Towards Independence

Throughout the colonial period, Costa Rica remained one of the provinces ruled by the Spanish viceroyalty in Guatemala (together with the provinces of El Salvador, Honduras and Nicaragua). Its position as the farthest province from the crown's representative and the fact that great mineral wealth was not discovered here meant that interest in this distant territory was minimal, which in turn allowed Costa Rica to develop in an atmosphere of relative autonomy not found in the other provinces of Central America.

The provincial Governors were always Spaniards appointed by the monarchy, although once settled in the new territory they inevitably set about attending to their own personal interests rather than those of the province and its colonists. This practice was by no means limited to the province of Costa Rica but was apparently commonplace throughout the New World colonies, which lead to much discontent among the colonists.

During the latter part of the 1700's, Spain's concern for the welfare of its American territories decreased as its interest in taxing them increased in order to help solve problems at home (including those brought on by a feisty Frenchman by the name of Bonaparte). Discontentment with the crown in other parts of Latin America led to wars of independence. There was even some sporadic insurrection in other areas of Central America between 1811 and 1814.

Deliberation over the situation of the Guatemalan territories with respect to their relation to Spain ended in the signing of the Guatemalan Independence Act on Sept. 15, 1821.

News of independence from Spain reached Costa Rica by messenger in mid-October and in November of 1821 the first provisional government of Costa Rica was formed. This body drafted the "Concord Pact" on Dec. 1, a document that is considered the original Costa Rican Constitution. The Pact established the sovereign right of Costa Rica to decide its political future and guaranteed to its citizens civil liberty, the right to property and other human rights.

However, this newfound independence from the mother country was not met everywhere with total acceptance. Throughout Central America there were groups of imperialists who still felt loyalty toward Spain and clashed with the separatists over the issue of becoming part of the Mexican Empire or remaining completely independent. Costa Rica was no exception. The majority of the town elders in both Cartago and Heredia proclaimed themselves imperialists, in contrast with the predominant republican sentiments professed in San José and Alajuela.

Thus, although Costa Rica did not have to fight to gain its independence, ironically it battled over the meaning of this status and in April of 1823, in the area of Ochomogo (halfway between Cartago and San José), a battle was waged between groups from the two factions. Those favoring independence were victorious.

Another other significant outcome of this skirmish was that the capital of the country was then transferred to San José from its previous site in Cartago.

The Beginnings of an Economy

The exportation of agricultural products to Nicaragua and Panama and the importation of cloth, metal implements and other goods that characterized the trade which Costa Rica conducted beyond its frontiers during the colonial period resulted in the concentration of wealth in the hands of local merchants. By the mid-18th Century, much of the agricultural produce came from small family-run farms, since shortages of indigenous labor caused the failure of many of the former large land holdings that had been a prominent feature of the Central Valley's landscape a century earlier.

Because currency was in short supply, most of the trade between farmers and merchants was conducted using a barter system in which the merchant inevitably got the better part of the bargain. Relatively little local commerce existed in the 1700's, since most people were farmers and most farms were designed to be self-sufficient. Thus, the majority of the trade consisted of surplus crops or livestock that were bartered to obtain imported items from the merchants.

In spite of continued population growth and agricultural expansion across the Central Valley, this bucolic, non-capitalistic lifestyle might easily have continued for many years after independence had it not been for the introduction of a foreign plant species: Coffea arabica, more commonly known as coffee.

The spread of coffee cultivation throughout the Central Valley resulted in numerous profound changes in the development of the fledgling republic. As more and more of the small subsistence farms converted to coffee plantations, it became necessary to import food crops from other countries, principally Nicaragua. The merchant class also became active in growing coffee on lands they owned and this necessitated the hiring of laborers. The operation of coffee mills also required salaried workers. Thus, the beginning of a capitalistic society, in which labor itself becomes a commodity, was established.

Just prior to the expansion of coffee growing, a source of mineral wealth was at last discovered in Costa Rica. In 1815 gold mining began in the Montes de Aguacate -- a mountainous area along the route traveled between the Central Valley and the Pacific port of Puntarenas. As a result of this activity, the government began minting coins in 1824. By 1833, gold exports accounted for 48% of the country's total exports.

