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Nicaragua The Coffee Boom, 1840s-1940s
Coffee was the product that would change Nicaragua's
economy.
Coffee was first grown domestically as a curiosity in the
early
1800s. In the late 1840s, however, as coffee's popularity
grew in
North America and Europe, commercial coffee growing began
in the
area around Managua. By the early 1850s, passengers
crossing
Nicaragua en route to California were served large
quantities of
Nicaraguan coffee. The Central American coffee boom was in
full
swing in Nicaragua by the 1870s, and large areas in
western
Nicaragua were cleared and planted with coffee trees.
Unlike traditional cattle raising or subsistence
farming,
coffee production required significant capital and large
pools of
labor. Laws were therefore passed to encourage foreign
investment
and allow easy acquisition of land. The Subsidy Laws of
1879 and
1889 gave planters with large holdings a subsidy of
US$0.05 per
tree.
By the end of the nineteenth century, the entire
economy came
to resemble what is often referred to as a "banana
republic"
economy--one controlled by foreign interests and a small
domestic
elite oriented toward the production of a single
agriculture
export. Profits from coffee production flowed abroad or to
the
small number of landowners. Taxes on coffee were virtually
nonexistent. The economy was also hostage to fluctuations
in the
price of coffee on the world markets--wide swings in
coffee
prices meant boom or bust years in Nicaragua.
Data as of December 1993
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