For Honduras, the period of federation had been disastrous. Local rivalries and ideological disputes had produced political chaos and disrupted the economy. The British had taken advantage of the chaotic condition to reestablish their control over the Islas de la Bahía. As a result, Honduras wasted little time in formally seceding from the federation once it was free to do so. Independence was declared on November 15, 1838, and in January 1839, an independent constitution was formally adopted.
Francisco Morazán then ruled only El Salvador, and in 1839 his forces there were attacked by a Honduran army commanded by General Francisco Ferrera. Ferrera was defeated but returned to attack again in the summer, only to suffer another defeat. The following year, Morazán himself was overthrown, and two years later he was shot in Costa Rica during a final, futile attempt to restore the United Provinces of Central America.
For Honduras, the first decades of independence were neither peaceful nor prosperous. The country's political turmoil attracted the ambitions of individuals and nations within and outside of Central America. Even geography contributed to its misfortunes. Alone among the Central American republics, Honduras had a border with the three potential rivals for regional hegemony—Guatemala, El Salvador, and Nicaragua. This situation was exacerbated by the political division throughout the isthmus between liberals and conservatives. Any liberal or conservative regime saw a government of the opposite ideology on its borders as a potential threat. In addition, exiled opposition figures tended to gather in states whose governments shared their political affiliation and to use these states as launching pads for efforts to topple their own governments. For the remainder of the century, Honduras's neighbors would constantly interfere in its internal politics.
After the fifteen-month interim presidency of Francisco Zelaya y Ayes (1839–40), conservative General Ferrera became independent Honduras's first elected president. Ferrera's two-year term (1841–42) was followed by a five-year period in which he alternately named himself president or allowed the congress to name an interim president while he maintained control of the country by holding the post then known as minister of war. Ferrera's last notable act was the unsuccessful attempt to depose the liberal Morazán as president of El Salvador. In 1847 Ferrera allowed fellow conservative Juan Lindo to assume the presidency. Under Lindo's presidency, a new constitution was adopted in 1848, and some effort was made to promote education, but any effort to make substantial improvements in the country's situation was doomed by continuing turmoil.
During Lindo's presidency (1847–52), the British began pressuring Honduras for the payment of debts and other claims. In 1849 a British naval force briefly occupied the port of Trujillo, destroying property and extorting 1,200 pesos from the local government. The following year, Lindo's own vice president revolted and was prevented from seizing power only through the military intervention of El Salvador and Nicaragua. All this turmoil may help to explain why Lindo refused an additional presidential term and instead turned over power in 1852 to the opposition liberals, headed by Trinidad Cabañas (1852–55). Three years later, the conservative government of Guatemala invaded Honduras and ousted Cabañas, installing in his place the conservative leader, Jose Santos Guardiola.
The fighting between liberals and conservatives was temporarily set aside because of the 1855 appearance in Central America of an American filibuster, William Walker, who established himself as president of Nicaragua in 1856. Cabañas briefly considered seeking Walker's aid in attempting to return to power. Instead, armies from all the countries of Central America joined to oppose Walker, who was forced to abandon Nicaragua in 1857 and return to the United States.
In 1859 the British agreed to a treaty that recognized Honduran sovereignty over the Islas de la Bahía (Bay Islands). Some of the British settlers in the area objected to this transfer and appealed to Walker for help. Walker evidently thought that his return to Central America would be welcomed by the Honduran liberals, who were once again trying to oust Guardiola. Walker landed on the Honduran coast in 1860 but found little support and encountered determined opposition from both the Hondurans and the British. He surrendered to the British, who promptly handed him over to Honduran authorities. A few days later in 1860, he died in front of a Honduran firing squad.
The return of the Islas de la Bahía and the death of Walker ended the immediate threat to Honduran territorial integrity, but other Central American nations continued to be involved in Honduran internal affairs. Guardiola was assassinated by his own honor guard in 1862, and the following decade witnessed the presidency change hands almost twenty times. General José María Medina served as president or dictator eleven times during that period, but Guatemalan intervention in 1876 drove him and his conservative supporters from power.
