Mexican Empire and Central American Federation

Rather than fighting for their independence from the Spanish empire, Central Americans had it handed to them without a struggle when colonial authority completely collapsed in the early 1820s. On September 15, 1821, representatives of the former colonies of Honduras, Costa Rica, Nicaragua, El Salvador, and Guatemala jointly declared independence from Spain in the government palace of Guatemala.

Brief struggles followed within the new countries over how to govern themselves. In Honduras, the two principal cities of Comayagua and Tegucigalpa split on the issue, the former opting to join with Mexico and the latter preferring a union of Central American republics.

By early 1822, the issue had been decided, and the countries declared themselves loyal to Iturbide, the new emperor of Mexico. This would-be empire lasted just over a year, at which point Iturbide was deposed and Central American nations joined together to become a federation, separate from Mexico.

The United Provinces of Central America was a fine idea in theory but in practice foundered on the unpleasant realities of local rivalries, suspicions, and the split between partisans of the Conservative and Liberal trains of political thought. Broadly, Conservatives favored the church, the land-owning elite, and a paternalistic attitude toward indigenous people and campesinos, while Liberals supported economic modernization, education, eradicating the power of the church, and a policy of erasing indigenous culture and homogenizing the population. By 1838, after 16 years of nonstop infighting among its members, the Central American union was dead, and each province became a sovereign nation.

The Birth of Honduras

After a few months of vacillation, Honduras declared itself independent on November 15, 1838, and enacted the first of many constitutions in January 1839. Between this time and 1876, Honduras experienced a period of extreme instability and precious little economic or social development.

Rivalries between Liberals and Conservatives dominated the political landscape across Central America during this era, and when one side was in power in one country, rulers of the opposite persuasion organized invasions or coups from their territory. Being in the middle of Central America, Honduras was a frequent target of and participant in these schemes and aggressions.

As if the squabbles between its Central American neighbors weren’t enough, Honduras also had to cope with the machinations of North Americans and British, both private citizens and government officials. American agent E. George Squier and British representative Frederick Chatfield abused their power to advance the interests of their respective countries, most particularly regarding a much-discussed but never realized transcontinental railroad or canal.

Even more ominous were the activities of private American and British citizens in Honduras. From the United States came the messianic, slightly lunatic “gray-eyed man of destiny,” William Walker. Convinced he was the savior of Central America, and backed by wealthy U.S. financiers, Walker invaded Nicaragua and declared himself president in 1855. Although his rule was short-lived, Walker performed the heretofore impossible task of uniting all the Central American republics—at least for as long as it took them to defeat and expel the hated gringo. Undaunted, Walker returned to Honduras in 1860 with the idea of retaking Central America, only to be captured near Trujillo by the British, turned over to Honduran troops, and summarily executed.

Ever more subtle than North Americans, British power brokers contented themselves not with outright invasion but with contracting a series of debts with the Honduran government. This made a few British bankers and several corrupt Hondurans rich but crippled the country before it had a chance to get started in its modernization.

In one of the shadier transactions in financial history, British bankers lent Honduras a bit less than £6 million to help construct a national railroad. The government eventually saw merely £75,000, the rest remaining in sticky fingers on both sides of the Atlantic. By 1871, only 92 kilometers of track had been laid, and even that was shoddily built and soon collapsed. Unable to cope with even the interest on the loan, successive governments tried to forget it existed until 1916, by which time Honduras owed US$125 million and had to plead for the loans to be renegotiated.

The Liberal Years

One of the first forward-thinking governments in Honduran history began in 1876, with the inauguration of President Marco Aurelio Soto, a Liberal. A firm believer in modernization, Soto and his successor, Luis Bográn, did what they could to lay the foundations for development.

Between 1876 and 1891, when Bográn was deposed, successive administrations regulated state finances, started free primary education, and reformed the legal code. Convinced of the need for foreign capital to lift Honduras out of poverty, Soto also promoted mining among U.S. investors.

His campaign’s most notable success, if it can be termed as such, was the founding of the New York and Honduras Rosario Mining Company in 1880, which quickly became the most profitable and productive mine in the western hemisphere during that period. Although the company provided jobs for a thousand Honduran workers and was for a time the most important economic and political player in Honduras, all profits went directly to New York; in the long run, Honduras saw little benefit for the concessions it offered.

The Banana Companies

The railroad and mining episodes gave merely a taste of the foreign domination that was to come with the advent of the banana industry on the north coast. U.S.-bound freighters were buying bananas from local producers as early as 1860, but in 1899 the Vaccaro brothers—later Standard Fruit, and now Castle and Cooke—set up the first foreign-controlled plantations on the mainland near La Ceiba. They were quickly followed by United Fruit and Cuyamel.

Once these foreign companies moved in, small-scale Honduran producers were forced out of business either through land buyouts or crude threats. Thus, by the beginning of World War I, the three largest companies, all foreign-owned, controlled huge portions of land, the country’s only railroads, and more than 80 percent of the Honduran export trade. Large chunks of rich bottom land were literally given away to the companies in return for the construction of railroads, which for the most part they never built.

The banana companies showed no compunction about bribing and cajoling government officials and army officers. When quieter tactics proved unsuccessful, financing a revolution was not entirely out of the question, and disputes were often decided in the end by U.S. military intervention.

Reviewing this inglorious period, one historian observed that “North American power had become so encompassing that U.S. military forces and United Fruit could struggle against each other to see who was to control the Honduran government, then have the argument settled by the U.S. Department of State.”

© Chris Humphrey and Amy E. Robertson from Moon Honduras, 5th Edition