Nicaragua and US Intervention
In 1909, President Zelaya refunded the national debt with a British
syndicate instead of a US-owned one. There was a revolt in Nicaragua in October,
which some Americans had fomented. In November, two of the conspirators, American soldiers
of fortune, were executed, which brought an excoriating note from the US Secretary of
State. The US refused to have relations with the Nicaraguan representative. Zelaya
resigned. The US navy intervened. By August, General Estrada, backed by the US, had
taken power. Within two months, the US was negotiating for control of the Nicaraguan
customs houses. By the Spring of 1910, Adolfo Díaz, a US protégé, had become president.
Under his leadership, the State Department had negotiated the Knox-Castillo Treaty of June
6, 1911, which would have put the customs in charge of Americans with the revenue to be
split between foreign (mostly British) creditors and the Nicaraguan government. The US
Senate rejected it. President William Howard Taft did essentially the same thing by
executive agreement. New York bankers made a 15 million dollar loan to Nicaragua, then a
1.5 million dollar advance a little later. The bankers got 51% interest in the
National Railway. They used the National Bank as collateral. Taft appointed the collector
of customs.
Díaz had problems running the tiny country. In July, 1912, when he faced a revolt, he
appealed to the US for aid; In August, US Marines were landed. They stayed until 1925;
left; came back in 1926; and stayed until 1935. So much for Nicaragua being a sovereign
country!