One year earlier, coffee had for the first time been shipped from Puntarenas to Chile, from where it would be sent on to England. This was the start of what was to become a very profitable relationship, so profitable in fact that from 1843 until 1880 coffee made up between 85% and 95% of the nation's exports. By then, most of the coffee production was being shipped directly to England.

The rich volcanic soils of the Central Valley and an ideal climate for growing coffee, combined with the agricultural tradition of the majority of the inhabitants and the marketing experience of the merchant class, propelled Costa Rica to an economic position far superior to most of the rest of Latin America, where many countries were so embroiled in bloody civil wars that concern for developing a national economy took a definite back seat.

Associated with the coffee boom were many advances in development, including the founding of banks (with a combination of British and Costa Rican capital), the construction and improvement of roads and port facilities, the establishment of the country's first telegraph system which connected Cartago with Puntarenas (via San José, Alajuela and Heredia), and the building of the nation's first railway linking Alajuela, San José and Cartago. Even the construction of the country's premier architectural showpiece, the National Theater, can be traced to the prosperity brought by coffee production.

During the second half of the 19th century, however, advances in health and education did not keep pace with the development of infrastructure. This is not to say that the governments of the time were not active in trying to provide improved education and health care, but simply that it took longer to see the results. Poor sanitary conditions were the principal cause of periodic outbreaks of infectious diseases, such as cholera and dysentery, and life expectancy at the turn of the twentieth century was only 30 years. With increased attention paid to the public health sector, life expectancy rose from 35 to 56 years between 1920 and 1950. Likewise, an expanding public education system resulted in a decline in illiteracy from 55% in 1910 to 33% in 1930, and to 21% in 1950.

Trains, Bananas, Chocolate and Gold

The oxcart, which has become something of a national symbol of Costa Rica, was instrumental in transporting sacks of coffee beans from the Central Valley to the Pacific port of Puntarenas, but this was made possible only after the path through the mountains was sufficiently widened in the mid-1840's to allow oxcarts to replace mules as a form of transportation. Nevertheless, shipping coffee to England from the Pacific side of the country meant a long, arduous voyage around Cape Horn. The obvious solution was to open a route that would link the Central Valley with the Caribbean coast. And the way to do it? A railroad!

In 1884, the Costa Rican government signed a contract with Minor Keith, a North American who agreed to construct a narrow-gauge railroad from San José to Limón in exchange for 300,000 hectares of land on the Atlantic side of the country. On this vast acreage Keith began banana production, and in 1899 joined with the Boston Fruit Company to form the United Fruit Company.

Afro-American laborers were brought from Jamaica to work the banana plantations and build the railroad because they were better adapted to the climatic conditions of the Caribbean lowlands than were the European-descended inhabitants of the Central Valley. Due to the relative isolation of the banana producing regions from the other populated areas of the country, a unique culture evolved on the Caribbean side of Costa Rica, characterized by a distinctive Jamaican flavor.

By 1913, Costa Rica was one of the world's leading banana exporters, although coffee was still the nation's principal foreign revenue earner. At about this same time, the United Fruit Company began converting some of its extensive monoculture banana plantations to cacao because of a fungal disease, known as "Panama disease," that was affecting the bananas. By 1925, cacao figured third on the country's list of export products.

Minor Keith also used his fortune in the purchase of 40,000 hectares of land in the Tilarán mountains, where he started the Abangares Gold Mining Company. Although seemingly worlds apart, this gold mining operation held much in common with the way banana production was carried out. Immigrant labor from Honduras, Nicaragua, and also Jamaica was employed along with Costa Rican workers. The work was demanding, and even though well-paid, the workers were isolated in the mining villages and had little choice but to spend their hard-earned pay in the company store owned by the mining company.

Since most of Keith's holdings were essentially vertical monopolies whose production came from land they owned or controlled, and his dealings with the government gave him the advantage of numerous tax breaks, a relatively small percentage of the income generated by his various activities entered the national economy.

The Revolution of 1948

Of the relatively little that might be known about Costa Rica beyond its borders is the fact that this tiny Central American nation is unique in having a functioning democratic system and no army. However, these conditions have only existed since 1949.

