military expenditures could also
be cut down, for the armies of the several states are maintained in
part at least for use against one another. With the money thus saved,
the improvement of means of communication and the development of
natural resources could be undertaken on a larger scale than ever
before, and could moreover be carried on without encountering many
of the obstacles which interstate jealousy now puts in the way. Much
more progress than is possible at present could be made in such
matters as public instruction, sanitation, and the encouragement of
agriculture; and problems like the development of markets for Central
American exports and the protection of the national resources against
excessive exploitation by foreign capitalists could be dealt with more
effectively by united action. To obtain these benefits, however, there
must be a central government able to preserve order and to make its
authority respected in all parts of the Isthmus, for one which could
not fulfill these requirements would be worse than none at all.

Projects for the federation of the Central American republics have
always aroused a friendly interest in the United States, where there
has been a hope that the Union would promote the stability and the
political and economic progress of the Isthmus. As early as 1859,
President Buchanan secretly offered to support Juan Rafael Mora, who
had just been exiled from Costa Rica, in an attempt to make himself
president of a restored Central American Union, promising to aid
him by sending two warships as an evidence of moral support. Mora
refused, however, on the ground that such a Union, even if it could
be established, would in the end be harmful to the best interests of
Costa Rica, which would be involved by it in the civil wars of the
other countries.[41] Some years later, Secretary Blaine expressed the
sympathy of the State Department with Barrios’ projects for uniting
the five countries, although he declined to intervene or to express
approval of the use of force in accomplishing them.[42] In 1907, before
and after the Washington Conference, there was a considerable amount of
discussion of the question in the United States both by officials and
by the press.

More recently, the intervention of the United States in the
international affairs of the Isthmus, and even in the internal affairs
of some of the republics, has made its attitude towards the question
of re-establishing the Union more important than ever before.[43]
Many of the leading statesmen of the Isthmus believe today that the
establishment of a strong and permanent federal government can only
be brought about through active aid from Washington. On the other
hand, it has been vehemently asserted that the establishment of what
is virtually an American protectorate over Nicaragua has made it
impossible that the other countries should join in any union with her
until the policy of the United States is reversed, since they would
subject themselves by doing so to the same foreign domination. Whether
this view is entirely justified may well be doubted. In the first
place, no permanent political connection between the United States and
Nicaragua has been established, or is likely to be established. The
government of the North American Republic has indeed intervened in
Nicaragua to prevent revolutions, but it seems probable that it would
be forced to do as much in any other Central American state where
similar conditions existed. The arrangements with the North American
bankers, which have aroused so much opposition in Central America, are
primarily of a financial character. It would be idle to deny that they
constitute infringements of Nicaragua’s sovereignty, but they can be
brought to an end at any time when the Republic is ready to repay the
money which its government has borrowed and to buy back the national
property which has been sold. It is ridiculous to suppose that either
the United States or the bankers have any ulterior political purposes,
or that their aim has been other than the improvement of the economic
situation of Nicaragua. The treaty providing for American control
of the canal route and for a naval base in the Gulf of Fonseca has
caused bitter controversies, but it is difficult to see how it can
have a permanent adverse influence on the question of the Union. The
United States has no interest in Central America more important than
that of aiding the five republics to become strong, prosperous, and
well-governed commonwealths, and it is therefore impossible to suppose
that it will be hostile to any movement which promises to improve their
situation.

The unionist idea is one which should command the sympathy of everyone
interested in the future welfare of the people of the Isthmus. As we
have seen, a stable federation, established upon an equitable basis,
and accepted by all of the five republics, could not but greatly
improve their situation, making them less exposed to aggression and
interference from outside, and encouraging their internal economic
and social development. The establishment of such a federation seems
impracticable at present, and an attempt to unite the five countries,
whether by force or by the voluntary action of their governments, would
probably result in more harm than good. But the time when a strong
and progressive Central American nation can be founded seems to be
drawing steadily though slowly nearer, and the forces which are now
at work, changing the internal and the international situation of
the five republics, may bring about the consummation which so many of
their statesmen desire, sooner than now seems possible. Every friend
of the Central American countries must hope that this will be so, in
order that the dangers to which they are now exposed through their own
divisions and weaknesses and through the inability of some of them to
afford protection to the life and property of foreigners may be averted.


FOOTNOTES:

[33] See Bancroft, _History of Central America_, Vol. III, p. 188ff.,
and A. Gómez Carillo, _Compendio de la Historia de la América Central_,
pp. 219, 304-305.

[34] Bancroft, III, p. 209; Gómez C., pp. 306-307; J. D. Gámez,
_Historia de Nicaragua_, p. 575.

[35] For the text of this treaty, see U. S. Foreign Relations, 1896, p.
390.

[36] President Cleveland recognized the Greater Republic on Dec. 24,
1896. Ibid, p. 369.

[37] Ibid., 1898, p. 172; Gómez, C. _op. cit._ p. 310.

[38] See U. S. Foreign Relations for 1881 and following years.

[39] See his annual message to the Nicaraguan Congress, Dec. 1, 1907.

[40] U. S. Foreign Relations, 1907, II, pp. 669, 721.

[41] Manuel Argüello Mora, the Costa Rican president’s nephew and
constant companion, gives an account of this interview, at which he was
present, in his “_Recuerdos é Impresiones_,” p. 66.

[42] See U. S. Foreign Relations for 1881 and the years immediately
following, under Guatemala.

[43] According to press dispatches dated August 31, 1917, the five
Central American governments are planning to hold a congress in the
near future to renew the conventions adopted at Washington in 1907,
and to discuss plans for a closer union between the states. It is said
that all of the other republics have accepted the invitation of the
government of Honduras to send delegates for this purpose.




                              CHAPTER IX

              THE CAUSES OF CENTRAL AMERICAN REVOLUTIONS

 Civil War as a Characteristic Central American Political
 Institution--Character and Extent of the Conflicts--Forces back of
 Them: Unfitness of the People for Democratic Government, Oppression by
 the Party in Power of its Enemies, Rivalry for Office, _Personalismo_
 and _Localismo_--Indifference of the Mass of the People--Hope for
 Improvement--Effects of Contact with the Outside World.


The most important fact in the history of the Central American
republics, from their declaration of independence down to the present
time, has been the almost continuous civil war from which the majority
of them have suffered. Their inability to establish stable governments
has retarded their economic and social progress in the past, and is a
menace to their welfare and even to their national existence today.
The development of agriculture, the building of roads and railroads,
and the civilization and education of the masses of the people, have
been discouraged, both by strife between factions at home and contests
with neighboring governments, and by the misrule resulting from the
predominance of the military elements which have been brought to the
front by the premium which these conflicts have placed on armed force.
The weakness of the five countries, moreover, has frequently exposed
them to acts of aggression from foreign powers, and in recent times
their very independence has been endangered because the apparent
incapacity of most of them for self-government has led to a general
belief in Europe and America that they must one day fall under the
control of some stronger power. Under modern conditions, it is
impossible for a government which cannot maintain order and secure to
the lives and property of foreigners the protection which international
law demands to expect that its rights of sovereignty, or even its
territorial integrity, should be scrupulously respected by governments
which are more powerful and better organized. The elimination of
internal disorder is therefore one of the most serious problems which
confronts the people of the Isthmus.

If one asks the average Central American, whether of the educated
classes or of the common people, what has been the principal cause of
the revolutions which have occurred in his country, he will almost
certainly answer: the ambition of professional politicians and the
abuse of power by the government,--the desire of each member of the
ruling class to hold office, and the tendency of each administration
to use its authority for the personal benefit of those who control its
policy and for the gratification of their hatred of their opponents.
The force of this reply can be readily appreciated by one who has
seen the conditions which exist in some of the five republics, but
the causes assigned are nevertheless hardly adequate to explain the
extreme prevalence of internal strife in the five republics. There
are many countries with perfectly stable governments which are cursed
with politicians more ambitious and more selfish than those who have
been prominent in revolutions in Central America, and many also where
the opponents of those in power are treated with far more severity
than falls to the lot of the defeated party there. The reasons given
indicate, perhaps, the motives which actuate those who participate
in each revolt, but they do not explain the underlying causes which
have made uprisings against the government more frequent in Central
America than in almost any other part of the civilized world. These
causes must be sought, not in the aspirations and immorality of any one
relatively small group of men, such as that which figures in Central
American political affairs, but rather in the nature and working of the
governmental institutions and in the economic and social condition of
the people as a whole.

The way in which revolution became the only means by which the
political institutions of the five republics could be worked has
already been described. The constitutions which were drawn up for
the federal government and for the five states in the years 1823-25
provided, as we have seen, for the choosing of the more important
officials by popular elections; but the holding of real elections soon
proved to be impossible, because of the ignorance and indifference
of the great majority of the people, and the lack of experience in
self-government among the ruling classes. The parties which were
contending with one another for the control of the government soon
yielded to the temptation to employ force and fraud to attain their
ends; and the voting for officials consequently became, first an
occasion for periodic disorders, accompanied frequently by an appeal to
arms, and then a mere farce, in which the triumph of the administration
candidate was assured by the pressure exerted by the government. Within
a few years after the declaration of independence, force had come to
be recognized as the only means by which power was secured and held,
and revolution was not only the sole remedy for bad government, but the
one way in which a change of officials could be effected. Civil war was
thus an indispensable part of the political system.

Revolutions were of almost yearly occurrence throughout the Isthmus
during the first half century after the declaration of independence,
for the development just described took place in each of the five
countries. In some, however, there was early apparent a tendency
towards avoiding actual warfare, so long as the established government
pursued a policy which made its rule tolerable to the parties not
represented in it. Even when disaffection grew so strong that a change
was inevitable, attempts were usually made to bring about a compromise.
Force still remained the basis of all authority, and potential
revolution the only corrective of bad government, but actual fighting
between the factions was rare. In Costa Rica, where this tendency was
strongest, practically no blood has been shed in political quarrels for
nearly sixty years. Nicaragua and Honduras, on the other hand, have
had frequent and sanguinary revolutions throughout their history as
independent nations. This difference between them and their peaceful
neighbor is enough to indicate that other factors, besides the mere
impossibility of changing their governments except by force, have
contributed to make them turbulent. Before attempting to explain what
these factors are, however, it is necessary to understand the nature of
Central American revolutions and the character and the motives of the
persons who participate in them.

In the first place, it should be borne in mind that the average
revolution is not a movement which embraces a very large number of
people or which calls into play deep economic or social motives. The
countries themselves are very small, for the largest barely exceeds
fifty thousand square miles in area. In all of them, except Salvador,
much of the national territory is so sparsely settled, and often so
impenetrable and unhealthful, that it hardly enters into consideration
as a theater of military operations. Of the total population, which
is probably not more than 600,000 in Nicaragua, Honduras, or Costa
Rica, only a very small portion is sufficiently interested in politics
to participate voluntarily in a civil war. Revolutionary armies,
therefore, rarely reach any great size, and they rarely need to in
order to succeed. The military force of the government is small,
ill-equipped, and poorly trained, and not infrequently part of it
proves disloyal in a political crisis. Although it is impossible to
estimate with any degree of accuracy how many soldiers are actually
under arms at a given time in such countries as Nicaragua or Honduras,
it seems very doubtful if the total exceeds two or three thousand, and
these are scattered through the country to such an extent that a much
smaller revolutionary force, sometimes of less than a hundred men,
can seize and hold an important strategic point before the government
has time to rally its forces. After an uprising has started, both
sides fill their ranks by voluntary recruiting and impressment, but
neither is able to raise or to fit out any army which would seem very
formidable to a single well-trained regiment. It is only necessary to
recall the stand which William Walker, with a few hundred dissolute
and undisciplined adventurers, was able to make against the combined
military power of the five republics, in order to appreciate the actual
force at the disposal of a Central American government. Yet these
governments are nevertheless able to suppress the greater part of the
revolts which occur against their authority.

The spirit which causes the revolutions is not often one which arouses
very much enthusiasm among the people at large. Their leaders are
usually inspired by a thirst for offices and spoils or a desire for
revenge against political rivals who have oppressed them, and the
rank and file are actuated mainly by sectional or class jealousy, but
rarely by any genuine political motives. There are of course many men
in politics who seek to obtain control of the government, even by
revolution, in order to effect economic and social reforms. Generous
and patriotic ideas are found both among the chiefs and their followers
in all parties, but they play a smaller part in actually bringing about
a revolt than do the less creditable but still very human motives upon
which the political parties are built up.

Revolutions are rarely the result of a widespread conspiracy among
the people. Even a large portion of the active members of the party
interested often know little about the plans of the leaders until an
armed uprising has already taken place. The procedure followed is much
the same in nearly all cases. A group of factional chiefs, with a few
score of their more intimate personal followers, raise the standard
of revolt with a pronunciamento against the government, naming one
of their number as provisional president. An attempt is made either
to seize from within some town in which the revolutionary party is
particularly strong, or to invade the country from outside, occupying
one of the seaports as a base of operations. The latter is perhaps
more common, because the important members of the opposition party
are generally in exile. The revolution not infrequently gains its
foothold, as did that of 1909 in Nicaragua, through the treachery of
local authorities who turn over to it the soldiers and the military
supplies under their control, or by the disaffection of high officials
sufficiently influential to carry with them a considerable part of the
army. Arms and supplies are secured from some neighboring government
which has reasons for wishing to overthrow the existing administration,
or from foreign corporations and speculators who wish concessions or
special privileges. A revolt often attains formidable proportions in
this way before the government can raise and equip an army to send
against it, as it usually starts in regions remote from the capital,
where it is able to consolidate its forces before it meets with
serious opposition. In the districts still under the control of the
authorities, meanwhile, martial law is proclaimed, known or suspected
adherents of the party responsible for the revolution are thrown into
jail, horses and other property are requisitioned for the army, and
every able-bodied man of the laboring and artisan classes, except
those who succeed in concealing themselves, is pressed into service
as a soldier. The result, of course, is an immediate paralyzation of
agriculture and commerce. A revolution thus begun often lasts several
months before there is a decision, although only a few battles are
fought, and only two or three thousand men, and often less, are engaged
on each side. If the rebels win a few successes at the beginning, or if
the government is unable to defeat them after a prolonged campaign, the
president usually falls, because of his loss of prestige and because of
the defection of the always numerous politicians who desire above all
else to be on the winning side. When this occurs, there is a complete
demoralization of all of the departments of the administration,
accompanied, not infrequently, by a split in the victorious party or a
counter revolution on the part of the defeated. Order is not restored
until one strong leader or group of leaders has established himself or
itself in complete military control.

Since these revolutions are the work of so small a proportion of the
people, their causes must evidently be sought not so much in any
inherent disorderliness and lawlessness of the nation as a whole, as in
the questions which have divided the classes interested in politics,
and in the conditions which have made it possible for these classes to
plunge the community into civil war time after time by their incessant
feuds, without being effectually checked by the desire of the rest of
the country for peace.

The instigators and leaders of Central American revolutions are in
almost every case the pure-blooded, or nearly pure-blooded, descendants
of the _conquistadores_, and one of the chief causes of these phenomena
must therefore be sought in the characteristics which the creole
aristocracy has inherited from its sixteenth century ancestors. Among
the Spaniards who founded the colonies on the Isthmus there were a few
respectable families, but the majority were adventurers, fugitives from
justice, and soldiers who had been left without occupation by the
cessation of the wars against the Moors, and came to America in search
of excitement and easily gained wealth. In exploring and subjugating
the Indian kingdoms, they showed a bravery and an indomitable energy
which have few parallels in history, but as colonists they were
turbulent, lawless, and unprincipled. Their cruelty towards the Indians
has already been described. Their dissensions among themselves, before
the government at home had firmly established its military control
over them, forecasted what might be expected when the authority of
Spain should be withdrawn, for the bloody clashes between rival
exploring parties, the vindictiveness and treachery exhibited towards
one another by ambitious governors who could not agree upon the extent
of their respective jurisdictions, and the occasional uprisings,
like that of the Contreras brothers in Nicaragua, among the rabble
of the Spanish settlements, made the annals of the Central American
provinces during the sixteenth century one long chronicle of bloodshed.
After the declaration of independence, it was the descendants of the
early colonists who carried on the civil wars which lasted almost
without intermission for so many years. The leaders of the political
factions,--the men who fill the higher offices when their party is in
power and bear the brunt of the opposition at other times,--are still
for the most part members of the white upper class, even though the
exclusiveness of the old creole aristocracy has been broken down.

It is rather surprising to find the native landholders and merchants,
who have more interest than anyone else in the maintenance of order
and good government, taking the lead in the civil wars which have made
order and good government impossible. But the feuds which have divided
the educated and wealthy classes among themselves have been so bitter
that it has been impossible down to the present time for their leaders
to co-operate with one another in establishing and supporting a stable
and efficient government. The custom of proscribing and despoiling
political enemies has kept alive and intensified the personal hatred
between the members of the rival parties even in those countries where
there are no fundamental economic or social questions upon which the
ruling classes are divided. After a change of government, the more
prominent adversaries of the victorious party are usually exiled or
imprisoned; their property is taken from them either by outright
confiscation or forced loans; and their constitutional rights are
little respected by the officials or by the courts. When an outbreak
against the government is attempted or threatened, many of those of its
opponents who are still at liberty are seized, and even their wives and
children are subjected to imprisonment and mistreatment, and sometimes,
as under the government of President Zelaya in Nicaragua, to barbarous
tortures. These persecutions, inspired not only by a determination to
prevent uprisings against the government, but often by a desire for
revenge and for the gratification of individual spite, frequently make
the situation of the enemies of the administration so intolerable that
they prefer to risk everything in a revolt rather than to submit. This
has been especially true in countries where continual revolutions have
kept party feeling at white heat, accustoming all classes to regard
civil war almost as a normal condition, and forcing the government to
take severe measures against all whom it thinks likely to resist its
authority by force of arms. Peace can never be hoped for under these
conditions. The only republics of Central America which have made any
real progress towards stable government are those where the opponents
of the party in power are treated with comparative fairness, and where
confiscation and imprisonment for political reasons are rare.

Resistance to oppression, however, is by no means the only motive
which leads members of the upper classes to engage in intrigues and
revolts against the government. The pursuit of office is in itself an
attractive occupation, for every member of the small ruling class has a
comparatively good chance of becoming president or cabinet minister or
of attaining some other honorable and lucrative position. The rewards
offered by politics are on the whole greater than those held out by the
more solid occupations, especially in those countries where continual
disorder make agriculture and commerce a precarious means of securing a
livelihood, for very few of the native planters or merchants receive so
great an income as they could secure, legitimately or illegitimately,
at the expense of the community if they could reach one of the higher
positions in the government. Politics, moreover, provides the natural
outlet for the energies of those members of the upper class who have no
property. This is especially true of the great majority of the lawyers,
doctors, and dentists, few of whom secure a respectable living from
their overcrowded professions.

Many members of the wealthy and educated classes, however, have always
worked for peace, realizing that revolutions not only deprived their
property of most of its value, but also lessened their own influence
in the community by raising demagogues and purely military leaders
to positions of prominence. The influence exerted by this moderate
party has depended upon the economic development of each country. In
Costa Rica and Salvador, where the cultivation of coffee has been
developed until it offers a more attractive field of endeavor than
politics, the great landholders have been a powerful factor in bringing
about the establishment of stable government. In Guatemala also, the
prosperity of agriculture has probably favored peace, although the
bitterness of party strife in that country and the backwardness of the
Indian population have greatly retarded its political development.
Agriculture in Honduras and Nicaragua, on the other hand, being still
in a primitive condition, affords a comparatively unattractive
occupation, and politics may still be said to be the chief interest of
the propertied classes.

Although the landholding and professional classes furnish the leaders,
the revolutions would hardly be possible without the participation of
the far more numerous other elements in the community. The half-breed
artisans in the towns and villages form perhaps the largest part of
the factional armies. These laborers, who have little property, and
therefore, so far as they can see, little direct interest in the
preservation of peace or the economic well-being of the community,
find in civil war both a welcome source of excitement and an avenue
for personal advancement and profit, for the opportunities for loot
during the campaigns, and the rewards distributed among the adherents
of the victorious party after a successful revolution, make conspiracy
and revolt a more lucrative occupation than hard labor at a trade.
There is no way in which the intelligent but unstable _ladino_, little
inclined to steady manual or intellectual labor, can so easily achieve
wealth and influence as by the pursuit of politics,--a vocation which
makes it possible for a boy of the humblest, barefooted, illiterate
family, coming from a thatched, one-room hut in the mountains, to
rise to a position where he is addressed as “Great and Good Friend”
by the heads of the leading nations of the world. Not a few artisans
and professional soldiers of this class have actually risen to such
a position, and some, especially in the Liberal party, have been
presidents of their countries for long periods. Ordinarily, however,
they play a less prominent part in affairs than the members of the
white aristocracy, who have the advantage of superior education, social
prestige, and wealth.

Those who hope to derive some direct individual profit, however,
form but a small part of the number of persons engaging in a typical
revolution. The rebel leaders would have but little hope of overcoming
the advantage conferred on the government by its control of the
administrative machinery, and above all of the standing army and
military stores, if they did not receive active support from adherents
far too numerous to be rewarded by offices or money in the event of
victory. The principal motive which brings together the rank and
file of a revolutionary army is “_personalismo_,”--the devotion to
individual chiefs, sometimes the heads of great families, sometimes
professional soldiers, sometimes mere demagogues, whose relation to
their followers is usually not so much that of political leaders as
of friends and patrons. Ties of blood, friendships, and gratitude for
favors received or expected play a much greater part in holding these
factions together than community of ideals or principles; and the very
nature of the parties consequently makes the strife between them the
more bitter and compromise the more difficult. Closely connected with
this _personalismo_ is _localismo_, the jealousy and rivalry between
town and town, which makes the political leaders of each hostile to
those in other parts of the country and enables them too often to carry
the common people with them in their armed opposition to a government
controlled by their enemies. We have already seen how disastrous an
influence this spirit has exerted in the history of the Isthmus, and
how it has been intensified by continual internal strife and by the
persecution of the people of one section by those of another.

Other factors also have often contributed, though usually in a minor
degree, to bring about an uprising against the government. Religious
questions have been a source of much trouble, although they are less
important at present than in the early history of the Isthmus. The
Church has now lost its one-time influence through the decline of
religious feeling among the people, but in the first half century
after the declaration of independence it was often strong enough to
instigate a revolt against a government which oppressed it, or, by
its own exactions, to cause one against a government which supported
it. Abuses of power by the officials, or the adoption of a policy
which directly injured a large portion of the people, have sometimes
done much to make a revolution possible, and dissatisfaction with
the existing administration, apart from any desire to put any other
group of individuals in power, always causes many persons to join the
ranks of the rebel army. Many others take part merely for the sake of
excitement and plunder,--because they wish to fight and to “eat fat
cows.” The revolutions, when they have once started, naturally attract
all of the discontented and adventurous elements in the community. But
it is _personalismo_ and _localismo_ which make it possible for them to
start, and which hold the armies participating in them together through
the exigencies of the conflict.

Only a small part of the people, however, enter at all into these party
conflicts. The great majority, especially in the rural districts,
know little and care less about political affairs. They dislike and
fear the revolutions, which often involve forced military service for
themselves and destruction for their livestock and their little patches
of corn and beans, but they have been so accustomed to misgovernment
and exploitation ever since their ancestors were conquered by the
Spaniards that it never occurs to them to make a concerted effort
to check the disorderly tendencies of the politicians. It is this
ignorance and indifference of the masses of the people, rather than
any disposition to turbulence in the nation as a whole, which has
prevented the establishment of stable government in many of the Central
American republics, by making it impossible to hold elections and work
the constitution by peaceful means, and by permitting rival cliques
of professional office-seekers to plunge the country into civil war
time after time for the gratification of personal ambitions and feuds,
without other restraint than that suggested by their own interests.

It is sometimes asserted that it is the Indian and part Indian element
which is chiefly responsible for the disorders in Central America. This
view seems to find justification in the tranquillity of Costa Rica,
where the population is almost entirely of Spanish descent, but it is,
in fact, very unjust to a race which is on the whole more peaceful,
law-abiding, and industrious than the descendants of their conquerors.
The Indians rarely participate in a revolution. In Guatemala, where
they have retained their racial identity more than in any other part
of the Isthmus, they have hardly ever risen against the government
since their final subjugation at the beginning of the colonial period,
although they have always been forced to serve against their will both
in the standing army and in revolutionary forces. The only real popular
uprising which has occurred in that republic,--the revolution which
placed Carrera in power in 1838, originated not among the Indians but
among the ignorant _ladinos_ in the districts east of the capital,
where the conditions are far more similar to those of Honduras and
Nicaragua than to those which prevail throughout the greater part of
Guatemala itself. It was among the half-breeds that Carrera secured
the followers who enabled him to establish his military despotism,
and it was these same half-breeds, under the influence of the village
priests, who made the Church so strong a factor during the Conservative
administration. In Nicaragua, the semi-civilized rural population in
the district of Matagalpa and the villages which have retained their
distinctly Indian character in the southwestern Sierras have as a
rule remained neutral, so far as they could, in the contests between
Leon and Granada, although the Indians of Matagalpa revolted on one
occasion, about thirty years ago, when they were forced to aid in
constructing a telegraph line into their country. The Indians in the
four northern countries, indeed, are responsible for the revolutions
only in the sense that they are helpless to prevent them. Their
situation is very different from that of the common people of Costa
Rica, where the early extinction of the aborigines made possible the
development of a compact, homogeneous community of white peasants,
among whom it was comparatively easy to establish stable political
institutions.

The causes of Central American revolutions, therefore, may be said to
be: first, the attempt to impose political institutions copied from
one of the world’s most advanced democracies upon a country where
elections were absolutely impossible; second, what may be called the
habit of revolution among the ruling class and the people of many of
the towns,--a habit formed during the turbulent years that followed
the breakdown of the federal constitution, and perpetuated by the
bitterness of personal feuds and sectional jealousy, the pursuit of
politics as a money-making occupation, and the mutual persecutions
of rival factions; and third, the backwardness of the masses of
the people, which has not only made the republican constitutions
unworkable, but has also prevented those who in the long run suffer
most from civil war from exerting any effective influence for peace.

None of these causes can be said to be permanent. There is no reason to
suppose that stable governments will not be attained eventually in all
of the five republics, as a result of the education of the people. The
public schools, which have been established in the last quarter century
even in the remote country districts of the Isthmus, have already done
much to improve the situation and enlarge the outlook of the masses of
the population, and to hasten the approach of the day when they will be
able to assume the control of their own affairs through the democratic
machinery which already exists on paper, and to protect themselves
against the disastrous consequences arising from the factional quarrels
of selfish professional politicians. This influence makes itself felt
slowly, but the social and political effects of popular education, once
they have asserted themselves, can never be undone. The penetration of
foreign ideas and the increase of wealth and improvement of standards
of living which have resulted from the development of foreign commerce
are also doing their part in changing the situation of the countries
of the Isthmus. The landholding classes, as we have seen, are already
exerting a strong influence in behalf of peace in the more prosperous
countries, for their success in agricultural pursuits has greatly
lessened their interest in politics. The laboring classes, also,
have found new opportunities for employment and advancement, and are
beginning to learn by experience that their own welfare is dependent
upon the peaceful development of their country. The factors in favor of
stable government have thus been immeasurably strengthened.

Those who hope for the ultimate political regeneration of the Isthmus
receive much encouragement from the example of Costa Rica, which
started upon her independent existence with the same institutions
and the same inexperience in self-government as her neighbors. Costa
Rica, it is true, has owed her freedom from civil war largely to her
isolation and her homogeneous European population, but the substitution
of a popularly elected and constitutional government for the military
tyrannies which had existed at first there as well as in other parts of
the Isthmus was due primarily to the education of the common people and
to the increasing realization on their part of their interest in the
conduct of public affairs. There is no reason to suppose that a similar
development will not take place eventually in Nicaragua, Honduras,
and Salvador, and even among the Indians of Guatemala. The people of
those countries have never had the opportunities for peaceful progress
which the prosperous peasants of Costa Rica have enjoyed, but there
seems little reason to suppose, from observation of the races as they
work side by side in schools and public offices, that the Indian or
the _mestizo_ of the other republics is inherently less capable of
advancement or less fitted for self-government than his fellow-citizen
of Spanish descent.

The changes brought about by increased intercourse with foreign
countries have on the whole favored stability and good government, but
in some respects they have been far from beneficial. While agriculture
or commerce has been made a more attractive occupation than conspiracy
and revolt for many of the great landholders, many others have been
driven out of these pursuits and into politics, as the only means of
making a living which remained open to them, by the immigration of more
efficient foreign planters and business men. We have already seen to
what an extent this has taken place in some of the five countries. The
interest in peace among the classes who by wealth and education are
best qualified to be the leaders of the community has been lessened by
the loss of their property, and the number of professional politicians
and revolutionists who are almost entirely dependent upon the pursuit
of office for support has been swelled by members of many families
which formerly devoted their energies to more useful occupations.

Not a few of the foreigners, moreover, have taken part in civil wars
and disturbances, for the furtherance of purely selfish aims, and
to the great detriment of the native community. The North American
or European professional revolutionist, usually an adventurer or a
fugitive from justice in his own country, is a type which is all too
familiar in the more disorderly countries of the Isthmus. He is rarely
anything more than a mercenary soldier, ready to offer his services
to the highest bidder, but his presence is a source of annoyance and
danger to the constituted authorities, and the viciousness and greed of
some who have been rewarded for their assistance in war with official
positions has equaled if not exceeded that of the most depraved
native leaders. The participation of these men in the armies on both
sides of a civil contest, moreover, is often a positive danger to the
Central American countries, because of the regrettable readiness of the
great powers of the world to protect their citizens in their real or
fancied rights even when they are engaged in an occupation so little
commendable as that of making war for money against a constituted
government. A significant example of the difficulties which arise from
this source was afforded by the events which followed the shooting of
two American adventurers during the Nicaraguan revolution of 1909.[44]

Still more dangerous to the welfare of the Central American countries
are the foreign corporations which, for equally unworthy purposes,
often render open or covert aid to a revolutionary movement, in order
to assure themselves of the protection and favor of the new government.
There is unfortunately little doubt that recent uprisings in Honduras
and Nicaragua have been financed and supplied with arms from New
Orleans, or that they have owed their success largely to the aid thus
received. So long as the resources of the five republics continue to
be developed under special concessions and privileges, there will
inevitably be a strong temptation for the large fruit companies and
other corporations having interests there to intervene in political
affairs, because of the great part which official favor or disfavor
plays in determining the conditions under which they do business.
Such a situation is disastrous to the internal peace of the countries
involved, for any discontented faction can usually secure support
from some group of investors or speculators who think that they can
further their interests or secure valuable concessions by promoting
a revolution. In the governments which come into power in this way,
however, the influence of the foreign corporations which have aided
them is generally far less than might be expected, for Central American
political leaders are none too grateful and none too scrupulous about
carrying out obligations which they have entered into; and they rarely
lose sight of their distrust of the foreigner in their appreciation of
his assistance.

