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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!