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Though I did not visit Nicaragua in these journeyings I think some notes on its position necessary to this study. It is the State next but one north of Panama, and is separated by the small State of Costa Rica. Though Nicaragua is broader than Panama from ocean to ocean, it has always been considered as possessing an alternative territory for a canal. This is owing to its large lake and existing waterways. British capitalists have in time past considered the feasibility of financing the construction of such a canal. The United States, bargaining with France for the price of de Lesseps' handiwork at Panama, used the idea of a Nicaraguan Canal as a persuader. It was used also with the Colombians before the Panama revolution.
Nicaragua is, therefore, a State on which the eyes of America have more frequently rested than on the remainder of the Central American republics. She has felt constrained to advise and help her, lend her money, and finally enter into virtual control.
In 1907 a war between Nicaragua and Honduras was settled by the joint efforts of Roosevelt and Diaz. The President of Mexico, who had succeeded in quelling the spirit of revolt in his own country, was ready to help in making Central America safe for Democracy, and under the auspices of his ideas a Central American Conference was held in Washington, and a sort of League of Nations tribunal was set up. Soon, however, fights broke out again, and Nicaragua started against Salvador, her north-western neighbor (1909). The United States then sent down the marines to hold the Nicaraguans in check.
Nicaragua was annoyed with the United States, but instead of showing it in action appealed ingratiatingly for some advice and money help. Next year the United States yielded a loan secured on her customs dues. It is like the story of a fallen woman—a little indignant at being ravished, she looks to the ravisher for advice and a little money. He says, "You can earn a good deal under my protection. I will advance you a small sum and take it back in dues upon your custom."
In 1914 Nicaragua was fourteen million dollars in debt and much embarrassed. It was, therefore, not difficult for the United States to drive a new bargain. In exchange for three million dollars, the expenditure of which the United States would supervise, Nicaragua was to grant to the said United States the exclusive right to construct an inter-oceanic canal. This canal the United States naturally had no intention of constructing. The significance of the deal is that no other Power should be granted powers to construct a canal—no competitor against the new Panama Canal. Besides this concession, by the same treaty two small off-coast islands were leased to the United States.
Nicaragua's debts to-day, internal and external, are greater than ever. She buys all she needs in American markets. A controller sits at the receipt of custom. She is indeed still a little annoyed, and corresponds with the patriots of Domingo and Cuba. The Central American nations, including Nicaragua, have however, concluded a new pact which brings them nearer to unity than they have ever been hitherto. This is based on the common ground of Latin sentiment, but its binding power is that of the dollar and a mutual economic interest. The relationship of these republics with the United States is friendly enough to be called domination with consent of those dominated. It is a remarkable contrast to the belligerency of Mexico. The Central American pact in 1923 came with a fanfare of drums heralding the Pan-American Conference at Santiago de Chile.