1938: Nicaragua

A Constitutional Assembly opened Dec. 15, the election of the delegates having been held on Nov. 6. The Constitutional changes considered included the right of the President to succeed himself and the extension of his term from four to six years (see EL SALVADOR for this method of setting up 'constitutional' dictatorships). According to the opening presidential address, adequate protection of labor and capital, based on the principles of social justice, will receive consideration. President Somoza has denied any Fascistic tendencies on the part of his Government. A law passed Jan. 25 forbids the dissemination of any foreign political philosophy, under penalty of deportation.

The salaries of all government employees were doubled in January to meet the high cost of living, caused by the heavy depreciation of the córdoba and the subsequent profiteering of merchants, who had increased prices over 100 per cent. A law passed Jan. 22, in an effort to lower food and clothing costs, limited mercantile profits to 20 per cent; to the same end, a project for cooperative stores has been proposed by the President. By the end of the year the financial situation was greatly improved and the currency stabilized. The new Brazilian coffee policy affected the coffee industry so severely that a new law regulating foreign exchange transactions was enacted late in December, 1937. On March 15, a new customs rate of exchange of two paper córdobas for $1.00 for all import duties was made effective. The reciprocal trade agreement with the United States continued in effect. In 1937 the United States handled 54 per cent of Nicaragua's import trade. The barter system, however, has more than doubled German sales in Nicaragua in the last three years and imports from Japan have increased 500 per cent. A commercial pact with France was approved May 19, guaranteeing a coffee quota for Nicaragua and reducing tariffs on French wines and liquors. The budget for 1937-38, which anticipated a deficit of 754,000 córdobas (estimates revenues, 5,586,000 córdobas; expenditures, 6,340,000 córdobas) showed a surplus at the close of the year, which will be applied to the construction of public buildings and highways.

The military and naval importance of a second interoceanic canal was stressed in the revival of the question of the construction of a Nicaraguan canal by Representative Vinson, author of the United States naval expansion bills of 1934 and 1938. The increase in effectiveness of weapons of attack, particularly from the air, and the reduction in the danger from sabotage in the case of a second canal, were offered in support of the contention that a canal through Nicaragua would be a justifiable and vital defense measure. It has not yet received the approval of the United States War Department. (For boundary dispute, see HONDURAS.)