When Mexico declared its independence from Spain in 1821, Costa Rica, with other parts of Central America, joined the short-lived Mexican Empire. In 1823 Costa Rica helped create the United Provinces of Central America but, disenchanted with the strife in the other four states of the federation, severed its ties in 1838. A pattern of isolationism similar to that of the colonial period was reinforced. Indeed, Costa Ricans invariably showed little interest in the many attempts to revive the federation throughout the 19th and most of the 20th century, until their country joined the Central American Common Market in 1962.

Costa Rican leaders soon realized the potential for coffee cultivation and strove to promote coffee planting. From the 1840s a constant stream of oxcarts carried coffee from the Valle Central to Pacific ports and ships bound for Europe. This trade triggered British investment. Unlike sugar and indigo planters, coffee farmers with even small acreage could derive an adequate if simple existence, and Costa Ricans achieved a competitive advantage over coffee farmers in other Latin American countries.

Costa Rica’s policy of isolationism did not completely save it from foreign troubles. In 1825 the province of Guanacaste seceded from Nicaragua and joined Costa Rica, creating an issue that was contended until the boundary treaty of 1896. Political refugees from other Central American countries attempted, and occasionally succeeded, in involving Costa Rica in regional conflicts. Another danger developed when William Walker and his band of filibusters took over Nicaragua in 1856, threatening all of Central America. Costa Rican troops participated in the Central American coalition force that drove Walker out of the region.

Material progress came to Costa Rica during the era of Gen. Tomás Guardia, who dominated the country from 1870 until 1882. His government curtailed liberty and added to the debt, but it also brought increases in coffee and sugar exports as well as widespread construction of schools. A new constitution, adopted in 1871, remained in effect, except for a brief interlude (1917–19), until 1949. The emphasis on agricultural exports strained transportation, and, with mainly British funds, Costa Rica sought to link the Valle Central with the seaports by railway. The chief promoter was an American, Minor C. Keith, who made a fortune with the opening of his rail line between Cartago and Limón. With vast land grants, Keith then entered the banana business. By the late 19th century, bananas were beginning to rival coffee as the chief source of Costa Rican foreign exchange, especially after Keith’s investments were merged with others to form the United Fruit Company in 1899.

The last decades of the 19th century were also marked by a gradual decline in Roman Catholic Church activity in secular affairs. The Jesuits were expelled for a few years, cemeteries were secularized, and public education was expanded. In 1886 free public education became compulsory; public schools, a museum, and a national library were founded. Though the government continued to support the church, the constitution of 1871 provided for religious toleration. Strengthening the tradition of democracy for which Costa Rica was to become famed throughout Latin America was the victory in 1889 of Pres. José Joaquín Rodríguez in what is considered the first entirely free and honest election in all of Central America.

Costa Rica in the 20th century

In the early 20th century Costa Rica and four other Central American republics established the Central American Court of Justice, the first international court with wide juridical powers. The headquarters were established in Cartago, but, when the building was destroyed in the 1910 earthquake, the headquarters were moved to San José. One of the court’s landmark cases involved the Bryan-Chamorro Treaty of 1916, which gave the United States permission to use the San Juan River (the border between Nicaragua and Costa Rica) as part of an interoceanic canal route. Costa Rica protested that Nicaragua was violating preexisting treaty rights and that opening a route would threaten Costa Rican security. The claim was brought before the court, which ruled in Costa’s Rica’s favour; however, Nicaragua refused to accept the ruling and withdrew from the court. Because of Nicaragua’s withdrawal and an overall ineffective judicial procedure, the court dissolved in 1918 after 10 years in existence. However, the building in San José, which had been constructed with help from a donation by U.S. philanthropist Andrew Carnegie, became the home of Costa Rica’s Ministry of Foreign Relations.

Costa Rica’s boundary with Panama (originally with Colombia, before Panamanian independence) was also in dispute. Arbitration awards by France and the United States in 1900 and 1914, respectively, had been generally favourable to Costa Rica but were rejected by Panama. In 1921 Costa Rica attempted forcible occupation of this area (on the Pacific coast) but was diverted by the intervention of the United States. Panama then evacuated the region, but relations between the two small states were not reestablished until 1928. In 1941 the governments finally reached an accord over the boundary.