From 1876 until 1882, liberal president Marco Aurelio Soto governed Honduras with the support of Guatemalan strongman General Justo Rufino Barrios. Soto succeeded not only in restoring order but also in implementing some basic reforms in finance, education, and public administration. But in 1883, he too fell into disfavor with Barrios and was forced to resign. His successor, General Luis Bográn, survived in office until 1891 when General Ponciano Leiva (who had ruled briefly three times from 1873–76) was returned to power in a manipulated election. Although a liberal, Leiva tried to rule as an absolute dictator, dissolving the fledgling Liberal Party of Honduras (Partido Liberal de Honduras, PLH) and deporting its leaders. The result was another round of civil conflict from which the reconstituted PLH ultimately emerged victorious. The PLH was led by Policarpo Bonilla, with the support of Nicaragua's liberal dictator, José Santos Zelaya.
When Bonilla assumed power in 1894, he began to restore a limited degree of order to the Honduran political scene. Another constitution was promulgated in 1895, and Bonilla was elected to a four-year term. Bonilla's administration revised civil codes, improved communications, and began an effort to resolve the long-standing boundary dispute with Nicaragua. Bonilla also ensured that in 1899, at the end of his term, he would be succeeded by his military commander, General Terencio Sierra.
The combined impact of civil strife and foreign interventions had doomed Honduras to a position of relative economic and social backwardness throughout the nineteenth century. The country had remained overwhelmingly rural; Tegucigalpa, Comayagua, and San Pedro Sula were the only towns of any size. In the early 1850s, the total population was estimated at 350,000, the overwhelming majority of whom were mestizos. By 1914 the population had grown to only 562,000.
Opportunities for education and culture were limited at best. Mid-nineteenth century records indicate that Honduras had no libraries and no regularly published newspapers. Two universities were maintained, although their quality was questionable. By the 1870s, only 275 schools, having approximately 9,000 pupils, existed in the entire country. In 1873–74, the government budgeted only the equivalent of US$720 for education, a sum designated for the national university.
At the end of the colonial period, Honduras' economy was based largely on mining, cattle raising and the export of tropical hardwoods. Unlike most of its neighbors, Honduras did not develop a significant coffee industry, and one of the results of this was that much of its export wealth ended up being generated by foreign firms, often creating little local capital. For much of the nineteenth century, Hondurans looked to mining as a means of improving their economic position.
The mining industry had fallen into severe neglect in the first decades of the century, however. Many mines had been abandoned and flooded. During the years following independence, efforts to revive the industry were generally frustrating for both domestic and foreign entrepreneurs. Effort after effort was abandoned because of civil disturbances, lack of transportation, and poor health conditions.
Mining was revived somewhat in the 1880s, when liberal reforms made foreign investment in mining interesting. A key factor in this revival was the activity of Washington S. Valentine's New York and Honduras Rosario Mining Company (NYHRMC), which had expanded rapidly and had become a major economic and political power within Honduras, not only in silver mining, but in railroad building (the InterOceanic Railroad). Owing in part to the company's efforts, the Honduran government had allowed foreign mining companies to operate in Honduras with a minimum of restrictions and a virtual exemption from taxes. By 1889 the company was annually shipping bullion with a value of over US$700,000 to the United States. Profits from this operation were extremely high; the company's dividends for the first half of 1889 totaled US$150,000.
The NYHRMC's success attracted other companies to Honduras, and gold and silver exports became the principal source of foreign exchange for the rest of the century. The NYHRMC's success stood alone, however; most of the nearly 100 other companies were total failures. The Yuscarán Mining and Milling Company sold over US$5 million in stock but failed to begin effective production. By the end of the nineteenth century, the brief mining boom was in decline, although the NYHRMC would remain a major factor in the Honduran economy until the mid-twentieth century.
Although mining had provided foreign exchange, the vast majority of Hondurans gained their livelihoods from agriculture, usually on a subsistence level. Periodic efforts were made to develop agricultural exports, but they met with little success. Some tobacco, cattle, and hides were exported, mostly to neighboring countries. The recurring civil conflicts and the resultant confiscation of stock by various military commanders, however, put a damper on efforts to develop the cattle industry and contributed to its rather backward status. Some bananas and other fruits were exported from the Islas de la Bahía, much of this trade going to New Orleans, but the volume was small and the benefit for the rest of the nation almost imperceptible.
