1942: Nicaragua

A comprehensive financial and economic agreement signed with the United States in the spring (1) allocates an Export-Import Bank loan of $500,000 to the National Bank of Nicaragua; (2) provides that the United States shall bear two-thirds of the cost of completing the Nicaraguan section of the Inter-American highway, as well as aid in building a road linking the Atlantic and Pacific coasts; (3) establishes high priority ratings for supplies and equipment needed by essential Nicaraguan industries; (4) guarantees the purchase over a five-year period by the United States Rubber Reserve Corporation of all Nicaragua's exportable rubber; and (5) offers Nicaragua the assistance of United States Department of Agriculture experts in rubber and abacá (hemp) cultivation. A supplementary convention, announced on Nov. 22, covers a link in the Inter-American highway, for which the United States will provide funds for hard-surfacing. This link is considered important in continental defense as well as an aid in quickening transportation between Nicaragua and the United States.

A cotton crop control measure was passed in August with a view not only to limiting planting to acreage sufficient for domestic and export needs, but also to diversifying the Republic's crops and lessening its heavy dependence on coffee, which is Nicaragua's second export. Because of the quota system, coffee prices are 40 per cent higher than two years ago. Gold is the chief export product, accounting for 60 per cent of the country's 1941 exports, which were the largest in value since 1926. The figure for gold exports in 1941 was $7,500,000 out of a total of $12,000,000; coffee followed with $2,500,000. Gold and coffee thus together account for about 90 per cent of the Republic's total exports. For the month of January 1942, gold exports reached $750,000, the largest monthly figure on record. The great increase which the war has brought about in Nicaraguan-United States trade is indicated by the fact that of the $12,000,000 export figure, the United States purchased $11,500,000 worth, or almost 96 per cent, whereas before the war broke out in Europe the United States took only 60 per cent, while Japan was Nicaragua's second largest purchaser. Merchandise from the United States now accounts for 95 per cent of all Nicaraguan imports.

In spite of heavy expenditures for highways and military purposes, the first six months of 1942 finished with a surplus of over 1,000,000 córdobas. All obligations due July 1 in New York and London were met; these consisted of interest on and amortization of bonds of 1909 and 1918 and frozen merchandise accounts due to North American and British exporters.

As a co-belligerent with the United States, Nicaragua has taken drastic measures against Axis nationals and assets within its territory. Following the sinking of the San Pablo in a Costa Rican port in July, all Axis nationals were ordered to remove from the coastal regions of the country.