In 1955—after two authoritarian administrations and a general strike initiated by banana workers—young military reformists staged a coup that installed a provisional junta and paved the way for constituent assembly elections in 1957.

The regimes of Gen. Juan Alberto Melgar Castro (1975–78) and Gen. Policarpo Paz García (1978–82) largely built the current physical infrastructure and telecommunications system of Honduras.

The country also enjoyed its most rapid economic growth during this period, due to greater international demand for its products and the availability of foreign commercial lending.

Even at the peak of the depression, he continued making regular payments on the external debt, adhering strictly to the terms of the agreement with the shareholders of British Bonds.

During his presidency, Carías cultivated a narrow relation with his fellow dictators of Central America, generals: Jorge Ubico of Guatemala, Maximiliano Hernández Martínez of El Salvador, and Anastasio Somoza García of Nicaragua.

His narrower relation was with the dictator Ubico, who helped to Carías to reorganize his secret police, and also captured and shot the leader of an uprising in Honduras who had committed the error of crossing into Guatemalan territory.

[2] Gálvez also followed the greater part of the fiscal politics of the previous administration, the reduction of the external debt, and paying off the last of the British bonds.

Tension in the entire Central American region increased with a confrontation developed between the left-leaning government of President Jacobo Arbenz Guzmán of Guatemala and the United States.

The strike finished in July of this year, the sindical leaders that had been accused to have bonds with Guatemala were imprisoned, but the banana companies yielded to some demands of the workers.

To complicate things more, Gálvez went to Miami, purportedly to receive medical treatment, although some sources say that he simply fled the country, leaving the government in the hands of vice-president Julio Lozano Díaz.

[2] The National Party (PNH) and the Revolutionary Nationalist Movement (MNR) did not accept the election of Villeda and boycotted the legislative assembly, producing a constitutional crisis.

Part of the confrontation involved the expropriation of United Fruit Company lands and charges that the Guatemalan government was encouraging agitation among the banana workers.

Honduras had given asylum to several exiled opponents of Arbenz, including Colonel Carlos Castillo Armas, but Gálvez was reluctant to cooperate in direct actions against Guatemala, and the plans were not activated.

The strikers presented a wide range of grievances, involving wages, working conditions, medical benefits, overtime pay, and the right to collective bargaining.

In June these forces crossed into Guatemala and after several days of political maneuvering but little actual fighting, Arbenz fled into exile, and Castillo Armas became president.

Labor leaders who had been accused of having ties with Guatemala were jailed, and the final settlement, which met few of the original demands, was signed with elements more acceptable to the government and the fruit companies than to the workers.

Despite the limited gains, however, the strike did mark a major step toward greater influence for organized labor in Honduras and a decline in the power of the fruit companies.

To complicate matters further, Gálvez left for Miami (reportedly to obtain medical treatment, although some sources claim he merely fled the country), leaving the government in the hands of Vice President Julio Lozano Díaz.

Unable to reconcile their differences and unwilling to accept Villeda Morales as president, the PNH and MNR deputies boycotted the legislature, producing a national crisis.

The PLH won a majority, and in November, by a vote of thirty-seven to twenty, the assembly selected Villeda Morales as president for a six-year term beginning January 1, 1958.

The shift in the military's attitude also reflected concern over what were viewed as more frequent rural disorder and growing radical influences in labor and peasant groups.

That same year, Honduras contributed a small contingent of troops to the Organization of American States (OAS) forces monitoring the election in the Dominican Republic.

Municipal elections were held in March 1968 to the accompaniment of violence and charges of open fraud, producing PNH victories but also fueling public discontent and raising the concern of the United States Embassy.

As the political situation deteriorated, the Honduran government and some private groups came increasingly to place blame for the nation's economic problems on the approximately 300,000 undocumented Salvadoran immigrants in Honduras.

In April INA announced that it would begin to expel from their lands those who had acquired property under agrarian reform without fulfilling the legal requirement that they be Honduran by birth.

This response to the fighting made a strong impression on a sector of the officer corps and contributed to an increased concern over national development and social welfare among the armed forces.

The government was under pressure to initiate administrative and electoral reforms, allow open elections in 1971, reorganize the military, and adopt new economic programs, including a revision of Honduran relations with the CACM.

Their representatives met with López Arellano and proposed a Plan of National Unity, calling for free elections, a coalition cabinet, and a division of government posts and congressional seats.

Reacting to these charges on March 31, 1975, the military relieved López Arellano of his position as chief of the armed forces, replacing him with Colonel Juan Alberto Melgar Castro.

Right-wing political forces criticized the Melgar administration's handling of the Ferrari Case, which involved drug trafficking and murder of civilians and in which members of the military had been implicated.