It is true that in Costa Rica the democratic tradition dates back to 1889, although direct voting for presidential candidates did not go into effect until 1910 and women gained the right to vote as late as 1953. Noheless, from 1821 to 1948, electoral fraud and coups d'état were a regular part of the local political reality -- witness to the fact is that in the 93 years between 1821 and 1914 there were a total of 92 political conflicts characterized by violence, although brief and limited in scope.

Many factors combined to create the political situation that resulted in the revolution, or civil war, of 1948.

Costa Rica's century-long economic dependence on a single export crop, coffee (bananas have never had the same direct influence on the national economy), inevitably tied the economy to the vagaries of an international market. Coffee prices had already been in decline for several years when the worldwide depression hit in 1930. This resulted in a drastic reduction of both coffee and banana exports along with a severe drop in imported goods. Because most government revenue was then generated by taxes on imports, the depression also decidedly diminished state funds.

The economic conditions produced a serious social crisis marked by unemployment, food scarcities, lowered wages for government employees, and a general decline in the standard of living to which Costa Ricans had been accustomed. The growing proletariat had already been making increasingly vehement demands for better working and living conditions prior to the onset of the depression, and thus the stage was set for the inception of the Costa Rican Communist Party in 1931. Several strikes by urban workers and by thousands of banana plantation workers in the Atlantic lowlands in 1934 demonstrated the power of this new political force and sent a clear signal to the traditional ruling class elite.

The government was obliged to take a more active role in solving social and economic problems. Banking traditionally had been controlled by foreign capitalists and the local coffee oligarchy, but in 1936, the state intervened in this area with the creation of the National Bank of Costa Rica and the General Superintendent of Banks, designed to exercise certain controls over the private banks. Previously, in 1933, a federal institute had been created to establish prices paid for coffee by the coffee mills and to regulate relations between the independent growers and the mills.

The end of a 70-year period of governmental liberalism and laissez-faire was being heralded. At the same time, a generational change was taking place in the national political arena and, in 1940, Dr. Rafael Angel Calderón Guardia was elected president with an overwhelming 85% of the vote. His ambitious platform, however, was limited by the federal fiscal deficit and a new period of difficult international economic times brought on by World War II.

Nevertheless, during his four years in office the University of Costa Rica was founded (1940), the Seguro Social -- a national health care program -- was created (1941), the "Social Guarantees" were amended to the Constitution (1942), and the Labor Code was enacted (1943). History will perhaps best remember Dr. Calderón for having promoted the Social Guarantees, which include the right to work, minimum wage, an eight-hour work day, a 48-hour work week, paid vacations, the right to unionize and to strike, social security and the formation of the Labor Courts to litigate disputes between workers and employers.

Despite the sweeping popularity that brought him into office, by the second year of his presidency Calderón was beset by critics from all sides. Those wielding economic power were not enamored of many of the social reforms, the communists were not in favor of legislation that instituted religion classes in public schools, and nearly everyone opposed the government's handling of the country's economic problems. To make matters worse, accusations of corruption were frequent.

Among the many critics was a politically unknown farmer/businessman, José Figueres Ferrer, who, during a radio program on July 8, 1942, denounced the government's economic policies and claimed that it had given in to the Communist Party. Incensed by his oratory, the government had him arrested and deported to Mexico. However, that was not to be the end of Mr. Figueres.

It was not until a year later that the government of Calderón Guardia actually did form a pact with the Communist Party in hopes of assuring a victory in the 1944 presidential elections. Both groups had a mutual interest in preserving the social reforms that had recently become law, and it is thought that perhaps Calderón, being aware of the decline in his popularity, imagined the communists could be useful with their capacity at organizing and mobilizing masses of people.

The election campaign of 1944 was marred by numerous violent confrontations between followers of the Calderón/communist coalition, known as "The Victory Block," and those of the León Cortés Democratic Party. Cortés had been president from 1936 - 1940 and was running for reelection against Teodoro Picado, the man picked by Calderón to succeed him. By an ample margin, Picado was declared the winner, although the opposition party denounced that the results were tampered.

Attempting to placate the opposition, Picado instituted several reforms aimed at improving public finance and, most importantly, promoted the creation of the Electoral Code which included the formation of the Electoral Tribune, supposedly a politically neutral organism charged with safeguarding election results and eliminating fraud.