The disturbing influences introduced by intercourse with other
countries, however, are offset, and more than offset, by the pressure
which foreign governments, actuated by a desire to protect their
subjects who have settled or invested capital in Central America, have
exerted in behalf of peace. The United States, especially, has been
forced to take positive action to prevent civil and international wars
in the Isthmus, not only because its commerce and its investments there
are larger than those of any other nation, but also because its settled
policy not to permit European intervention in the affairs of the weaker
American nations has made it necessary to adopt measures which deprive
other powers of an excuse for interference. Inspired by a desire to
promote the stability and well-being of its neighbors, the United
States has in the last ten years taken more and more radical steps to
safeguard the peace of the Isthmus, until it has finally reached the
point of actually suppressing revolutions in one of the countries by
force. Its influence has therefore become the most potent factor, for
good or for evil, both in the external and the internal affairs of the
five republics. No description of Central American conditions would be
complete without a discussion of the way in which this influence has
been exercised.


FOOTNOTES:

[44] See Chapter XI.




                               CHAPTER X

                   THE WASHINGTON CONFERENCE OF 1907

 The Increased Responsibilities of the United States in the Caribbean
 Sea Since 1900--The San José Conference--The War of 1907--The
 Washington Conference and the Conventions Adopted by it--Their
 Effectiveness in Promoting Internal and International Peace--Work of
 the Central American Court--The Central American Conferences and the
 Central American Bureau.


The first years of the twentieth century have brought about a decided
change in the attitude of the United States towards its neighbors
around the Caribbean Sea. The increasing importance of our political
and economic interests in those countries has made their domestic
prosperity and the maintenance of their independence from European
influence more than ever before essential to our own well-being.
American investments and trade in the West Indies have attained such
great proportions that anything which affects the normal life of one
of the countries of that region is felt at once in commercial and
financial centers in the United States. The sugar plantations of
Cuba and the banana plantations of Central America, to take only two
examples, represent many millions of dollars of American capital,
and at the same time are important sources of the food supply of the
American people. Simultaneously with the expansion of our economic
interests, our political interests in the Caribbean have become of
paramount national importance. The acquisition of Porto Rico, and much
more the building of the Panama Canal, have made it impossible for the
United States to remain indifferent when international complications
arise which affect the military situation or the political status
of countries close to these possessions. The Monroe Doctrine, as
applied to the American tropics, has thus become more than ever an
indispensable national policy.

At the same time, the maintenance of the Monroe Doctrine has involved
increasingly heavy responsibilities and burdens, because the commercial
and financial interests of other countries in the Caribbean have
also increased as that region has been developed economically and
commercially. Even when they have had no ulterior political motives,
the European powers have been unable to stand by with equanimity while
the security and the interests of their citizens were endangered by
the continual revolutions and other disorders which have occurred in
some tropical American states. There has consequently been evident
an increasing disposition on their part to use force both to secure
protection for their nationals and to obtain the payment of debts due
to the latter by irresponsible and unscrupulous governments. To such
interventions, which necessarily tend to assume a political character,
the United States cannot possibly remain indifferent. Neither, however,
can it oppose itself to the protection by another country of the lives
and property of the latter’s subjects. European interference in the
affairs of American countries can only be averted if the United States
itself assumes the duty of protecting foreigners in the more turbulent
of the neighboring republics, and the Monroe Doctrine can only be
upheld in the long run if intelligent and disinterested efforts are
made to help those republics to remedy the conditions which at present
expose them to aggression. As President Roosevelt said in 1905:

 “We cannot permanently adhere to the Monroe Doctrine unless we succeed
 in making it evident, in the first place, that we do not intend to
 treat it in any shape or way as an excuse for aggrandizement on our
 part at the expense of the Republics to the south of us; second, that
 we do not intend to permit it to be used by any of these Republics
 as a shield to protect that Republic from the consequences of its
 own misdeeds against foreign nations; third, that inasmuch as by
 this doctrine we prevent other nations from interfering on this side
 of the water, we shall ourselves in good faith try to help those of
 our sister republics which need such help, upward toward peace and
 order.”[45]

The first occasion on which the new policy of the United States became
evident in its dealings with the Central American republics was in
1906, when there was a war between Guatemala and Salvador, in which
Honduras, as the ally of the latter country, also became involved. The
conflict had arisen from the aid furnished by some of the officials
of Salvador to a revolutionary movement directed against President
Estrada Cabrera. After exerting his influence in vain to prevent the
outbreak of hostilities, President Roosevelt invited President Díaz
of Mexico to join him in offering mediation. The efforts of the two
governments, seconded by those of Costa Rica, resulted in the holding
of a peace conference on the deck of the U. S. S. Marblehead, at
which representatives of the United States, Mexico, Costa Rica, and
Nicaragua were present, as well as the plenipotentiaries of the three
belligerents. At this meeting an agreement was signed providing for the
cessation of hostilities and the disarmament of the contending forces,
and for another conference, to be held later, to conclude a general
treaty of peace.[46]

The second conference was held at San José, Costa Rica, in September
of the same year. Each of the Central American republics was invited
to send delegates, and all did so with the exception of Nicaragua.
President Zelaya declined because he was unwilling to recognize
the right of the United States to intervene in Central American
affairs.[47] The governments, represented agreed that all differences
arising out of the late war should be arbitrated by the United States
and Mexico, and that future disputes should be settled by Central
American tribunals, specially organized to deal with each case as it
arose. They pledged themselves to keep political refugees from other
states away from the frontiers of the countries from which they had
been exiled, and not to allow their territory to be used as a base for
revolutionary movements against their neighbors. Provision was made
also for the establishment of a Central American Bureau in Guatemala
City and a pedagogical institute in Costa Rica; and general conventions
were signed regulating commerce, navigation, and extradition. The work
of the San José Conference was superseded by that of the Washington
Conference of the following year, when the treaties entered into were
reaffirmed and given greater weight by the moral support of the United
States and Mexico.[48]

The San José Conference was followed by a year of almost continuous
disorder. In December, 1906, a revolution was started in Honduras
against the government of Manuel Bonilla. The rebels were operating
close to the Nicaraguan boundary, and it was asserted that they were
receiving aid from President Zelaya. Whether or not this was so, an
alleged violation of Nicaraguan territory by the troops of Honduras
soon made war seem inevitable. At the urgent request of the United
States and of the other Central American republics, both Zelaya and
Bonilla agreed to submit the dispute to the arbitration of a tribunal
composed of one member from each Central American republic, which met
at once at San Salvador. Before taking up the matter in dispute, this
body demanded that both parties withdraw their armies from the border.
As Zelaya refused to do this, and furthermore declared in advance that
he would not accept any settlement which did not make full reparation
for the violation of the Nicaraguan frontier, the tribunal dissolved.
Zelaya at once declared war on Honduras, and sent forces to co-operate
with the revolutionists there. Salvador, on the other hand, assisted
the Bonilla administration, at first indirectly and later by sending
troops, although her government remained ostensibly neutral. Despite
this aid, Bonilla’s forces were completely defeated at Namasigue, on
March 18, 1907, and not long afterward Tegucigalpa and Amapala, where
Bonilla made his last stand, were captured by the Nicaraguan troops
and the Honduranean revolutionists. Miguel Dávila was inaugurated as
provisional president of Honduras.[49]

By this time, another general conflict seemed inevitable. Zelaya was
preparing to attack Salvador, and President Estrada of Guatemala,
fearing the extension of Nicaraguan influence, was apparently ready to
intervene in defense of his neighbor. The United States and Mexico,
however, at the request of the governments of Costa Rica, Guatemala,
and Salvador, again exerted their good offices, and finally brought
about a conference at Amapala between the ministers of foreign affairs
of Nicaragua and Salvador. Here, with the assistance of the diplomatic
representatives of the United States, an effort was made to settle
the differences between these two countries. The chief question at
issue was the presidency of Honduras, for Salvador declared that she
could not accept terms of peace which did not assure the existence of
a government in that Republic which would be satisfactory to her and
to Guatemala, which had now become her ally against Zelaya. After a
long discussion of various names in an effort to find a candidate who
would not only be acceptable to all of the neighboring governments,
but who would also be able to maintain himself in power in Honduras,
the delegates finally agreed upon General Terencio Sierra, a former
president of Honduras, who was then in command of the Nicaraguan forces
at Amapala. They accordingly signed a secret treaty, by which they
pledged themselves to overthrow the Dávila government and to set up one
under Sierra in its place. Nicaragua, however, as the fifth article
stated, found it difficult to attack President Dávila, who was her
ally, and therefore left this to Salvador. After Dávila was disposed
of, both were to join in assisting Sierra, and he was to be considered
the ally of both.[50] Having settled this matter, they drew up a
general peace treaty.

The terms of these treaties were never carried out. The exigencies of
her internal politics prevented Salvador from supporting Sierra, and
Dávila was consequently able to establish himself firmly in power.
His government, set up by Nicaraguan arms, was of course perfectly
acceptable to Zelaya, but the latter nevertheless made the failure
of Salvador to carry out the stipulations of the Amapala agreement
a pretext for again beginning hostilities against that country.
Animated, as he said, by a desire for the union of Central America, he
openly aided a revolt against the government of President Figueroa,
sending men and supplies to Acajutla on a Nicaraguan gunboat.[51] This
expedition was repulsed, and further hostilities were averted by the
energetic representations of the United States.

Zelaya’s avowed aggressive designs against the other states, and his
control over the government of Honduras, created a situation which
was intolerable to Guatemala and Salvador. It was soon evident that
these countries were planning to attack him, by the usual means of
aiding revolutions in Nicaragua and Honduras. The situation became
very threatening in the latter part of the summer of 1907, for the
four states were already massing armies on their frontiers. In view
of the imminent danger of war, Presidents Roosevelt and Díaz jointly
offered their mediation, and brought pressure to bear on the various
governments to cease their hostile preparations. As a result, it was
agreed that a conference should be held in Washington to settle all
outstanding difficulties and permanently to establish the relations of
the Central American republics on a peaceful basis. The United States
and Mexico were invited to appoint representatives “to lend their good
and impartial offices in a purely friendly way towards the realization
of the objects of the Conference.”[52]

The delegates of the five Central American countries met in the Bureau
of American Republics on November 14, 1907. The United States was
represented by Mr. William I. Buchanan, whose tact and perseverance
were inestimably valuable in the negotiations of the succeeding five
weeks. Secretary of State Root and Señor Creel, the Mexican ambassador,
made speeches at the inaugural session, and the Conference began its
work under the most favorable auspices, animated by a spirit of mutual
good will and by a genuine desire to bring about peace in Central
America. Following the lead of Salvador, each government in turn
declared that it had no claims or grievances against its neighbors,
and that it was ready to proceed at once to a discussion of plans
for a closer union between the republics. A proposal by Nicaragua
and Honduras for the immediate establishment of a Central American
federation caused a temporary interruption of the prevailing good
feeling, but harmony was soon restored, and the work of the Conference
proceeded smoothly until December 20, when eight conventions,
representing the fruit of its deliberations, were signed by the
delegates.[53]

The first of these was a general treaty of peace and amity, by which
the five governments sought to remove several of the chief causes of
revolutions and international wars in the Isthmus, and to provide for a
closer co-operation in promoting their common interests. Among its most
important provisions were the following:

 Article I. “The Republics of Central America ... bind themselves to
 always observe the most complete harmony, and decide every difference
 or difficulty that may arise amongst them, of whatever nature it may
 be, by means of the Central American Court of Justice created by the
 Convention which they have concluded for that purpose on this date.”

 Art. II. “... They declare that any disposition or measure which
 may tend to disturb the constitutional organization” [that is, the
 existing government] “of one of the Republics is to be deemed a menace
 to the peace of all.”

 Art. III. “Taking into account the central geographical position
 of Honduras, and the facilities which owing to this circumstance
 have made its territory most often the theater of Central American
 conflicts, Honduras declares from now on its absolute neutrality in
 event of any conflict between the other republics; and the latter, in
 their turn, provided such neutrality be observed, bind themselves to
 respect it, and in no case to violate the Honduranean territory.”

 Art. XVI. “... Desiring to prevent one of the most frequent causes
 of disturbances in the Republics, the contracting Governments shall
 not permit the leaders or principal chiefs of political refugees, or
 their agents, to reside in the departments bordering on the countries
 whose peace they might disturb.”

 Art. XVII. “Every person, no matter what his nationality, who, within
 the territory of one of the contracting parties, shall initiate or
 foster revolutionary movements against any of the others, shall be
 immediately brought to the capital of the Republic, where he shall be
 submitted to trial according to law.”

The other provisions of the treaty aimed to make the relations
between the republics closer and more friendly, and to foster their
co-operation for the furthering of their mutual interests. It
provided for a reciprocal recognition of the validity of judicial
proceedings, professional degrees, patents, and copyrights. Citizens
of each country, residing in the territory of one of the others, were
to enjoy the same privileges as nationals of the latter, and were
to be considered as citizens of the latter if they fulfilled other
constitutional requirements. Each Republic pledged itself to accredit
a permanent legation to each of the others, and agreed that its
diplomatic and consular agents in foreign countries should afford the
same protection to the persons, ships, and properties of the citizens
of other Central American states as to their compatriots. Vessels
of any Central American state were to receive the same treatment as
national vessels in the ports of others, and an agreement was to be
entered into for the encouragement by subsidies of the coasting trade
and of foreign steamship connections. The establishment of a practical
agricultural school in Salvador, a school of mines and mechanics in
Honduras, and one of arts and trades in Nicaragua, as well as the
proposed pedagogical institute in Costa Rica and the Central American
Bureau in Guatemala, was recommended, although not specifically
provided for.

An additional convention to the General Treaty contained radical and
rather impractical provisions aiming to make revolutions less frequent:

 Art. I. “The Governments of the High Contracting Parties shall not
 recognize any other Government which may come into power in any of the
 five Republics as a consequence of a _coup d’état_, or of a revolution
 against a recognized government, so long as the freely elected
 representatives of the people thereof have not constitutionally
 reorganized the country.”

 Art. II. “No Government of Central America shall in case of civil war
 intervene in favor of or against the Government of the country where
 the struggle takes place.”

 Art. III. “The Governments of Central America, in the first place, are
 recommended to endeavor to bring about, by the means at their command,
 a constitutional reform in the sense of prohibiting the re-election
 of the President of a Republic, where such prohibition does not
 exist; secondly, to adopt all measures necessary to effect a complete
 guarantee of the principle of alternation in power.”

Another convention established a Central American Court of Justice,
consisting of five judges, one to be elected by the legislature of each
state. To this tribunal, the five republics bound themselves “to submit
all controversies or questions which may arise among them, of whatever
nature and no matter what their origin may be, in case the respective
Departments of Foreign Affairs shall not have been able to reach an
understanding.” The Court was also to take cognizance of suits which
citizens of one of the contracting parties might bring against the
government of one of the others on account of violation of treaties or
denial of justice and of the other cases of an international character,
including those which two or more of the Central American governments,
or one of them and a foreign government, might agree to submit to it.
It was to be “competent to determine its own jurisdiction, interpreting
the Treaties and Conventions germane to the matter in dispute, and
applying the principles of international law.” Article XIII provided:

 “From the moment in which any suit is instituted against any one
 or more governments up to that in which a final decision has been
 pronounced, the Court may at the solicitation of any one of the
 parties fix the situation in which the contending parties must remain,
 to the end that the difficulty shall not be aggravated and that things
 shall be conserved in _statu quo_ pending a final decision.”

In the exercise of its duties, the Court might address itself to the
governments or the tribunals of the respective states, to have its
orders carried out, or it might provide for securing their execution
through special commissioners, whom the parties were to assist in every
way possible. The latter solemnly bound themselves to submit to the
judgments of the Court, and agreed “to lend all moral support that may
be necessary in order that they may be properly fulfilled.”

Every effort was made to secure the complete independence of the
Court. It was to sit at Cartago, Costa Rica,[54] where it would be
more free from political or personal pressure than in some other parts
of the Isthmus. The judges were to serve for five years, receiving
a fixed salary paid out of the treasury of the Court, to which each
state contributed, and enjoying the privileges and immunities of
diplomatic agents; and they were not to exercise their profession or
hold public office during their term of service. They were not to
consider themselves barred from sitting in a case to which their
own governments were parties, for they were to represent, not the
individual states, but the “national conscience of Central America.”

An additional article proposed to give the Court “jurisdiction over
the conflicts which may arise between the Legislative, Executive, and
Judicial powers--when as a matter of fact the judicial decisions and
the resolutions of the National Congress are not respected.” This
provision, which would have authorized the tribunal to intervene in
the internal affairs of the contracting powers in times of internal
disorder, was never ratified.

The Convention which established the Central American Bureau recognized
certain interests as being “those to which special attention should
be paid.” These were: “the peaceful reorganization of their mother
country, Central America”; the establishment of a broad, practical,
and complete system of education of an essentially Central American
character; the development of commerce and the advancement of
agriculture and industry; and the uniformity of civil, commercial,
and criminal legislation, customs tariffs, and monetary systems. The
functions of the Bureau were to be all those considered necessary and
expedient to achieve the objects placed in its care. It was to have an
organ of publicity, and was to serve as a center for the distribution
of information about Central American conditions both in the Isthmus
and in foreign countries.

At the same time, several other conventions were signed. One provided
for the extradition of criminals; another for the establishment of a
pedagogical institute directed by the government of Costa Rica but
supported by all of the others; another for the co-operation of the
five countries in making plans for the construction of the Central
American sections of the Pan American railway and the improvement of
other means of intercommunication. By still another treaty, each of
the contracting governments obligated itself to name one or more
commissions to study the currency systems, customs tariffs, weights and
measures, and other matters of an economic and fiscal nature in their
respective countries. After these had reported, delegates were to be
appointed to a Central American Conference, which was to discuss the
measures recommended by the commissioners, and especially the reform
of the various currency systems on a gold basis. Similar conferences
were to be held annually thereafter to consider matters which the
governments might agree to submit to them.

The Conference’s program for the political and economic regeneration
of the Isthmus was obviously too ambitious to be carried out at
once, for evils arising from deep-rooted habits and fundamental
social conditions could not be done away with by mere international
agreement, however sincere the contracting parties might be in their
desire for peace and for a realization of a closer union. No one
could reasonably expect that the five governments would turn at once
from their attitude of mutual suspicion and hostility to a harmonious
co-operation in undertakings for their common welfare. Neither of the
two main objects of the Washington Conventions,--the elimination of
civil and international wars and the creation of closer ties between
the five republics with a view to uniting them eventually under one
government,--seemed to have been realized to any appreciable extent in
the years immediately following 1907, and this led many who had hoped
that there would at once be a marked improvement in international
relations to brand the treaties as a failure. A careful examination
of their results, however, shows that the treaties have been very far
from a failure, even though their effects have as yet only begun to
make themselves felt. Both of the objects of the Conference have been
realized to some extent, and there is every prospect that they will be
realized more and more fully as time goes on.

At first, indeed, there was little change in the relations between
the five republics. Some of the governments, and especially that of
Nicaragua, showed little inclination to carry out the obligations
of the conventions in good faith. President Zelaya, who already
practically controlled Honduras through the Dávila government,
continued his machinations against the tranquillity of other
neighboring states, directing his efforts mainly towards placing one of
his own supporters in the presidency of Salvador. His open assistance
to Prudencio Alfaro, who made repeated attempts to invade that republic
in 1908 and 1909, finally forced the United States to authorize the
commanders of its naval vessels in Central American waters to use force
to prevent the launching of filibustering expeditions from Nicaraguan
ports.[55] Zelaya’s policy created a situation which was intolerable
to Guatemala and Salvador, and soon convinced all who were interested
in Central American affairs that he was the greatest obstacle to
the establishment of permanent peace in the Isthmus. President Taft
expressed this belief in his annual message to Congress in December,
1909, when he said:

 “Since the Washington Conventions of 1907 were communicated to the
 Government of the United States as a consulting and advising party,
 this Government has been almost continuously called upon by one or
 another, and in turn by all of the five Central American republics,
 to exert itself for the maintenance of the conventions. Nearly every
 complaint has been against the Zelaya government of Nicaragua, which
 has kept Central America in constant tension and turmoil.”

In the early part of the summer of 1908, a band of revolutionists
invaded Honduras from Salvador, and another band, led by General Lee
Christmas, an American soldier of fortune, attacked some of the towns
on the north coast of that republic. There was little doubt in the
minds of well-informed people that one or both of Zelaya’s principal
enemies, the Presidents of Guatemala and Salvador, were aiding the
revolutionists with a view to striking at him through the government
of Honduras. Zelaya at once prepared for war, and the treaties of
peace, hardly six months old, seemed to have been forgotten. The United
States and Mexico, however, made strong representations to all the
parties concerned, and Costa Rica, by a happy inspiration, suggested
to the newly established Central American Court that it interpose
its influence to prevent the threatened conflict. On July 8, this
tribunal addressed a telegram to the presidents of Guatemala, Salvador,
Honduras, and Nicaragua, urging them to submit their differences to
arbitration. On receipt of this communication, Nicaragua and Honduras
made formal complaints to the Court in accordance with the terms of the
Washington Conventions,--Honduras charging that Guatemala and Salvador
had fomented and assisted the revolution, and had failed to restrain
the Honduranean exiles residing in their territory, and Nicaragua
appearing as an interested party. The Court acted with promptness and
decision. The complainants were asked to submit proofs in support of
their charges, and Guatemala, Salvador, and Nicaragua were ordered to
refrain from any military movements which might suggest intervention
in the internal affairs of Honduras, and to reduce their forces to a
peace basis. These messages were transmitted and answered by telegraph,
so that within five days of the Court’s first note a _modus vivendi_
had been established and the immediate danger of a conflict had been
dispelled. After Guatemala and Salvador complied with the orders of
the Court, the revolution in Honduras subsided. The Court handed down
its decision on December 19, 1908. Salvador was absolved of all
responsibility for the revolution in Honduras by the votes of the
judges representing Salvador, Guatemala, and Costa Rica against those
of the judges from Honduras and Nicaragua. Guatemala was exonerated by
all except the representative of Honduras. This decision was severely
criticised by many persons in Central America, and it lost much of its
force from the fact that most of the judges had obviously voted as the
interests of the governments which named them dictated. There could
be no doubt, however, that the Court had averted a general Central
American war, and had thus done a signal service to the cause of
peace.[56]

By this time it was clear that the Washington Conventions would have
little effect so long as Zelaya continued to be president of Nicaragua.
When a revolution broke out against him in the fall of 1909, therefore,
it was regarded with more sympathy and favor by those who had been
interested in the work of the Conference than was consistent with the
spirit, at least, of the Conference’s acts. The attitude of the United
States and of the other Central American governments, as we shall see
in the next chapter, did much to make this uprising a success. Zelaya’s
defeat naturally involved the fall of Dávila a short time afterward.

After the elimination of Zelaya, the beneficial effects of the
Conventions began to show themselves somewhat more than had been
possible while the same conditions which had caused the disturbances
of the years 1906-7 had continued to exist. It became evident after
1910 that they marked a turning point in the relations of the five
republics. Since that year, and in fact, if we except occasional
attempts to render covert aid to revolutions, since 1907, there has not
been one international war in Central America. It would be difficult
to point to another ten years in the history of the Isthmus of which
this has been true. It is, moreover, hardly conceivable under present
conditions, and especially in view of the influence exerted in behalf
of peace by the United States, that there should be an armed conflict
between two or more of the five republics. The principal object of the
Washington Conference may therefore be said to have been realized.
The change which has taken place has been in large part due to the
fact that the five countries themselves have generally abided by the
provisions of the Treaty of Amity and the Treaty establishing the
Central American Court, for they have refrained from sending troops
to intervene in one another’s internal affairs, and have shown a
readiness which had been rare before 1907 to submit differences which
arose between them to settlement by diplomatic means or arbitration
rather than by a resort to arms. Their relations with one another
have undoubtedly been improved by the new spirit which the Conference
called into being, and their feeling of common nationality and their
readiness to co-operate for the realization of their mutual purposes
and ambitions have been strengthened by an increasing realization of
the external dangers which confront a Central America divided and
distracted by internal wars.

The Conventions did less to bring about stability of government in
the individual states, but even in this their effect has been by
no means negligible. Internal disorders cannot, of course, be done
away with while their fundamental causes remain; and the convention
providing that governments coming into office by the use of force
should not be recognized until after they had received the approval
of the voters at a popular election, and that the state constitutions
should be so amended as to insure alternation in power, have been
entirely disregarded. Nevertheless, revolutionary uprisings have been
made decidedly less frequent by the fact that several of the republics
have faithfully observed their obligations to exercise surveillance
over political exiles from neighboring countries and not to encourage
or permit the organization within their territories of attempts to
overthrow nearby governments. Enemies of the established order in one
of the republics now find it far more difficult than ever before to
secure the base of operations and the financial and military assistance
which are usually indispensable for the success of a revolt.

The measure of success which the work of the Conference has attained
has been very largely due to the energetic support by the United States
of the principles which it established. The government at Washington
has several times intervened diplomatically, or even by the use of
force, to prevent violations of the more important conventions, to
which it was practically, if not formally, a party. In doing this,
it has usually acted upon the invitation of one or the other of the
five republics. It has not hesitated to use any means necessary to
prevent unjustified attacks by one country on another, and it has
often brought strong pressure to bear to deter the signatory powers
from permitting their territory to be used as a base of revolutionary
operations against their neighbors. Sometimes North American influence
has apparently been the only factor which has secured respect for
the obligations imposed by the peace treaty, for one or two of the
parties which signed that treaty have shown little disposition to abide
by its provisions and have thus endangered the peace of the Isthmus
despite the fact that their neighbors were endeavoring to carry out the
provisions of the Conventions in good faith.

The Central American Court of Justice, which was to have been the
crowning work of the Conference, has not entirely fulfilled the
expectations of its founders. It cannot be said to be a tribunal
independent of and superior to the five governments, to which
any aggrieved person or state may appeal in the confidence of
securing justice. Several of the men appointed as judges have been
distinguished lawyers of conspicuous ability and undoubted integrity,
but at the same time there have been others, sometimes constituting
the majority of the Court, who have owed their nominations purely
to domestic political considerations. The honor and the large
salary attached to them have made the judgeships one of the most
attractive positions in the gift of the state governments, and there
has consequently been a keen competition for them among prominent
politicians, which has made it more difficult to select a man solely
on his merits. In addition to this, the importance of controlling the
Court as a means of influencing the international politics of the
Isthmus has made almost inevitable the appointment of men who could
be relied upon to vote as their governments wished when important
questions were at issue. The control exerted over the judges by the
powers which named them has prevented the Court from becoming in any
true sense independent, and has given it the position of a standing
commission of distinguished diplomats rather than that of a true court
of justice. This was perhaps inevitable, because the states of the
Isthmus, which had never known a judicial tribunal not subject in some
degree at least to official influence, could hardly grasp the idea of
an international body which would be entirely free from the dictation
of the authority which created it. There has been, therefore, no strong
force of public opinion to support the Court in asserting its right to
speak for the “National Conscience of Central America,” and even the
judges themselves have shown little inclination to seize and hold the
position of complete freedom from control with which the Washington
Conference had intended to invest them.

That this was true was evident in the first case that was brought
before the tribunal. In deciding the suit of Honduras and Nicaragua
against Guatemala and Salvador in 1908, each of the judges from the
four states interested voted, as we have seen, on the side supported
by the country which had appointed him. The general belief that the
dictation of the governments involved, rather than the facts as shown
by the evidence, had determined the decision of this question, did
much to injure the Court and to deprive it of public confidence. Its
independence suffered another serious blow as the result of the action
taken in another question which arose three years later after the
revolution in Nicaragua. The government which succeeded Zelaya failed
to contribute its share towards the expenses of the Court, in which
the judge appointed by the late administration was still sitting.
Now the salaries of the judges, according to the convention founding
the tribunal, were to be paid out of the latter’s treasury, from a
general fund to which each of the states contributed. In this way
the Conference had hoped to establish the financial independence of
the judges with respect to their governments, but its intention does
not seem to have been carried out, for the refusal of Nicaragua to
contribute her quota was regarded as the equivalent of withholding her
judge’s salary. The latter was thus forced to withdraw temporarily from
the Court, whereupon that body, instead of calling upon the substitute
provided by its constitution, admitted a new magistrate appointed
by the Conservative government of Nicaragua. This action entirely
disillusioned those who had hoped that the Court would be above party
politics and independent of outside pressure, for it established the
dependence of the judges on the governments that named them, and
constituted a recognition by the tribunal itself of the fact that its
members were representatives of the administration in power in their
respective countries, rather than magistrates whose tenure was secure
without regard to political changes during their legal term of office.

