Policies favoring international trade and investment began in the 1870s, and soon foreign interests became involved, first in shipping from the north coast, especially tropical fruit and most notably bananas, and then in building railroads. In 1888, a projected railroad line from the Caribbean coast to the capital, Tegucigalpa, ran out of money when it reached San Pedro Sula. As a result, San Pedro grew into the nation’s primary industrial center and second-largest city. Comayagua was the capital of Honduras until 1880, when the capital moved to Tegucigalpa.
Since independence, nearly 300 small internal rebellions and civil wars have occurred in the country, including some changes of régime.
20th Century and the Role of American Companies:
In the late nineteenth century, Honduras granted land and substantial exemptions to several US-based fruit and infrastructure companies in return for developing the country’s northern regions. Thousands of workers came to the north coast as a result to work in banana plantations and other businesses that grew up around the export industry. Banana-exporting companies, dominated until 1930 by the Cuyamel Fruit Company, as well as the United Fruit Company, and Standard Fruit Company, built an enclave economy in northern Honduras, controlling infrastructure and creating self-sufficient, tax-exempt sectors that contributed relatively little to economic growth.
American troops landed in Honduras in 1903, 1907, 1911, 1912, 1919, 1924 and 1925.
In 1904, the writer O. Henry coined the term “banana republic” to describe Honduras, publishing a book called Cabbages and Kings, about a fictional country, Anchuria, inspired by his experiences in Honduras, where he had lived for six months. In The Admiral, O.Henry refers to the nation as a “small maritime banana republic”; naturally, the fruit was the entire basis of its economy. According to a literary analyst writing for The Economist, “his phrase neatly conjures up the image of a tropical, agrarian country. But its real meaning is sharper: it refers to the fruit companies from the United States that came to exert extraordinary influence over the politics of Honduras and its neighbors.” In addition to drawing Central American workers north, the fruit companies encouraged immigration of workers from the English-speaking Caribbean, notably Jamaica and Belize, which introduced an African-descended, English-speaking and largely Protestant population into the country, although many of these workers left following changes to immigration law in 1939. Honduras joined the Allied Nations after Pearl Harbor, on 8 December 1941, and signed the Declaration by United Nations on 1 January 1942, along with twenty-five other governments.
Constitutional crises in the 1940s led to reforms in the 1950s. One reform gave workers permission to organize, and a 1954 general strike paralyzed the northern part of the country for more than two months, but led to reforms. In 1963 a military coup unseated democratically elected President Ramón Villeda Morales. In 1960, the northern part of what was the Mosquito Coast was transferred from Nicaragua to Honduras by the International Court of Justice.
1969–1999 (Wars and Corruption):
In 1969, Honduras and El Salvador fought what became known as the Football War. Border tensions led to acrimony between the two countries after Oswaldo López Arellano, the president of Honduras, blamed the deteriorating Honduran economy on immigrants from El Salvador. The relationship reached a low when El Salvador met Honduras for a three-round football elimination match preliminary to the World Cup.