In the first decade of the 20th century, Nicaraguan strongman José Santos Zelaya put Miguel Dávila into the Honduran presidency. This led in 1911 and 1912 to something more serious than periodic revolutions. The U.S. president, William Howard Taft, sent marines to protect American banana investments, which by this time had grown considerably, with three companies exploiting this Honduran product. All three made large capital outlays in the form of improved port facilities, railroads, workers’ settlements, and similar developments.

In 1918 Honduras declared war on Germany but took no active part in World War I. Thereafter, disenchanted Liberals and Conservatives formed the National Party to challenge continued Liberal rule. In 1932, following political unrest and economic decline caused by the Great Depression, National Party leader Gen. Tiburcio Carías Andino was elected president and remained in office until 1949. Carías’s policies, however, differed little from Liberal political or economic policy.

Honduras declared war on Japan, Germany, and Italy in December 1941. The wartime curtailment of shipping brought much economic distress; export surpluses of bananas, coconuts, and copra piled up, leading to widespread unemployment and consequent unrest. But the government was able to maintain itself, and it promulgated some beneficial reforms. Carías survived a revolution in 1947, but he soon turned the government over to his minister of defense, Juan Manuel Gálvez (ruled 1949–54).

Julio Lozano Díaz (1954–56) continued National Party rule, but political turmoil and military revolt in 1957 led to the congressional election of Ramón Villeda Morales (1957–63), a Liberal who brought some modernization to the transportation system and to labour legislation. In 1963 Col. Osvaldo López Arellano overthrew Villeda and declared himself head of state, returning the National Party to power. In the summer of 1969 the Soccer War with El Salvador broke out, triggered indeed by a soccer (football) game but caused by severe economic and demographic problems. Though brief, the war dampened hopes for economic and political integration in Central America.

Honduras was ruled by military governments from 1963 until the election of Ramón Ernesto Cruz (1971–72). Cruz’s election resulted from the Soccer War, which Honduras had lost militarily. But López, chief of the armed forces, retained real power, and in December 1972 he removed Cruz from office. Pressured toward modernizing reforms by younger military officers, López astonished many by announcing, in January 1974, a reform program that included land redistribution. His program had little success, however.

López was discredited and forced to resign in 1975 because of an international bribery scandal; he was replaced by Col. Juan Alberto Melgar Castro (1975–78). Honduras prospered modestly under Melgar, largely because of high earnings from the elevated world coffee market during those years. His administration was weakened, however, by a series of scandals.

Gen. Policarpo Paz García, who attained power through a bloodless military coup in late 1978, pledged to continue Melgar’s policies, but he soon faced harder times. Central America entered a cycle of violence with the revolution in Nicaragua that overthrew Anastasio Somoza Debayle in July 1979 and the revolution in El Salvador that was underway in that same year. Honduras appeared to be an island of stability as its neighbours experienced guerrilla warfare. In November 1981 the country elected a civilian government after 17 years of almost continuous military rule.

The new Honduran president, Roberto Suazo Córdova of the Liberal Party, was a noted anticommunist who favoured strong relations with the United States. Hopes ran high for internal improvements, but these were dashed as Honduras became embroiled in the growing regional conflicts. Protests grew over the presence of Nicaraguan contras (guerrilla fighters), who were using U.S.-sanctioned Honduran border areas as bases for attacks against Nicaragua’s Sandinista government. There was also dissension over U.S.-run camps for training Salvadorans in counterinsurgency to combat the growing civil war in their country. (Honduras banned these camps in 1984.) The U.S. presence supported the further militarization of Honduras, and Honduran army chieftain Gustavo Álvarez Martínez appeared to be the real power there until 1984, when younger officers loyal to Suazo ousted the chieftain amid anti-American demonstrations in Tegucigalpa. Suazo’s government continued, however, to cooperate with the anti-Sandinista activities of the United States, and he received substantial economic aid in return, including U.S. construction of airports and other military installations. In the late 1980s Honduras joined the other Central American governments in a cooperative movement for regional peace. This brought increased pressure to restrict contra activity and to reduce the U.S. presence in Honduras.

The U.S. government had hoped that its relations with Honduras would help establish the country as a model Central American democracy, but that image was tarnished in 1986 when another Liberal, José Azcona Hoyo, succeeded Suazo despite having received far fewer votes than the National Party candidate, Rafael Leonardo Callejas. In 1989, however, Callejas won election and took office in 1990, the first time in 57 years that an opposition government had taken office peacefully.

Callejas’s administration faced labour disputes, rising crime and violence, and charges of corruption. A major conflict between independent banana producers and Chiquita reduced banana exports in 1990, and by 1992 the annual per capita income in Honduras was only two-fifths of what it had been prior to the conflict. Severe economic and financial decline allowed the Liberals to sweep back to power in 1994 with Carlos Roberto Reina, whose conciliatory approach did not solve all the nation’s problems but nevertheless gained him wider support than Callejas had enjoyed, and the Liberals were able to win again in November 1997. The new president, Carlos Flores Facussé, an engineer with close ties to the United States, represented the more conservative wing of the Liberal Party and promised to continue the probusiness policies of his predecessors. In October 1998, however, Hurricane Mitch, one of the worst storms to strike the Western Hemisphere in recorded history, dumped torrential rains on the country, washing away crops, roads, and population centres throughout Honduras. The storm killed several thousand Hondurans, displaced in excess of a million persons, ruined the country’s economy and infrastructure, and caused widespread misery and unemployment. A massive international relief effort supported the reconstruction efforts, which occupied Honduras for the next several years.