Since its action in averting a general war in 1908, the Court has been
more ornamental than useful. It has served as a symbol of Central
American unity, and it has kept alive the principle of international
arbitration, but it has actually decided very few cases. Three or
four suits have been brought against the government of one of the
countries by citizens of another, charging violation of treaty rights
or denial of justice, but the Court has refused in every instance to
adjudicate them, on the ground that the petitioners had not exhausted
the means of redress at their disposal in the countries where they
claimed that they had been mistreated. It also refused to intervene in
the internal affairs of Costa Rica in 1914 to determine the validity
of a presidential election. During the two revolutions in Nicaragua,
in 1910 and 1912, it endeavored to bring about an agreement between
the contending factions, and in 1912 it even sent a commission of
its members to confer with the rival leaders; but its efforts came
to naught in both cases because the Conservatives, who had the moral
support of the United States, were confident of their ability to defeat
their opponents, and therefore refused to agree to a compromise.

Its most recent, and in many ways its most important decisions, were
those handed down on September 30, 1916, and March 2, 1917, in the
suits brought against Nicaragua by Costa Rica and Salvador, which
claimed that their rights had been violated by the recent treaty
between that country and the United States. The Court refused to
declare the treaty void, saying that it had no jurisdiction over the
United States, but it held, nevertheless, that the complainants’ rights
had been violated, thus condemning Nicaragua’s action as illegal. This
case has raised a very serious question as to the extent to which the
authority of the tribunal will be recognized. Despite Nicaragua’s
refusal to appear as a party to the case or to accept the verdict,
there can be no doubt that the Court had jurisdiction over the question
at issue, or that Nicaragua is bound, by the Washington Conventions,
to respect its decision. Whether she will do so, however, seems very
doubtful. If she continues in her refusal, and is supported in her
attitude by the Government of the United States, the prestige of the
Court will be seriously impaired, if, indeed, its very existence is not
endangered. It is already rather unpopular because of the expense which
it involves and because it has accomplished so little, and it seems
probable that it would have been disbanded before this if the United
States had not exerted a strong influence in behalf of its continuance.

The measures planned by the Conference for promoting closer economic
relations between the five republics have only been carried out in
part, and their results have been far from satisfactory. Although the
provisions for granting citizens of each Central American state the
rights of citizens in all the others, and the mutual recognition of
professional degrees, patents, and copyrights, have undoubtedly done
much to encourage travel and commerce and to promote good feeling, the
more ambitious projects outlined in the Conventions have been almost,
if not quite, fruitless. Few of the educational institutions which
the Conference contemplated have been established, and those which
individual states have founded as a result of its recommendations have
not attained a truly international character because of the reluctance
of other governments to appropriate money for their support. The
Central American conferences met annually for five years, drawing up
conventions for the reform of the currency and fiscal systems, the
establishment of free trade, the adoption of a comprehensive unified
system of education, and the improvement of interstate communications;
but they were finally discontinued because none of their work had been
given any practical effect by the governments. The Central American
Bureau (Oficina Internacional Centroamericana) has perhaps been the
only institution provided for at the meeting in 1907 which has thus
far fully justified its creation. This office, which has been sort of
a clearing house for statistical and other data, has done much useful
work in distributing commercial information in Central America and
abroad, and has also served as an international agency for elaborating
plans for joint action on subjects of general importance. Its organ,
“Centro America,” is the most important periodical published in the
Isthmus.

It is still too early to attempt a final estimate of the results
of the Washington Conference, or to judge of the ultimate economic
and political effects of its work. Some of the stipulations of the
conventions adopted by it have never been carried out, and others have
been rendered obsolete by the events of the last ten years, but in the
main the agreements entered into are still in force, and are by no
means without practical value. The provisions restraining the states
from interfering in one another’s affairs and binding them to submit
their disputes to arbitration cannot but make a great change in the
political conditions of the Isthmus, if the five countries continue to
observe them and if the United States continues to exert its influence
to secure respect for them. The spirit of Central American unity, which
inspired the actions of the Conference, is growing stronger daily as
the states realize more fully their dependence upon one another and
the importance of presenting a united front to the world. It seems not
improbable that the meeting in Washington in 1907 will be looked back
upon in the future as a turning point in the history of the Isthmus,
marking a first and decisive step towards the elimination of the
international and internal wars which had hitherto been so frequent and
so destructive.


FOOTNOTES:

[45] Quoted by Critchfield (_American Supremacy_, Vol. II, p. 419) from
a speech made at Chautauqua.

[46] U. S. Foreign Relations, 1906, I, 834ff. Mexico, _Boletín Oficial
de la Secretaría de Relaciones Exteriores_, Vol. 22, p. 235.

[47] Nicaragua, _Mem. de Relaciones Exteriores_, ’07, p. xxvii, 5.

[48] For the text of these conventions, see U. S. For. Rel., ’06, I, p.
857.

[49] U. S. Foreign Relations, ’07, p. 606; Nicaragua, _Memoria de
Relaciones Exteriores_, ’07, most of which is devoted to an account of
the events here discussed.

[50] For the text of this treaty, see Nicaragua, _Memoria de Relaciones
Exteriores_, ’07, p. 405.

[51] Annual message to Nicaraguan Congress, Dec. 1, 1907.

[52] Article II of preliminary protocol, signed Sept. 17, 1907. U. S.
For. Rel., ’07, II, p. 644.

[53] Mr. Buchanan’s report, with the text of the conventions, is
printed in U. S. For. Rel., ’07, pp. 665-723.

[54] After the destruction of Cartago by an earthquake in 1910 it was
moved to San José.

[55] See the article by Professor P. M. Brown, at the time U. S.
Minister to Honduras, in the American Political Science Review, Vol.
VI, Supplement, p. 160.

[56] For an account of the case, in addition to the official report of
the Court, see the Am. Journal of International Law, Vol. II, p. 835.




                              CHAPTER XI

          THE INTERVENTION OF THE UNITED STATES IN NICARAGUA

 The Revolution of 1909--Attitude of the United States--Victory of
 the Conservatives--Financial and Political Difficulties Confronting
 the New Government--The Dawson Agreement and the Loan Treaty--Reform
 of the Currency, Establishment of the Customs Collectorship, and
 Reorganization of the Foreign Debt by the American Bankers--The
 Joint Claims Commission--Failure of the Loan Treaty--The Revolution
 of 1912 and the Intervention of the United States--Support of the
 Government Since 1912 by American Marines--New Loans and Purchase of
 the Railroad and Bank Stock by the Bankers--The Election of 1916--The
 Canal Treaty--Objections of Costa Rica and Salvador--Decision of the
 Central American Court--Opposition to Our Policy in Nicaragua and
 the Influence of Our Policy on Our Relations with the Other Central
 American States.


In October, 1909, a band of Nicaraguan Conservatives started a
revolution at Bluefields. They won over Juan J. Estrada, the governor
of the province of which that city is the capital, by proclaiming him
provisional president, and thus secured control of most of the East
Coast of the Republic. Money and supplies were obtained from some of
the other Central American countries, and also from the foreign colony
on the Coast, whose interests had been injured by certain concessions
which President Zelaya had recently granted. This assistance, and the
protection afforded by the wild country which separated Bluefields
from the rest of the Republic, enabled the revolutionists to raise a
considerable army and to organize a _de facto_ government before the
constituted authorities were able to attack them.

The uprising was from the first regarded with sympathy throughout
Central America and in Washington, for Zelaya’s continual encouragement
of revolutions in other countries had made him obnoxious to all of his
neighbors, and had led to a general belief that his administration was
the principal obstacle to the establishment of peace in the Isthmus.
The relations between Nicaragua and the United States had been strained
for some time, because of the friction caused by Zelaya’s violations
of the Washington Conventions, and because there had been a number of
unpleasant diplomatic incidents, including the prolonged dispute over
the so-called Emery claim,[57] which had culminated in the withdrawal
of the American minister from Managua. Nevertheless, both the United
States and the other Central American countries remained at first
ostensibly neutral in the contest. In November, however, the execution
by Zelaya’s troops of two American soldiers of fortune, who held
commissions in the revolutionary army, caused President Taft to break
off diplomatic relations with the Liberal administration entirely, and
to give the revolution his open, if indirect, support.

The attitude of the American government was set forth in a note
addressed by Secretary of State Knox to the Nicaraguan Chargé
d’Affaires at Washington. “Since the Washington Conference of
1907,” it stated, “it is notorious that President Zelaya has almost
continuously kept Central America in tension and turmoil.” The Liberal
administration was described as “a regime which unfortunately has been
a blot upon the history of Nicaragua.” The murder of American citizens
was but the culmination of a series of outrages which had made friendly
relations between the two governments impossible. Moreover, the United
States was convinced “that the revolution represents the ideals and
the will of a majority of the Nicaraguan people more faithfully
than does the Government of President Zelaya.” The revolution, the
Secretary said, had already attained serious proportions on the East
Coast, and new uprisings were reported in the West. This tended to
produce “a condition of anarchy which leaves, at a given time, no
definite, responsible source to which the Government of the United
States could look for reparation for the killing of Messrs. Cannon and
Groce, or indeed, for the protection which must be assured American
citizens and American interests in Nicaragua. In these circumstances,
the President no longer feels for the Government of President Zelaya
that respect and confidence which would make it appropriate hereafter
to maintain with it regular diplomatic relations, implying the will
and the ability to respect and assure what is due from one state to
another.” Both factions were to be held responsible for the protection
of American life and property in the sections under their control. The
United States would wait, before demanding reparation for the murders,
until it saw whether or not the government which was in power after
the revolution was “entirely dissociated from the present intolerable
conditions.” Meanwhile it reserved the liberty to take such action as
it saw fit to preserve its interests, and the State Department would
continue to receive unofficially both the former Chargé d’Affaires and
the representative of the revolution.[58]

This note brought about Zelaya’s fall, for he realized that he could
not hope to maintain himself against the open opposition of the
United States. After vainly attempting to come to an understanding
with Secretary Knox, the Nicaraguan ruler yielded to the advice of
President Díaz of Mexico and to the pleas of his friends at home, and
resigned his position to Dr. José Madriz, one of the most distinguished
citizens of Leon. The Liberals had hoped to placate the United States
by making president a civilian of known ability and honesty, but their
expectations were disappointed, for President Taft refused to recognize
the new executive.[59] The revolutionists also declined his offer to
open peace negotiations.

For a time, nevertheless, it appeared probable that President Madriz
would be able to restore order. On February 22, 1910, a revolutionary
army which attempted to invade the lake region was defeated and almost
destroyed, and Estrada and the other leaders, with the remnants of
their troops, were forced to retire to Bluefields. The government
at once prepared to attack that city vigorously by land and by sea,
proclaiming a blockade of the port, and occupying the Bluff, where the
customs house was situated. The final reduction of the rebel army,
however, proved impossible. The officers of the American warships,
which had been sent to the port at the outbreak of the war, refused
to allow the blockading squadron to interfere with American ships or
ships carrying American goods, and denied the right of the Government
officials to collect customs duties at the Bluff, permitting Estrada to
establish a new customs house in the territory under his control. When
the Liberal commanders, thus prevented from cutting off the supplies or
the revenues of the insurgents, prepared to take the town by assault,
the American commander forbade them to attack it from the land side,
and threatened to sink the gunboats if they shelled the rebel trenches.
This action, taken on the ground that a bombardment or fighting in the
streets would destroy the property of Americans and other foreigners,
rendered certain the defeat of the Government army, which could not
long remain encamped far from its base of supplies in the hot and
unhealthful coast district outside of the city. Within a few weeks the
besiegers were forced to withdraw into the interior.

The Liberals in control at the capital, who had already lost the
sympathy of many of Zelaya’s former supporters by their wholesale
political arrests and their partisan policy, were completely
discredited by their failure to take Bluefields, and their government
collapsed entirely when Estrada again approached the interior with
a reinforced army. There were new outbreaks at several points in the
lake region which it was impossible to suppress. Madriz left Managua
on August 20, 1910, and the revolutionists entered the city on the
following day.

The revolutionary forces were composed mainly of adherents of the
wealthy Conservative families of Granada, but there were also many
Liberals, some of whom had been prominent leaders in the revolt, who
had joined the uprising either from personal hostility to Zelaya or
from the hope of gaining something for themselves. The new provisional
president, Juan J. Estrada, was a member of the artisan class of
Managua, who had been raised by Zelaya to the position of governor of
the East Coast province, and whose leadership had been accepted by the
Conservatives only because the success of their plot at the beginning
depended upon his betraying his patron and turning over to them the
garrison at Bluefields. Another Liberal, General José María Moncada,
who had for several years been an opponent of Zelaya, became minister
of _gobernación_ in the new government, and was one of the most trusted
advisors of the provisional president. The minister of war, General
Luís Mena, had formerly been a follower of the Chamorro family, but
his military exploits during the recent struggle and his influence
with the army had given him a prestige which threatened to eclipse
that of his former patrons, and had made him the most powerful figure
in the administration. None of these men were liked or trusted by the
old Granada aristocracy, who had hoped through the success of the
revolution to regain the power which they had enjoyed during the thirty
years before Zelaya became president. Even the _Granadinos_, however,
were not entirely united among themselves, for there was no little
jealousy between some of the great families. General Emiliano Chamorro,
who had for many years been the leader of Conservative revolts against
Zelaya, had a strong following among the members of his party in all
sections of the Republic, but he was opposed by a faction headed by
the Cuadra family, who subsequently became very powerful through their
alliance with President Adolfo Díaz. It is necessary to bear in mind
these rivalries between the different leaders and groups in the new
administration, in order to understand the political difficulties which
confronted it during the two years following its accession to power.

The agreement by which the Liberals had turned over the government to
the revolutionary leaders had provided for a general amnesty, for a
free election to be held within one year, and for the recognition of
the debts contracted by both parties during the struggle. Little or
no attention was paid to the two former articles, but the debts of
both parties,--to members of the revolutionary forces,--were fully
recognized, and, in so far as the condition of the treasury permitted,
paid. Each person who had taken part in the revolt received fifty
hectares (about 123 acres) of the national lands, and vast sums were
awarded to prominent members of the Conservative party who had suffered
under the Zelaya regime from confiscation or forced loans, or even from
“moral” injuries, such as the death of a close relative. A large sum
which had been left in the treasury by Dr. Madriz was soon exhausted,
and new issues of unsecured paper money were resorted to. By April,
1911, the government admitted that the already depreciated currency
had been further inflated to the extent of 15,000,000 pesos, and in
the autumn of the same year 10,000,000 pesos more were secretly put
into circulation.[60] Some of this money was necessarily used to meet
the current expenses of the government, for the revenues had suffered
a serious decline since the revolution, but the greater part seems to
have gone to those in power and to their friends and relatives.

The emptiness of the treasury, accompanied by the inflation of the
currency to twice its former quantity, made worse the already desperate
economic situation of the country. The revolution had paralyzed
agriculture and commerce, not only by taking thousands of workers
away from their fields and shops, but also by the actual destruction
of cattle and crops, and by the complete disorganization of the
transportation system. The discontent caused by these conditions made
the position of the new government very precarious, for the Liberals,
who outnumbered the Conservatives in the country at large, had no
intention of accepting their defeat as final. They felt that they had
been beaten, not through the superior strength of their enemies, but by
the intervention of the United States; and they were encouraged to keep
up an active opposition to the government by the hope of returning to
power through the dissensions which soon appeared among the different
chiefs of the Conservative party. The opposition press, which for a
few months enjoyed and abused an unwonted liberty, kept party feeling
at the boiling point, and the bitterness between the two factions was
greatly intensified by a bloody clash between government troops and the
members of a peaceful Liberal parade at Leon in November, 1911. The
Conservative administration, bankrupt and divided within itself, seemed
for a time utterly unable to cope with the situation.

The Republic was saved from falling into a condition of complete
anarchy only by the assistance rendered to the new government by
the United States. In October, 1910, the State Department sent Mr.
Thomas C. Dawson to Managua to study the situation and to bring about
an understanding between the Conservative leaders. Through his good
offices, the so-called Dawson agreement was signed on November 5 by
the principal leaders of the revolution. This arrangement provided
for the continuance of Estrada at the head of the government, for the
appointment of a commission containing American members to pass on
all claims against the government arising out of the recent war and
out of the cancellation of concessions granted by Zelaya, and for the
negotiation of a loan treaty in the United States.[61] A constitutional
convention which met on December 31 elected Estrada provisional
president for two years, and Adolfo Díaz vice-president. The new
administration was at once officially recognized by the United States.

Estrada’s position was by no means an easy one. He could rely neither
upon the military power, which was entirely in the hands of General
Mena, nor upon the Constitutional Convention, which was composed
chiefly of followers of Emiliano Chamorro. The rival ambitions of
the different leaders soon broke down the political arrangements
established by the Dawson agreement. When the Convention framed a
constitution which would have made itself rather than the president
the actual authority in the state, Estrada dissolved it, thus breaking
with Chamorro, who left the country. Estrada later attempted to remove
from office and imprison General Mena, who had used his control of the
army to fill a new constituent assembly with his personal followers.
The military leaders remained loyal to their chief, and prepared to
secure his release by force. Only the intervention of the United States
minister averted fighting in the streets of Managua. Estrada and
Moncada, the minister of _gobernación_, resigned, and Díaz succeeded to
the presidency, with the consent of Mena. The minister of war was for
some months the real head of the government.

Meanwhile the plans for the financial reorganization of the Republic,
which had also been a part of the Dawson agreement, had assumed
definite form. Early in 1911, a study of the situation had been made
by a financial advisor appointed by Estrada at the suggestion of the
State Department. The pecuniary difficulties which confronted the new
government were growing very serious. Foreign creditors, supported by
their governments, were urgently demanding the payment of interest
on the bonded debt, and several claimants were seeking compensation
for concessions which the revolutionists had cancelled or violated.
The treasury was practically empty, and the repeated issues of paper
money which had been resorted to to provide funds had disorganized the
currency to such an extent that fluctuations in the rate of exchange
made foreign commerce almost impossible.[62]

On June 6, 1911, a treaty was signed with the United States, by which
that country agreed to assist Nicaragua in securing a loan from
American bankers for the consolidation of its internal and external
debt and for other purposes. The loan was to be secured by the customs
duties, which were to be collected, so long as the bonds remained
unpaid, by an official appointed by Nicaragua from a list presented
by the fiscal agent of the loan and approved by the President of the
United States.[63] The treaty was similar in every way to that signed
in January of the same year by the United States and Honduras, and,
like it, was never ratified by the United States Senate. On September
1, while it was still under consideration by the Senate, contracts
were signed by which Brown Brothers and Company and J. and W. Seligman
and Company, of New York, agreed to lend the Republic fifteen million
dollars when the treaty went into effect. The bankers were to purchase
the Republic’s bonds, bearing five per cent interest, at 90¹⁄₂ per cent
of their face value, and the money thus received was to be employed
for the reform of the currency, the construction of railroads from the
interior to Matagalpa and to the Atlantic Coast, and the refunding
of the external and the internal debts. As there was little hope of
immediate action on the loan treaty, for the United States Congress
had adjourned, the bankers agreed to purchase of the Republic six per
cent treasury bills to the amount of $1,500,000, in order to provide
funds for the most needed reform, an immediate reorganization of the
currency. These were guaranteed by the customs revenues, which were to
be administered until the notes were retired by a collector general
designated by the bankers. The Republic agreed that any dispute
relating to this contract should be referred to the Secretary of State
of the United States for final decision. The treasury bills were to be
retired at once if the fifteen-million-dollar bond issue took place.[64]

The product of this loan was spent by the bankers for the benefit of
the Republic. The reorganization of the monetary system was intrusted
to the National Bank of Nicaragua, an institution incorporated in the
United States with capital supplied from the loan. This was to be
managed by the bankers until such time as the treasury bills should
be paid. On March 20, 1912, a new currency law was passed by the
Nicaraguan Congress, putting into effect a plan which had been worked
out by two distinguished American financial experts, who had been sent
by the bankers to report on the situation.[65] A unit called _Córdoba_,
equal in value to one dollar United States currency, was instituted,
and the National Bank was authorized to issue paper and silver money
of the new denominations in such quantities as it might consider
expedient. This was to be exchanged for the old _billetes_ at a rate
to be fixed by agreement between the President of Nicaragua and the
bankers. The bank-notes which were to form the greater part of the new
circulating medium were to be kept at par by the sale of drafts against
a reserve fund maintained in New York by the Republic with its own
money, but managed by the National Bank. The latter was to have full
control of the currency reform as the agent of the Republic, and was to
have an exclusive right to issue paper money.

Meanwhile it had been found that additional funds would be necessary
if the currency reform were to be carried out, because the secret
issues of paper money made during the autumn of 1911, even after the
signature of the treasury bills agreement, had greatly increased the
probable expense of the reform. The bankers therefore agreed to open a
credit of $500,000 to provide the reserve fund contemplated in the plan
of reorganization, and agreed also to lend the Republic an additional
$255,000 in small monthly amounts for current expenses. Both of these
advances were to bear interest at the rate of six per cent, and were
to be repaid when Nicaragua received the money which was due to it, as
will be explained below, from the Ethelburga Syndicate. Payment was due
on October 15, 1912, but the bankers agreed to grant an extension of
time both for these loans and for the treasury bills, if the Republic
were then unable to pay them. In return, the Republic agreed to cut
down its budget and to raise the customs duties by collecting them at
a new rate of exchange. At the same time, it granted the bankers an
option on fifty-one per cent of the stock in the National Railway, the
management of which was to be turned over to a corporation formed in
the United States. This company was to be entirely controlled by the
bankers until they had received all money due them from the Republic.

As soon as the plan for the currency reform was completed the
government began to purchase and destroy the old paper money, in order
to reduce the rate of exchange, for the expert commission had decided
that a conversion at the prevailing rate of twenty to one would work
a serious injustice to some classes in the community in view of the
rapidity with which the rate had risen during the past twelve months.
This proceeding, although justifiable from a broad social point of
view, involved a heavy expense to the government, and at the same
time proved extremely profitable to those who had shared in the
distributions of paper money which had taken place since the victory
of the revolution. The National Bank was established in the summer
of 1912, and early in 1913 the new money was in circulation. The old
_billetes_ were gradually retired, being exchanged at a fixed rate of
12¹⁄₂ to one. In November, 1915, they ceased to be legal tender.

Meanwhile the Customs Collectorship had been installed in December,
1911, under the direction of Colonel Clifford D. Ham. This gentleman
has administered the service ever since, in accordance with the terms
of the treasury bills contract and of the later agreement with the
holders of the Republic’s foreign debt. The Collector General, in
his own words, has regarded himself not so much as an employee of
the Nicaraguan Government as a “trustee, with obligations to four
parties--the Republic of Nicaragua, the Secretary of State of the
United States, certain citizens of the United States, and certain
citizens of England.”[66] In accordance with this view, he has
declined to recognize the right of the Tribunal of Accounts and other
governmental agencies to exercise any authority over him, and he has
been in the main supported in this position by the higher Nicaraguan
officials. By the terms of its arrangements with the bankers, the
Republic is debarred from reducing its tariff without the latters’
consent, or from taking any other action which might lessen the value
of the guarantee afforded by the customs revenues. The collectorship,
and the readjustment of the foreign debt which its establishment made
possible, may perhaps be said to be the one conspicuously successful
feature of the American bankers’ operations in Nicaragua. The Collector
General, who has entire power to appoint and remove his subordinates,
has reorganized and reformed the service, and has succeeded in
eliminating most of the corruption and inefficiency which had prevailed
under native administration. Foreign importers and customs agencies
who had enjoyed special privileges or improper exemptions have in
some cases opposed the new regime very bitterly, but the majority of
the business men of the country have had good reason to welcome the
substitution of a fair system for one which exposed them to continual
extortion and fraud. The amount of revenue secured, in proportion to
the imports, has been greatly increased, although the paralyzation
of trade during the war of 1912 and the commercial stagnation which
has prevailed since the beginning of the European war have prevented
the receipts from reaching an amount much greater than that secured
in the days of Zelaya. Nevertheless, the collections during 1913,
the only year since the establishment of the new system in which
normal conditions prevailed, were the largest in the history of the
Republic.[67]

Negotiations with the holders of the Republic’s foreign debt were
completed in the first months of 1912, when an arrangement highly
beneficial to both parties was brought about by the American bankers,
acting on behalf of the Nicaraguan Government. Zelaya had refunded the
then existing foreign debt in 1909, by placing bonds to the amount of
£1,250,000 at seventy-five per cent of their face value, bearing six
per cent interest, with the Ethelburga Syndicate in London. As the
service of this loan had been suspended after the revolution, and the
British Government had already intervened diplomatically on behalf
of the bondholders, the need for a readjustment had been pressing. A
contract was signed on May 25, 1912, between the American bankers and
the Corporation of Foreign Bondholders, by which the latter agreed to
a reduction of the interest on the loan to five per cent, on condition
that the interest and amortization charges be made a first lien on
the customs receipts of the Republic, and that those receipts should
continue to be collected under the control of the bankers. This
agreement not only effected a saving in money and an improvement in the
credit of the Republic, but it also secured for the government the use
of a sum of £371,000, representing part of the proceeds of the sale of
the 1909 bonds, which had been held in London when the service of the
loan had been suspended. About one-third of this money was used for the
payment of interest already due, but the remainder was available, in
accordance with an agreement made on the same date between the American
bankers and the Republic, for the fortification of the currency reform
and the repayment of a part of the obligations of the government to the
bankers.

The Claims Commission provided for by the Dawson agreement began its
sessions on May 1, 1911. It was authorized by legislative decree to
adjudicate without further appeal all unliquidated claims against the
government, including especially those arising from the late war and
from the cancellation of concessions and other contracts made by former
administrations. Of the three commissioners, one was a Nicaraguan
citizen appointed by the Nicaraguan Government and the other two
were Americans, one named by the Republic on the recommendation of
the United States and the other designated by the State Department.
The commission continued its labors until late in 1914, and passed
on 7,908 claims for a total of $13,808,161 gold. Its awards amounted
to $1,840,432.31, about two-thirds of which was for small claims
presented by natives. The American holders of concessions, who demanded
$7,576,564.13, received only $538,749.71. The original intention had
been to provide for the payment of these awards with the money received
from the proposed fifteen-million-dollar bond issue. It was impossible
after the failure of the loan treaty for the government to do this,
but a sum of $158,548 was nevertheless provided from the customs
receipts for the payment of 4,116 of the smallest claims, which were
mainly for losses of livestock and similar property by poor persons
during the civil wars of 1909-10 and 1912.[68] Even though the plan
for the refunding of the internal debt could not be carried out, it
was a decided advantage both for the government and for the holders of
the claims to have them passed on by an impartial tribunal, in order
that the former might know definitely how much it owed, and that the
latter might secure the recognition of their claims as acknowledged
obligations of the treasury.

These measures had been carried out by the State Department, and by
the bankers at the request and with the co-operation of the State
Department, in anticipation of the ratification of the loan treaty by
the United States Senate. Their effect was practically to put into
operation the most important features of that agreement,--the customs
collectorship, the adjustment of the external debt, and the reform
of the currency,--despite the opposition to the State Department’s
policy which defeated the treaty in the Senate. The rejection of the
treaty, however, made it impossible to secure money for the complete
execution of the reforms which had been inaugurated by the Treasury
Bills Agreement, for the bankers were naturally unwilling to make the
large loan which had been planned for without an adequate guarantee
of the protection of their government. Their situation and that of
the Republic was thus made very difficult. The foreign debt remained
in English and French hands; the creditors of the government at home
remained unpaid; the projected railroads could not be built; and the
general improvement in the condition of business and agriculture, which
had been expected to result from the solution of the government’s
financial difficulties and the payment of its obligations to planters,
merchants, and officials, did not take place. The poor credit of the
Republic made it impossible for it to secure additional loans from the
bankers except on onerous terms, while its pressing necessities forced
it to embark on a hand-to-mouth policy of mortgaging or selling all of
its available resources in order to secure funds. The bankers, on the
other hand, had been drawn into a business which promised little profit
or credit to themselves, but from which they could not well withdraw.
Instead of underwriting a large bond issue, and aiding in an ambitious
project for the economic regeneration of Nicaragua, as they had
expected to when they first entered into the contracts of September,
1911, they have become involved deeper and deeper in the financial
support of a virtually bankrupt government.

While these financial operations were being carried out, the political
situation had become more threatening than ever. General Mena had
caused the Assembly to elect him President of the Republic, in
October, 1911, for the term beginning January 1, 1913, notwithstanding
the protests of the United States Minister and of the Granada
Conservatives, who asserted that this action was a violation of the
Dawson agreement. The strength of the opposition to this proceeding
encouraged President Díaz to attempt to throw off the control of the
minister of war. On July 29, 1912, he summarily removed the latter from
office, and appointed Emiliano Chamorro general-in-chief of the army.
Mena fled to Masaya, with a large part of the troops and of the city
police of the capital. Most of the national stores of artillery and
ammunition had been gathered in Masaya and in Granada, where Mena’s son
was in command of the barracks. The revolutionists were reinforced by
a large number of Liberals, for Benjamín Zeledón, formerly minister of
war under Zelaya, assumed the leadership of one of their armies, and
the people of Leon revolted and seized control of that city and of the
neighboring provinces. Mena’s distrust of his old enemies, however, and
his refusal to send arms and ammunition to the Leon leaders, prevented
effective co-operation between the two factions, and probably saved the
government from defeat.

