Boundary questions between Central Amer ican states furnished an opportunity for Eng land to assert her earlier territorial claim. In 1852 Webster, acting under friendly mediation of the American government, submitted propo sitions for adjustment of such questions be tween Costa Rica and Nicaragua, but they were rejected by Nicaragua. In 1853, Marcy, anxious to prevent European intermeddling in Central American affairs (and especially. English en croachments in Honduras), encouraged the re establishment of the Central Federation, but he was not ready to pledge the American govern ment to expel the British from the Bay Islands. After 1853, American diplomatic re lations in Central America were affected by the constant apprehension of European influence inimical to American interests, and by a series of irritating events including the bombardment and burning of Greytown by Americans in 1854 as a punishment for an alleged insult to the Athencan Minister to Nicaragua.
Relations were complicated by Walker's bold designs in connection with the political factions in Nicaragua, culminating in his con quest of Nicaragua and his election to the presidency of the country. By his expeditions, and by the filibuster diplomacy with which he vainly sought to gain recognition at Washing ton, he caused Nicaragua to present to the American government a series of claims for damages and created an ill feeling of all the Latin American representatives which culmi nated in the draft of the proposed treaty of alliance against the supposed designs of the United States.
The most important result of the Walker episode was the closure of the transit, causing a diversion of traffic which perhaps changed the destiny of Nicaragua.
In this period, by 1856, the American gov ernment adoptedi a more aggressive American policy in regard to control of transit and canal routes.
During the Civil War, the Central American people, seeing that the causes which produced were passing away by the results of Union victories, and fearing the designs of all Europe (and especially of France) against American states, became more friendly to the government at Washington and anxiously hoped for the restoration of the Union. Soon after the fall of Vicksburg and the failure of Lee at Gettysburg, some advocated annexation to the United States. Others relying on the American government as natural protector of American republics requested alliance or aid. To them Seward replied that the most effective aid to American republics was the moral influ ence resulting from the integrity of the Amer ican Union and the stability of republican in stitutions.
The considerate policy of Secretary Seward during the Civil War period in forbearing to press claims of American citizens against the government of Nicaragua — claims which had long been a source of diplomatic irritation— unfortunately caused Nicaragua to regard the claims as abandoned and to refuse to negotiate a claims convention in 1871, although she agreed to a treaty of amity, commerce and navigation in 1867. The claims long remained a source of diplomatic discussion at intervals and were never settled.
Until the beginning of the 20th century the chief interest and attention of the United States in Central America, aside from the main tenance of the Monroe Doctrine, was centred in the possibility of constructing a trans-isth mian canal across Nicaragua. With the idea that the Nicaraguan route was more practical than the Panama route, an American canal company was organized in 1889 — nominally to build a canal across Nicaragua, but really to induce the American government to take the responsibility in the enterprise. Until 1903, a violent controversy ensued between the advo cates of the two routes. With the idea of con structing a canal via the Nicaragua route the American government negotiated for the with drawal of the Clayton-Bulwer Treaty which was finally terminated by the Hay-Pauncefote Treaty of December 1901. Soon thereafter, how ever, a decision was made in favor of the Panama route, disappointing the hopes of Nicaragua.
In recent years, earlier American interests and influence in Central America have been modified and expanded by new American ex pansions in world commerce and larger Amer ican participation in world politics. By 1917 the United States dominated the Central Amer ican market and invested in Central America more capital than any other country, and was thus more closely related to the country by economic bonds.
The American government, with a policy of forbearance and national unselfishness, too long allowed Central America to suffer from divisions, irresponsible leadership, revolution and bankruptcy. True, it sometimes used its good offices to prevent interstate conflicts, il lustrated in 1888 by President Cleveland's ar bitration of a long pending boundary dispute between Costa Rica and Nicaragua. With the hope of sources of conflict it also urged a closer union and co-operation, recom mending a return to the earlier policy of fed eration. In 1874 it began a series of friendly efforts to encourage the establishment of a strong and settled union, but practically aban doned its diplomatic efforts in that direction after the pourparlers of Blaine in 1881.