As bananas emerged as an export after the 1870s, first from the Bay Islands and the mainland, foreign (mostly U.S.) shipping companies began taking the crop to the United States. In 1889 the Vaccaro brothers of New Orleans, founders of what would become the Standard Fruit and Steamship Company (later known as Standard Fruit Company, and then as Dole), shipped their first boatload of bananas from Honduras to New Orleans. The fruit found a ready market, and the trade grew rapidly. By 1902 local railroad lines were being constructed on the Caribbean coast to accommodate the expanding banana production. The economic dominance and political influence of these companies was so great from the late 19th until the mid 20th century that Honduras became the original model for the banana republic.
Banana production in northern Honduras began in the 1880s and was largely in the hands of local people. A census of 1899 revealed that northern Honduras that over 1,000 people in the region between Puerto Cortes and La Ceiba (and inland as far as San Pedro Sula) were tending bananas, most of them small holders. The fruit companies received very large concessions of land on which to grow bananas, often forcing small holders who had been growing and exporting bananas off their land or out of business. In addition, they brought in many workers from the British West Indies, especially Jamaica and Belize, both to work on the plantations, but also as lower managers and skilled workers. The companies often favored the West Indian workers because they spoke English and were sometimes better educated than their Honduran counterparts. This perception of foreign occupation, coupled with a growing race-prejudice against the African-descended West Indians led to considerable tension, as the arrival of the West Indians drove demographic change in the region.
Standard Fruit was joined by new rivals, Samuel Zemurray's Cuyamel Fruit Company, and the United Fruit Company, all of which tended to be vertically integrated, owning their own lands and railroad companies and ship lines such as United's "Great White Fleet". Through land subsidies granted to the railroads, by 1920 they controlled vast tracts of the best land along the Caribbean coast. Coastal cities such as La Ceiba, Tela, and Trujillo and towns further inland such as El Progreso an La Lima became virtual company towns.
For the next twenty years, the U.S. government was involved in quelling Central American disputes, insurrections, and revolutions, whether supported by neighboring governments or by United States companies. As part of the so-called Banana Wars all around the Caribbean, Honduras saw the insertion of American troops in 1903, 1907, 1911, 1912, 1919, 1924 and 1925. For instance, in 1917 the Cuyamel Fruit Company extended its rail lines into disputed Guatemalan territory.
Although the peaceful transfer of power from Bonilla to General Sierra in 1899 was important as the first time in decades that such a constitutional transition had taken place, that year was a watershed in another, even more important, sense.
Sierra's efforts to perpetuate himself in office led to his overthrow in 1903 by General Manuel Bonilla, who proved to be an even greater friend of the banana companies than Sierra had been. 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.
Conservative Manuel Bonilla was an opponent rather than a relative or friend of Sierra's liberal predecessor, Policarpo Bonilla. During Manuel Bonilla's term in office, he imprisoned ex-president Policarpo Bonilla for over two years and took other steps to suppress his political opposition, the liberals, who were the only group with an organized political party. The conservatives were divided into a host of personalist factions and lacked coherent leadership. Manuel 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.
Manuel Bonilla promoted some internal improvements, notably road building. He improved the route from Tegucigalpa to the Pacific coast. On the international front, he concluded friendship pacts with Nicaragua and later with Guatemala and El Salvador.
Of perhaps greatest significance was the work accomplished during Manuel Bonillo's administration to delineate the long-disputed border with Nicaragua. The area, called the Mosquitia region, was located in the eastern part of the country in the department of Gracias a Dios. The area was large but virtually unpopulated except for small groups of Miskito who owed little allegiance to either nation. In 1894 a treaty provided for the establishment of a boundary commission, composed of representatives of Honduras and Nicaragua, to resolve the dispute.