As it was, the government could not expect to hold out long, with
little ammunition and few troops, while the rebels controlled
practically all the approaches to the capital. The United States,
however, could hardly permit the overthrow of the Conservative
authorities. Mena, who had fallen seriously ill, had been forced to
let the leadership of the revolution pass almost completely into the
hands of Zeledón and the Leon chiefs. If Zelaya’s followers regained
control of the government, all of the efforts of the State Department
to place Nicaragua on her feet politically and financially would have
been useless, and the interests of the New York bankers, who had
undertaken their operations in the country at the express request
of the United States Government, would be seriously imperiled. The
American Minister, therefore, demanded that President Díaz guarantee
effective protection to the life and property of foreigners in the
Republic. The latter replied that he was unable to do so, but asked
the United States to assume this responsibility itself. In compliance
with this request, American marines landed at Corinto, and assumed
control of the National Railway, which ran from that port through
Leon, Managua, and Masaya to Granada. This, as we have seen, was the
property of the government, but was held and operated by the bankers as
a partial guarantee of their loans. By September 8, traffic had been
resumed between Corinto and Granada, although the rebels still held
all of the more important cities along the route with the exception
of Managua. On September 18, the United States Minister, Mr. Weitzel,
made public an official declaration that the United States intended to
keep open the routes of communication in the Republic and to protect
American life and property. His government, he said, had been opposed
to Zelaya not only as a person but as a system, and it would exert
its influence, at the request of President Díaz, to prevent a return
to that system and to uphold the lawful authority. This pronouncement
disheartened the revolutionists and caused many to withdraw from the
uprising. On September 25, General Mena surrendered at Granada to
Admiral Sutherland, the commander of the American forces, and the
rebels were confined to their positions at Masaya and Leon. A few days
later, Admiral Sutherland ordered Zeledón to evacuate the Barranca
Fort, overlooking Masaya, on the ground that his position threatened
the railway. When the Liberal leader refused, American troops stormed
and took the position. The war soon afterwards came to an end with the
surrender of Leon to another American officer. Seven American marines
and bluejackets had lost their lives.[69]

After the revolution, it was necessary to decide upon the election of a
president for the term 1913-1917. The greater part of the Conservative
party supported the candidacy of General Chamorro, but Díaz, who
controlled the machinery of the administration, desired to succeed
himself in power. An agreement was effected through the intervention of
Mr. Weitzel, who insisted that the _Chamorristas_ accept Díaz, while
Chamorro was given the position of minister at Washington. At the
election, which was held while a large part of the American marines
were still in the country, the three or four thousand voters who were
allowed to participate unanimously approved the official ticket, which
was the only one in the field.

Since 1912, the Government of Nicaragua has practically been maintained
in office by the support of the United States, for a legation guard
of one hundred marines is kept in one of the forts at Managua and a
warship is stationed at Corinto as reminders that the United States
will not permit another uprising against the constituted authorities.
One hundred well-trained and well-equipped soldiers are in themselves
no inconsiderable force in a country like Nicaragua, and their
influence is increased by the recollection of the events of 1912.
Without their moral backing, the administration could hardly have
remained in power. Although President Díaz dealt with his opponents
more justly and humanely than has been customary in Nicaragua, and
showed great liberality in his attitude towards the expression of
political opinion in the press and in private conversation, his
administration did not have the whole-hearted adherence of any of the
larger political groups, and was for this reason decidedly unpopular.
Not only the Liberals and the friends of General Mena, but even most
of the Conservatives, were dissatisfied. General Chamorro himself
co-operated loyally with the president, but he was unable to prevent
many of his followers from conspiring to place their own faction in
power. There were, therefore, continual intrigues and frequent petty
revolts, which lessened the government’s prestige and exhausted its
energy and resources. The outbreak of another civil war was prevented,
apparently, only by the determined attitude of the United States.

Two of the causes which contributed most to the weakness of the Díaz
government were its inability to meet its current expenses and the
increasing unpopularity of its relations with the New York bankers.
At the time of Mena’s revolt, the difficulties confronting the
treasury had seemed in a fair way to solution, but the expense and
the loss of revenue due to the war made matters worse than ever. The
government was forced to ask further advances from the bankers, and
to turn over to them, as security, and in the hope of improving its
financial situation thereby, the collection of all of its internal
revenues.[70] These were administered by the National Bank for a year,
after which the arrangement was abandoned as unsatisfactory, because
of the difficulties encountered by the American administrators in
obtaining the enforcement of the fiscal laws and the prevention of the
clandestine manufacture of _aguardiente_. It was reported in October,
1916, however, that the internal revenues had again been taken over by
the bankers.

As there was no improvement in the financial condition of the Republic,
contracts providing for further assistance by the bankers were signed
on October 8, 1913. The latter agreed to purchase another issue of
treasury bills to the amount of one million dollars, bearing interest
at six per cent, and at the same time bought fifty-one per cent of the
stock of the National Railway for one million dollars, thus becoming
the owners of property which they had in fact held and operated for
more than a year. The Republic agreed to employ a part of the two
million dollars thus received in the payment of all its outstanding
obligations to the bankers and to the National Bank, including the sums
still due on the 1911 treasury bills and the supplementary loans, and
in the addition of $350,000 to the currency reserve. At the same time
it was to subscribe $47,000, while the bankers subscribed $153,000,
for an increase in the capital of the National Bank, which was to be
raised from $100,000 to $300,000. The remainder of the money, amounting
approximately to three quarters of a million dollars, went to the
Republic for its current expenses. Since the bankers acquired fifty-one
per cent of the stock of the National Bank as well as of the Railway
by these contracts, it was arranged that they should name six, the
Nicaraguan Minister of Finance two, and the United States Secretary of
State one, of the directors of both corporations.

Before these new treasury bills fell due, the outbreak of the European
war put an end to all hope for the immediate financial rehabilitation
of the Republic. The economic situation of the country at large was
already very bad before this final disaster occurred. The exhaustion
and demoralization which had resulted from two unusually destructive
civil wars, combined with the reduction of military forces in the
rural districts from motives of economy, had led to a great increase
in highway robbery and crime, which caused general unrest and
discouraged internal commerce. Matters were made worse by the continual
political agitation. The crops, moreover, had been severely damaged by
droughts and by a plague of grasshoppers, and in many districts the
agricultural population had been reduced to a pitiable state of want.
The merchants in the cities had suffered great losses from the failure
of the Government to pay for large amounts of supplies purchased or
requisitioned by it, and from the inability of the treasury to meet the
salaries of the public employees, who made up a large part of the city
population. When the outbreak of the war cut off the European credits
upon which both the coffee growers and the merchants had depended,
foreign and domestic commerce came almost to a standstill. The income
of the national treasury was greatly reduced, for the receipts from the
customs duties declined from $1,730,603.22 in 1913 to $1,237,593.33 in
1914 and $789,716.76 in 1915, and the other revenues decreased at the
same time to an alarming extent. It was manifestly impossible for the
government to meet even the most necessary of its current expenses,
if it had to discharge its obligations to foreign creditors at the
same time, and it would have faced absolute bankruptcy had not the
bankers again come to its assistance. The payment of interest on the
treasury bills was suspended, by contracts made in October, 1914, and
the bankers used their good offices to secure a similar suspension of
charges on the English debt, in order that the Republic might use all
of the reduced customs revenue for its own needs. These arrangements
have since been renewed from time to time for short periods, always
on condition that the Republic should so far as possible resume the
service of the loans if it should receive the three million dollars due
to it in accordance with the canal treaty with the United States.

The conditions created by the war put a severe strain upon the new
currency system. The replenishment of the reserve fund became well-nigh
impossible just at the time when the disorganization of international
credit, which forced exchange upon European centers to an unprecedented
figure throughout the Western Hemisphere, caused an abnormal drain upon
it. The National Bank, therefore, was forced to suspend the sale of the
drafts by which the par value of its notes had been maintained. At the
same time there was a strong popular demand for new issues of money
to supply funds for the government and to finance the coffee growers,
who were unable to secure the usual advances from abroad for moving
their crop. As a result of this, a contract was signed on December
2, 1914, by which a new issue of 1,500,000 Córdobas was provided
for,--C1,000,000 to be used for making loans to agriculturalists and
exporters, and C500,000, which was to be guaranteed by the proceeds of
a new capital tax collected by the National Bank, for the payment of
salaries and other obligations of the government. At the same time,
the Bank was authorized to pay its depositors with additional notes,
secured by mortgages and other securities. All of these issues were to
be retired as rapidly as the loans were repaid and the profits of the
capital tax were received. The interest upon the loans to planters and
merchants, which was to be at the rate of twelve per cent, was divided
between the government and the Bank,--an arrangement highly profitable
to the latter, considering that the notes were exclusively obligations
of the Republic. So long as these issues were still in circulation,
the Bank was not to sell drafts against the reserve fund, and the
government was to be relieved of its obligation to maintain that fund
at the amount required by previous contracts. The new issues of paper
and the suspension of the sale of exchange constituted of course a
temporary abandonment of the gold standard. The premium on New York
drafts rose to thirty per cent during the first months of 1915, but in
May of that year it was greatly reduced by the operations of an English
bank in Managua. Some months later, the National Bank itself resumed
the sale of drafts with its own funds, thus raising its notes again to
their par value.

Early in 1916, all parties in the Republic turned their attention
to the coming presidential election. In the campaign which preceded
this, the various political groups enjoyed a very unusual amount of
freedom in carrying on their propaganda, and each one founded clubs
and published numerous newspapers to support its candidate. The
chief factions which took part in the campaign were: the government
party, which had few friends outside of official circles; the old
Conservatives, with their chief strength in Granada, who were in the
main enthusiastic followers of Emiliano Chamorro; and the Liberals,
who, though by no means entirely at harmony among themselves, were
nevertheless united in their determination to regain control of the
government. There were also one or two lesser groups, which had hopes
of coming into power as the result of a compromise between the more
extreme parties. The Liberals, with the support of the great city of
Leon, and with a strong following in each of the other important cities
except Granada, were probably more numerous than all of their opponents
together. It was clear from the beginning, however, that the outcome
of the election would depend not so much upon the will of the majority
as upon the attitude assumed by the United States. The administration,
which had made Dr. Carlos Cuadra Pasos the official candidate,
obviously intended to perpetuate its own regime, relying on the support
of the American marines to prevent armed opposition to its plans. The
Chamorristas, on their side, believed that the United States would
insist that the Government accept their candidate, who had won general
respect during his service as minister at Washington. The security of
American interests in Nicaragua was in very large measure dependent
upon the continuance in power of the Conservative party, of which
Chamorro was undoubtedly the most popular leader; and the latter had
strong additional claims to consideration because of his loyal support
of the constituted authorities, after the disappointment which he had
suffered in 1913, and despite the discontent of his own followers with
the Díaz administration.

The Liberals, on the other hand, believed that any fair solution of the
situation would restore them to power. They unquestionably constituted
a majority of the people of the Republic, and they were on the whole
more united than their Conservative opponents. For several years they
had been endeavoring to secure the withdrawal of the marines from
Nicaragua, believing that they would easily obtain control of the
government as soon as the existing administration should be deprived of
foreign support; and they had been carrying on an extensive campaign
in Central America and in political circles in Washington with a view
to arousing sentiment against the intervention of the United States
in the internal affairs of Nicaragua. Their leaders desired first of
all to secure the withdrawal of the American marines, but many were
willing, if this proved unobtainable, to accept American supervision
of the presidential election, which would have reduced somewhat the
possibility of the exercise of pressure and the employment of fraud
by the government. Whatever chance the Liberals might once have had
to secure the recognition of their right to participate on equal
terms in the election, however, was forfeited when they nominated as
their candidate for president Dr. Julián Irías, Zelaya’s most trusted
minister, who had been closely associated with the dictator in all of
the acts which had aroused the hostility of the United States between
1906 and 1909. Although Irías was one of the ablest and most popular
leaders of the Liberal party, it was hardly possible that a man whose
election would mean a restoration of the old regime should become
president of Nicaragua with the consent and assistance of the United
States.

The United States could not well escape the responsibility for deciding
which of the three candidates should become president for the ensuing
term. A policy of non-intervention except to prevent disorder would
have meant the election of Dr. Cuadra, against the wishes of the great
majority of both parties. A supervised election, on the other hand,
supposing that it could have been conducted with any fairness, which
seemed unlikely, would probably have placed in office a president
whose avowed object was to expel the American bankers from the
Republic and to terminate American influence in the government. It was
almost inevitable under such circumstances that the Conservative party
should receive the open support of the American minister. By the time
of the election, it was evident that General Chamorro was to be the
next president. Dr. Irías had been prevented from entering Nicaragua
when he came home to conduct his campaign in August, and the Liberals
had been warned that no candidate who had been associated with the
Zelaya regime would be recognized by the United States if elected.
Somewhat later Dr. Cuadra withdrew his candidacy. The election was held
in October, and the new president, General Chamorro, was inaugurated in
January, 1917.

After the attempt to secure the ratification of the loan treaty had
been finally abandoned, the hopes of the Nicaraguan Government for the
eventual solution of its financial problems were centered upon a new
agreement signed in February, 1913, which provided for the payment by
the United States to Nicaragua of three million dollars in return for
an exclusive right to construct a transisthmian canal through the San
Juan River and the Great Lake and for the privilege of establishing a
naval base in her territory on the Gulf of Fonseca. After Mr. Bryan
assumed office as Secretary of State, this treaty was modified by the
addition of an article by which Nicaragua agreed not to declare war
without the consent of the United States, or to enter into treaties
with foreign governments affecting her independence or territorial
integrity, or to contract public debts beyond her ability to pay, and
by which she recognized the right of the United States to intervene
in her affairs when necessary to preserve her independence or to
protect life and property in her domain. This so-called protectorate
plan failed of ratification in the United States Senate, and a new
treaty, without it, was signed on August 5, 1914. Despite the strong
opposition which this also encountered in the Senate, it was finally
ratified with some amendments, and was proclaimed on June 24, 1916. The
principal provisions of the treaty as ratified were as follows:

I. “The Government of Nicaragua grants in perpetuity to the Government
of the United States, forever free from all taxation or other public
charge, the exclusive proprietary rights necessary and convenient for
the construction, operation, and maintenance of an interoceanic canal
by way of the San Juan River and the Great Lake of Nicaragua, or by way
of any route over Nicaraguan territory....

II. “... The Government of Nicaragua hereby leases for a term of
ninety-nine years to the Government of the United States the islands in
the Caribbean Sea known as Great Corn Island and Little Corn Island;
and the Government of Nicaragua further grants to the Government of
the United States for a like period of ninety-nine years the right
to establish, operate and maintain a naval base at such place on the
territory of Nicaragua bordering upon the Gulf of Fonseca as the
Government of the United States may select....

III. “In consideration of the foregoing stipulations and for the
purposes contemplated by this Convention and for the purpose of
reducing the present indebtedness of Nicaragua, the Government of
the United States shall ... pay for the benefit of the Republic of
Nicaragua the sum of three million dollars ... to be applied by
Nicaragua upon its indebtedness or other public purposes for the
advancement of the welfare of Nicaragua in a manner to be determined by
the two high contracting parties....”

Even before this treaty had been made public, unofficial reports
revealing its provisions had led Costa Rica and Salvador to protest
vigorously to the United States and to Nicaragua against what each
considered to be a grave infringement of its own rights. Their
opposition had led the United States Senate to add to the treaty a
proviso declaring that nothing in the Convention was intended to affect
any existing right of Costa Rica, Salvador, or Honduras. This, however,
did little to conciliate those states, and the efforts of the State
Department to secure their approval of the new condition of affairs
created by the treaty by an offer to make similar agreements with
them, to safeguard their rights and to indemnify them with pecuniary
compensations, proved unavailing. After the treaty had been proclaimed,
Costa Rica and Salvador took their protests to the Central American
Court of Justice, requesting that tribunal to enjoin Nicaragua from
carrying out its provisions. The Court decided to take cognizance of
the matter, despite Nicaragua’s refusal to be a party to any action
before it.[71]

Costa Rica’s case was a simple one, based upon treaty provisions. By
the boundary treaty between her and Nicaragua, signed in 1858, she had
been given perpetual rights of free navigation in the lower part of the
San Juan River, and the Nicaraguan Government had agreed to consult
her before it entered into any contract for the construction of an
interoceanic canal. There had been some dispute about the terms of this
treaty, which had led in 1888 to the submission of the questions at
issue to the arbitration of President Cleveland. The latter had held
the treaty valid, and had expressly declared in his award that: “The
Republic of Nicaragua remains bound not to make any grants for canal
purposes across her territory without first asking the opinion of the
Republic of Costa Rica.” Costa Rica asserted that the construction
of the proposed canal would interfere with her navigation of the San
Juan River, thus infringing her rights under the convention of 1858
and also under those provisions of the Washington Conventions of 1907
which granted to each Central American Republic the free navigation
of the waters of the others; that it would injuriously affect her own
territory on the banks of the San Juan; and finally that the Canal
Treaty had been signed and ratified before she had even been informed
of its provisions, and without her assent being asked at any stage of
the proceedings. Nicaragua refused to answer the complaint of Costa
Rica, and declared that she would neither recognize the competence
of the Court to assume jurisdiction in the matter nor abide by its
decision when rendered. She denied that the treaty was either a
concession for the construction of a canal, or an agreement for the
sale of the San Juan River, saying that it was only an option granting
to the United States the privilege of building a canal, under an
additional contract, at some future time.

Salvador’s case was based upon broader political grounds, and her
protests were directed chiefly against the establishment of the naval
base in the Gulf of Fonseca, in close proximity to one of her most
important ports. “It must be patent to every one,” her complaint
stated, “that the establishment, by a powerful state, of a naval
base in the immediate vicinity of the Republic of El Salvador would
constitute a serious menace--not merely imaginary, but real and
apparent--to the freedom of life and the autonomy of that Republic. And
that positive menace would exist, not solely by reason of the influence
that the United States, as an essential to the adequate development
of the ends determined upon for the efficiency and security of the
proposed naval base, would naturally need to exercise and enjoy at all
times in connection with incidents of the highest importance in the
national life of the small neighboring states, but would be also, and
especially, vital because in the future, in any armed conflict that
might arise between the United States and one or more military powers,
the territories bounded by the Gulf of Fonseca would be converted,
to an extent incalculable in view of the offensive power and range
of modern armaments, into belligerent camps wherein would be decided
the fate of the proposed naval establishment--a decision that would
inevitably involve the sacrifice of the independence and sovereignty
of the weaker Central American States, as has been the case with the
smaller nations in the present European struggle under conditions more
or less similar.”

Furthermore, Salvador asserted that the treaty violated her proprietary
rights in the Gulf of Fonseca. As successors of the Central American
Federation, she said, Salvador, Honduras, and Nicaragua exercised a
joint ownership over the Gulf, which clearly gave her the right to
object to the use of its waters for military purposes by a foreign
power. Her contention was somewhat weakened by the fact that the
three republics in question had divided all of the islands of the
Gulf between them, and that each in practice exercised jurisdiction
over a portion of it; but it was nevertheless impossible to show that
any treaty to which Salvador had been a party had ever put an end to
the community which the three adjacent republics had inherited from
Spain and the Central American Federation. Salvador also asserted
that the treaty was prejudicial to the general interests of Central
America, which despite temporary political separation was nevertheless
a definite political entity of which each of the states was still a
part. The alienation of Central American territory by one country was
a violation of the rights of the others. Such alienation was at the
same time, by a rather far-fetched interpretation, claimed to be a
violation of the article in the Washington Peace Treaty of 1907 which
declared any alteration in the constitutional order of one of the
states a menace to the welfare of all. Finally, it was maintained that
the treaty could not legally have been concluded under the Nicaraguan
constitution, and was therefore void.

The Court handed down its decision in the case of Costa Rica on
September 30, 1916. It declared that Nicaragua had violated Costa
Rica’s rights by making the treaty, but it declined to declare the
treaty void, as it had no jurisdiction over the United States. On March
2, 1917, it handed down a similar decision in the case of Salvador.
Its action has been disregarded by Nicaragua, and by the United
States. The decision has undoubtedly created an extremely embarrassing
situation. There can be no doubt that the Court had jurisdiction over
the question at issue, under the terms of the Washington conventions,
or that the other Central American countries, and particularly Costa
Rica, had strong cases against the convention, based not only upon
international law and treaty provisions, but also upon the necessity
for protecting their vital national interests. If the treaty is still
put into effect, after what has happened, both the Court of Justice and
the Washington Conventions will have ceased to be of practical value,
and our government will be committed to a policy which involves the
entire disregard of what the Central American republics consider to be
their rights. It may well be doubted whether even the great military
value of the proposed naval base, or the theoretical value of an option
on another canal route, are worth the permanent alienation of Central
American public opinion and the abandonment of the considerations of
justice and good will which have hitherto governed our relations with
the five republics.

The policy pursued by the United States Government in Nicaragua
since 1912 has caused bitter resentment throughout Central America.
The Nicaraguan Liberals and most thinking people in other parts of
the Isthmus feel that the intervention of American marines in the
revolution of 1912 and the subsequent maintenance of the administration
by armed force have reduced Nicaragua to the position of a subject
country and have gravely jeopardized the independence of the other
republics. The Díaz government has been regarded as a mere creature of
the State Department, and it is denied that the agreements made by it
are in any sense acts of the Nicaraguan nation. Both the contracts with
the American bankers and the canal convention are regarded as evidences
of an intention in the State Department to exploit the present
situation for the benefit of American capitalists and for the promotion
of an aggressive policy of political expansion. It is perhaps rather
difficult for Americans, who realize how far any purpose of territorial
expansion is from the minds of those who control our foreign policy,
to comprehend the feeling of suspicion and fear which recent events
have aroused among the more intelligent and patriotic classes in
Central America. That feeling is nevertheless in large measure
justified. No country can be said to enjoy independence when it is
constantly in danger, as the events of the last five years have shown
all the Central American republics to be, of arbitrary and sometimes
undiscriminating intervention by an outside power in their political
and financial affairs. Although the United States has been actuated
in the policy which it has pursued solely by a desire to promote the
peace and prosperity of the Central American countries, neither the
necessity for the action which it has taken nor the purity of its
motives has been fully appreciated in the Isthmus. The result has been
a misunderstanding and a sentiment of hostility which threaten, unless
steps can be taken to regain their confidence, to make the people of
the five republics regard their North American neighbor as their most
dangerous enemy.

It will be difficult to convince the Central Americans of the sincerity
of our good will or the disinterestedness of our intentions so long
as we continue to uphold a minority administration in Nicaragua by
force of arms. The maintenance of the established authority has thus
far been unavoidable because the only alternative was the abandonment
of Nicaragua to a renewal of the civil wars which reduced her to so
pitiable a condition before 1912. Peace was the first and absolute
necessity if the country were to be saved from utter ruin. But it is
unthinkable that the United States, in the name of constitutional
government, should permanently identify itself with any one faction
or that it should continue indefinitely to use its power to exclude
from all share in the administration the party to which a majority of
the people of the Republic profess allegiance. Ultimately, an attempt
must be made, either to hold a fair election or to effect an agreement
between the various parties by which a president accepted by all can be
placed in office.

Any adjustment of the political situation must necessarily involve
measures to protect the interests of the American bankers, who have
invested about two million dollars in their efforts to preserve
Nicaragua from bankruptcy and to improve her economic condition. Brown
Brothers and Company and J. and W. Seligman and Company entered upon
their dealings with Nicaragua at the explicit request of the State
Department, and it would be impossible to expose them to the partial
or total loss of their investments by withdrawing the support of the
government. The first thought of a Liberal administration would be to
undo so far as it could the situation created by the loan contracts.
Actual confiscation of property would of course be impossible, but
both the bankers and the holders of the English bonds, which are now
secured by the American collection of the customs duties, might suffer
serious losses at the hands of an unfriendly president. For this
reason, an agreement in regard to the future status of the bankers, or
an adjustment of the debts due to them from the Republic, would be an
essential part of any arrangement which aimed to terminate the American
intervention.

The motives and methods of the bankers, like those of the State
Department, have been severely impugned by the Nicaraguan Liberals and
by the leaders of public opinion in other parts of Central America.
One constantly hears charges that they are co-operating with a corrupt
and subservient administration to defraud the people, and that they
have taken advantage of the needs of the government and the greed of
the officials to secure control of all of the more valuable national
property. Those who make these accusations point to the fact that
the Republic has become heavily indebted to the New York firms, and
that the National Railway, the National Bank, the customs houses, and
the collection of the internal revenues have at the same time passed
into their hands, while the government apparently has nothing to show
in return. The more serious of these charges spring entirely from
ignorance or from partisan political motives. The Liberals are ready
to use any means and to make any statement likely to discredit the
Conservative administration or to arouse public sentiment in Nicaragua
or in the United States against the policy which has enabled their
rivals to remain in power; and the patriotic fervor of their efforts
to free their country from alien domination receives at least a part
of its force from the fact that they hope thereby to gain control of
the government for themselves. Few of them, moreover, have taken the
trouble to investigate the financial operations of the bankers in
order to substantiate the accusations which they make. The writer was
unable, during a stay of six months in Nicaragua, to find one prominent
Liberal who had even read the loan contracts. For this, and for the
statement frequently put forth that the Government and the bankers
have carried on their operations in secret and in an underhand manner,
there is no excuse, for every one of the more important contracts has
been published in the reports of the Minister of Finance, which are
easily accessible to the public. It must be remembered, however, that
there are very few persons in Nicaragua who are fitted by training or
experience to form an intelligent opinion from the perusal of these
documents.

The bankers’ investments in Nicaragua so far have been as follows:

1913 Treasury Bills                         $1,000,000
51% of the stock in the National Railway     1,000,000
51% of the stock in the National Bank          153,000
                                            ----------
  Total (exclusive of accrued interest)     $2,153,000

Earlier loans were, as we have seen, repaid or refunded with the 1913
treasury bills. These bear interest at the rate of six per cent, which
is certainly not excessive if we consider the desperate condition of
the Republic’s credit. The par value of the bankers’ holdings in the
capital stock of the railway is $1,683,000. Since the total net profits
of the line were $244,706.62 Cordobas in 1913-14, and $251,320.56 in
1914-15,[72] it is evident that it will be a valuable property under
foreign management and protection, although the return thus far has
not been great considering the dangers attending investments in such
enterprises in countries where revolutions, with their consequent
destruction of material and paralyzation of traffic, are of frequent
occurrence. It should be remembered, moreover, that the Government
still owns forty-nine per cent of the stock and thus receives nearly
half of the profits, so that it is a direct beneficiary from the
improvement in the property and the increase in the profits which
resulted from the reorganization. The Republic shares similarly in
any profits which may be made by the National Bank. This institution,
founded primarily for the purposes of the currency reform, has
apparently not made large profits up to the present time, because of
its small capital, its not very efficient management, and the heavy
expenses involved in maintaining three separate branches besides
the central office. It has received small sums for its services in
connection with the currency reform, and it has in addition loaned
considerable amounts to the government and to private individuals,
charging both twelve per cent interest, which is rather less than the
prevailing rate in Nicaragua. The wisdom, and perhaps the propriety, of
some of its operations have been open to criticism, but its services
in connection with the currency reform and its extension of credit to
the government when the latter has been in difficulties have certainly
justified its institution.

The charge that the United States Government has been guided in its
financial policy in Nicaragua by a deliberate intention to exploit
the people of that country for the benefit of American capitalists is
of course simply ridiculous. Equally so is the idea that two great
financial institutions of the standing of Brown Brothers and Seligman
and Company would compromise their reputation and devote their time
and energy in schemes for defrauding Nicaragua of a few thousands of
dollars a year. The bankers have necessarily sought to protect their
own interests, and in order to do so have imposed rather onerous
conditions upon the Republic; but it must be remembered that they have
been dealing with a practically bankrupt country, which is at the
present time unable to meet any of its foreign obligations, and that
their investments are rendered doubly insecure by the bad economic
situation and by the uncertainty of political conditions. The sums
involved and the possibilities of illegitimate profits may well seem
immense to citizens of a country whose total annual budget is only
two or three million dollars; but no one who sees the matter in its
true proportions can well believe that the bankers have been enriching
themselves very rapidly at the expense of Nicaragua.

On the other hand, it must be admitted that the loan contracts have
contained much that is objectionable from the point of view of the
patriotic Nicaraguan citizen. The situation which they have created
cannot but be humiliating to a people which values its national
independence. The collection of the public revenues by foreigners, and
the sale of the most valuable national property, however necessary for
the good of the country, has naturally been exceedingly distasteful to
public opinion. Moreover there has been a suspicion, apparently too
well founded, that some of the money received from the bankers has
benefited certain high officials rather than the nation as a whole, and
there is no doubt at all that large profits were made by members of the
party in power as the result of the currency reform. The men sent from
the United States to take charge of the various interests acquired by
the bankers have not always shown tact or ability, and some of them,
for this reason or from causes lying entirely beyond their control,
have become very unpopular. The raising of rates by the railway, and
the refusal to grant free passes to all persons of social or political
prominence, have caused much dissatisfaction; and the National Bank
has been severely criticised for its failure to make loans to everyone
who was in need of money. The currency reform was bitterly opposed at
first because of the inconvenience which the conversion caused and
the apparent shortage of money which resulted, and it was generally
regarded as a failure when the bank-notes fell below par at the
outbreak of the European war. It has since become more popular. The
financial reforms as a whole, however beneficial in the long run,
have involved expenses which the nation could ill afford. The expert
commission which worked out the currency reform, the mixed claims
commission, the officials of the customs service, and other Americans
who have been appointed to official or semi-official positions since
1912 have received remunerations which have seemed inordinately
large as compared with the incomes of the native officials; and the
publication of their salaries and their expense accounts has given rise
to many charges of extravagance.

It is easy to point out how insignificant these grievances are as
compared with the benefits conferred by the adjustment of and the
reduction of charges on the foreign debt, the immense improvement
in the operation of the railway and in the customs service, and the
establishment of a currency system on a stable basis in place of
the depreciated, fluctuating paper of former times. It is also easy
to prove that the vast majority of the people have been inestimably
better off through the maintenance of order, which has been entirely
due to the military and financial support of the government by the
United States, than they would have been if the bloody party strife
and the wars with Central American neighbors which marked the last
years of the Liberal regime had been allowed to continue. But this
does not alter the fact that the situation which exists in Nicaragua
today is inherently and fundamentally wrong, and that it cannot form a
basis for a permanent settlement satisfactory either to that country
or to the United States. Our government cannot continue to uphold by
force a minority administration and to support that administration
in a financial policy which is opposed by the great majority of the
Nicaraguan people, if it wishes to eradicate the suspicion in Central
America, and in fact throughout Latin America, that its ultimate
intention is to deprive Nicaragua, and eventually her neighbors, of
their position as independent nations.


FOOTNOTES:

[57] See U. S. Foreign Relations, 1909, under Nicaragua.

