The quintessential " banana republic" Honduras  became a foreign enclave as a result of Anglo-American control over it's railroads, mining industry and banana production in the 1800's. U.S. banana companies were to dominate the country for many years. After the turn of the century, The United Fruit Company and the Standard Fruit and Steamship Company expanded their control over the rich alluvial plains of Honduras' Atlantic coast. By 1929, the United Fruit Company owned or controlled 650,000 acres of the best arable land, along with railroads and ports. The banana operations were run like private cheifdoms, in which the companies kept order and crushed labor organizing with their own security forces or by calling in U.S. troops.

    Bananas came to represent some 88% of Honduran exports, focusing on the economic activity of the country almost wholly in the atlantic coast region. Honduras is the only Central American country whose economic center is not the capital (Tegucigalpa) but a town near the Caribbean coast ( San Pedro Sula ). A second result was that the population of the coastal regions became predominately West Indian, since the U.S. companies preferred to hire English speaking laborers. In addition to those recruited from the Caribbean islands, there was a Garifuna ( Black Carib ) population concentrated on the Bay Islands off the coast and in the town of Trujillo, where the government granted them 7,000 hectares of land in 1901.

    Honduras was distinguished from it's neighbors by the totality of the banana companies' control. In contrast to El Salvedor, Costa Rica,and Guatemala, no native groups or companies rose to make fortunes in coffee exports. Instead, the U.S. companies controlled the government, financing political parties which conspired against each other. The U.S. also began training a Honduran army and air force which were commanded by the U.S. officers and seven primarily to protect the interests of the banana companies.

    The banana companies cultivated only about one-third of their lands,meaning that mich of the best land lay idle. In addition, corrupt officials frequently would appropriate large tracts of land, either keeping it for themselves or selling it to foreign companies. One example occurred in Trujillo, where a local military commander, Col. Gustavo Alvarez, expropriated 2,000 hectares of land belonging to the Garifuna and distributed them amongst wealthy landowners over the Garifunas' protests.

    In 1964, the agricultural multinational Castle & Cooke took over Standard Fruit, continuing to market bananas and pineapples under the Dole label. In Honduras, as elsewhere in Central America, the banana companies had begun to return some of their lands to the government, but continued to market the bananas grown by small farmers or peasant cooperatives on the returned lands. This arrangement not only avoided the political problems of direct ownership, but placed all the risk of crop failure on the small growers while keeping virtually the entire profit for the companies.

    In September of 1974, Hurricane Fifi destroyed 60% of Honduras' agricultural production, and Standard Fruit abandoned many of it's plantations. the idled banana workers responded by organizing Las Isletas Peasants Enterprise, whose members planted and harvested bananas collectively and shared the profits. Las Isletas processed over one million boxes of bananas in 1976 and four million in 1977, selling the produce to Standard Fruit. But when Las Isletas decided to market its fruit through the Union of Banana Exporting Countries, Standard pressured the Honduran government to arrest 200 militant members of Las Isletas and ransack the association's headquarters.

    Few people then foresaw the shadow of war hanging over Honduras and by 1981, the U.S. was using honduras as the staging ground for attacks against Nicaragua and against the FMLN guerillas in El Salvador.

    Since that time, the Atlantic coast of honduras has become the scene of an immense U.S. military buildup. Formerly backward, forgotten Honduras has moved into the center-stage as the primary U.S. counterinsurgency base. The economic enclave established by the mining and banana companies at the turn of the century has been transformed into a U.S. military enclave.

See CIA Demographics

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