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In 1909, a conservative revolt broke out in Nicaragua against the liberal
dictator-president Jose Santos Zelaya (1853-1919), whose bellicose actions and
interference in other Central American nations were oposed by the United States;
two US citizens aiding the rebels were captured and executed, causing an angry
protest by US secretary of state Philander C. Knox (1853-1921). When Zelaya was
forced to resign on December 16, 1909, Nicaragua was in a state of near anarchy,
and a power struggle between conservative and liberal factions ensued. In May
1911, the conservative Adolfo Diaz (1874-1964) became provisional president and
promptly requested US aid. A treaty was reached between the United States and
Nicaragua, whereby New York banks made loans to furnish working capital for
Nicaragua, and an American customs collectorship was instituted to retire
domestic and foreign debts. When the US Senate rejected the treaty, President
William Howard Taft (1857-1930) enacted the plan by executive agreement, but the
loans were restricted.
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