Although no longer the world's leading banana exporter, Honduras is a 'banana republic,' since exports of that fruit are the source of some 80 per cent of government income and the trade balance. The United Fruit Company's concentration on that single crop is so great that foodstuffs must be imported from El Salvador and Nicaragua. The output has been seriously affected in recent years, however, by the sigotaka leafspot disease, which is now being brought under control. Gold, produced by the Rosario mines, is the only other important export. A group of North American technicians will make a study of possibilities of rubber production here, as well as in Costa Rica and Panama, looking towards development of rubber production in the Western Hemisphere (see COSTA RICA).
The 'gentleman's agreement' with Nicaragua over a boundary dispute, arranged by a conciliation commission composed of United States, Costa Rican and Venezuelan arbitrators, expired Jan. 22, but the two governments recently adopted a non-aggression pact, which relieves the former tension over the border question. By this agreement both governments consented to remove troops from the disputed border.
The 1939-40 budget estimated revenues at 11,403,000 lempiras, expenditures at 11,026,000 lempiras. Payment in 1939 was continued on the external debt, annual service amounting to $200,000.
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