1941: Nicaragua

The policy of complete cooperation with the United States which President Anastasio Somoza voiced during the year, notably in February when he invited the United States to establish air and naval bases on Nicaragua's Atlantic and Pacific coasts, was given tangible demonstration when the Republic declared war on the Axis powers in December. Lend-lease credits have been extended to Nicaragua for the purchase of defense materials. A huge prodemocracy demonstration was held Nov. 29, protesting the execution of hostages in occupied France.

Recognition of the strategic importance of the Pan American Highway has led the United States to adopt a new policy towards its construction. Instead of expecting the countries concerned to cover the entire construction costs, the United States now proposes, according to a bill signed by President Roosevelt on Dec. 26, to spend on its own account a sum not exceeding $20,000,000 for cooperation in its construction as far as Panama. The United States Government, thus, assumes up to two-thirds of the cost of some 1,500 miles of road still unfinished. Completion is expected in about five years. Through the Export-Import Bank it has already contributed largely to the financing of construction, especially in the Central American portion. It is estimated that approximately two-thirds of the total highway system to Buenos Aires, a distance of 11,000 miles, is passable. The biggest gap is between Mexico and Guatemala.

The Pan American Highway is very important to Nicaragua since the Republic's economic development is hampered by lack of adequate transportation facilities. Therefore, an additional $2,000,000 credit, made available by the Export-Import Bank in March for another road project, not the Pan American Highway, is also very welcome. Only preliminary work has been accomplished on the canalization of the San Juan River. Positive government measures to improve the national economy have taken the form of easy credits to new industries and agriculture, and the promotion of agricultural exports. The chief agricultural projects are the commercial development of rubber and chicle. The National Bank of Nicaragua has also extended credits for the tapping of wild rubber trees.

Gold exports to the United States and Canada in 1941, totaling over $7,000,000, showed an increase of 26 per cent over 1940. Since the rediscovery of gold in Nicaragua and the current gold boom, that commodity has surpassed coffee as the country's first export. Unfortunately for Nicaragua's foreign exchange only a percentage of gold exports returns to the Republic since the important mines are owned and operated by North American and Canadian capital. The general purchasing power of the country depends on coffee and bananas. The more than 30 per cent rise in Nicaraguan coffee prices, following the Inter-American Coffee Agreement (See BRAZIL for Nicaragua's quota), assures a higher export income than was expected in view of the small 1941 crop. The United States took 93 per cent of Nicaragua's exports this year and supplied 90 per cent of the Republic's imports. A budgetary surplus of 3,000,000 córdobas at the end of 1940, and a ten per cent reduction of the public debt during that year testify to Nicaragua's strong financial position when 1941 opened.