[58] For the text of the note, see U. S. Foreign Relations, 1910, p.
455.

[59] The events leading up to Zelaya’s fall are discussed in U. S.
Foreign Relations, 1909, President Taft’s message to Congress on
Foreign Relations, December, 1909, and Zelaya’s book, “_La Revolución
de Nicaragua y Los Estados Unidos_.”

[60] See Messrs. Harrison and Conant’s Report Presenting a Plan of
Monetary Reform for Nicaragua, pp. 10, 11.

[61] See U. S. Foreign Relations, 1910, pp. 764-6.

[62] The rate of exchange rose from 913% in December, 1909, to 2,000%
at the end of 1911. See the Report of Messrs. Conant and Harrison, p.
15.

[63] The text of the treaty is printed in the American Journal of
International Law, 1911, Supplement, p. 291.

[64] These and the later contracts between the bankers and the
Nicaraguan Government have been published in the annual reports of the
ministry of _Hacienda y Crédito Público_.

[65] Their report was the above cited Report Presenting a Plan of
Monetary Reform for Nicaragua. The Monetary Law is printed in the
report, p. 71.

[66] See his official report, December, 1914, p. 12.

[67] The following table, compiled from the Reports of the Collector
General for 1911-13 and 1915, shows the total receipts, reduced to
American gold, for the years 1904-15:

1904    $  910,627.27
1905     1,282,246.86
1906     1,595,219.53
1907     1,246,844.85
1908     1,027,437.16
1909       976,554.15
1910       854,547.29
1911     1,138,428.89
1912     1,265,615.12
1913     1,729,008.34
1914     1,234,633.54
1915       787,767.11


[68] For the work of the Commission, see the article by Mr. Schoenrich,
one of its members, in the American Journal of International Law, Vol.
9, p. 958.

[69] Report of the Navy Department, 1912, p. 13.

[70] See the contracts of Oct. 31, 1912, _Memoria de Hacienda_, 1912-13.

[71] Costa Rica protested to the United States on April 17, 1913,
and to Nicaragua on April 27, 1913. Salvador protested to the United
States on October 21, 1913, and to Nicaragua on April 14, 1916. The
notes exchanged in regard to the treaty are published in Costa Rica,
_Memoria de Relaciones Exteriores_, 1913, 1914, etc., and in Salvador,
_Libro Rosado_ for the same years. The documents accompanying the cases
presented before the Central American Court have been published in
English by the legations of the two countries at Washington.

[72] Nicaragua, _Memoria de Hacienda_, 1915, p. 750.




                              CHAPTER XII

                               COMMERCE

 Principal Exports of the Isthmus: Coffee, Bananas, and Precious
 Metals--Other Products--Imports--Condition of American Trade--Effects
 of the European War.


The foreign commerce of Central America is based upon the exchange of
coffee, bananas, precious metals, and a few other products of minor
importance for manufactured articles from the United States and Europe.
The most important export, from the Central American point of view,
is coffee; for the banana farms, which belong to foreign corporations
and are cultivated by foreign laborers, are situated in districts so
far away from the centers of population that they play a small part in
the economic life of the country, and the gold and silver mines are
also with few exceptions the property of European and North American
capitalists. The mining companies give employment to many natives at
wages somewhat greater than those paid in agricultural enterprises,
but otherwise they do little to add to the general prosperity of the
community. The owners of the coffee plantations, the majority of whom
are natives, reside in Central America and spend their income there,
and all employ exclusively native labor. Except in Honduras, where it
is cultivated only for local consumption, coffee is the chief export of
the mountain region on the West Coast where the great majority of the
inhabitants of the Isthmus live.

Central American coffee is of an excellent quality, and brings a high
price in the European markets, to which the greater part of it has
always been sent. The product of Costa Rica is a favorite in England,
while “Coban” and other Guatemalan varieties are well known in Germany
and on the continent. The product of the Isthmus has not been so
popular in the United States, where it has been unable to compete with
the lower-priced, but inferior, coffee of Brazil or with certain other
superior grades which have secured a better foothold in our markets.
Table V indicates the disposition of the crop of each country of the
Isthmus in normal times, and to some extent the change which has been
brought about in export conditions by the European war.


                                TABLE I

                   EXPORTS OF CENTRAL AMERICA, 1913.

                        (Value in U. S. Gold.)

                Guatemala   Salvador   Honduras  Nicaragua  Costa Rica

Coffee         12,254,724  7,495,214    116,302  5,004,449   3,605,029
Bananas           825,670     ......  1,714,398    429,802   5,194,428
Precious Metals    ......  1,495,805    886,591  1,063,077   1,021,473
Hides             455,476     95,870    159,820    326,599     132,883
Timber            247,759     ......     12,617    321,869     141,361
Rubber            100,323     18,092     14,289    278,763      44,482
Sugar             349,052     72,852     ......     31,805      ......
Chicle            142,108     ......     ......     ......      ......
Balsam of Peru     ......     89,476     ......     ......      ......
Cocoanuts          ......     ......    219,968     ......      ......
Indigo             ......     52,984     ......     ......      ......
Cacao              ......     ......     ......     39,828     105,034
Live Cattle        ......     ......    251,361    288,009[73]   ......

The ripe berry is prepared for the market at a cleaning and drying
plant called a _beneficio_. The larger growers, who produce the greater
part of the total crop, ordinarily have their own _beneficios_ on
their plantations. Those who have not been able to install the rather
expensive machinery which these plants require either ship their coffee
partly cleaned, in the shell, or else have it prepared for the market
on the plantation of a neighbor or at establishments which exist
for the purpose in such cities as Guatemala and Managua. The small
landholders, many of whom have a few trees from which they secure a
money income to supplement their food crops, ordinarily sell their
coffee in the berry to the owners of the _beneficios_. The exportation
is frequently, perhaps usually, undertaken by the planter himself, who
ships his crop directly to an importer in some European city or on
consignment to an agent in Hamburg or London, to be sold in the open
market. This seems to be the general though not the universal practice
in Costa Rica, Salvador, and Nicaragua. In Guatemala, on the other
hand, there are several German and North American houses which buy the
coffee from the grower and export it on their own account. Certain
companies in the United States, with agencies in Central America, have
done a large business of this kind, especially since the beginning of
the European war.

The majority of the coffee plantations of the Isthmus belong to native
Central Americans. This is true even in Guatemala and Nicaragua,
where, as has been said in preceding chapters, nearly all of the
largest and best equipped _fincas_ are the property of Germans or of
other aliens.[74] In Salvador and Costa Rica there are few foreign
owners. Even in these countries, however, the tendency which has been
so strong in Guatemala, for the more valuable plantations to pass
gradually into the hands of investors from abroad, has been at work in
recent years. Foreign influence, moreover, is by no means confined to
the ownership of the plantations themselves, for the native planters
frequently have financial connections with European banking houses
in the Central American capitals or in Hamburg or London which give
the latter a large measure of control over the sale of their coffee
and even over their methods of production. A very large proportion of
the plantations is heavily mortgaged to these concerns, and even the
annual crop is often hypothecated or sold to the banker several months
before it is harvested, and is handled by him when ready for market.
The terms of these arrangements are usually anything but favorable to
the planter. In Guatemala, for example, the banker ordinarily not only
receives interest on the sums advanced at the prevailing rate of ten or
twelve per cent, but at the same time takes an option upon the entire
crop, under which he can purchase it at twenty-five cents per bag less
than the market price at the time of the harvest. This option alone is
equivalent to the payment by the planter of about three per cent of
his entire gross receipts, in addition to the interest. Under these
conditions, especially in view of the improvidence and inefficiency
of many of the native landowners, it is not strange that the most
desirable plantations are passing one by one into the hands of Germans
and Englishmen, who are able either to finance themselves or to secure
money for moving their crops upon better terms.


                               TABLE II

                 THE WORLD’S EXPORTS OF BANANAS, 1911.

     (From U. S. Daily Consular and Trade Reports, Dec. 26, 1912.)

Central America--
Costa Rica           9,309,586 bunches.
Honduras             6,500,000   ”
Nicaragua            2,250,000   ”
Guatemala            1,755,704   ”
                    ----------
Total               19,815,290 bunches.

Other Countries--
Jamaica             16,497,385 bunches.
Colombia             4,901,894   ”
Panama               4,261,500   ”
Canary Islands       2,648,378   ”
Cuba                 2,500,000   ”
Mexico                 750,000   ”
British Honduras       525,000   ”
Other Countries      1,037,516   ”
                    ----------
Total               33,121,673 bunches.
                    ----------
Grand Total         52,936,963 bunches.

 Total imports into United States, 1911, 44,699,222 bunches. (Commerce
 and Navigation of the U. S., 1911.)

Second only to coffee in the value of the total amount exported, and
far more important so far as the United States is concerned, are
bananas. In 1913, nearly twenty-two million bunches, or between two and
three billions of bananas, were exported from Costa Rica, Honduras,
Guatemala, and Nicaragua. Nearly all of this immense amount, which was
about forty per cent of the total commercial production of the world,
went to the United States. Less than fifty years ago, Mr. Minor C.
Keith, who was building a railway from Puerto Limon to the interior of
Costa Rica, began the cultivation of bananas along the line in order to
provide freight for the road during the years which must elapse before
it could reach the inhabited part of the Republic. Until this time, the
hot and unhealthful forests along the East Coast of Central America had
been an uninhabited and undeveloped jungle, but they proved so well
adapted to the growing of bananas that the fruit farms soon became
more valuable than the railway. Meanwhile other planters had engaged
in the same business in Jamaica and elsewhere in the West Indies,
and the banana, which had hitherto been a curiosity, was coming into
general use in the United States. The more important producers around
the Caribbean Sea joined in forming the United Fruit Company, which is
now by far the most important business concern in tropical America.
Its immense plantations in Central America, Jamaica, Cuba, Colombia,
and Panama are traversed by hundreds of miles of railway, and their
products are carried to the United States and Europe by a great fleet
of its own steamers, which are the principal, and since the beginning
of the European war almost the only, carriers of freight and passengers
between Central American ports and the eastern part of the United
States. Besides the numerous lines built expressly for carrying bananas
from the farms to the wharves, the Fruit Company, or concerns allied to
it, control the entire railway system of Guatemala, a large part of
that of Salvador, and the most important road, from San José to Puerto
Limon, in Costa Rica. The few independent growers along its lines are
completely at its mercy, for they have no alternative but to sell their
fruit to it under the conditions which it dictates. In Honduras and
Nicaragua, there are a number of ostensibly competing companies, with
their own railway lines and ships, but many of these are said to be
actually under the control of the greater corporation. The latter has
on more than one occasion shown itself ruthless and unscrupulous in
dealing with real competitors, over whom it has every advantage through
its control of the facilities for shipping fruit.

In the last few years, the bananas have been attacked by a disease
which apparently shows itself in nearly all plantations after a certain
period of cultivation. Its appearance has made it necessary to abandon
large tracts of developed land and many miles of railway, especially
in some portions of Costa Rica. No means of checking it has yet been
discovered, and it has been found easier to plant new farms than to
fight it where it has obtained a foothold. At present the disease does
not seem likely to decrease materially the total production, for there
are still immense tracts of virgin land suitable for banana growing
around the shores of the Caribbean Sea, but it is a very grave menace
to the prosperous communities which have grown up on the coast as a
result of the fruit trade. Unless it is overcome, or unless some other
product, such as cacao, can be grown on the abandoned farms, there
seems to be serious danger that many sections of the East Coast will
sink back into jungle.

Among Americans who have been on the Coast and have but a slight
acquaintance with the interior, there is a tendency greatly to
exaggerate the influence of the United Fruit Company in Central
America. As a matter of fact, that corporation plays a smaller part
than might be expected in the economic and political life of the five
republics. On the Coast, especially in Costa Rica, it is all-powerful,
for it absolutely controls the industry and the export and import trade
of the banana country, and is the employer of the greater part of
the population; but in the interior, where the great majority of the
people live, its influence is confined to its control of the railway
lines. These are not owned and operated directly by the Fruit Company,
but by corporations closely connected with it. There are also many
other enterprises, including street railways, mines, and electrical
plants, which have been financed by some of the capitalists who are
prominent in the Fruit Company, so that the total Central American
investments of what are known as the “Keith interests” are very great.
These investors, however, apparently interfere little in politics.
Their relations with the governments, sometimes cordial, sometimes
the opposite, are not so close that they can be said to exercise
any important influence on the internal affairs of any of the five
republics, and the native officials are apt to be jealous of their
power and to regard with suspicion any concession which seems likely to
increase their influence.

Notwithstanding the immense development of the banana trade, the full
possibilities of this fruit in providing cheap fruit for the people of
the temperate zones are still far from being realized. Exportation from
Central America and other producing countries is at present limited
to the amount necessary to meet the demand for the fresh fruit in the
United States, because the European market has as yet been little
exploited, and few facilities have been provided for exporting bananas
from the Caribbean to transatlantic ports. A considerable proportion of
the product of Costa Rica was sent to England in the years immediately
preceding the war, but the total was insignificant in comparison
with the consumption in the United States.[75] Millions of bunches of
fruit now go to waste every year, for the amount cut each week on the
plantations is arbitrarily limited with a view to the state of the
market and the facilities for shipping, and thousands of bunches are
rejected at the train or at the steamer as being overripe or otherwise
defective. It ought to be practicable to convert this waste product
into dried bananas or banana flour, both of which are now commercially
possible, but few attempts have so far been made to do so. The two
or three factories which have been established in Central American
ports for this purpose have had little success, apparently from poor
management or lack of proper equipment.

The precious metals, which rank third in the list of exports, are
found in all parts of Central America, but as yet they have been
exploited on a comparatively small scale. There are a few gold and
silver mines, operated by foreign capital, in each of the republics
except Guatemala, but the total exportations of the Isthmus, according
to customs reports, amounted to less than four and one half millions
of dollars in 1913.[76] The investment of foreign capital in mines has
been discouraged by the disorder which has prevailed in some of the
five republics, and the lack of adequate transportation facilities
has been an obstacle to the introduction of heavy machinery and to
the exportation of the product. These difficulties, which have held
back the production of gold and silver, have of course made impossible
the exploitation of the other mineral resources of the Isthmus,
although these are known to be great. With the establishment of
internal stability and the building of good roads to the metalliferous
districts, however, mining should easily become a much more important
industry than it is at present.

In comparison with coffee, bananas, and the precious metals, the other
exports of Central America are of little importance. The herds of
cattle, which are one of the principal forms of wealth in Honduras
and Nicaragua, provide some horns and hides for shipment to foreign
countries, but the quantity has hitherto been very small. The live
animals are the chief articles of commerce between Honduras and
Nicaragua on the one hand and their more densely populated neighbors
on the other, but they have never been exported to any extent to other
countries. Mahogany, Spanish cedar, and other forest products, such as
rubber and chicle, which is used in making chewing gum, are exported,
chiefly by foreigners, from the low country along the coasts. Sugar
in various forms and cacao are grown in large quantities, but almost
entirely for local consumption. Besides these products, typical of any
tropical country, there are others which have importance in certain
localities as articles of foreign commerce. Thus, some millions of
cocoanuts are shipped from the North Coast of Honduras, and indigo and
balsam of Peru from Salvador. None of these minor exports have received
very much attention, because the interest of the native community
has been centered in the production of coffee and of the staple food
crops, and foreign capital has been invested chiefly in mines, banana
plantations, and railways. With the comparatively good transportation
facilities that now exist, it would seem that there should be a great
opportunity for the cultivation of such products as cacao, vanilla, and
rubber, or for the shipment to the United States, on the fast banana
steamers, of some of the countless delicious tropical fruits which have
hitherto been almost unknown in our markets. Countries of such rich
and varied agricultural possibilities, with such easy access to the
Gulf ports of the United States, must eventually acquire an importance
far greater than that which they now have in supplying our markets with
many kinds of food which we cannot ourselves produce.


                               TABLE III

SHARE OF THE UNITED STATES, GREAT BRITAIN, AND GERMANY IN THE COMMERCE
                          OF CENTRAL AMERICA.

                               EXPORTS.

                   United States  Great Britain  Germany      Total

Guatemala, 1913      3,923,354      1,857,105   7,653,557   14,449,926
           1915      6,881,410      1,322,271      50,237   11,566,586
Salvador, 1913       2,676,637        668,823   1,611,085    9,411,112
          1915       3,096,277        341,920       9,945    8,812,387
Honduras, 1913       2,974,000         18,000     164,000    3,421,000
          1915       2,987,000          1,000         690    3,858,000
Nicaragua, 1913      2,722,385        998,564   1,887,698    7,712,047
           1915      3,079,810        438,500      ......    4,567,201
Costa Rica, 1913     5,204,429      4,319,085     504,506   10,324,149
            1915     4,864,803      4,438,233      13,225    9,971,582
Total for Central   ----------      ---------  ----------   ----------
  America, 1913     17,500,805      7,861,577  11,820,866   45,318,234
           1915     20,909,300      6,541,924      74,097   38,775,756

 (Compiled from official reports of the Central American governments.
 The values are given as in American gold, calculated at the prevailing
 rate of exchange for the year in question.)

Even before the beginning of the European war, the United States
bought the greater part of Central America’s exports. Nearly all of
the bananas went to American ports, as did by far the greater part of
the gold and silver from the mines. With the coffee, the situation
was different, but the partial closing of the European markets forced
the planters to seek a market for this in the United States. This was
especially true in Guatemala, where American buyers were almost the
only ones in the field during 1915 and 1916. In the countries which
had been less dependent on the German market, the change was not so
marked, but all of them nevertheless shipped more coffee to the United
States in those years than ever before. Costa Rica, however, retained
her privileged position in the London market, at least during 1915,
and Salvador found valuable new customers in the Scandinavian countries
and Holland. The necessity for finding new purchasers has naturally
involved a considerable loss for the Central American planters. Their
coffee has on the whole met with a favorable reception in the United
States, but the prices which they have received have not been so high
as those to which they were accustomed in the markets in which they
had long established connections, and they have encountered no little
difficulty in making shipments because of the withdrawal of many of the
steamers which formerly called at the ports of the Isthmus.


                               TABLE IV

       IMPORTS OF COFFEE INTO THE UNITED STATES, 1913 and 1915.

   (From Commerce and Navigation of the United States, 1915, p. 75.)

                    1913              1915
Guatemala       18,544,228 lbs.    44,605,039 lbs.
Salvador         8,756,267  ”      15,823,350  ”
Nicaragua        2,915,239  ”       6,430,600  ”
Honduras           239,114  ”         665,912  ”
Costa Rica       1,474,397  ”       6,770,964  ”


                                TABLE V

           COFFEE EXPORTS OF CENTRAL AMERICA, 1913 and 1915.

    (Figures in quintals of 100 lbs. Spanish or 46 kg. From Central
                  American government publications.)

                  Guatemala              Salvador            Nicaragua           Costa Rica
                1913      1915        1913      1915      1913       1915      1913      1915
U. S.         211,886   386,080      107,796   142,337    36,753     62,439    16,032    38,969
England       106,666    .....[77]    34,151    29,127    32,854     40,816   231,382   204,711
Germany       432,329    .....[77]   121,201       994    75,634     ......    25,451     1,304
Austria-H.     42,054    .....[77]    35,574       381    ......     ......    ......    ......
France         ......    .....[77]   159,559    90,502   103,012     57,379    ......    ......
Italy          ......    ......      95,389    76,147    ......     30,095    ......    ......
Holland        ......    ......      ......    92,763    ......     ......    ......    ......
Scandinavian
  countries    ......    ......      ......   218,619    ......     ......    ......    ......
Total         -------   -------     -------   -------   -------    -------   -------   -------
exports       875,337   775,622     625,942   663,216   243,324    198,533   283,023   265,355


The imports of Central America are those of all tropical countries
which have no manufacturing industries of their own. Machinery and
tools for agricultural purposes; textiles; flour, lard, and other food
products which are produced in insufficient quantities in the Isthmus;
and in general, manufactured articles of all kinds, must be purchased
abroad. The greater part of these are for the use of the upper classes,
but even the ordinary laborers, whose standard of living in many places
is otherwise little better than it was in the days when the country had
no foreign commerce, use some foreign goods, such as cheap textiles and
machetes.

In the import as well as the export trade, the United States easily
occupies the leading place, supplying the greater part of the
foodstuffs, hardware, and machinery, and a very considerable part of
the textiles. Our share in the total, even before the war, was well
over fifty per cent, with Great Britain and Germany respectively second
and third. Tables VI, VII, and VIII will give an approximate idea of
the nature and origin of the imports of the Isthmus in normal times.
The predominance of the United States was due primarily to proximity
and superior steamer connections. The Caribbean ports of the Isthmus,
which are less than fifteen hundred miles from our Gulf ports, were
connected with those ports by regular lines of swift steamers, whereas
they had no adequate means of communication with Europe. The Pacific
ports, on the other hand, although they were visited regularly by the
small steamers of the German Cosmos Line, relied chiefly upon the
service of the Pacific Mail between San Francisco and Panama.

This gave American trade an advantage which would have been even
greater than it was if transatlantic manufacturers had not been favored
by several factors which to some extent offset their geographical
handicap. Freight rates to Europe, however, were not proportionately
greater than rates to the United States, even in cases where the goods
must be transshipped at a North American port. Furthermore, European
merchants controlled the greater part of the import and wholesale
trade in each of the five republics, and naturally bought articles
from export houses in their own country, whenever they could, not only
for sentimental reasons, but because they received better terms and
longer credits. Even at the present time, when the war has caused a
great reduction in the exports of all of the belligerent countries,
the people of the Isthmus still continue to buy certain classes of
goods from French or English manufacturers which might just as well
be imported from the United States if American manufacturers made an
effort to secure the trade.


                               TABLE VI

SHARE OF THE UNITED STATES, GREAT BRITAIN, AND GERMANY IN THE COMMERCE
                          OF CENTRAL AMERICA.

                               IMPORTS.

  (Compiled from Central American government publications; values in
                            American gold.)


                    United States  Great Britain    Germany      Total

Guatemala, 1913      5,053,060      1,650,387      2,043,329   10,062,327
           1915      3,751,761        577,206        146,053    5,072,476
Salvador, 1913       2,491,145      1,603,846        713,855    6,173,545
          1915       2,478,322      1,054,838         41,136    4,182,922
Nicaragua, 1913      3,244,008      1,150,611        619,212    5,770,006
           1915      2,592,799        302,294         36,960    3,159,219
Honduras, 1913-14    5,262,000        460,000        522,000    6,625,000
          1914-15    5,177,000        303,000         96,000    5,875,000
Costa Rica, 1913     4,468,946      1,289,181      1,341,333    8,867,280
            1915     3,031,997        548,810         42,979    4,478,782
Total for Central   ----------      ---------      ---------   ----------
America, 1913       20,519,159      6,154,025      5,239,729   37,498,158
         1915       17,031,879      2,786,148        363,128   22,768,399


                               TABLE VII

            PRINCIPAL IMPORTS OF GUATEMALA, 1913 and 1915.

(From U. S. Commerce Reports and Guatemalan official statistics; values
                          in American gold.)

                                                       1913.       1915.

Cotton goods, total                                  1,734,832   758,570
  United States                                        503,920
  Great Britain                                        778,278
  Germany                                              337,181

Linen, hemp, and jute manufactures (in large part
coffee sacks). Total                                   222,320   252,481
  United States                                         20,788
  Great Britain                                         80,954
  Germany                                              111,141

Woolen manufactures, total                             253,107    52,308
  United States                                         30,938
  Great Britain                                         64,635
  Germany                                              111,866

Silk manufactures, total                               263,448    68,525
(Mostly from Japan, China, and France.)

Manufactures of iron and steel, total                  685,548   121,198
  United States                                        384,094
  Great Britain                                         97,434
  Germany                                              181,538

Glass, crockery, earthenware, etc., total              106,825    27,859
  United States                                         24,783
  Germany                                               58,944

Leather goods, total                                   156,688    94,661
  United States                                        110,318
  Germany                                               30,244

Foodstuffs, total                                      566,856   538,236
  United States                                        260,854
  Great Britain                                         54,859
  Germany                                               86,923

Stationery, paper, etc., total                         179,798   147,243
  United States                                         87,420
  Germany                                               60,491

Drugs and medicines, total                             268,523   108,666
  United States                                         99,359
  Germany                                               62,375

Wheat flour, from United States                        394,931   506,510

Agricultural and industrial machinery, total           350,366   127,433
  United States                                        175,683
  Great Britain                                         86,456
  Germany                                               78,711

Lumber, from United States                             179,880    78,667

Railway material, total                                426,826   121,843
  United States                                        424,235

Petroleum, from United States                          184,936   110,925

Wines, liquors, etc., total                            347,752 125,583
  United States                                         73,752
  Germany                                               73,415

Other articles, total                                1,636,678   732,449
  United States                                      1,079,007
  Germany                                              406,214
  Great Britain                                         50,298


                              TABLE VIII

                   PRINCIPAL IMPORTS OF COSTA RICA.

    (From Costa Rican official statistics, quoted in U. S. Commerce
           Reports, Dec. 9, 1916. Values in American gold.)

                                                1913.      1915.

Live cattle, from Nicaragua                    323,067     95,964

Cotton goods, total                            828,948    466,699
  United States                                243,802    266,333
  Great Britain                                355,042    129,848
  Germany                                      124,699      4,491

Coal, total                                    261,975    106,953
  United States                                258,329     92,039

Drugs, total                                   150,142    115,903
  United States                                 76,173     85,194
  Germany                                       29,690      4,065

Electrical material, total                     150,339     95,176
  United States                                121,416     86,773

Flour, total                                   258,407    224,480
  United States                                257,457    209,662

Lard, total                                    200,362    144,181
  United States                                194,968    142,270

Railway material, total                        296,772     62,387
  United States                                272,242     59,725

Rice, total                                    143,391    108,649
  United States                                 31,621     93,283
  Germany                                       82,088

Wheat, from United States                      219,487    323,567

Coffee sacks, total                             88,958     98,531
  United States                                 11,161     13,220
  Great Britain                                 69,424     83,919

That they have not done so seems to be due chiefly to indifference. The
reasons why American exporters fail to make a better showing in Latin
American markets have been discussed so often and so fully in the last
three years that there is little object in repeating them here. It is
sufficient to say that the same story of carelessness in filling orders
and in packing goods, of failure to send well-equipped salesmen, and
of refusal to comply with the custom of the country in such matters as
credits and accommodations, are heard in Central America as elsewhere.
Since the European war has forced the importers of the Isthmus to
depend more than ever before upon American manufacturers for their
supplies, one hears many complaints of inconsiderate or discourteous
treatment, and of general inefficiency in handling trade.

One of the chief obstacles to the increase of American trade in
Central America has been the lack of banking facilities. Most of the
banks which exist in the larger cities of the Isthmus at the present
time are purely local institutions, and their operations are rarely
such as to make them a strong force for good in the economic life of
the community. They speculate in the rate of exchange, issue more or
less depreciated paper money, engage in financial transactions with
the government which consume a large part of their available funds,
and make loans to planters and merchants at rates of interest which
vary from ten per cent, with first-class security, to thirty or forty
per cent in cases where the element of speculation is greater. These
conditions, which are perhaps inevitable in a country where capital
is so scarce and where the instability of political affairs makes
the element of risk in all credit transactions so great, seriously
detract from their usefulness. Unfortunately, moreover, there are
some institutions which are not managed in accordance with the
principles either of sound banking or of ordinary honesty, and these
are necessarily a source of weakness to the whole financial community.
Within the last five years, two of the largest banks in Central America
have failed, under circumstances which aroused very grave suspicions
of mismanagement and defalcation. The banks cannot afford adequate
facilities for financing the export and the import trade, for they
have neither the available funds nor the connections abroad which are
necessary for this purpose. Moreover, they can obtain such high profits
in other forms of operations that there is little inducement for them
to engage in ordinary commercial transactions. Many of them are engaged
in the coffee export business or in other forms of trade themselves
and are consequently little inclined to aid other merchants who may
wish to compete with them. The establishment of branches of American
banks, dedicated to a legitimate banking business, and especially to
the financing of American trade, would perhaps do more to stimulate
commerce with the United States than any other one influence.

The question of credits has been another serious obstacle to the
development of our trade. The average Central American merchant must
have from three to six months to make payment for goods which he
imports, because he in turn must grant a considerable time to the
small retail dealers whom he supplies. American manufacturers are as a
rule unwilling to grant credits for so long a period, and they have
sometimes exposed themselves to heavy loss when they have done so
because of the difficulty of ascertaining which of the local importers
were deserving of confidence. This difficulty also could to a great
extent be obviated if reliable American banks could be established in
the five republics.

That our commerce holds first place in Central America despite these
drawbacks is due partly to the fact that there are certain articles,
such as flour, railway material, and petroleum, which the people of the
Isthmus must almost inevitably purchase in our markets, and partly to
the activity of a few great corporations which have stores or permanent
agencies in Central America, and handle a very large amount of imports
from the United States. The United Fruit Company and other fruit
companies in Honduras and Nicaragua, as well as most of the mining
companies, maintain commissaries where American goods are sold in
great quantities. Grace and Company, in co-operation with the American
International Corporation, does a considerable business in merchandise
on the West Coast, and has offices in most of the important cities of
the Isthmus. Several well-known American manufacturers also are more
or less adequately represented by permanent agents in the important
commercial centers.

Although our share in the total imports and exports of the Isthmus has
been greater than ever before, since the beginning of the European
war, the total of our trade has not been so large as might have been
expected, because of the partial paralyzation of the commerce of the
five republics. At the outbreak of hostilities the foreign credits
upon which the normal business of the Central American community had
depended were entirely cut off, and exchange on European centers rose
to a prohibitive figure, especially in the countries which were not on
a gold basis. Merchants were thus unable to obtain goods or even to pay
their debts. At the same time, the purchasing power of their customers
was seriously decreased, because the rise in the rate of exchange
made prices inordinately high in the local currency, and because the
planters, unable to secure advances from abroad to move their crops,
were forced to cut down their expenditures and in some cases to lay off
their workmen. Most of the governments, also, were in severe financial
difficulties, for their revenues, which consisted chiefly of the import
duties, had declined, and their expenditures, of which the money for
the service of the foreign debt constituted an important part, had
increased with the advance in the cost of foreign drafts. Some of them
were thus unable to pay their employees, and the poverty of the latter
intensified the general financial depression. For a time, the sale
of foreign goods almost ceased. When it was found, however, that the
products of the Isthmus could still be sold abroad, even if at somewhat
lower prices, confidence began to return and commerce recovered to some
degree, but imports are still far below normal, and seem likely to
remain so for some time.

