In spite of all this impressive growth, the money didn't ever seem to reach the poor Nicaraguans.
By 1977, the richest tenth of the people in Nicaragua earned the vast majority of the money. What this means is that even though the average salary in Nicaragua wasn't very high, most people were making a lot less than that average. The highest average salary in Nicaragua was one thousand three hundred dollars per year in 1970. In the United States, families who make eighteen thousand dollars each year are considered poor.
Another problem with the economy was that there were not enough jobs for all the people who were moving to the cities. In 1970, only four percent of the people could not find full-time jobs. But by 1978, thirteen percent of the people couldn't find a job no matter how hard they looked.
One major cause of the unemployment was the 1972 Managua earthquake. Managua had been the manufacturing and commercial center of the country with more than 90% of the businesses located there. A huge section of the city was completely destroyed and, in spite of the fact that millions of dollars were sent from international donors to help rebuild the country, Somoza never repaired the destruction. Somoza's failure to help the country in it's time of need was also a major factor which led to his downfall.
In agriculture, the small-landowners who lived on small farms and managed to feed themselves completely
The Sandinistas took control of the country and created a team of five individuals to rule. Facing enormous obstacles, they tried to get the country back on its economic feet. The US helped them at first, but after they realized that the FSLN was very left-wing, they cut off their support in 1981 and they started to fund the anti- Sandinista guerrillas called Contras. Things started to get really hectic in Washington when the Sandinistas signed an aid pact with the former USSR in 1982. In November of 1984, national elections were held and the Sandinista presidential candidate, Daniel Ortega Saavedra, won in a landslide. He proceeded to declare a state of emergency and suspended civil rights in October of 1985. In lieu of these facts, the United States Congress voted to stop sending support to the Contras in 1985 and they didn't start up again until October of 1986 when Ortega's state of emergency ended in Nicaragua. A scandal arose in November of 1986, however, when it was discovered that the profits from secret arms sales to Iran had gone to fund the Contra warriors during the period when no aid was supposed to be extended. This situation has become known as the Iran-Contra Affair. Facing massive unemployment, incredibly inflation rates, and domestic and international pressure caused by the collapsing East-bloc support, the Sandinistas agreed to their first peace talks with the Contras in March of 1988 and a temporary truce was in fact achieved.
Go see a recently declassified document of Reagan's order to the CIA to conduct operations with the Contras in Nicaragua.
It is interesting to note that although the Sandinistas have been the subject
of a vast amount of criticism, they were in fact responsible for toppling the
oppressive regime of Somoza. The Sandinistas were almost wiped out in
the late 60's but they revived. In 1974 and in 1978 they made dramatic
raids that netted them tons of money and the release of their captured
friends as well as the embarrassment of Somoza's regime. The Sandinistas
were widely supported at first, but their programs of economic control
caused them to rapidly lose upper-middle urban and rural supports. This
program required the nationalization of many private industries, the
confiscation and redistribution of private property, and mandatory service
of every able-bodied man in the army.
In order to keep the Sandinistas in line, Chamorro agreed to keep
Humberto Ortega, Daniel Ortega's brother, as chief of the army. In doing
this she managed to enrage the Contras and some of the rearmed. By
1993, the situation had turned into a crisis as some Contras took 38
hostages in a protest against Ortega. The Sandinistas responded by
kidnapping the vice-president of Nicaragua and 32 others. The hostages
were eventually released in August and Chamorro agreed to remove
Ortega in 1994. This reduced her popularity with the still-powerful Sandinistas even more.
On the bright side, some of the Contras who had rearmed were convinced
to join the national police force by the government. Also, the National
Assembly had its first meeting in January of 1994. It was the first time in
two years that they had met. (The legislatures were divided when some
people were accused of bribery.) Just before Ortega was scheduled to step
down, it was announced that he would stay in office until 1995. Then, in
February of 1995, Ortega stepped down peacefully and Joaquin Cuadra
Lacayo took over, thus completing the first peaceful transfer of the office
of chief of the army in Nicaragua's history.