Zelaya was of Nicaragua's liberal party and enacted a number of progressive programs, including improving public education, building railroads, and establishing steam ship lines. However his wish for personal power often led him to policies contrary to democratic principles.
In 1894 he seized the Mosquito Coast, by military force; it had long been the subject of dispute, home to a native kingdom claimed as a protectorate by the British Empire. Zelaya's gamble paid off, and the United Kingdom, not wishing to go to war for this distant land of little value to the Empire, recognized Nicaraguan sovereignty over the area.
José Santos Zelaya was reelected president in 1902 and again in 1906.
The possibility of building a canal across the isthmus of Central America had been the topic of serious discussion since the 1820s, and Nicaragua was long a favored location (See: Nicaragua Canal). When the United States shifted its interests to Panama, Zelaya negotiated with Germany and Japan in an unsuccessful effort to have a canal constructed in his state.
José Zelaya had ambitions of reuniting the United States of Central America (see: History of Central America), with, he hoped, himself as national president. With this aim in mind he gave aid to liberal federalist factions in other Central American nations.
The Zelaya administration had growing friction with the United States government, which started giving aid to his Conservative opponents in Nicaragua. In 1907 U.S. warships seized some of Nicaragua's sea ports. Zelaya's allies fought the conservatives and U.S. funded mercenaries battling against them. In October of 1909 officers of Zelaya's government executed some captured rebels; two United States mercenaries were among them, and the U.S. government declared their execution grounds for formal intervention. At the start of December United States Marines were landed on Nicaragua's Caribbean Sea coast. On 17 December, 1909, Zelaya resigned and left for exile in Mexico. A U.S. sponsored conservative regime was installed in his place. The U.S. Marines stayed in Nicaragua through 1925.
The Nicaraguan province of Zelaya is named after José Santos Zelaya.
See also: History of Nicaragua