After the close of the war, it seems probable that the position lost
by English and German exporters since 1914 will be regained by them,
unless their American competitors make a more successful effort than
they have yet made to secure a permanent foothold in the market. The
European houses which control the import business of the Isthmus
will probably turn back to their former correspondents at the first
opportunity, for their experience with American firms in the last three
years has not been such as to encourage them to continue it after they
are able to resume their old connections. Many of the difficulties
which merchants in Central America say they have encountered in dealing
with American exporters have undoubtedly been due to war conditions
in the United States and to an ignorance on both sides of the other’s
methods of doing business, but many others can only have resulted from
carelessness and indifference to new trade opportunities.

Nevertheless, there is every prospect that the share of the United
States in the commerce of Central America will continue to increase in
the future as it has in the past. Proximity and the excellent steamer
connections created by the banana trade give our manufacturers an
advantage against which European importers will find it increasingly
hard to compete. The North American element in the Isthmus as a whole
is increasing more rapidly than any other foreign element, especially
in the banana towns on the East Coast, and North American investments
are probably already greater than those of any other country. The
richer classes among the Central Americans themselves, moreover, travel
more and more in the United States rather than in Europe, and thus
acquire a taste for articles of North American manufacture, where they
formerly demanded French or English products. A great increase in our
trade with the five republics waits only upon the establishment of
proper banking facilities and upon the awakening of American exporters
to a realization of their opportunities.


FOOTNOTES:

[73] Figures of Costa Rican government for imports from Nicaragua.

Note. These figures are compiled from official statistics, or from
the United States Daily Consular and Trade Reports, which in turn are
based upon the official statistics of the Central American governments.
They are inexact, because the statistics upon which they are based are
rarely entirely trustworthy.

[74] Special Agent Harris, in his Report on “Central America as an
Export Field” (U. S. Dept. of Commerce, Special Agents’ Series, No.
113), gives the following figures in regard to the ownership and
production of the coffee plantations of Guatemala:

Nationality     No. of Plantations  Product in quintals
Guatemalan          1,657                 525,356
German                170                 358,353
North American         16                  19,285
Other                 236                 143,242


[75] 2,763,111 bunches were exported from Costa Rica to England in
1913. (Costa Rica, _Anuario Estadístico_, 1913, p. 279.)

[76] It is probable that more than this was actually produced. Large
amounts are said to be smuggled out of certain countries every year to
avoid paying the export tax, and this assertion is to some extent borne
out by a comparison of the export statistics with the import statistics
of the United States.

[77] Figures not available.




                             CHAPTER XIII

                    CENTRAL AMERICAN PUBLIC FINANCE

 Sources of Revenue--Defects of the Fiscal Systems--Floating
 Debts--Brief History of the Bonded Debt in Each Republic--Depreciation
 of the Currency Systems--The Monetary Situation in Each Country--Need
 for Financial Assistance from the United States.


Few factors have done more to retard the economic progress of the
Central American republics than the defects of their fiscal systems.
The inability of the governments to meet the current expenses of
efficient administration or to discharge their obligations to
foreigners, and the demoralization of the monetary systems which has
resulted from attempts to make the depreciation of the currency a
source of revenue, have been a serious drawback to the investment
of capital and the development of commerce in the Isthmus, and have
involved some of the five countries in rather serious diplomatic
complications. This financial weakness has been due partly to
the nature of the governments’ incomes, partly to defects in
administration, arising from ignorance or dishonesty, and partly to
general economic and political conditions.

Each of the five republics obtains its revenues principally from
customs duties, on exports and imports, and from the rum monopoly.
Other sources of income, of which the most important are tobacco and
powder monopolies and stamp taxes, amount to very little as compared
with these two great items. Direct property taxes, the introduction of
which has at times been attempted in Guatemala, Nicaragua, and Costa
Rica, have met with very little success, and have been very unpopular.

This fiscal system has many bad features. The duties upon imports,
upon which the chief reliance is placed, are so high that they seem
in many cases to discourage commerce. This is especially true in
regard to the cheap textiles and other articles used by the working
classes, for the imposition of the duty according to the gross weight
of the package, and the failure to make adequate distinction between
different qualities of the same category of articles, raises the prices
of some goods to a point where consumption is materially lessened.
There are still stronger objections to the second great source of
revenue, the manufacture and sale of _aguardiente_, or rum, for as in
other countries where similar monopolies have existed the temptation
to stimulate the consumption of the liquor has in some cases proved
stronger than consideration for the welfare of the community. In view
of the relation between drink and vice and crime, which is nowhere more
directly evident than among the working classes of the Isthmus, it is
hard to understand how the public authorities can not only permit but
encourage the unrestricted sale of what is little more than a low grade
of alcohol. Some of the governments, indeed, have endeavored by raising
the price of the _aguardiente_ to check its consumption, and have
done so without materially decreasing their own income, but with the
majority the object has seemed to be to sell a large amount at a low
price rather than the opposite.

The following table shows the revenues of each of the five republics in
1913, the last year before the general financing disorganization caused
by the European war:


     Revenues in 1913. (Approximate equivalent in American gold.)

Source of revenue  Guatemala    Honduras    Salvador   Nicaragua    Costa Rica

Import duties      1,930,000   1,130,000   2,900,000   1,680,000[78]  2,500,000

Export duties      1,275,000      88,000     600,000                   112,000

Liquor and other
monopolies           450,000     775,000   1,200,000   1,368,000     1,150,000

State owned
railways,
telegraphs,
postal service,
etc. (Gross
income)              200,000     140,000     285,000                   500,000

Miscellaneous        325,000     377,000     615,000     317,000       208,000
                   ---------   ---------   ---------   ---------     ---------
Total revenues     4,180,000   2,500,000   5,600,000   3,355,000     4,470,000

The way in which the Central American governments spend their income
has already been described. The heaviest outlays are those for military
purposes and for the service of the foreign debt. The following table
shows roughly the division of the expenditures between the different
departments of the administration:


     Expenditures in 1913. (Approximate equivalent in U. S. gold.)

Department          Guatemala   Honduras  Nicaragua   Salvador Costa Rica
_Gobernación_         220,000    320,000    208,000    860,000    380,000
Public works          130,000    287,000    902,000    600,000    695,000
Public instruction    180,000    152,000    159,000    354,000    635,000
War and marine        520,000    720,000    410,000  1,600,000    627,000
Finance and public
  credit              475,000    185,000    385,000  2,150,000  1,320,000
Charities                   *          *      9,600    500,000     80,000
Judiciary                   *     70,000    127,000    280,000    325,000
Miscellaneous         695,000     26,000  2,800,000    126,000    211,000
                    ---------  ---------  ---------  ---------  ---------
Total expenditures  2,320,000  1,750,000  4,809,000  6,470,000  4,273,000

* Not specified.

 Note. The miscellaneous expenditures include items of nearly $500,000
 for “exchange,” i. e. for buying drafts on foreign places, in
 Guatemala, and of $1,680,000 for paying claims arising from recent
 revolutions in Nicaragua.

The revenues are decreased, and the expenditures are increased, in
some countries to an alarming degree, by inefficiency and corruption
in their administration. The control of the public funds is almost
entirely in the hands of the President and his subordinates, for the
voting of taxes and of the budget by Congress is a very perfunctory
matter even in those countries which have most nearly attained
constitutional government in other respects. The income is derived
from sources which remain much the same from year to year, and its
disposition is subject to little control by the Congress, because the
annual financial legislation does not always appropriate specific sums
for specific purposes, but simply divides the estimated expenditure
between the various departments. The administration, moreover, does
not seem to regard itself as bound to keep within the general limits
laid down if it can obtain funds for additional outlays. The Congress,
which is rarely in a position to oppose itself to the wishes of
the executive in this or in other matters, usually ratifies excess
expenditures or proposed changes in the budget with little question.

In some of the countries, there is undoubtedly a large amount of
corruption in the management of financial affairs. The traditions
of the public service encourage rather lax conduct on the part of
the officials, for custom and public opinion tolerate many practices
which are now considered improper in countries which have had a longer
experience in self-government, and those who are unscrupulous are
aided in defrauding the government by the inadequate provision which
is made for the supervision of accounts. The commonest forms of graft
are those which imply a rather loose standard of official morality
rather than actual theft or dishonesty, but it cannot be denied that
there are many officials, some of whom occupy the highest positions in
their respective countries, who have enriched themselves during their
tenure of office by means which nothing could excuse. Few such men,
fortunately, occupy positions of power in the five republics at the
present time.

The chief fault of Central American public finance is the indifference
shown in regard to the balancing of revenues and expenditures. The
governments frequently pay salaries and other obligations with receipts
rather than with money. This practice gives rise to many abuses, for
often the receipts can be cashed only by persons having influence
with the authorities of the treasury department, and thus become a
source of graft. Certain governments, indeed, make it a practice to
buy their own promises to pay at a discount, after depreciating them
by refusing to redeem them at their face value. The floating debt,
which ordinarily bears a very high rate of interest, is always an
indefinite but steadily increasing quantity, comprising a great variety
of obligations. It includes claims for salaries and for supplies
furnished to the government, for damage to property during revolutions,
for violated concessions and contracts, and other demands of every
degree of validity. Some of these are paid off from time to time as the
condition of the treasury permits, but no provision is made for the
service or amortization of the internal debt as a whole.[79]

Each of the five republics has also a bonded debt, held for the most
part in England. In most cases this dates back to the loan of £163,000
contracted in London by the officials of the first Central American
Federation. Costa Rica and Salvador paid off their share of this after
they became independent, but the other states, after defaulting for
several years, eventually made arrangements for refunding the bonds
with new loans. At the same time, further issues were made, chiefly
for the construction of railways, during the period of prosperity
and inflation which accompanied the first development of the coffee
plantations in the seventies and eighties. These were often accompanied
by fraud, in which both the officials of the Central American
governments and the companies which floated the bonds participated,
and which in some cases reached immense proportions. The service of
the foreign debts became very difficult when the coffee prices fell,
and when the decline in the price of silver, upon which the monetary
systems of the Isthmus were based, greatly increased the amount of
the debt in terms of the national currency without proportionately
increasing the national revenues. During the decade 1890-1900, nearly
all of the republics found it impossible to maintain regular payments
of interest. New arrangements were therefore made with the creditors,
who were forced to accept successive reductions of their claims,
amounting in some cases to a large proportion of the total, in order
to obtain any payment at all. These readjustments, with the partial
repudiation which they involved, naturally injured severely the credit
of the five countries.

Guatemala has until very recently been involved in almost continuous
difficulties with her creditors. Her share of the debt of the Central
American Federation remained in default until 1856, when it was
refunded with the accrued interest into a new five per cent loan of
£100,000. In 1869 another loan of £500,000, issued at 70¹⁄₂ and bearing
interest at six per cent, was issued through a London banking house.
Both loans went into default in 1876. They were refunded in 1888 by a
bond issue of £922,700, bearing four per cent interest, and another
issue was made at the same time to consolidate the internal debt. The
Republic again failed to meet its obligations to its creditors in 1894,
and the latter were forced to accept a further reduction of their
claims. By an arrangement made in 1895, both the external and internal
bonds were refunded by a new issue of £1,600,000, at four per cent,
secured by a special tax of $1.50 gold on each bag of coffee exported.
These bonds now constitute the principal foreign debt of the Republic.
The government soon violated the terms of the agreement under which
they were issued, for the coffee export tax was reduced in 1898 and
1899, and its proceeds were used for other purposes than the service
of the loan. Payments of interest were suspended from 1898 to 1913.
After several fruitless attempts to reach an agreement, the bondholders
finally secured the resumption of payments through the energetic
diplomatic intervention of the British government, and the interest has
been met regularly since 1913. The principal, on December 31, 1915,
amounted to £2,357,063.[80]

Salvador had paid off her share of the federal debt in 1860, by a
compromise with the holders of the bonds. In 1899, a loan of £300,000
at six per cent and in 1892 another of £500,000 at six per cent were
obtained from bankers in London for the purpose of extending the
railway line from Acajutla to Santa Ana and San Salvador. These were
secured by mortgages on the railway. In 1894 the service of the loans
was assumed by the Central American Public Works Company, which took
over the railway for eighty years in return for a promise of an annual
subsidy from the government and a guarantee of a minimum annual profit.
In 1899 this company entered into another contract with the Republic,
by which it agreed to retire on its own account all of the 1889 and
1892 bonds, converting them into five per cent mortgage debentures of
the Salvador Railway Company, which had been formed to take over the
concessions held by the Public Works Company. The Railway Company was
to receive a fixed annual subsidy of £24,000 for eighteen years. In
this way the bonds ceased to be obligations of the Republic. The only
foreign bonded debt of Salvador at the present time is the issue of
six per cent sterling bonds secured through two London banks in 1908.
On January 1, 1916, £756,900 out of the original £1,000,000 were still
outstanding. The service of these was suspended after the outbreak of
the European war, but an arrangement was made with the bondholders by
which the coupons from August, 1915, to August, 1919, were to be funded
into new bonds bearing seven per cent interest.

Costa Rica, which had paid off her share of the Central American
debt in full immediately after the dissolution of the Federation,
contracted two loans in London,--one of £1,000,000 at six per cent in
1871, and the other of £2,400,000 at seven per cent in 1872,--during
the first years of General Guardia’s administration. From the two,
it is said that the Republic received a total sum of £1,158,611, 18
s, 5 d,[81] the rest being kept by the speculators who arranged the
transaction. The service of the debt was suspended in 1874. In 1885 a
new arrangement was made through Mr. Minor C. Keith, by which the old
bonds were refunded at one half their face value by a new issue of
£2,000,000 at five per cent. The interest was to be paid by Mr. Keith
until 1888, in return for concessions in regard to the railroad which
he was building, and after that date by the government. The service
of the debt was suspended from 1895 to 1897, when a new agreement
was made by which the rate of interest was reduced and the unpaid
coupons were exchanged for certificates at forty per cent of their
face value. Payments were resumed and were maintained until October,
1901, when a financial crisis caused by high rates of exchange and
falling coffee prices again forced the government to suspend them. For
nearly ten years the bondholders were put off, usually on the ground
that the Republic was unable to pay as much as its creditors asked.
Each administration made an effort to settle the matter by securing
a reduction of the debt, but refunding contracts made with Speyer
and Company in 1905 and with the National City Bank of New York in
1909 were rejected by the Congress. Finally, however, the pressing
need for refunding the internal debt, which bore ruinous rates of
interest and was increasing alarmingly every year, led the government
to make a new contract with Mr. Minor Keith in 1911. This provided for
a bond issue of £1,617,200, bearing four per cent interest for the
first ten years and five per cent thereafter, to refund entirely the
principal and the unpaid interest of the old debt, which, even with
the numerous previous reductions, amounted to £2,710,293 by the end of
1910. The creditors accepted the arrangement, and the bonds were taken
by an international syndicate, formed by bankers in New York, London,
Hamburg, and Paris. The interest was secured by the customs revenues,
the administration of which was to be taken over by the syndicate in
case of default. As soon as the Congress had ratified this agreement,
another loan of 35,000,000 francs at five per cent, issued at eighty,
and secured by a mortgage on the _aguardiente_ monopoly, was arranged
in Paris for the payment of the internal debt. Since 1911, the service
of these obligations has been maintained with scrupulous regularity.
The total foreign debt of the Republic on December 31, 1915, was
31,478,392.27 colones, or $14,641,112.68 American gold.[82]

In Nicaragua, £285,000 in six per cent bonds secured by a mortgage on
the National Railway had been issued in 1886. Payments were suspended
on these in 1894, and an arrangement was made in 1895 by which the
interest was reduced to four per cent. In 1904, another six per cent
loan, to the amount of $1,000,000 gold, was negotiated with Mr.
Weinberger of New Orleans. Both of these debts were paid in 1909 by
means of an issue of £1,250,000 at six per cent contracted for by the
Ethelburga Syndicate of London. The interest on the Ethelburga loan
was reduced to five per cent in 1912, through the good offices of the
two New York banking firms which had undertaken the reorganization of
the currency, on condition that these firms continue to administer the
customs revenues of the Republic, by which the bonds were secured.
The total foreign debt of Nicaragua on December 31, 1915, was as
follows:[83]

Ethelburga bonds (£1,179,620)        $5,740,131
Debt to Brown Brothers and Seligman   1,060,000
                                     ----------
Total                                $6,800,131

Honduras is now the only one of the Central American republics which
has not effected some adjustment of its foreign debt. This country,
on January 1, 1916, owed to foreign creditors the immense sum of
£25,407,858,[84] arising from loans contracted in London and Paris
in the years 1867-70. Bonds to a nominal value of £5,398,570, and
bearing from five to ten per cent interest, were issued at that time
for the construction of an interoceanic railroad from Puerto Cortez
to the Gulf of Fonseca. The greater part of the money received from
the investors in these securities seems to have been divided between
the officials of the Republic and the promoters, with the result
that the sum which finally found its way into the national treasury
was sufficient only to build ninety kilometers of the railroad. The
payments of interest, which until that time had been made out of the
principal of the loan, were suspended in 1872, and the quotation of
the bonds on the European exchanges dropped rapidly from 85¹⁄₂% to
1¹⁄₄% of their face value.[85] A few half-hearted efforts to enter into
negotiations with the bondholders have been made during the years which
have since intervened, but the Republic has shown little inclination
to make good its obligations, and there have even been occasional
propositions to repudiate the debt altogether, because of the fraud
which accompanied its flotation. Meanwhile the government has been
unable to make arrangements for the extension of the National Railway
into the interior, because of the lien held by the bondholders upon the
line, and it has also been unable to obtain new loans for carrying out
other internal improvements. The foreign debt has thus been one of the
principal factors which have retarded the Republic’s economic advance.

Early in 1909, a plan for the settlement of the debt was arranged by
the British minister in Central America, but its consummation was
prevented by the protest of the United States, which insisted that
provision must at the same time be made for the adjustment of certain
American claims. An arrangement suggested by J. P. Morgan and Company
was therefore substituted for the British scheme. The New York bankers
agreed to purchase the old bonds at the rate of £15 in cash for each
£100 of the old bonds with their accrued interest, on condition that
the United States government be a party to the agreement under which
this was done. After some delay, a treaty was signed on January 10,
1911, by Secretary of State Knox and the Minister of Honduras at
Washington, in accordance with which the United States was to assist
Honduras in obtaining a loan secured by her customs duties, which
were to be administered, until the bonds were paid, by a collector
general nominated by the State Department. The treaty was rejected by
the Honduranean Congress on January 31, 1911.[86] After the Bonilla
revolution, another attempt was made to arrange for the loan, but there
was such strong opposition to the treaty in the American Senate that
nothing could be accomplished. In February, 1912, J. P. Morgan and
Company withdrew from the negotiations, and a syndicate of New Orleans
bankers took their place. The treaty, however, was never ratified, and
the plan for a new loan was finally abandoned.

At the Pan American Financial Conference in May, 1915, the delegates
from Honduras announced that their government was ready to increase
the customs duties and the banana export tax to a point where they
would yield an additional sum of $410,000 gold each year, which might
be set aside for the service of the foreign debt. As the holders of the
bonds have indicated their willingness to negotiate upon this basis,
there seems to be reason to hope that an adjustment will eventually be
brought about which will place the credit of the Republic on a sound
basis.[87] Until this is done, it will be impossible to build railroads
or to carry out the other internal improvements which are indispensable
for the development of the country.

The failure of the Central American governments to fulfill their
obligations to foreign creditors is not due entirely to a listless
sense of national honor, for in many cases there has been serious
doubt whether these obligations should be regarded as entirely valid.
The circumstances under which the majority of the public debts were
contracted were such that the governments have felt a strong reluctance
to recognize their duty to repay them in full. The bonds, bearing heavy
rates of interest, were usually purchased in the first place at a
considerable reduction from their face value, and the speculators who
floated them took advantage of the ignorance or the cupidity of the
agents with whom they negotiated to defraud the borrowing governments
of large sums. A large part of the product of the issue, in fact, seems
in many cases to have been retained by the underwriters or divided by
them with the Central American officials. Subsequent administrations
were naturally unwilling to repay sums from which the country as a
whole had never received the benefit, especially as the service of the
loan involved a heavy and in some cases intolerable burden upon the
impoverished treasury and deprived the government of resources which
were sorely needed for the maintenance of order and the promotion of
internal improvements.

One of the influences which have most disastrously affected the
government finances and the credit of the Central American republics
during the last generation has been the depreciation of their
currencies. Until the last decade of the nineteenth century, the money
of the Isthmus had been based upon the silver dollar, subdivided into
eight _reales_ or one hundred cents. Each of the five countries had its
own coinage, but foreign money, especially from other Latin American
states, was ordinarily accepted at its face value. When the market
price of silver declined, as it did with great rapidity after 1890,
there was a serious disturbance both of the foreign commerce and of the
finances and credit of the five governments, and this disturbance was
intensified by a further depreciation of the currency, in Guatemala,
Costa Rica, and Nicaragua, by the issue of irredeemable paper money.
For a number of years, rates of exchange fluctuated widely, with
a general upward tendency, and it became increasingly difficult
for merchants to pay their bills in foreign countries and for the
governments to meet the service of their loans. Costa Rica, and later
Nicaragua, succeeded in establishing a currency on a gold basis, but in
the other republics the situation grew more and more difficult until
the outbreak of the European war in 1915. This catastrophe caused the
rate of exchange upon New York to rise from 25 to 100 per cent in each
of the five countries, and made necessary a suspension of payments upon
the foreign debt in two of them.

Several causes have contributed to the disorganization of the Central
American currencies. The fallacies which have at times caused
unfortunate experiments with the monetary systems of other countries
have been as attractive in Central America as elsewhere, and every
financial or commercial depression has seen demands, which have
usually been acceded to, for an increase in the circulating medium.
The banks, whose notes form the larger part of the currency in each
state, have been subject to little effective regulation, and have in
some cases been abetted by the governments in flooding the country
with worthless paper money. By unscrupulous speculation in foreign
exchange, moreover, they have often done much to cause unnecessarily
violent fluctuations in the premium on gold. At the present time, laws
relieving the banks of their obligation to exchange their notes for
gold or silver are in force in Guatemala, Salvador, Nicaragua, and
Costa Rica. The factor which has done most to disorganize the monetary
systems of the five republics, however, has been the inability of the
authorities to resist the temptation to use the depreciation of the
currency as a source of revenue. There is no easier method of raising
money for pressing needs than the issue of government paper or the
granting of special privileges to the banks in return for loans; and
few of the countries have as yet learned that such a policy in the long
run does far more harm than good.

The worst currency system of the Isthmus is that of Guatemala, where
silver coin has entirely disappeared from the circulation within the
last twenty years. On assuming office in 1898, President Estrada
Cabrera found himself confronted by serious financial difficulties
arising from the extravagance of his predecessor and the business
depression from which all of the Central American countries were at
the time suffering. In order to provide funds, the new administration
resorted to what was practically an issue of unsecured paper money.
In return for a large loan, drawn in part from the reserves which
guaranteed their circulation, the banks were relieved of their
obligation to redeem their notes in silver, and a large issue of
new notes, guaranteed solely by the claims of the banks against the
government, was made at the same time through the so-called _Comité
Bancario_. Subsequent decrees made all debts payable in paper even
though the contracts expressly provided for payment in silver.
The redemption of the bank-notes has never been attempted, and
further issues have been made from time to time until the amount in
circulation, on January 1, 1916, was more than $160,000,000.[88] The
money depreciated rapidly. Just before the outbreak of the European
war, the paper _peso_ was worth about five cents in gold, but in August
and September, 1914, the difficulty of obtaining drafts on foreign
countries forced the rate of exchange from 20 to 1 to 40 to 1. It has
remained approximately at this point since that time, although it has
fluctuated considerably, sometimes rising or falling as much as thirty
per cent within a few weeks.

The circulating medium is now in a very bad condition. The notes of the
smaller denominations are dirty and torn almost beyond recognition,
and in quantity they fall far short of supplying the necessities of
commerce. The subsidiary coinage, which consists of nickel and copper
pieces of 12¹⁄₂ and 25 cents, is also insufficient in quantity, and it
is supplemented in ordinary transactions by tokens issued by business
houses and municipalities, tram-car tickets, and postage stamps. This
state of affairs naturally causes great inconvenience to persons
engaged in commerce on a small scale.

The fluctuations in the rate of exchange make business transactions
very difficult, for merchants who handle imported goods must change
their prices from day to day if they are to avoid loss, and must at
the same time face the greatly decreased purchasing power of the
masses of the people when the money in which wages and salaries are
paid depreciates. There is a growing tendency to quote prices and make
transactions in United States currency, of which there is a large
amount in circulation.

Proposals for reforming the currency have been made from time to
time, but none of them have been taken up by the government. The
reintroduction of a metal standard, in fact, has been opposed by one of
the most influential classes in the community. The coffee planters and
other employers of labor have benefited greatly by the rising rate of
exchange. Despite the depreciation of the currency, they have raised
the wages of their employees comparatively little, and the latter,
bound by contracts from which the decline in their earning power made
it more difficult than ever for them to escape, have been unable to
protest. The result has been an enormous increase in profits, for wage
costs have been reduced, while the coffee has continued to be sold for
gold in the European and North American markets. The government also
benefits by the present situation, for the revenues from the customs
houses are received in gold, and the employees are paid in paper, with
the result that there is a yearly increasing surplus in favor of the
treasury. The effect of this condition on the morality of the underpaid
officials has already been mentioned.

In Nicaragua, monetary conditions were much similar to those in
Guatemala before the reform carried out by the New York bankers in
1912. President Zelaya had driven the silver out of circulation early
in his administration by the issue of legal tender treasury notes, and
the value of the _peso_, after his fall, had sunk to about five cents
gold. The establishment of a new currency, under the 1911 treasury
bills agreement, has been described in Chapter XI. At the beginning
of the European war, the new money was exchangeable at par for sight
drafts on New York. The inability of the government to replenish the
exchange fund against which these drafts were drawn forced the National
Bank to suspend their sale for a time, with the result that the premium
on American exchange rose to thirty per cent early in 1915. More
recently, however, the National Bank has resumed the sale of drafts at
par with its own funds.

Honduras is still upon a silver basis. Silver coin circulates at its
intrinsic value, and bank-notes, which are generally used in commerce,
are accepted at par in the cities and towns, although the country
people as a rule prefer to use specie. The Republic has coined little
money of its own, but a considerable part of the silver of Guatemala
and Nicaragua found its way over the border when those republics fell
under a paper regime, and _pesos_, or dollars, from Salvador, Chile,
and Peru are in general use. The monetary system of the Republic is
thus better than that of the majority of its neighbors, but it can
nevertheless hardly be said to be sound. The rise and fall of the price
of silver in the world’s markets involves fluctuations in the rate of
exchange which are only less violent than in the case of an unsecured
paper circulation, and cause much inconvenience and danger to merchants
dealing with foreign countries. A part of the Republic’s imports, which
for several years past have exceeded the exports, are undoubtedly paid
for in silver coin, despite the restrictions on the export of specie.
This tends to leave only subsidiary coins, of a lower standard of
fineness than that of the _pesos_, in circulation, and to make it more
difficult also for the banks to maintain their metallic reserves. Since
the beginning of 1916, especially, the scarcity of exchange on New
York, combined with the high price of silver in the foreign markets,
has threatened to drain the country of its circulating medium, and has
forced the government to forbid entirely the exportation of coin.

The currency of Salvador was until very recently on a silver basis,
but in August, 1914, the banks, whose notes formed a large part of the
circulating medium, were allowed to suspend silver payments in order to
safeguard their metallic reserves, and the exportation of specie was
forbidden. Silver coin has now almost disappeared from circulation,
and bank-notes and small nickel coins have taken its place in all
transactions. The fact that the banks still maintain a large reserve
for the resumption of specie payments after the war, however, has
prevented a serious depreciation, although the rate of exchange has
fluctuated considerably.

In Costa Rica, the depreciation of the currency had begun as early as
1882 with the issue of government paper and bank-notes which gradually
drove silver coin out of circulation. Rates of exchange rose slowly
until 1896, when President Rafael Yglesias procured the passage of a
law which provided for the establishment of a gold standard. A unit
called the _colón_, worth about 46¹⁄₂ cents in United States currency,
was adopted, and certificates were gradually exchanged for the old
money at the rate of one _colón_ for one _peso_. On July 15, 1900, the
government was able to begin the redemption of these certificates in
gold coin. A new law, meanwhile, had required the banks to guarantee
their notes by adequate reserves of specie, so that the currency of
the Republic was placed upon a sound basis. At the outbreak of the
European war, however, the government relieved the banks of their
obligation to redeem their notes in gold. A little later, finding that
its revenues were falling off, and being unable to arrange for a loan
with the existing banks, it granted to a new institution, the Banco
Internacional, the privilege of issuing inconvertible notes secured by
government bonds. The result was a rapid depreciation of the currency.
The rate of exchange on New York rose from 218 on August 1, 1914, to
260 in January, 1915, and to nearly 300 a few months later. It has been
reduced somewhat since that time, and a metallic reserve has gradually
been accumulated by the Banco Internacional, so that there seems to be
ground for hoping that the paper will be redeemed at par when normal
conditions are restored.

