History of Honduras - Honduras in The Twentieth Century - The Internationalization of The North, 1899-1932 - The Rise of United States Influence in Honduras (1899-1919)

The Rise of United States Influence in Honduras (1899-1919)

In 1899, the banana industry in Honduras was growing rapidly and the peaceful transfer of power from Policarpo Bonilla to General Terencio Sierra would mark the first time in decades that such a constitutional transition had taken place. By 1902, railroads had been constructed along the country's Caribbean coast to accommodate the growing banana industry. However, Sierra made efforts to perpetuate himself in office after refusing to step down after a new president was elected in 1902 and would be overthrown by Manuel Bonilla in 1903. After toppling Sierra, Bonilla, a conservative, imprisoned ex-president Policarpo Bonilla, a liberal rival, for two years and made other attempts to suppress liberals throughout the country, as they were the only group in the country with an organized political party. The conservatives were divided into a host of personalist factions and lacked coherent leadership, but Bonilla made some efforts to reorganize the conservatives into a "national party." The present-day National Party of Honduras (Partido Nacional de Honduras—PNH) traces its origins to his administration.

Bonilla proved to be an even greater friend of the banana companies than Sierra had been. Under Bonilla's rule, companies gained exemptions from taxes and permission to construct wharves and roads, as well as permission to improve interior waterways and to obtain charters for new railroad construction. He would also successfully establish the border with Nicaragua and resist an invasion from Guatemala in 1906. After fending off Guatemalan military forces, Bonilla sought peace with the country and signed a friendship pact with both Guatemala and El Salvador.

Nicaragua's powerful President José Santos Zelaya saw this friendship pact as an alliance to counter Nicaragua and began to undermine Bonilla. Zelaya now supported liberal Honduran exiles in Nicaragua in their efforts to topple Bonilla, who had established himself as a dictator. Supported by elements of the Nicaraguan army, the exiles invaded Honduras in February 1907. With the assistance of Salvadoran troops, Manuel Bonilla tried to resist, but in March his forces were decisively beaten in a battle notable for the introduction of machine guns into Central American civil strife. After toppling Bonilla, the exiles established a provisional junta, but this junta would not last.

The United States noticed: it was in US interests to contain Zelaya, protect the region of the new Panama Canal, and defend the increasingly important banana trade. This Nicaragua-assisted invasion by Honduran exiles strongly displeased the United States government, which concluded that Zelaya wanted to dominate the entire Central American region, and the government dispatched marines to Puerto Cortes to protect the banana trade; US naval units were also sent to Honduras and were able to successfully defend Bonilla's last defense position at Amapala in the Gulfo de Fonseca. Through a peace settlement arranged by the US charge' d' affaires in Tegucigalpa, Bonilla stepped down and the war with Nicaragua came to an end.

The settlement also provided for the installation of a compromise regime headed by General Miguel R. Davila in Tegucigalpa. Zelaya, however, was not pleased by the settlement, as he strongly distrusted Davila. Zelaya afterwards made a secret arrangement with El Salvador to oust Davila from office. The plan failed to reach fruition, but alarmed the United States. Mexico and the U.S. then called the five Central American countries into diplomatic talks at the Central American Peace Conference to increase stability in the area. At the conference, the five countries signed the General Treaty of Peace and Amity of 1907, which established the Central American Court of Justice to resolve future disputes among the five nations. Honduras also agreed to become permanently neutral in any future conflicts among the other nations.

In 1908, opponents of Davila made an unsuccessful attempt to overthrow him. Despite the failure of this coup, the United States became concerned over Honduran instability. The Taft Administration saw the huge Honduran debt, over $120 miilion, as a contributing factor to this instability and began efforts to refinance the largely British debt with provisions for a United States customs receivership or some similar arrangement. Negotiations were arranged between Honduran representatives and New York bankers, headed by J.P. Morgan. By the end of 1909, an agreement had been reached providing for a reduction in the debt and the issuance of new 5 percent bonds: the bankers would control the Honduran railroad, and the United States government would guarantee continued Honduran independence and would take control of customer revenue.

The terms proposed by the bankers met with considerable opposition in Honduras, further weakening the Dávila government. A treaty incorporating the key provisions of this agreement with J.P. Morgan was finally signed in January 1911 and submitted to the Honduran legislature by Dávila. However, that body, in a rare display of independence, rejected it by a vote of thirty-three to five.

An uprising in 1911 against Dávila interrupted efforts to deal with the debt problem. The United States stepped in to mediate the conflict, bringing both sides to a conference on one of its warships. The revolutionaries, headed by former president Manuel Bonilla, and the government agreed to a cease-fire and the installation of a provisional president who would be selected by the United States mediator, Thomas Dawson. Dawson selected Francisco Bertrand, who promised to hold early, free elections, and Dávila resigned.

The 1912 elections were won by Manuel Bonilla, but he died after just over a year in office. Bertrand, who had been his vice president, returned to the presidency and in 1916 won election for a term that lasted until 1920. Between the years 1911 and 1920, Honduras saw relative stability. During this time, railroads expanded throughout Honduras and the banana trade grew rapidly. This stability, however, would prove to be difficult to maintain in the years following 1920. Revolutionary intrigues also continued throughout the period, accompanied by constant rumors that one faction or another was being supported by one of the banana companies.

The development of the banana industry contributed to the beginnings of organized labor movements in Honduras and to the first major strikes in the nation's history. The first of these occurred in 1917 against the Cuyamel Fruit Company. The strike was suppressed by the Honduran military, but the following year additional labor disturbances occurred at the Standard Fruit Company's holding in La Ceiba. In 1920, a general strike hit the Caribbean coast. In response, a United States warship was dispatched to the area, and the Honduran government began arresting leaders. When Standard Fruit offered a new wage equivalent to US$1.75 per day, the strike ultimately collapsed. Labor troubles in the banana area, however, were far from ended.