At the turn of the twentieth century Honduras began making a number of positive changes, partially based on their massive banana industry. This crop provided jobs and substantial income, while also improving infrastructural changes to move this product and people. As this industry grew, the United States became a great ally and trading partner of the country, however this also undermined neighboring countries and soon Honduras was a threat to both El Salvador and Nicaragua. These countries united in 1907 to overthrow Honduran president, Jose Santos Zelaya, while the United States stepped in to protect the banana industry.
U.S. involvement continued for the next few years as political strife and increasing debt overcame the country. The U.S. helped broker a peace deal and the country remained relatively stable until about 1920. During this time and later politics and the banana industry were intertwined as this was the country's greatest source of income and one which had powerful foreign allies, most notably in the United States, who was the largest importer of Honduran bananas.
The banana industry truly created Honduran society from the late 1800s to early 1900s as numerous foreign banana companies built infrastructure, controlled the domestic economy, and brought in workers from Belize and the Caribbean, due to their ability to speak English. These companies had strong political connections and fought each other, creating internal chaos. Additionally, these foreign companies primarily owned the lands on which they were working, so in many cases this income didn't trickle down to the Honduran people, but rather remained in the hands of foreign companies and foreign workers. These battles led to the "Banana Wars" which lasted intermittently from 1903 to 1925. It was Honduras that gained the name "Banana Republic."
The early 1900s was marred with political instability, but few full blown battles, until the 1920s when a number of coups and insurrections occurred, leading to greater unity within Central America. These insurrections led to numerous Central American countries to agree to stay out of politics of their neighbors and hence, a number of coups ceased. However political stability was far from certain and violence again broke out in Honduras, lasting until 1925.
From 1925 political stability and free elections began to be the norm, but the depression in the 1930s slowed the economy and soon political dictatorships had returned. In 1948 this ended as outside pressure encouraged free elections. This stability only lasted until 1955 when another coup took over the government, but then again relative stability lasted until the late 1960s.
In 1969 El Salvador invaded Honduras, but this invasion was short lived; it did however begin another string of political coups and instability as the presidency changed hands a number of times in the early 1970s. This military rule ended in 1980 with a free election and began a period of time when the U.S. again became very involved in the country as it again became a close ally and trading partner of Honduras.
Since the 1980s Honduras has remained relatively stable with only minor outbreaks and political maneuvers. Their economy has slowly grown and relations with their neighbors, as well as with the United States, have remained positive.