By 1904 the commission had been able to agree on only the lower part of the boundary. In that year, to reach agreement on the upper part, the representatives of the two nations picked King Alfonso XIII of Spain as a neutral, third member of the commission, in effect making him the arbiter. His decision, announced in 1906, gave the bulk of the disputed territory to Honduras, establishing the upper boundary line along the Río Coco. At the time, both governments accepted the decision, but in 1912 Nicaragua raised new objections. The dispute was finally resolved in favor of the 1906 arbitration only in 1960.
In 1906 Manuel Bonilla successfully resisted an invasion from Guatemala, but this was his last major success. The friendship pact with Guatemala and El Salvador signed in 1906 was interpreted as an anti-Nicaraguan alliance by the Nicaraguans. Nicaragua's powerful President Zelaya began to support exiled Honduran liberals in their efforts to topple Manuel Bonilla, who had become, in effect, the Honduran dictator. Supported by elements of the Nicaraguan army, the exiles invaded Honduras in February 1907 and established a provisional junta. 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.
Until the early twentieth century, the United States had played only a very limited role in internal Honduran political clashes. Because there was not a resident United States minister in Tegucigalpa, the minister to Guatemala had been accredited for that position. The presence of the United States in the Caribbean increased following the Spanish–American War (1898), however. The decision to build a canal through Panama and expanded commercial activities led to a more active role for the United States government, as well as for United States companies.
By 1907 the United States looked with considerable disfavor on the role Zelaya of Nicaragua was playing in regional affairs. When the Nicaraguan army entered Honduras in 1907 to overthrow Bonilla, the United States government, believing that Zelaya wanted to dominate the entire region, landed marines at Puerto Cortés to protect the North American bananas trade. Other United States naval units prevented a Nicaraguan attack on Bonilla's last position at Amapala in the Golfo de Fonseca. After negotiations conducted by the United States naval commander, Manuel Bonilla sought refuge on the USS Chicago, and the fighting came to an end.
The United States chargé d'affaires in Tegucigalpa took an active role in arranging a final peace settlement, with which Zelaya was less than happy. The settlement provided for the installation of a compromise regime, headed by General Miguel Dávila, in Tegucigalpa. Dávila was a liberal but was distrusted by Zelaya, who made a secret arrangement with El Salvador to oust him from office. This plan failed to reach fruition, but the United States, alarmed by the threat of renewed conflict in Central America, called the five Central American presidents to a conference in Washington in November.
The Central American Peace Conference of 1907 made a major effort to reduce the level of conflict within the region. A Honduran proposal to reestablish the political union of the Central American states failed to achieve acceptance, but several other measures were adopted. The five presidents signed the General Treaty of Peace and Amity of 1907 pledging themselves to establish the permanent Central American Court of Justice, which would resolve future disputes. The treaty also committed the five countries to restrict the activities of exiles from neighboring states and provided the basis for legal extraditions. Of special interest was a United States-sponsored clause that provided for the permanent neutrality of Honduras in any future Central American conflicts.
Another convention adopted by all five states committed the signers to withhold recognition from governments that seized power by revolutionary means. The United States and Mexico, which had acted as cosponsors of the conference, indicated informally that they would also deny recognition to such governments. From the point of view of the United States Department of State, these agreements represented a major step toward stabilizing Central America in general and Honduras in particular.
The first test of the new treaty involved Honduras. In 1908 opponents of President Dávila, probably supported by Guatemala and El Salvador, invaded the country. Nicaragua supported the Honduran president, and war seemed imminent. Perhaps motivated by the possibility of United States intervention, however, the parties agreed to submit the dispute to the new Central American court. The court ultimately rejected the Honduran and Nicaraguan complaints, but in the meantime the revolt collapsed, thus briefly restoring peace to Honduras.
Along with fighting off efforts to overthrow him, President Dávila made some attempts to modernize Honduras. He invited a Chilean officer to establish a regular military academy, which failed to survive beyond his time in office. Like his predecessor, Dávila encouraged the activities of the banana companies. The companies, however, were less than totally happy with him, viewing his administration as ineffective. In addition, rivalry among the companies became a factor in Honduran politics. In 1910 Dávila's administration granted the Vaccaro brothers a generous rail concession that included a provision prohibiting any rival line within twenty kilometers. This concession angered Samuel Zemurray of the newly formed Cuyamel Fruit Company. Zemurray had encouraged and even helped finance the 1908 invasion and was to continue to make trouble for the Dávila administration.
