1 - A century of independence: foundations of export-led growth

Summary

To much of the outside world, Central America in 1920 was a source of amusement. O. Henry's unflattering description of ‘banana republics’ in Cabbages and Kings (Henry, 1917) had caught the foreigners' imagination and even those who had travelled widely in the region (e.g. Cunningham, 1922) could not resist the lure of characters like Lee Christmas, the former United States railway engineer, who was widely credited with making and breaking governments in the northern republics of Central America. The US occupation of Nicaragua since 1912 did little to encourage the outside world to associate the region with progress and development and the fact that a Nicaraguan President had invited the US marines in the first place probably only made matters worse.

Central Americans, however, viewing the progress of the region in the century since independence, had reasons for feeling a sense of satisfaction. The turmoil of the first fifty years had given way to a half-century (1870–1920) of steady, if not unbroken, economic progress. This was based above all on the solid foundations of two export crops (coffee and bananas), which appeared to be well suited to climatic conditions in Central America and which were absorbed in increasing quantities by the world market. The introduction of crops to Central America of permanent utility to the world market ended a search which had been going on fruitlessly since colonial times (McLeod, 1973). It also solved the problem of how to integrate the region into the world economy (a goal considered desirable by all Central American leaders in the nineteenth century).