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Rh prevented the exploitation of any of these minerals on a large scale, and the total value of the ores exported was only £174,800 in 1904 and £239,426 in 1905. The total value of the exports in a normal year ranges from about £500,000 to £600,000, and that of the imports from £450,000 to £550,000. Apart from minerals the most valuable commodity exported is bananas (£209,263 in 1905); coco-nuts, timber, hides, deer-skins, feathers, coffee, sarsaparilla and rubber are items of minor importance. Nearly 90% of the exports are shipped to the United States, which also send to Honduras more than half of its imports. These chiefly consist of cotton goods, hardware and provisions. The manufacturing industries of Honduras include the plaiting of straw hats, cigar-making, brick-making and the distillation of spirits.

Finance.—Owing to the greater variety of its products and the possession of a metallic currency, Honduras is less affected by fluctuations of exchange than the neighbouring republics, in which little except paper money circulates. The monetary unit is the silver peso or dollar of 100 cents, which weighs 25 grammes, .900 fine, and is worth about 1s. 8d.; the gold dollar is worth about 4s. The principal coins in circulation arc the 1-cent copper piece, 5, 10, 20, 25 and 50 cents, and 1 peso silver pieces, and 1, 5, 10 and 20 dollar gold pieces. The metric system of weights and measures, adopted officially on the 1st of April 1897, has not supplanted the older Spanish standards in general use. There is only one bank in the republic, the Banco de Honduras, with its head office at Tegucigalpa. Its bills are legal tender for all debts due to the state.

In July 1909 the foreign debt of Honduras, with arrears of interest, amounted to £22,470,510, of which more than £17,000,000 were for arrears of interest. The principal was borrowed between 1867 and 1870, chiefly for railway construction; but it was mainly devoted to other purposes and no interest has been paid since 1872. The republic is thus practically bankrupt. The revenue, derived chiefly from customs and from the spirit, gunpowder and tobacco monopolies reached an average of about £265,000 during the five years 1901–1905; the expenditure in normal years is about £250,000. The principal spending departments are those of war, finance, public works and education.

Constitution and Government.—The constitution of Honduras, promulgated in 1839 and frequently amended, was to a great extent recast in 1880. It was again remodelled in 1894, when a new charter was proclaimed. This instrument gives the legislative power to a congress of deputies elected for four years by popular vote, in the ratio of one member for every 10,000 inhabitants. Congress meets on the 1st of January and sits for sixty consecutive days. The executive is entrusted to the president, who is nominated and elected for four years by popular vote, and is re-eligible for a second but not for a third consecutive term. He is assisted by a council of ministers representing the departments of the interior, war, finance, public works, education and justice. For purposes of local administration the republic is divided into sixteen departments. The highest judicial power is vested in the Supreme Court, which consists of five popularly elected judges; there are also four Courts of Appeal, besides subordinate departmental and district tribunals. The active army consists of about 500 regular soldiers and 20,000 militia, recruited by conscription from all able-bodied males between the ages of twenty and thirty. Service in the reserve is obligatory for a further period of ten years.

Religion and Education.—Roman Catholicism is the creed of a very large majority of the population; but the constitution grants complete liberty to all religious communities, and no Church is supported by public funds or receives any other special privilege. Education is free, secular and compulsory for children between the ages of seven and fifteen. There are primary schools in every convenient centre, but the percentage of illiterates is high, especially among the Indians. The state maintains a central institute and a university at Tegucigalpa, a school of jurisprudence at Comayagua, and colleges for secondary education, with special schools for teachers, in each department. The annual cost of primary education is about £11,000.

