The situation deteriorated into
civil war on the 2 May 1926 when a group of Liberal exiles landed at
Bluefields. Soon, the east coast of Nicaragua was ablaze with rebellion. Liberal forces wore red hatbands, while the Conservatives donned blue ones. However, many soldiers carried both colors in case they were wounded and required medical attention from the enemy's side. The primary commander of the Liberals on this coast was
José María Moncada, who fought to make the exiled Dr. Sacasa president. Another Liberal general was
Anastasio Somoza García, who led an army in the southwestern part of Nicaragua. American Marines and
sailors were sent to occupy the country's ports to establish "neutral zones", which would prevent fighting in these areas and push the Liberal rebels inland. The United States was deeply concerned with matters in Nicaragua, since the
left-wing government of
Mexico was supplying the rebels with arms. To try to put an end to the conflict, the United States arranged a truce and had
Lawrence Dennis oversee Conservative and Liberal representatives at a meeting aboard the
USS Denver on the 1 October 1926. Nothing came out of the conference and fighting resumed shortly afterwards. On the 11 November 1926, Chamorro resigned from the presidency, leaving
Sebastián Uriza holding the reins of power. On 14 November
Adolfo Díaz, who was referred to as "our Nicaraguan" by the United States, became president and was recognized by the U.S. Dr. Sacasa returned to Nicaragua on the 1 December 1926, arriving at the port of
Puerto Cabezas and proclaiming a rival government, which was only recognized by Mexico. In January 1927,
U.S. president Calvin Coolidge lifted the
arms embargo on the Nicaraguan government, allowing his country to legally provide military aid to the Conservatives. Moncada's forces began marching westwards towards Managua, defeating Conservative forces along the way. Meanwhile, Liberals led by Gral Francisco Parajón Montealegre struck at the city of
Chinandega, causing one of the most destructive battles of the war, the so called Battle of Chinandega, which raged from 6 to 9 February 1927, and saw 500 Conservative defenders face off against between 600 and 2,000 Liberal attackers, with "hundreds [being] killed on each side." During the fighting, much of the city was destroyed by fire. The blaze was "probably" caused by Liberal soldiers or "civilian looters", but many blamed two American airmen flying for the Conservative government. Eventually, the rebels were driven from the city after some bitter
house-to-house fighting. With the Liberals advancing on Managua, the United States found itself on the verge of war. It couldn't afford to let a left-wing Mexican-backed regime rise to power in the region. Díaz appealed to American fears of
communism by saying the rebels were
Bolshevist in nature. Marine reconnaissance aircraft flying for the Conservatives were already occasionally receiving fire from Liberal forces, although the more "[r]esponsible" rebel officers tried to prevent a clash with the Americans. ==Peace of Tipitapa==