Despite the failure of the 1908 uprising, the United States remained concerned over Honduran instability. The administration of William Howard Taft saw the huge Honduran debt, over US$120 million, 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 customs revenue.
The terms proposed by the bankers met with considerable opposition in Honduras, further weakening the Dávila government. A treaty incorporating the key provisions 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.
The relative stability of the 1911–20 period was difficult to maintain. Revolutionary intrigues continued throughout the period, accompanied by constant rumors that one faction or another was being supported by one of the banana companies. Rivalry among these companies had escalated in 1910 when the United Fruit Company had entered Honduras. In 1913 United Fruit established the Tela Railroad Company and shortly thereafter a similar subsidiary, the Trujillo Railroad Company. The railroad companies were given huge land subsidies by the Honduran government for each kilometer of track they constructed.
The government expected that in exchange for land the railroad companies would ultimately build a national rail system, providing the capital with its long-sought access to the Caribbean. The banana companies, however, had other ideas in mind. They used the railroads to open up new banana lands, rather than to reach existing cities. Through the resultant land subsidies, they soon came to control the overwhelming share of the best land along the Caribbean coast. Coastal cities such as La Ceiba, Tela, and Trujillo and towns further inland such as El Progreso and La Lima became virtual company towns, and the power of the companies often exceeded the authority wielded in the region by local governments.
For the next two decades, the United States government was involved in opposing Central American revolutions whether the revolutions were supported by foreign governments or by United States companies. During the 1912–21 period, warships were frequently dispatched to areas of revolutionary activity, both to protect United States interests and to exert a dampening effect on the revolutionaries. In 1917 the disputes among the companies threatened to involve Honduras in a war with Guatemala. The Cuyamel Fruit Company, supported by the Honduran government, had begun to extend its rail lines into disputed territory along the Guatemalan border. The Guatemalans, supported by the United Fruit Company, sent troops into the area, and it seemed for a time that war might break out. United States mediation ended the immediate threat, but the dispute smoldered until 1930 when a second United States mediation finally produced a settlement.
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.
World War I had a generally negative impact on Honduras. In 1914 banana prices began to fall, and, in addition, the war reduced the overall amount of agricultural exports. The United States entry into the war in 1917 diverted ships to the war effort, making imported goods, such as textiles, scarce. The shortages of goods in turn led to inflation, and the decline in trade reduced government revenues from tariffs. The banana companies, however, continued to prosper; Standard Fruit reported earnings of nearly US$2.5 million in 1917. Despite its problems, Honduras supported the United States war effort and declared war on Germany in 1918.
In 1919 it became obvious that Bertrand would refuse to allow an open election to choose his successor. Such a course of action was opposed by the United States and had little popular support in Honduras. The local military commander and governor of Tegucigalpa, General Rafael López Gutiérrez, took the lead in organizing PLH opposition to Bertrand. López Gutiérrez also solicited support from the liberal government of Guatemala and even from the conservative regime in Nicaragua. Bertrand, in turn, sought support from El Salvador. Determined to avoid an international conflict, the United States, after some hesitation, offered to meditate the dispute, hinting to the Honduran president that if he refused the offer, open intervention might follow.
Bertrand promptly resigned and left the country. The United States ambassador helped arrange the installation of an interim government headed by Francisco Bográn, who promised to hold free elections. However, General López Gutiérrez, who now effectively controlled the military situation, made it clear that he was determined to be the next president. After considerable negotiation and some confusion, a formula was worked out under which elections were held. López Gutiérrez won easily in a manipulated election, and in October 1920 he assumed the presidency.