The Central American republics will have to depend upon the assistance
of foreign capital both for the readjustment of their foreign debts and
the reorganization of their monetary systems,--reforms for which the
need will become pressing soon after the conclusion of the war. The
problem of placing their credit on a sound basis is one of the most
important which confronts them today. If their economic development
is to continue, they will require new loans from abroad, not only
for refunding old obligations and stabilizing their depreciated and
fluctuating currencies, but also for building railways and roads,
improving ports, and making other internal improvements. These new
loans, probably, can be obtained to best advantage only in the United
States, with the aid of the American government, for no other country
has the interest which we have in the solvency and the economic welfare
of the Central American nations, and no other, while the Monroe
Doctrine is maintained in its present form, is really in a position
to guarantee to its bankers the full measure of protection which
is necessary to make loans to the republics of the Isthmus a safe
investment.


FOOTNOTES:

[78] Includes export duties.

[79] The internal debt of each of the republics, according to
statistics compiled from their Treasury Reports and from the 1915
Report of the Council of the Corporation of Foreign Bondholders, was as
follows on December 31, 1914.

(Figures in American gold.)

Guatemala                   3,880,986
Salvador                    4,563,676
Nicaragua                   6,676,662
Honduras (July 31, 1914.)   1,844,585
Costa Rica                  2,692,215


[80] These and other details in regard to the bonded debts of the
Central American Republics are for the most part based on information
in the 1915 Report of the Council of the Corporation of Foreign
Bondholders in London.

[81] Message of President Jiménez to Congress, 1911.

[82] Costa Rica, _Memoria de Hacienda_, 1915. This sum includes certain
minor obligations to correspondents in New York, London, and Paris.

[83] This does not include the accrued interest, which now amounts to a
considerable sum, as the service of the loans has been suspended since
1914.

[84] Report of the Council of the Corporation of Foreign Bondholders,
1915, p. 207.

[85] Honduras, Boletín Legislativo, April 19, 1911. (Quoting from the
Moniteur des Rentiers of Paris.)

[86] The treaty was exactly similar to that signed in the same year by
the United States and Nicaragua. For the text, see the American Journal
of International Law, Vol. 5, supplement, p. 274.

[87] See the 1915 Report of the Council of the Corporation of Foreign
Bondholders.

[88] U. S. Commerce Reports, Supplement 29a, September 2, 1916.




                              CHAPTER XIV

         THE INFLUENCE OF THE UNITED STATES IN CENTRAL AMERICA


 The Economic and Political Interests of the United States in
 Central America--Intervention in the Internal Affairs of the Five
 Republics--Antagonism in Central America--Beneficial Effects and
 Shortcomings of Our Policy--How the United States can Assist in
 Promoting Good Government and Economic Development--Moral Influence of
 the United States--The Ultimate Object of Our Policy.


The events of the last ten years have made it clear that the relations
between the United States and Central America must inevitably be
closer than our relations with countries whose well-being is of less
vital importance to us. However much we may dislike interfering in the
internal affairs of our neighbors, we cannot remain indifferent when
disorder and misrule paralyze agriculture and commerce and threaten
to provoke European intervention in a region where our political and
economic interests are so great as they are in the republics bordering
on the Caribbean Sea. Both for our own security and for the sake of
helping neighbors with whom we are united by powerful ties of proximity
and common interests, we must inevitably use our influence more and
more to aid the Central American republics in developing stable
political institutions which will insure their prosperity and their
continued independence.

The interests of the United States in the Isthmus are far greater
than those of any other foreign power. In the first place, like the
other countries around the Caribbean Sea, the five republics are one
of the most promising fields for the expansion of American commerce
and the investment of American capital. While no one of them is an
important customer of itself, together they make up a market which will
one day be of very great value. Our exports to them have increased
greatly in recent years and especially since the beginning of the
European war, and our imports from them are growing steadily. Only a
very small part of the food-producing possibilities of the tropics,
moreover, has as yet been realized, and economists say that it is not
improbable that the people of the temperate zone will be forced to rely
upon their equatorial neighbors for an increasingly large proportion
of their provisions in the not distant future. If this is so, the
development of that part of the tropics which is naturally tributary to
us commercially cannot be a matter of indifference. This development
can only take place with the improvement of political conditions, and
with the introduction of capital from wealthier countries which the
establishment of peaceful government will make possible.

The establishment of peaceful government in the Isthmus is a matter
in which we are deeply interested for political reasons. The Monroe
Doctrine must always be a paramount principle of our foreign policy,
at least in so far as it deals with the countries of the Caribbean,
because the exercise of political influence in that region by a foreign
power could not but be a constant menace to our peace and security.
Several European nations, however, have extensive and legitimate
interests in Central America, for many of their citizens reside and
own property there and most of the foreign debt of each of the five
republics is held in London or Paris. It is impossible to expect that
they should remain inactive when these investments are made worthless
by internal disorders or by the arbitrary action of irresponsible
native rulers. Whatever one may think of the morality of the protection
of foreign investments by intervention and the collection of public
debts by force, this is the established practice of most civilized
nations, and it is a practice which finds much justification in the
conditions which exist in certain Central American countries. The
landing of troops and the seizure of ports by a foreign power, so near
our shores and in the immediate vicinity of the Panama Canal, can
hardly fail to endanger the most vital interests of the United States,
because of the manifold opportunities which such measures afford for
exerting an influence over internal politics. The control of the policy
of one of the Central American governments by a European chancellory or
the grant of special economic privileges would of course be intolerable
to the United States. That such consequences might follow even a simple
intervention to enforce the payment of debts, is all too evident from
events which have occurred in other parts of the world. The American
government cannot, however, oppose measures adopted by European powers
for the protection of the legitimate interests of their nationals
without itself assuming a certain responsibility for the safeguarding
of foreign life and property. Even supposing that it were sufficiently
powerful to prevent other governments from intervening, it could
hardly allow its protection to be made a cloak for the confiscation of
foreign property and the repudiation of bonded debts by unscrupulous
professional revolutionists like those who have at one time or another
been in power in each of the Central American countries.

The United States has already gone very far in its attempts to assist
its Central American neighbors to attain political and financial
stability. At first it limited its efforts to friendly advice and
mediation. By participating in the Washington Conference of 1907,
however, it became in a measure responsible for the enforcement of the
conventions drawn up by that body, in so far, at least, as they related
to the discouragement of revolutions, the compulsory arbitration of
disputes, and the neutralization of Honduras.[89] The continual
violation of the provisions of the Washington Treaties by President
Zelaya of Nicaragua led President Taft to break off relations with him
in 1909 and to intervene in the revolution of that year in such a way
that the fall of the Liberal administration was inevitable; and the
financial and military assistance which it was necessary to render to
Zelaya’s successors, in order to prevent the Republic from falling into
a state of anarchy, imposed new and still greater responsibilities upon
the United States. Since 1912, when a revolt against the established
authorities was suppressed by American troops, the Conservative
government at Managua has been kept in office by the presence of a
force of American marines, and the State Department has become deeply
involved in assisting the Republic to adjust its financial affairs.
The United States has recently acquired new interests in the Isthmus
by the treaty giving it the right to construct an interoceanic canal
through Nicaragua and to establish a naval base in the Gulf of Fonseca.
Meanwhile outbreaks of disorder have been discouraged in all parts of
the Isthmus by the influence exerted by the authorities at Washington
against violations of the 1907 conventions and by their refusal to
recognize governments which came into power through revolution.

The policy of the United States has aroused strong antagonism in
Central America. The people of the Isthmus are by no means convinced
of the disinterestedness or the friendly intentions of their
powerful neighbor, and it would be difficult to persuade them that
the interference of the latter in their affairs will ultimately be
for their own good. Their hostility is due partly to the inevitable
opposition among a proud and sensitive people to foreign intervention
in their domestic concerns, and partly to the failure of the American
government to convince the Central Americans of the altruism of its
aims. Our State Department has had no definite, well-understood, and
energetically enforced policy, but has been forced from step to step
by circumstances as they have arisen, and its course of action has
not always been such as to inspire confidence in the purity of its
motives. The attitude of the American government in the revolution
of 1909-10 in Nicaragua, for example, was hardly consistent in view
of its championship of the Washington Conventions, notwithstanding
the excellent reasons which the United States as well as the Central
American countries had for desiring President Zelaya’s fall. The
“Dollar Diplomacy” of Mr. Taft’s administration was regarded throughout
the Isthmus as the opening wedge for the political absorption of the
five republics by the United States. This feeling caused the emphatic
rejection of the proposed loan treaty by the Honduranean congress,
and aroused a violent opposition to the financial policy of the
Conservative government in Nicaragua,--an opposition which was greatly
intensified by the fact that the authorities who signed the loan
contracts and who turned over to American banking concerns the control
of the customs houses, the currency system, and the national railways,
were maintained in office by the armed forces of the United States. The
steps taken more recently in connection with the canal treaty have been
regarded by many Central Americans as final proof of the aggressive
intentions of the American government.

The United States has nevertheless achieved one of its main objects, in
that revolutions and international wars have been checked throughout
the Isthmus. There has been no very serious disturbance of the peace
since the suppression of Mena’s revolt in Nicaragua in 1912. This has
been due partly to the efforts of the State Department to secure the
strict observance of those provisions of the Washington Conventions
which restrain the Central American republics from intervening in one
another’s internal political affairs, and from allowing their territory
to be made the base of operations against neighboring governments, but
more to a fear on the part of native political leaders that a renewal
of the disorderly conditions which formerly existed would lead to
American intervention and to the domination of their affairs, as in
Nicaragua, by an outside power. This apprehension has exerted a most
valuable restraining influence on enemies of the established order in
many countries which had hardly ever known five years of continuous
peace before 1912. There were, it is true, small revolts in Nicaragua
and Guatemala in 1915 and 1916, but they were easily suppressed by the
authorities, and they hardly disturbed the tranquillity of the greater
part of the territory of the republics in which they occurred. Their
insignificance showed that no large or influential section of the
opposition party had participated in them. As the result even of this
short era of peace, there has been a marked improvement in economic and
political conditions in many sections of the Isthmus.

The policy of refusing to recognize any forcible change of government,
however, is a very difficult one to carry out consistently. It would
be manifestly impossible to prevent all revolutions. An attempt to do
so would involve continual armed intervention in the internal affairs
of the Central American republics, which would be as burdensome and
distasteful to the United States as it would be intolerable to the
people of the Isthmus. It is often equally impossible, and sometimes
exceedingly disastrous, to refuse to recognize a government which has
sprung from a revolution. After one administration has fallen and its
successor has established itself firmly in power, the refusal of the
United States to recognize the new authorities only weakens them, and
thus opens the way for a complete disintegration of the political
organization, without advancing appreciably the cause of constitutional
government. The restoration of the old regime is rarely either possible
or desirable. The ousted authorities, if they themselves secured
office, like almost all Central American administrations, as the
result of a successful revolution or an election controlled by the
government, can hardly lay claim to a higher degree of legality than
their successors, and a president who has once lost his prestige and
his following is not often able to re-establish a strong and efficient
government, even with foreign support.

The prevention of chronic civil war is indeed the first great requisite
for the improvement of political conditions in Central America, but
even peace will be a doubtful blessing in the long run if it is secured
by the maintenance in office by outside influence of presidents who
are responsible to no one and who have nothing to fear from popular
opposition. The mere discouragement of revolutions offers no solution
for the most serious of Central America’s political problems, for it
provides no guarantee of good government and no peaceful method of
removing authorities whose rule may have become intolerable.

The responsibility resting upon the United States is the more
serious, because the American government is not infrequently called
upon actually to decide who shall be president of one or the other
of the five republics. Even an intervention to protect foreign life
and property often determines, as a matter of fact, the outcome of a
civil war, and the influence upon internal politics is still greater
when the United States uses diplomatic pressure or force to prevent
a revolution or to bring about an agreement between the contending
factions. In either case, the United States practically imposes upon
the country affected the rule of one or the other political group. It
is impossible to intervene merely to prevent disorder, and then leave
to the people the choice of their own rulers, for elections, as we have
seen, are nothing more than a form for putting into effect the choice
of the government already in office. It would be foolish to attempt
to force democratic institutions upon the less advanced republics
of the Isthmus at the present time. No president of one of those
countries, however sincere he might be in his purpose, could really
hold a free election, and any attempt to do so would probably end in
bloodshed and disaster. An election supervised by the United States,
which was proposed as a solution of the recent presidential problem in
Nicaragua, would be equally unsatisfactory as a means of establishing
a new administration. Aside from the difficulty of ascertaining the
wishes of a nation where the majority of the voters have no interest in
political affairs, there are so many opportunities for fraud and for
the exercise of pressure by the government and by the local officials
at every stage of the campaign, as well as in the election itself, that
it would be practically impossible to guarantee the opposition party a
fair chance. An administration which has once obtained military control
can perpetuate itself indefinitely under constitutional forms until its
opponents become sufficiently strong to overthrow it by force of arms.

The United States, therefore, can hardly assist one party in securing
and holding the control of the government, without assuring itself that
the men whom it thus keeps in office are acceptable to the people under
their rule, and that they administer the affairs of their country with
at least a reasonable degree of honesty and efficiency. This can only
be done by establishing an administration which fairly represents the
best elements in the community. It should not be impossible to secure
such an administration by an agreement between the party leaders,
who for all practical purposes represent the country in political
affairs. Compromise between the various factions, which is the only
practicable means, except revolution, of changing the higher officials,
is the end towards which the diplomatic efforts of the United States
should be directed in cases where circumstances make a reorganization
of the government inevitable. The more respectable and patriotic
leaders of all parties would far prefer an adjustment of this kind to
a continuation of civil war, and even those who might be unwilling to
subordinate their own ambitions to the general welfare would probably
accept it rather than incur the danger of armed intervention by the
United States.

The friendly mediation of the United States would do much to improve
the political conditions of the Isthmus if it were directed towards
strengthening the influence of the better element in the educated
class. Numerous intelligent and patriotic men of high political ideals
are to be found in each country, but they have not hitherto had so
large a share in the direction of affairs as they should because the
revolutions have brought to the front military leaders and demagogues
rather than statesmen. Even where men of the highest character have
been at the head of the government, as has not infrequently been the
case, they have found themselves forced to place corrupt or unworthy
men in office for political reasons, because they have been unable to
free themselves from dependence upon the support of the professional
politicians. With the greater stability in the government which will
necessarily result from the discouragement of revolutions, however,
the less turbulent elements should become more and more prominent,
especially if they are supported by the influence of the United States.

The United States can at the same time materially assist its Central
American neighbors by aiding them in securing new loans for the
reorganization of their finances and the development of their natural
resources. The unenviable record of Central American bonds makes it
unlikely that any bankers, whether American or European, would lend
money to one of the five republics, unless it were on the most onerous
terms, without an effective guarantee of the protection of their
government in case of default. Considering the close relation between
the solvency of the countries of the Isthmus and the maintenance of the
Monroe Doctrine, it is evident that the United States must eventually
exert its good offices in cases where it has been impossible to reach
an agreement with foreign creditors by any other means.

In Santo Domingo and Nicaragua, the service of loans made by American
bankers has been guaranteed by placing the administration of the
customs duties in the hands of officials appointed by or at least
approved by the State Department. This is far from being an entirely
satisfactory solution of the problem. The collectorships thus far
established have provided a highly satisfactory guarantee for the
foreign creditors, and have decidedly increased the efficiency of the
customs service, but their existence has been very distasteful and
of doubtful advantage to the native community. Graft is abolished in
the customs houses themselves, but there is nothing to prevent that
portion of the receipts which is not used for the service of the
foreign debt from being misspent. Revolutions are not done away with,
for revolutionists fight, not, as is sometimes said, for the possession
of the customs houses, but rather for the control of the appointing
power and of the revenues, which the customs officials must necessarily
turn over to them when they become the _de facto_ government. The
chief result is the imposition upon the American government of a heavy
burden of responsibility which forces it to intervene continually in
the internal affairs of the native governments, and which often leads
to friction with the officials and to a feeling of dislike towards
the United States in the community at large. The acceptance of foreign
financial control, moreover, inevitably involves a lessening of the
sense of international responsibility and a certain loss of national
self-respect which cannot but react unfavorably upon internal politics.

It may well be questioned whether the bondholders could not be
satisfactorily protected by other methods. If, for instance, the
foreign loan were secured by the hypothecation of the customs revenues
or of some other easily collected source of revenue, with a promise
of the protection of the State Department in realizing the guarantee
of the loan in case of default, the interests of the creditor would
be adequately protected, while the Central American governments, so
long as they dealt honestly by the bondholders, would be spared the
humiliation of having to place one of their principal functions in
the hands of a foreign official who was in no way subject to their
control. This is the basis upon which Costa Rica’s external debt rests
at present, except that no foreign government participated officially
in the arrangement. There would probably be little difficulty about
maintaining the service of the loan under such conditions. The majority
of the Central American governments have shown little regard for
their credit in times past, but they would probably manifest little
inclination to default if their debts were reorganized on a fair basis,
and if they were aware that a failure to pay would involve the seizure
of their customs houses.

It is highly desirable that the United States should exercise a
measure of control over the operations not only of American bankers
but of other American corporations which do business in the Isthmus.
The economic development of the last twenty-five years has created a
situation in which some of the five republics are almost powerless
to protect themselves against the oppression and greed of foreign
interests, for corporations like the great fruit companies and
the railroad companies are able to bring to the support of their
projects financial resources which far exceed those of the local
government or of any group of natives. Some of these concerns, by the
corruption of officials or by the unscrupulous use of their control
of transportation facilities, have obtained special privileges which
have been an obstacle to the legitimate business of other foreigners
and to the development of the community as a whole. Moreover, serious
international difficulties have not infrequently arisen when subsequent
governments have attempted to annul or to modify these concessions.
Only a more careful supervision of the contracts entered into by
American concerns with native officials, who are not always above
temptation and who are in any event rarely in a position to ascertain
the financial responsibility of the concerns with which they are
dealing or the ultimate effects of the privileges which are asked,
can insure the United States against the possibility of being forced
to use its power to protect unscrupulous speculators and predatory
corporations in the exercise of rights which, even though legally
acquired, are in many cases extremely unfair and injurious to the
countries which have granted them.

The same interests which have obtained inequitable concessions by
dishonest methods have too often sought to secure influence with the
native governments by fomenting and assisting revolutions against
presidents from whom they cannot obtain what they desire. In recent
years influences of this kind have done even more to cause internal
disorder in some of the republics than the intervention and intrigues
of other Central American governments. Honduras has been the chief
sufferer, for the numerous outbreaks which occurred in that Republic
between 1907 and 1911 seem to have been financed in many cases by
interests in New Orleans, and to have received valuable assistance
from the foreign colony on the North Coast. In Nicaragua also the
indiscriminate granting of concessions on the one hand and the
dissatisfaction among the foreign interests which were injured by
these grants of special privileges on the other was one of the primary
causes of the revolution of 1909-10. If permanent peace is ever to
be established in the Isthmus, the encouragement of revolutions from
outside, whether it be for the satisfaction of the ambition or the
jealousy of petty despots in neighboring republics or for the pecuniary
profit of unprincipled foreigners, must be repressed by every possible
means.

Much can be done to promote stable government in Central America by the
consistent enforcement of the principles of the Washington conventions,
for few revolutions, except those which originate in genuine popular
discontent with the existing regime, would attain formidable
proportions if they were not allowed to use neutral territory as a
base and if they received no assistance from other Central American
countries or from friends in the United States. If the American
government exerts its influence to secure the observation of the 1907
treaties, and at the same time adopts effective means for restraining
its own citizens from disturbing the peace of the Isthmus, the position
of constituted governments throughout Central America will be greatly
strengthened. To be effective, such a policy must be vigorously
enforced, and its one end,--to prevent revolutions and international
wars in Central America,--should be pursued in such a way that there
can be no suspicion of selfish objects or ulterior political purposes.

Much depends upon the character and the ability of the men who are sent
to represent the United States diplomatically in the Central American
capitals. Unless they are fitted for their positions by disposition
and by training, their relations with the native governments can never
be entirely satisfactory. An acquaintance with the character of the
people and a command of Spanish are of the first importance, for
Central American political methods and the motives which govern the
action of men and parties, incomprehensible at best to the average
American, are entirely beyond the understanding of one who does not
speak the language and is thus barred from association with any but
a very small portion of the people. The cordiality of our relations
with the republics of the Isthmus depends to a very great extent upon
the capacity of our agents to win the confidence and friendship of
their people; and the extremely important position occupied by the
United States minister in these countries, where he is forced to play
a part far more influential than that which falls to the lot of the
average diplomat, makes it an act of injustice to the Central American
countries themselves to send ministers who are not properly qualified
for their position.

The influence and authority of the United States in Central America
are very great, for there are few educated men in the Isthmus who do
not realize that the future of their countries will be determined
almost entirely by their relations with their northern neighbor. The
people of the five republics have always admired our civilization
and our institutions, and they have often turned to the American
government, not only for protection against European powers, but also
for aid in adjusting their domestic difficulties. They have bitterly
resented the policy of the last five years, which they have regarded
as a menace to their independence, but their hostility to American
intervention would to a great extent disappear if they were convinced
that it was actuated by a desire to assist them and not by any purpose
of expansion. Even those elements which are most jealously opposed to
foreign control at present would not object so strongly to the exercise
of foreign influence if they themselves profited by it, and most of the
more intelligent and patriotic political leaders avow that they would
welcome the assistance of the American government in securing peace
and stability in the Isthmus and in bringing about the Central American
Union.

While their political and economic interests have become so closely
interdependent, cultural ties between the United States and Central
America have also grown far stronger in the last quarter century as a
result of the increasing prosperity of the coffee-producing countries
and the improvement in means of communication. The wealthier families
of the Isthmus travel more and more in the United States, and a very
large proportion of them send their children to be educated in our
schools and colleges. English has taken the place formerly held by
French as the most widely spoken foreign language, and North American
news services and periodicals are the principal sources of information
on events occurring in the outside world. The creation of ties of this
kind will have more influence than treaties and diplomatic conferences
in determining whether our relations with Central America shall be
friendly and mutually profitable rather than characterized by dictation
and compulsion on the one side and bitter resentment on the other.

The influence of North American civilization in the Isthmus, which is
daily becoming stronger under present conditions, could be greatly
increased if the missionary educational enterprise which has been so
successful in the Orient could be turned in some measure to these
countries at our own doors. The establishment by American philanthropic
societies of institutions for higher education and for technical
training in agriculture and engineering would perhaps do more than any
other one factor could to improve both the economic and the political
conditions of the Isthmus. Many of the governments have advanced far in
the primary instruction of their people, but they have been prevented
from making corresponding progress in higher education by the expense
involved and by the lack of properly trained teachers. There is no form
of assistance which the people of the Isthmus would appreciate more,
and which would do more to convince them of the friendly intentions of
their great neighbor.

The political stability and the prosperity of the Central American
countries have been the one great object which the United States has
sought in its relations with their governments. Modern conditions have
made the maintenance of peace and the development of commerce and
natural resources in the Isthmus far more important to the American
people than ever before. It is inevitable, therefore, that the United
States should exert a decided influence in the internal affairs of
the five republics, so long as disorder and insolvency expose them
to aggression by European powers. But it should never be forgotten
that the ultimate purpose of the American policy is to enable the
countries of the Isthmus to attain a position where they can manage
their own affairs without outside interference. Careless talk about
the ultimate absorption of these countries by the United States is as
unwarranted as it is mischievous, for none of the measures thus far
taken in any Central American state have had as their object or their
logical outcome permanent political domination. If the efforts of our
government to assist its weaker neighbors are to attain any measure of
success, its sincerity and its freedom from any desire for territorial
expansion must be placed beyond all doubt.

The present political condition of the Isthmus is a transitory one,
which is changing rapidly with the economic development of the
country and the spread of education among the common people. If they
are given a fair chance, the five republics will work out their own
salvation, but they will not be aided in doing so either by the
establishment of foreign protectorates over them or by the attempt of
a foreign government to impose upon their people responsibilities
of self-government for which they are not as yet ready. The ultimate
solution of their political problems must be sought in making a reality
the democratic institutions which each of them already possesses on
paper, by preparing their people for the intelligent exercise of the
suffrage. When the people are fitted to take an active part in choosing
their own officials, as they already do in Costa Rica, and when they
have learned the respect for the constitution and for the will of
the majority which can only come with experience in self-government,
there will be no need for foreign intervention to protect life and
property from destruction at the hands of revolutionary armies. To aid
in bringing that time nearer should be one of the primary aims of the
foreign policy of the United States.


FOOTNOTES:

[89] “The Treaties and Conventions of Washington of 1907, ... were
conceived, debated, and concluded through the friendly intervention of
the Government of the United States of America. These conventions have,
therefore, the moral guaranty of that great nation.” (Case of Costa
Rica against Nicaragua before the Central American Court of Justice,
1916, p. 9.)




                             BIBLIOGRAPHY

_of the more important historical and descriptive material dealing with
                           Central America_


A. OFFICIAL DOCUMENTS.

1. Publications of the United States Government, especially:

 Foreign Relations of the United States.

 Commerce Reports.

 Congressional Documents.

 Congressional Record.

 Annual Reports of the Navy Department.

 Treaties and Conventions of the United States.

2. Publications of Central American governments.

 Each of the Central American Republics publishes the annual reports
 of the principal executive departments, under the titles _Memoria
 de Relaciones Exteriores_, _Memoria de Hacienda y Crédito Público_,
 etc. Most of them also have statistical bureaus, which publish annual
 reports containing interesting although too often inaccurate material.
 They also publish official gazettes, collections of laws and treaties,
 and other material.


B. HISTORICAL WORKS.

1. General histories of Central America.

 Bancroft, Hubert Howe: History of Central America. (3 vols.) San
 Francisco, 1883-90.

 Fortier, A., and Ficklen, J. R.: Central America and Mexico. (Vol. IX
 of G. C. Lee’s History of North America.) Philadelphia, 1907.

 Fuentes y Guzman, Francisco Antonio de: Historia de Guatemala, ó
 Recordación Florida. (Deals only with the sixteenth century.) Madrid,
 1882-83.

 Gómez Carillo, Augustín: Estudio Histórico de la América Central. San
 Salvador, 1884.

 ---- ----: Compendio de Historia de la América Central. Guatemala,
 1906.

 Jaurros, Domingo: History of Guatemala. (Translated from the Spanish.)
 London, 1823.

 Milla, José: Historia de la América Central, 1502-1821. (2 vols.)
 Guatemala, 1879-82.

 Montúfar, Lorenzo: Reseña Histórica de Centro América. (A collection
 of source material in 7 volumes.) Guatemala, 1878-87.

 Montúfar, Manuel: Memorias para la Historia de la Revolución de Centro
 América. San Salvador, 1905.

 Squier, Ephraim G. Historia Política de Centro América. Paris, 1856.

2. Nicaragua.

 Gámez, José Dolores: Historia de Nicaragua. Managua, 1889.

3. Costa Rica.

 Mora, Manuel Argüello: Páginas de Historia, Recuerdos é Impresiones.
 San José, 1898.

 Fernández Guardia, Ricardo: Historia de Costa Rica: El Descubrimiento
 y la Conquista. San José, 1905.

 ---- ----: Same, translated into English. New York, 1913.

 ---- ----: Cartilla Histórica de Costa Rica. San José, 1909.

 Fernández, León. Historia de Costa Rica durante la Dominación
 Española, 1502-1821. Madrid, 1889.

 ---- ----: Colección de Documentos para la Historia de Costa Rica. San
 José, 1881-83.

 Montero Barrantes, Francisco: Elementos de Historia de Costa Rica. (2
 vols.) San José, 1892-94.

4. The Mosquito Coast and the Nicaragua Canal.

 Keasbey, L. M.: Early Diplomatic History of the Nicaragua Canal.
 Newark, 1890. (Columbia Ph.D. dissertation.)

 ---- ----: The Nicaragua Canal and the Monroe Doctrine. New York, 1896.

 Peralta, Manuel M. de: Costa Rica y Costa de Mosquitos. Paris, 1898.

 Travis, Ira D.: History of the Clayton-Bulwer Treaty. Ann Arbor, 1900.

 ---- ----: British Rule in Central America. Ann Arbor, 1895.

 Williams, Mary W.: Anglo-American Isthmian Diplomacy, 1815-1915.
 Washington, 1916.

5. Walker’s expeditions to Nicaragua.

 Doubleday, Charles William: The Filibusters’ War in Nicaragua. New
 York, 1886.

 Lucas, D. B.: Nicaragua: War of the Filibusters. Richmond, Va., 1896.

 Montúfar, Lorenzo: Walker en Centro América. Guatemala, 1887.

 Nicaise, Auguste: Les Filibustiers Américains. Paris, 1861.

 Scroggs, William O.: Filibusters and Financiers. New York, 1916.

 Wells, William V.: Walker’s Expedition to Nicaragua. New York, 1856.

6. Miscellaneous material for more recent history.

 Buchanan, William I.: Report of the Central American Peace Conference,
 1907. Washington (U. S. State Department), 1908.

 Corte de Justicia Centroamericana. Sentencia en el Juicio promovido
 por la Republica de Honduras contra las Republicas de El Salvador y
 Guatemala, 1908. San José, Costa Rica, 1908.

 ---- ----: Anales. San José, 1911--

 Council of the Corporation of Foreign Bondholders; Annual Reports.
 London.

 Crichfield, Geo. W.: American Supremacy. New York, 1908.

 Espinoza, Rudolfo: Nicaraguan Affairs. Memorial to the U. S. Senate.
 San José, Costa Rica, 1912.

 Harrison, F. C., and Conant, C. A.: Report Presenting a Plan of
 Monetary Reform for Nicaragua. Presented to Messrs. Brown Brothers and
 Company and Messrs. J. and W. Seligman and Company. New York, 1912.

 Knox, Philander C.: Speeches in the Countries of the Caribbean.
 Washington, 1912.

 Kraus, Herbert: Die Monroedoktrin. Berlin, 1913.

 Jones, Chester Lloyd: Caribbean Interests of the United States. New
 York, 1916.

 Legation of Salvador in Washington: Before the Central American Court
 of Justice. The Republic of El Salvador vs. the Republic of Nicaragua.
 Complaint of the Republic of El Salvador. (Translated.) Washington,
 1916.