History.—It was at Cape Honduras that Columbus first landed on the American continent in 1502, and took possession of the country on behalf of Spain. The first settlement was made in 1524 by order of Hernando Cortes, who had heard rumours of rich and populous empires in this region, and sent his lieutenant Christobal de Olid to found a Spanish colony. Olid endeavoured to establish an independent principality, and, in order to resume control of the settlers, Cortes was compelled to undertake the long and arduous march across the mountains of southern Mexico and Guatemala. In the spring of 1525 he reached the colony and founded the city which is now Puerto Cortes. He entrusted the administration to a new governor, whose successors were to be nominated by the king, and returned to Mexico in 1526. By 1539, when Honduras was incorporated in the captaincy-general of Guatemala, the mines of the province had proved to be the richest as yet discovered in the New World and several large cities had come into existence. The system under which Honduras was administered from 1539 to 1821, when it repudiated the authority of the Spanish crown, the effects of that system, the part subsequently played by Honduras in the protracted struggle for Central American unity, and the invasion by William Walker and his fellow-adventurers (1856–1860), are fully described under.

War and revolution had stunted the economic growth of the country and retarded every attempt at social or political reform; its future was mortgaged by the assumption of an enormous burden of debt in 1869 and 1870. A renewal of war with Guatemala in 1871, and a revolution three years later in the interests of the ex-president Medina, brought about the intervention of the neighbouring states and the provisional appointment to the presidency of Marco Aurelio Soto, a nominee of Guatemala. This appointment proved successful and was confirmed by popular vote in 1877 and 1880, when a new constitution was issued and the seat of government fixed at Tegucigalpa. Fresh outbreaks of civil war occurred frequently between 1883 and 1903; the republic was bankrupt and progress again at a standstill. In 1903 Manuel Bonilla, an able, popular and experienced general, gained the presidency and seemed likely to repeat the success of Soto in maintaining order. As his term of office drew to a close, and his re-election appeared certain, the supporters of rival candidates and some of his own dissatisfied adherents intrigued to secure the co-operation of Nicaragua for his overthrow. Bonilla welcomed the opportunity of consolidating his own position which a successful war would offer; José Santos Zelaya, the president of Nicaragua, was equally ambitious; and several alleged violations of territory had embittered popular feeling on both sides. The United States and Mexican governments endeavoured to secure a peaceful settlement without intervention, but failed. At the outbreak of hostilities in February 1907 the Hondurian forces were commanded by Bonilla in person and by General Sotero Barahona his minister of war. One of their chief subordinates was Lee Christmas, an adventurer from Memphis, Tennessee, who had previously been a locomotive-driver. Honduras received active support from his ally, Salvador, and was favoured by public opinion throughout Central America. But from the outset the Nicaraguans proved victorious, largely owing to their remarkable mobility. Their superior naval force enabled them to capture Puerto Cortes and La Ceiba, and to threaten other cities on the Caribbean coast; on land they were aided by a body of Hondurian rebels, who also established a provisional government. Zelaya captured Tegucigalpa after severe fighting, and besieged Bonilla in Amapala. Lee Christmas was killed. The surrender of Amapala on the 11th of April practically ended the war. Bonilla took refuge on board the United States cruiser “Chicago.” A noteworthy feature of the war was the attitude of the American naval officers, who landed marines, arranged the surrender of Amapala, and prevented Nicaragua prolonging hostilities. Honduras was now evacuated by the Nicaraguans and her provisional government was recognized by Zelaya. Miguel R. Davila was president in 1908 and 1909.

—Official documents such as the annual presidential message and the reports of the ministries are published in Spanish at Tegucigalpa. Other periodical publications which throw much light on the movement of trade and politics are the British Foreign Office reports (London, annual), United States consular reports (Washington, monthly), bulletins of the Bureau of American Republics (Washington), and reports of the Council of the Corporation of Foreign Bondholders (London, annual). For a more comprehensive account of the country and its history, the works of K. Sapper, E. G. Squier, A. H. Keane and T. Child, cited under , are important. See also E. Pelletier, Honduras et ses ports: documents officiels sur le chemin-de-fer interocéanique (Paris, 1869); E. G. Squier, Honduras: Descriptive, Historical and Statistical (London, 1870); C. Charles, Honduras (Chicago, 1890); Handbook of Honduras, published by the Bureau of American