During Bográn's brief time in office, he had agreed to a United States proposal to invite a United States financial adviser to Honduras. Arthur N. Young of the Department of State was selected for this task and began work in Honduras in August 1920, continuing to August 1921. While there, Young compiled extensive data and made numerous recommendations, even persuading the Hondurans to hire a New York police lieutenant to reorganize their police forces. Young's investigations clearly demonstrated the desperate need for major financial reforms in Honduras, whose always precarious budgetary situation was considerably worsened by the renewal of revolutionary activities.
In 1919, for example, the military had spent more than double the amount budgeted for them, accounting for over 57 percent of all federal expenditures. Young's recommendations for reducing the military budget, however, found little favor with the new López Gutiérrez administration, and the government's financial condition remained a major problem. If anything, continued uprisings against the government and the threat of a renewed Central America conflict made the situation even worse. From 1919 to 1924, the Honduran government expended US$7.2 million beyond the amount covered by the regular budgets for military operations.
From 1920 through 1923, seventeen uprisings or attempted coups in Honduras contributed to growing United States concern over political instability in Central America. In August 1922, the presidents of Honduras, Nicaragua, and El Salvador met on the USS Tacoma in the Golfo de Fonseca. Under the watchful eye of the United States ambassadors to their nations, the presidents pledged to prevent their territories from being used to promote revolutions against their neighbors and issued a call for a general meeting of Central American states in Washington at the end of the year.
The Washington conference concluded in February with the adoption of the General Treaty of Peace and Amity of 1923, which had eleven supplemental conventions. The treaty in many ways followed the provisions of the 1907 treaty. The Central American court was reorganized, reducing the influence of the various governments over its membership. The clause providing for withholding recognition of revolutionary governments was expanded to preclude recognition of any revolutionary leader, his relatives, or anyone who had been in power six months before or after such an uprising unless the individual's claim to power had been ratified by free elections. The governments renewed their pledges to refrain from aiding revolutionary movements against their neighbors and to seek peaceful resolutions for all outstanding disputes.
The supplemental conventions covered everything from the promotion of agriculture to the limitation of armaments. One, which remained unratified, provided for free trade among all of the states except Costa Rica. The arms limitation agreement set a ceiling on the size of each nation's military forces (2,500 men for Honduras) and included a United States-sponsored pledge to seek foreign assistance in establishing more professional armed forces.
The October 1923 Honduran presidential elections and the subsequent political and military conflicts provided the first real tests of these new treaty arrangements. Under heavy pressure from Washington, López Gutiérrez allowed an unusually open campaign and election. The long-fragmented conservatives had reunited in the form of the National Party of Honduras (Partido Nacional de Honduras, PNH), which ran as its candidate General Tiburcio Carías Andino, the governor of the department of Cortés. However, the liberal PLH was unable to unite around a single candidate and split into two groups, one supporting former president Policarpo Bonilla, the other advancing the candidacy of Juan Angel Arias. As a result, no candidate secured a majority. Carías received the greatest number of votes, with Bonilla second, and Arias a distant third. By the terms of the Honduran constitution, this stalemate left the final choice of president up to the legislature, but that body was unable to obtain a quorum and reach a decision.
In January 1924, López Gutiérrez announced his intention to remain in office until new elections could be held, but he repeatedly refused to specify a date for the elections. Carías, reportedly with the support of United Fruit, declared himself president, and an armed conflict broke out. In February the United States, warning that recognition would be withheld from anyone coming to power by revolutionary means, suspended relations with the López Gutiérrez government for its failure to hold elections.
Conditions rapidly deteriorated in the early months of 1924. On February 28, a pitched battle took place in La Ceiba between government troops and rebels. Even the presence of the USS Denver and the landing of a force of United States Marines were unable to prevent widespread looting and arson resulting in over US$2 million in property damage. Fifty people, including a United States citizen, were killed in the fighting. In the weeks that followed, additional vessels from the United States Navy Special Service Squadron were concentrated in Honduran waters, and landing parties were put ashore at various points to protect United States interests. One force of marines and sailors was even dispatched inland to Tegucigalpa to provide additional protection for the United States legation. Shortly before the arrival of the force, López Gutiérrez died, and what authority remained with the central government was being exercised by his cabinet. General Carías and a variety of other rebel leaders controlled most of the countryside but failed to coordinate their activities effectively enough to seize the capital.