 Legation of Costa Rica in Washington: Before the Central American
 Court of Justice. The Republic of Costa Rica vs. the Republic of
 Nicaragua. Complaint of Costa Rica. Washington, 1916.

 ---- ----: Same title. Decision of the Court in the Case of Costa Rica
 vs. Nicaragua. Washington, 1916.

 Moncada, José María: Cosas de Centro América. Madrid, 1908.

 ---- ----: The Social and Political Influence of the United States in
 Central America. New York, 1911.

 Oficina Internacional Centroamericana: Centro América. (Quarterly
 organ of the Bureau.) Published in Guatemala City.

 ---- ----: El Arreglo de la Deuda Externa de Costa Rica. Guatemala,
 1911.

 ---- ----: Informes de las Conferencias Centroamericanas. Guatemala,
 1908-13.

 Rojas Corrales, Ramón: El Tratado Chamorro-Weitzel ante Centro América
 y ante El Derecho Internacional. San José, 1914.

 World Peace Foundation: The New Panamericanism. Pt. III. (Pamphlet
 series.) The Central American League of Nations, Boston, February,
 1917.

 Zelaya, José Santos: La Revolución de Nicaragua y los Estados Unidos.
 Madrid, 1910.


C. DESCRIPTIVE WORKS, TRAVELERS’ ACCOUNTS, ETC.

1. Central America in general.

 Bailey, John: Central America. London, 1850.

 Bates, H. W.: Central America, the West Indies, and South America. (In
 Stanford’s Compendium of Geography and Travel.) London, 1878.

 Batres, Luís: Centro América. San José, 1879.

 Dunlap, Robert G.: Travels in Central America. London, 1847.

 Dunn, Henry: Guatemala, or the United Provinces of Central America in
 1827-28. New York, 1828.

 Froebel, Julius. Seven Years’ Travel in Central America, Northern
 Mexico, and the Far West of the United States. London, 1859.

 Keane, A. H.: Central and South America. London, 1901.

 Morelet, Arthur: Travels in Central America. New York, 1871.

 Palmer, Frederick: Central America and its Problems. New York, 1910.

 Perigny, Maurice de: Les Cinq Republiques de l’Amerique Centrale.
 Paris, 1911.

 Sapper, Karl: Mittelamerikanische Reisen und Studien aus den Jahren
 1888 bis 1900. Braunschweig, 1902.

 ---- ----: Das Noerdliche Mittel-Amerika. Braunschweig, 1897.

 Squier, Ephraim G.: Notes on Central America. New York, 1855.

 ---- ----: States of Central America. New York, 1858.

 Stephens, John Lloyd: Incidents of Travel in Central America, Chiapas,
 and Yúcatan. London, 1854.

2. Guatemala.

 Brigham, W. T.: Guatemala, the Land of the Quetzal. New York, 1887.

 Crowe, F.: The Gospel in Central America. London, 1850.

 Domville-Fife, C. W.: Guatemala and the Central States of America.
 London, 1910.

 Maudsley, A. C. and A. P.: Glimpse at Guatemala. London, 1899.

 Pepper, C. M.: Guatemala, the Country of the Future. Washington
 (Legation of Guatemala), 1906.

 Winter, N. O.: Guatemala and her People of Today. Boston, 1909.

3. Salvador.

 Martin, Percy F.: Salvador of the Twentieth Century. London, 1911.

4. Honduras.

 Belot, Gustave de: La Verité sur le Honduras. Paris, 1869.

 Squier, Ephraim G.: Honduras, Descriptive, Historical, and
 Statistical. London, 1870.

 Wells, William V.: Explorations and Adventures in Honduras. New York,
 1857.

5. Nicaragua.

 Belt, Thomas: The Naturalist in Nicaragua. London, 1874. (Now
 published in the Everyman’s Library.)

 Government of Nicaragua. La República de Nicaragua. Managua, 1906.

 Lévy, Pablo; Nicaragua. Paris, 1873.

 Niederlein, Gustavo: The State of Nicaragua in the Greater Republic of
 Central America. Philadelphia (Philadelphia Commercial Museum), 1898.

 Pector, Desiré: Étude Économique sur la République de Nicaragua.
 Neûchatel, 1893.

 Squier, Ephraim G.: Nicaragua, its People, Scenery, Monuments, and the
 Proposed Nicaragua Canal. New York, 1852.

 Stout, Peter F.: Nicaragua, Past, Present, and Future. Philadelphia,
 1859.

6. Costa Rica.

 Calvo, Joaquín Bernardo: The Republic of Costa Rica. Chicago and New
 York, 1890.

 Government of Costa Rica: Revista de Costa Rica en el Siglo XIX. San
 José, 1900.

 Molina, Felipe: Bosquejo de Costa Rica. New York, 1851.

 Niederlein, Gustavo: The Republic of Costa Rica. Philadelphia
 (Philadelphia Commercial Museum), 1898.

7. Publications of the United States Department of Commerce, Bureau of
Foreign and Domestic Commerce.

 Central America as an Export Field. (By Garrard Harris.) Special
 Agents’ Series, no. 113. 1916.

 Trade Directory of Central America and the West Indies. Miscellaneous
 series, no. 22. 1915.




                                 INDEX


    A

    Acajutla, port of, 115

    Accessory Transit Company, 83 f.

    Agriculture, methods of, 16;
      Costa Rica, 138, 159, 163;
      Guatemala, 66 ff.;
      Honduras, 126, 129 ff., 132 ff.;
      Nicaragua, 91 ff.;
      Salvador, 100, 106, 112

    Aguardiente, 10, 15, 67, 246;
      influence of, on people, 48, 66, 71;
      monopoly in, 285, 292

    Alajuela, 138, 144

    Alfaro, Prudencio, 217

    Alta Verapaz, labor conditions in, 59;
      products of, 70

    Amapala, 128;
      capture of, 208;
      Treaty of (1895), 103, 170;
      Treaty of (1907), 209

    American International Corporation, 281

    American investments in Central America. _See_ Capital

    American Phalanx, 82 f.

    Amusements, 4, 10

    Araujo, Manuel Enrique, 103

    Arbitration. _See_ Central American Court of Justice

    Arce, Manuel José, 29

    Army, 42 f., 188 f., 196;
      Costa Rica, 154;
      Guatemala, 57;
      Nicaragua, 73 f.;
      Salvador, 108 f.

    Ayuntamientos. _See_ Government, Municipal


    B

    Balsam of Peru, export of, 112 f., 273

    Bananas, 20, 133 f., 204;
      blight, 270;
      export trade in, 268 ff.;
      Costa Rica, 138, 160 f.;
      Guatemala, 70;
      Honduras, 120, 133 f.;
      Nicaragua, 97

    Banks. _See_ Finance

    Barillas, Manuel Lísandro, 52

    Barrios, Gerardo, 102

    Barrios, José María Reyna, 52

    Barrios, Justo Rufino, 52, 102, 123, 171 f.

    Beneficios, 18, 266 f.

    Bertrand, Francisco, 124

    Blaine, Secretary, policy of, 181 f.

    Blanco, General, 145 f.

    Bluefields, 96 f.;
      blockade of, 230;
      revolution at (1909), 227 ff.

    Bográn, Luis, 123

    Bonilla, Manuel, 123 f.;
      172, 207 f.

    Bonilla, Policarpo, 123

    Brown Brothers and Company, loans to Nicaragua, 235 ff., 259 ff.,
        292
          f.

    Buchanan, President, restoration of Central American Union favored
          by, 181

    Buchanan, William I., 210

    Bureau, Central American. _See_ Central American Bureau


    C

    Cabañas, Trinidad, 122

    Cabinets. _See_ Government

    Cabrera, Manuel Estrada. _See_ Estrada Cabrera, Manuel

    Cacao, export of, 17, 92, 273

    Cannon, Lee Roy, execution of, 228 f.

    Capital, foreign, influence of, 98, 183, 267 f.;
      in Central America, 281 f., 288 f.;
      in Honduras, 127, 132;
      in Nicaragua, 235 ff., 259 ff.
      _See also_ Finance

    Carazo, Evaristo, 87 f.

    Caribbean Coast, importance of, 20, 70;
      in Costa Rica, 160 f.;
      in Honduras, 132 ff.;
      in Nicaragua, 95 ff.

    Carillo, Braulio, 141, 144 f.

    Carrera, Rafael, 32, 51, 101 f., 122, 168, 198

    Cartago, 138 f., 144

    Castellón, Francisco, 81

    Castro, José María, 146

    Catholic Church, influence of, 13, 131, 196, 198

    Cattle, 16 f., 67, 78, 92;
      export of, 273;
      Costa Rica, 142;
      Honduras, 120, 126 f., 135;
      Salvador, 112

    Central America, progress retarded in, 14 f., 185 ff.;
      export trade of, 265 ff.;
      import trade of, 275 ff.;
      revenue, sources of, 284 f.;
      expenditures of each republic (1913), 286 f.;
      foreign debts, origin of, 288 f.;
      currencies, depreciation of, 296 ff.;
      foreign capital, need of, 302;
      investments, opportunities for, 303 f.;
      United States, opposition to, 306 f.;
      financial assistance, need of, 311 ff.

    Central American Bureau, San José Conference establishes (1906), 206
          f.;
      Washington Conference establishes (1907), 212;
      convention establishing, 215;
      work of, 225 f.

    Central American Court of Justice, 213 ff.;
      case of Nicaragua and Honduras vs. Guatemala and Salvador, 218 f.;
      work of, 221 ff.;
      case of Nicaragua and United States Canal Treaty, 254 ff.

    Central American Federal Republic. _See_ Central American Union

    Central American Federation. _See_ Central American Union

    Central American Public Works Company, 290

    Central American Union, 28 ff., 144;
      need of, 164 f.;
      advantages of, 179 ff.;
      difficult to form, 171 f., 174 ff.;
      attempts to renew, 102, 168 ff.;
      Union of 1842, 168;
      Union of 1849, 169;
      Union of 1895, 170

    Centro Americo, 226

    Cerna, Vicente, 52

    Chalchuapa, battle of (1885), 105, 172

    Chamorro, Emiliano, 231 f., 234, 243, 245, 250 ff.

    Chamorro, Frutos, 169

    Chinandega, treaty of (1842), 168 f.

    Christmas, General Lee, 218

    Cities. _See_ Government, municipal

    Civil Wars. _See_ Revolutions

    Claims. _See_ Investments, foreign

    Clayton-Bulwer Treaty, 82, 96

    Climate, Costa Rica, 138 f.;
      Guatemala, 67 f.;
      Nicaragua, 92;
      Salvador, 100

    Coban, 70

    Cochineal, export of, 17

    Cocoanuts, export of, 273

    Coffee, 5, 17 ff., 274 f.
      cultivation, methods of, 265 ff.;
      export of, 266 ff., 275;
      Costa Rica, 142, 144, 160 ff.;
      Guatemala, 66 f.;
      Honduras, 136;
      Nicaragua, 93;
      Salvador, 100, 112, 115

    Colonos, 59

    Commerce, 265 ff.,
      development retarded, 14 f.;
      foreign control of, 21, 276 ff.;
      exports, 17, 265 ff.;
      imports, 275 f.;
      United States trade with Central America, 276 ff.;
      Costa Rica, 159 ff., 274;
      Guatemala, 67 f., 274;
      Honduras, 135 f., 274;
      Nicaragua, 92 ff., 274;
      Salvador, 114 ff., 274

    Communication, means of. _See_ Transportation

    Concessions, 22, 313 ff.,
      Honduras, 134 f.;
      Nicaragua, 89 f., 97.
      _See also_ Investments, foreign

    Conferences, 176,
      U. S. S. Marblehead (1906), 206;
      San José (1906), 206 ff.;
      Washington Conference, 216, 220 f.;
      annual, 216, 225

    Congress. _See_ Government.

    Conservatives. _See_ Political Parties

    Contract labor system. _See_ Labor

    Contreras brothers, 192

    Corinto, 87, 244 f.

    Corn, 112

    Corporations, foreign,
      influence of, 22, 83 f., 132, 134, 202, 269 ff.;
      need of government control of, 313 ff.
      _See also_ Brown Brothers and Co.; Ethelburga Syndicate;
          Seligman, J. & W. and Co.; Finance

    Corral, General, 81 f.

    Costa Rica,
      agriculture, 138, 159 f., 162 f.;
      area and population, 1, 138 ff., 162 f.;
      army, 154;
      bananas, 138, 160 f., 268 ff.;
      cattle, 142;
      coffee, 142, 144, 160 ff., 275;
      commerce, 159 ff., 266, 268, 274 f., 277 f.;
      Court of Justice, decisions of, 224, 253 ff.;
      education, 147, 158 f.;
      finance, 285 ff., 290 ff., 301;
      government, 143 f., 147 ff., 154 ff., 159;
      history, 144 ff.;
      labor, 139 ff., 163;
      land, ownership of, 141 f.;
      peace, internal, 148 ff., 194, 200;
      politics, 148 ff.;
      transportation, facilities of, 157, 160 f., 291;
      United Fruit Co., 160 f.

    Court of Justice. _See_ Central American Court of Justice

    Courts, corruption of, 36, 46 ff.

    Creel, Señor, 210

    Creoles, 3 ff., 25, 56, 78, 191 f.

    Crops. _See_ Agriculture

    Cuadra family, 232,
      Dr. Carlos Cuadra Pasos, 250 ff.

    Currency systems, 296 ff.,
      Costa Rica, 301;
      Guatemala, 54, 297 ff.;
      Honduras, 300;
      Nicaragua, 236 ff., 248 f., 263, 299;
      Salvador, 300 f.

    Customs, collection of, 238 f., 312


    D

    Dávila, Miguel, 123 f., 172, 208 ff., 217

    Dawson, Thomas C., 233

    Dawson agreement, The, 233 f., 243

    Delgado, Father, 29

    Díaz, Adolfo, 232, 234, 243 ff.

    Díaz, Porfirio, 173, 206, 210, 229

    Diseases. _See_ Sanitation

    Dueñas, Francisco, 102


    E

    East Coast. _See_ Caribbean Coast

    Education, 11, 199, 317 f.,
      Costa Rica, 147, 158 f.;
      Guatemala, 55, 61;
      Honduras, 131;
      Nicaragua, 89;
      Salvador, 110 f.

    Elections, 30 f., 34 f.,
      Costa Rica, 148 ff.;
      Guatemala, 55 f.;
      Nicaragua, 74, 245, 249 ff.

    El Triunfo, 116

    Emery claim, 228

    Encomiendas. _See_ Repartimientos

    Escalón, José Pedro, 103

    Esquivel, Ascensión, 147

    Estrada, Juan J., 227, 230 f., 234 f.

    Estrada Cabrera, Manuel, 53, 74, 206, 297

    Ethelburga Syndicate, 237 f., 240, 292 f.

    European War, effect of, 115, 135, 247 ff., 274 f., 279, 281 ff.,
          290, 296, 298 ff.

    Exchange, rates of, 296, 298 ff.

    Export trade. _See_ Commerce

    Ezeta brothers, 102


    F

    Fernández, Mauro, 147

    Fernández, Próspero, 146

    Ferrer, Francisco, 122

    Fiallos, Señor, 173

    Figueroa, Fernando, 103, 209

    Filibusters and filibustering, 81 ff., 217 f.

    Filísola, General, 28

    Finance, 21 f., 235 ff., 259 ff., 279 ff., 284 ff. _See also_
          Capital Corporation Investment Loans

    Fonseca, Casto, 80

    Fonseca, Gulf of, 115, 117, 119,
      naval base on, 252 ff.

    Fruit trade. _See_ Commerce


    G

    Gainza, Governor-general of Guatemala (1821), 24, 80

    Germany,
      Central American commerce with, 274 ff., 277 f.

    Gold, 120, 272

    González, Alfredo, 148

    González, Santiago, 102

    González Víquez, Cleto. _See_ Víquez, Cleto González

    Government, 25, 41 f.,
      Executive, powers of, 33 ff., 37, 39 ff., 286 f.;
      Cabinets, 37;
      Legislatures, 36;
      Judiciary, 36 f., 46 ff., 111, 155 f.;
      Costa Rica, 143, 147 ff., 154 ff.;
      Guatemala, 53 ff.;
      Honduras, 124 f.;
      Nicaragua, 73 ff.;
      Salvador, 105, 107 ff.
      _See also_ Political Parties, Politics

    Government, municipal, 27, 37 f., 66, 156

    Grace and Company, 281

    Graft. _See_ Politics

    Granada,
      Leon, rivalry with, 77 ff.;
      capture of (1855), 81

    Granados, Miguel García, 52

    Great Britain,
      bondholders in Guatemala supported by, 289;
      bondholders in Honduras supported by, 294;
      bondholders in Nicaragua supported by, 240;
      Central American commerce with, 274 f., 277 ff., 282;
      protectorate on Mosquito Coast, 95 f., 168 f.

    Greytown, 82, 95 f.

    Groce, Leonard, execution of, 228 f.

    Guardia, General Tomás, 33, 146, 291

    Guardia Civil, 109

    Guardiola, Santos, 122

    Guatemala,
      agriculture, 66 ff.;
      area and population, 1, 50, 57 ff., 67, 70, 198;
      army, 57 f.;
      bananas, 70, 268 f.;
      cattle, 67;
      Central American Union and, 168, 178;
      coffee, 66 ff., 266 ff., 275;
      commerce, 67 f., 274, 277 f.;
      education, 55, 61;
      finance, 54, 285 f., 288 f., 297 f.;
      government, 53 ff.;
      labor, 58 ff., 62 ff.;
      land, ownership of, 64;
      politics, 54 f.;
      transportation, facilities of, 68 ff.;
      United Fruit Co., 69 f.

    Gutiérrez, Rafael, 102 f.


    H

    Habilitadores, 62, 64

    Ham, Colonel Clifford D., 238 f.

    Health. _See_ Sanitation

    Heredia, 138, 144

    Herrera, Dionisio de, 80

    Highways. _See_ Transportation

    Honduras,
      agriculture, 119 f., 126, 129 ff., 132 f.;
      area and population, 1, 120, 129 f., 133;
      bananas, 120, 133, 268;
      capital, foreign, 127 f., 132, 134 f.;
      Caribbean Coast, importance of, 132 ff.;
      Central American Union and, 167 f.;
      cattle, 120, 126 f., 135, 273;
      coffee, 136, 266, 275;
      commerce, 133 ff., 273 f., 277;
      economic development of, retarded, 126 ff.;
      education, 131;
      finance, 285 f., 288, 293 ff., 300;
      foreign relations, 121, 123, 168 f., 172, 207 f.;
      government, 124 f.;
      living, standards of, 129 ff.;
      mines, 120, 127;
      transportation, facilities of, 127 f., 134 f., 293;
      United Fruit Co., 134 f.;
      Washington conventions, 211 f.


    I

    Immigration, foreign, 21

    Import trade. _See_ Commerce

    Indians, 2, 58, 178,
      Costa Rica, 138 ff.;
      Guatemala, 57 ff., 64, 198;
      Honduras, 120;
      Nicaragua, 72, 93 f.;
      Salvador, 100

    Indigo, 17, 92, 273

    Industries. _See_ Manufacturing

    International Health Commission. _See_ Sanitation

    Investments, foreign, 21 ff., 265 ff., 271, 301 f., 311 ff. _See
          also_ Finance

    Irías, Dr. Julián, 251 f.

    Iturbide, Augustin, 28 f.


    J

    Jeréz, Maximo, 81 f., 85 f.

    Jiménez, Jesús, 146

    Jiménez, Ricardo, 148

    Jinotega, 93

    Joint Claims Commission. _See_ Nicaraguan Joint Claims Commission

    Jornaleros, 59 ff.

    Judiciary. _See_ Government

    Junta Consultiva, 24

    Justice, Central American Court of. _See_ Central American Court
          of Justice


    K

    Keith, Minor C., 160, 269, 291,
      interests, 271

    Knox, Secretary, note of, to Zelaya, 228 f.


    L

    Labor, 7 f., 10 f.,
      Costa Rica, 139 f., 163;
      Guatemala, 59 ff., 62 ff.;
      Nicaragua, 93 ff.;
      Salvador, 114

    La Ceiba, 133

    Ladinos, 6, 57, 72, 195

    La Libertad, 116

    Land, ownership of, 3, 6, 64, 93 f., 141 f., 267 f.

    La Union, 115, 117

    Legislatures. _See_ Government

    Leíva, Ponciano, 123

    Lempa River, 100, 115

    Leon,
      Granada, rivalry with, 77 ff.

    Ley de Trabajadores (1894), 59 ff.

    Liberals. _See_ Political Parties

    Living, conditions of, 4 ff., 8 ff., 113 f., 129 ff., 161 ff.

    Loans, foreign, 235 ff., 241 ff., 294. _See also_ Finance

    Local Government. _See_ Government, municipal

    Localismo, 43 f., 73, 76 f., 196 f.

    Lumber, 17, 70, 135, 273


    M

    Madriz, José, 229 f.

    Mahogany. _See_ Lumber

    Malespín, Francisco, 101 f.

    Managua, 80, 86 ff.

    Mandamientos, 59

    Manufacturing, 15, 114

    Marblehead (U. S. S.), 206

    Martínez, Tomás, 85 f.

    Matagalpa, 92 ff., 236

    Medina, José María, 122

    Meléndez, Don Carlos, 103

    Mena, General Luís, 231, 234, 242 ff.

    Menéndez, Francisco, 102

    Mestizos. _See_ Ladinos

    Metals, precious. _See_ Mines

    Mexico, 28, 123, 206 ff., 218, 229. _See also_ Díaz, Porfirio

    Mines, 120, 126 f., 272 f.

    Missionaries, influence of, 13

    Moncada, General José María, 231, 234

    Monroe Doctrine, 204 ff., 302, 304 f.

    Montealegre, José María, 145

    Mora, Juan, 144

    Mora, Juan Rafael, 145, 181

    Morazán, Francisco, 29 f., 80, 101, 122, 145, 167

    Morgan, J. P. & Co., 294

    Mosquito Coast, 95 ff., 169

    Municipal government. _See_ Government, municipal

    Muñoz, Trinidad, 80


    N

    Namasigne, battle of (1907), 208

    National Constituent Assembly, 28 ff., 166

    Negroes. _See_ Population

    New York and Honduras Rosario Mining Co., 127

    Nicaragua,
      agriculture, 91 ff.;
      area and population, 1, 72, 76, 93 f.;
      army, 73 f.;
      bananas, 97, 268;
      canal route in, 75 f., 252, 254 ff.;
      capital, foreign, 89 f., 97, 235 ff., 259 ff.;
      Caribbean Coast, 95 ff.;
      cattle, 78, 92, 273;
      Central American Union and, 167 f.;
      Claims Commission, 240 f.;
      commerce, 92 f., 238, 274, 277;
      coffee, 93, 266, 275;
      Court of Justice, decision of, 223 f.;
      education, 89;
      finance, 232 ff., 239 ff., 246 ff., 248 f., 259 ff., 263, 285 f.,
          288, 292, 299 f.;
      foreign influence in, 95 ff., 169;
      government, 73;
      history, 81 ff., 89 ff.;
      labor, 93 ff.;
      politics, 74, 76 ff., 89, 245, 249 ff.;
      transportation, facilities of, 97 f., 237, 246, 261, 292;
      United States, intervention of, 182, 228 ff., 244, 306

    Nicaragua, Lake, 75

    Nicaraguan Joint Claims Commission, 240 f.


    O

    Oficina Internacional Centroamericana. _See_ Central American
          Bureau


    P

    Pan American Financial Conference (1915), 294 f.

    Panama Canal, 161, 204

    Paper money. _See_ Currency

    Pasos, Dr. Carlos Cuadra, 250 ff.

    Peonage. _See_ Labor

    Personalismo, 43 f., 76 f., 196 f.

    Peten, 70

    Police, 53, 108 f., 157

    Political Parties, 26, 29, 31 ff., 43 ff., 149 ff., 165,
      Conservatives, 29, 32 f., 167 f.;
        Guatemala, 51 ff.;
        Honduras, 122;
        Nicaragua, 78 ff., 85 ff., 169 f., 231, 233, 250;
        Salvador, 102 f.,
      Liberals, 29, 32 f., 167 f.;
        Guatemala, 50 ff.;
        Honduras, 122;
        Nicaragua, 78, 85 ff., 228 ff., 233, 250 f., 260;
        Salvador, 101 f.

    Politics, corruption in, 45 ff., 186 ff., 286 ff., 291 ff.,
      Costa Rica, 159;
      Guatemala, 54;
      Honduras, 125;
      Nicaragua, 76 ff., 89;
      Salvador, 111 f.;
      foreign influence on, 132, 135, 161, 200 ff., 227 314 f.

    Population, 2, 50, 72, 100, 120, 138 ff.,
      Negro, 20, 120 f., 133, 160.
      _See also_ Indians

    Ports, 68 f., 87, 97, 115 f., 128 f., 132, 160 f. _See also_
          Transportation

    President, power of. _See_ Government

    Press, influence of, 48, 149 f.

    Protectorates. _See_ Great Britain, United States

    Puerto Barrios, 68 f.

    Puerto Cortez, 133

    Puerto Limón, 160

    Puntarenas, 160 f.


    R

    Railways. _See_ Transportation

    Regalado, Tomás, 103

    Religion. _See_ Catholic Church

    Repartimientos, 7, 58, 139 f.

    Revolutions, causes of, 49, 185 ff.

    Rivas, Patricio, 81

    Roads. _See_ Transportation

    Rockefeller Foundation. _See_ Sanitation

    Rodríguez, José Joaquín, 147

    Roosevelt, Theodore, 173, 205 ff., 210

    Root, Elihu, 210

    Rum. _See_ Aguardiente


    S

    Sacasa, Roberto, 88

    Salazar, General, 145 f.

    Salvador,
      agriculture, 100, 106, 112;
      area and population, 1, 99 f., 113 f.;
      army, 108 f.;
      cattle, 112;
      Central American Union and, 167 f.;
      coffee, 100, 112, 115, 266, 275;
      commerce, 114 f., 274, 277;
      Court of Justice, decision of, 224;
      education, 110 f.;
      finance, 285 f., 288, 290, 300 f.;
      foreign relations, 104 ff., 117;
      Guatemala and, 29;
      government, 107 ff.;
      labor, 114;
      manufactures, 114;
      Nicaraguan Canal Treaty, protest against, 253 ff.;
      peace, internal, 194;
      politics, 105 f., 111 f.;
      transportation, facilities of, 109, 115 ff., 290

    Sanitation, 9, 157 f.

    San José, 138, 144, 160;
      conference at, 206 f.

    San Salvador, 99, 115 f.

    Santa Ana, 102, 115 f.

    San Vicente, 115

    Schools. _See_ Education

    Seligman, J. & W. and Co., 235, 242, 246 ff., 259 ff., 292 ff.

    Sierra, General Terencio, 123, 209

    Silver, 127, 272 f.

    Social conditions, 5, 10, 12, 22 f.

    Sonsonate, 115

    Soto, Bernardo, 146

    Soto, Marco Aurelio, 123

    Spain, influence of colonial system of, 14

    Spoils system. _See_ Politics

    Steamship lines, 19, 69, 97, 116, 132, 269. _See also_
          Transportation

    Sugar, 112


    T

    Taft, William H., 217, 228

    Tegucigalpa, 19, 122, 128 f., 208

    Tinoco, Federico, 148

    Trade. _See_ Commerce

    Transportation, 19, 177,
      Costa Rica, 157, 160, 291;
      Guatemala, 68 ff.;
      Honduras, 127 f., 134 f., 293;
      Nicaragua, 97, 237, 246, 261, 292;
      Salvador, 109, 115 ff., 290.
      _See also_ Steamship lines

    U

    Union, Central American. _See_ Central American Union

    United Fruit Company, 19 ff., 269 ff., 281;
      Costa Rica, 160 f.;
      Guatemala, 69 f.;
      Honduras, 134 f.

    United States,
      Central American Union, 171, 181 ff.;
      commerce with Central America, 269, 274 ff., 279 ff.;
      commercial and financial interests of, 180 ff., 204 f., 303 ff.;
      financial assistance of, needed in Central America, 279 f., 302;
      Honduras, intervention in, 123, 294;
      influence of, in Central America, 203, 220 f.;
      intervention in Central America, 304 ff.;
      intervention, results of, 307 ff.;
      Mexico and, intervention of, 207 ff.;
      Monroe Doctrine, maintenance of, 205 f.;
      Mosquito Coast, British control of, 95;
      Nicaragua, relations with, 98, 182, 228 ff., 233 f., 235 ff., 244,
          250, 253 f., 258;
      relations with Central America, 105, 171;
      Salvador, relations with, 117;
      trade, opportunities for, 282 f.;
      trade retarded, 279;
      Walker, attitude toward, 82 f.


    V

    Valle, Andrés, 102

    Vásquez, Domingo, 123

    Víquez, Cleto González, 148


    W

    Wages, 10, 299. _See also_ Labor

    Walker, William, 81 ff., 85 f., 145, 189

    Washington Conference (1907), 123, 173, 210 ff., 216 f., 226, 305;
      conventions of, 105, 176, 211 ff., 220 f., 315


    Y

    Yglesias, Rafael, 147, 301


    Z

    Zacapa, 116

    Zaldívar, Rafael, 102, 172

    Zelaya, José Santos, 88 ff., 96 f., 103, 123 f., 170, 172, 193, 207
          ff., 217 ff., 227 ff., 299, 306

    Zeledón, Benjamin, 243 f.



                          Transcriber’s Notes

Obvious punctuation errors and omissions have been corrected.

Page 209: “avowed agressive” changed to “avowed aggressive”

Page 235: “printed in the Americal” changed to “printed in the American”

Page 262: “the heavy enpenses” changed to “the heavy expenses”

Page 289: “the the coffee export” changed to “the coffee export”



*** END OF THE PROJECT GUTENBERG EBOOK 76272 ***