The Bryan-Chamorro Treaty was signed on August 5, 1914 under the approval of the Taft administration. The Wilson administration changed the treaty by adding a provision similar in language to that of the Platt Amendment, which would have authorized U.S. military intervention in Nicaragua. The United States Senate opposed the new provision; in response, it was dropped and the treaty was formally ratified on June 19, 1916.
From 1912 to 1925, the United States had amicable relations with the Nicaraguan government because of friendly conservative party presidents Adolfo Diaz, Emiliano Chamorro, and Diego Manuel Chamorro. In exchange for political concessions from the presidents, the United States provided the military strength to ensure the Nicaraguan government internal stability.
The Treaty was named after the principal negotiators:William Jennings Bryan, U. S. Secretary of State; and then General Emiliano Chamorro, representing the Nicaraguan government. By the terms of the Treaty, the United States acquired the rights to any canal built in Nicaragua in perpetuity, a renewable ninety-nine year option to establish a naval base in the Gulf of Fonseca, and a renewable ninety-nine year lease to the Great and Little Corn Islands in the Caribbean. For these concessions, Nicaragua received three million dollars.
Most of the three million dollars was paid back to foreign creditors by the United States officials in charge of Nicaraguan financial affairs. This allowed the Nicaraguan government to avoid having to pay from its internal revenue the loans it acquired from foreign banks. This debt was amassed by the Nicaraguan government for internal development due to the devastation inflicted from several civil wars waged years prior.
The United States and Nicaragua held a convention on July 14, 1970 that officially abolished the treaty and all its provisions.
At various times since the Panama Canal opened in 1914, the Nicaragua route has been reconsidered. Its construction would shorten the water distance between New York and San Francisco by nearly 800 kilometers (500 mi). The Bryan-Chamorro Treaty kept Nicaragua from competing with the Panama Canal.
The provision of the Bryan-Chamorro Treaty granting rights to United States in the Corn Islands was contested by El Salvador and Costa Rica. The Central American Court of Justice saw in the favor of the two countries. The United States ignored the decision, contributing significantly to the court's collapse in 1918.