In an effort to end the fighting, the United States government dispatched Sumner Welles to the port of Amapala; he had instructions to try to produce a settlement that would bring to power a government eligible for recognition under the terms of the 1923 treaty. Negotiations, which were once again held on board a United States cruiser, lasted from April 23 to April 28. An agreement was worked out that provided for an interim presidency headed by General Vicente Tosta, who agreed to appoint a cabinet representing all political factions and to convene a Constituent Assembly within ninety days to restore constitutional order. Presidential elections were to be held as soon as possible, and Tosta promised to refrain from being a candidate. Once in office, the new president showed signs of reneging on some of his pledges, especially those related to the appointment of a bipartisan cabinet. Under heavy pressure from the United States delegation, however, he ultimately complied with the provisions of the peace agreement.
Keeping the 1924 elections on track proved to be a difficult task. To put pressure on Tosta to conduct a fair election, the United States continued an embargo on arms to Honduras and barred the government from access to loans—including a requested US$75,000 from the Banco Atlántida. Furthermore, the United States persuaded El Salvador, Guatemala, and Nicaragua to join in declaring that, under the 1923 treaty provision, no leader of the recent revolution would be recognized as president for the coming term. These pressures ultimately helped persuade Carías to withdraw his candidacy and also helped ensure the defeat of an uprising led by General Gregorio Ferrera of the PNH. The PNH nominated Miguel Paz Barahona (1925–29), a civilian, for president. The PLH, after some debate, refused to nominate a candidate, and on December 28 Paz Barahona won virtual unanimous election.
Despite another minor uprising led by General Ferrera in 1925, Paz Barahona's administration was, by Honduran standards, rather tranquil. The banana companies continued to expand, the government's budgetary situation improved, and there was even an increase in labor organizing. On the international front, the Honduran government, after years of negotiations, finally concluded an agreement with the British bondholders to liquidate most of the immense national debt. The bonds were to be redeemed at 20 percent of face value over a thirty-year period. Back interest was forgiven, and new interest accrued only over the last fifteen years of this arrangement. Under the terms of this agreement, Honduras, at last, seemed on the road to fiscal solvency.
Fears of disturbances increased again in 1928 as the scheduled presidential elections approached. The ruling PNH nominated General Carías while the PLH, united again following the death of Policarpo Bonilla in 1926, nominated Vicente Mejía Colindres. To the surprise of most observers, both the campaign and the election were conducted with a minimum of violence and intimidation. Mejía Colindres won a decisive victory—obtaining 62,000 votes to 47,000 for Carías. Even more surprising was Carías's public acceptance of defeat and his urging of his supporters to accept the new government.
Mejía Colindres took office in 1929 with high hopes for his administration and his nation. Honduras seemed on the road to political and economic progress. Banana exports, then accounting for 80 percent of all exports, continued to expand. By 1930 Honduras had become the world's leading producer of the fruit, accounting for one-third of the world's supply of bananas. United Fruit had come increasingly to dominate the trade, and in 1929 it bought out the Cuyamel Fruit Company, one of its two principal remaining rivals. Because conflicts between these companies had frequently led to support for rival groups in Honduran politics, had produced a border controversy with Guatemala, and may have even contributed to revolutionary disturbances, this merger seemed to promise greater domestic tranquility. The prospect for tranquility was further advanced in 1931 when Ferrera was killed while leading one last unsuccessful effort to overthrow the government.
Many of Mejía Colindres's hopes, however, were dashed with the onset of the Great Depression. Banana exports peaked in 1930, then declined rapidly. Thousands of workers were laid off, and the wages of those remaining on the job were reduced, as were the prices paid to independent banana producers by the giant fruit companies. Strikes and other labor disturbances began to break out in response to these conditions, but most were quickly suppressed with the aid of government troops. As the depression deepened, the government's financial situation deteriorated; in 1931 Mejía Colindres was forced to borrow US$250,000 from the fruit companies to ensure that the army would continue to be paid.