Any advance that might have been gained towards smoothing over differences with the opposition was nullified, however, by the changes made to the tax laws in December of 1946. Both small agricultural and industrial producers as well as those with large capital were equally vocal in their discontent over having to pay higher taxes, especially the agricultural exporting class that was long accustomed under the liberal regimes to not having their activities taxed.

Meanwhile, in 1944, José Figueres had returned from exile committed to forming the "Second Republic" and a year later created the Social Democratic Party. Six months later, this party entered into an alliance with the León Cortés Democratic Party and the National Union Party, led by Otilio Ulate, who was later elected as the party nominee for the presidential election of 1948. Their platform centered on free elections and anti-communism. The Victory Block's candidate was Dr. Calderón Guardia, who aspired to a second term in office.

The months leading up to the elections on February 8, 1948 were filled with tension and frequent acts of violence perpetrated by members of both major political forces. The level of conflict escalated from that of the elections four years earlier with the inclusion of terrorist attacks on newspaper companies, radio stations, and even important political figures, including Calderón himself. And, of course, both sides alleged that the other party intended to rig the election results.

Officially, Otilio Ulate outpaced Calderón by 10,000 votes, but the Victory Block garnered a greater number of seats in the legislature than did the National Union Party. Calderón Guardia refused to acknowledge the defeat. Also, the day after the elections, a fire of suspicious origin destroyed many of the ballots. It seems that the Electoral Tribune was not very successful in its first trial by fire.

By majority, the members of the Electoral Tribune declared Ulate to be the President-elect, pending confirmation by the Legislative Assembly. Calderón petitioned the legislature to nullify the results, which they did (the majority of representatives were members of the Victory Block party), although they ruled that the legislative position results were valid.

That was the spark that ignited the fuse that had been set years ago. On March 12, 1948, word reached San José that a band of revolutionaries led by José Figueres had taken over the town of San Isidro del General in the southern part of the province.

The revolution lasted for five weeks with sporadic fighting in which Figueres' troops, self-proclaimed as the National Liberation Army, proved victorious over the badly organized and poorly directed Costa Rican army. In fact, much of the defense of the government was provided by armed communist party members. However, the government was reluctant to give them enough material support to be truly effective, and on April 19, the government of Teodoro Picado opted to surrender to Figueres.

The Second Republic

The Figueres-Ulate Pact was signed on May 1, 1948, giving Figueres 18 months to govern the country without a legislature before turning over power to Ulate. Amazingly, in the context of Latin American politics, this pact was fulfilled on November 8, 1949.

During those intervening 18 months, the Government Council presided by Figueres instituted many profound changes. Among these were the nationalization of the banking system, the establishment of a 10% capital goods tax, the prohibition of the Communist Party, the abolishment of the country's armed forces, and the creation of the Costa Rican Electricity Institute (I.C.E.). Not all of these measures were met with pleasure by all sectors of the population.

Despite its reformist intentions and promises made at the end of the revolution, the temporary government was characterized by a very authoritarian style and even embarked on a veritable witchhunt against members of the Calderón and Picado governments. On December 10, 1948, the exiled Dr. Calderón and his supporters invaded Costa Rica from Nicaragua. With the aid of the Organization of American States, this overthrow attempt was squelched.

The Government Council also drew up a proposed new Constitution to be ratified by the National Constitutional Assembly, elected in January of 1949 for just this purpose. This assembly rejected the Council's draft and set about writing its own version based on the nation's previous Constitution of 1871. The new Constitution of Costa Rica, which maintained the Social Guarantees established under the presidency of Dr. Calderón Guardia, was ratified on November 7, 1949.

As evidenced during the mere year and a half that José Figueres held power over the decision-making process of the country, the government would become a much more active player in the nation's economic and social affairs. The period from 1950-80 can be typified by unprecedented growth of the public sector, the modernization and diversification of the country's economy, and the accumulation of a tremendous national debt.

With the expansion of government services and the proliferation of state institutions, the number of public employees rose from slightly more than 15,000 in 1949 to nearly 130,000 by the year 1979. On the positive side, Costa Rica now possesses better health and education systems and more infrastructure, particularly roads and electrification, than most other Latin American nations. The cost of this has been the creation of an unwieldy and often ineffective bureaucracy, along with the dubious distinction of having the world's second largest per capita debt in 1980.