United Fruit Company

An Assignment In Latin America 000000000000

Submitted by Hayden Santimano

Department of CLAS Goa University 2012 201!

"#$%A&I#' #" &H( U'I&(D "$UI& C#%)A'* Unti+ 1,-- .ananas /ere virtua++y un0no/n in 1estern (urope 2 US3 In 1,405 Captain Loren6o Do/ .a0er purc7ased 1-0 bunc7es of bananas for a s7i++ing a bunc7 at )ort Antonio5 8amaica and so+d at t/o do++ars a bunc7 at 8ersey City3 Andre/ )reston5 an agent of t7e sma++ but respected produce firm5 Seaverns 2 Co so+d t7e bananas at a commission3 So5 in 1,,95 t7e .oston "ruit Company /as founded3 &o meet increasing demands for bananas in t7e States5 .a0er and )reston rea+i6ed t7ey /ou+d 7ave to +oo0 fart7er abroad t7an 8amaica5 Cuba5 and Santo Domingo for t7eir fruit supp+y3 &7ey 7ad 7eard of %inor :eit75 a rai+road bui+der in Costa $ica5 /7ose companies;t7e &ropica+ &rading and &ransport Company5 t7e Co+ombia Land Company5 and Snyder .anana Company;7ad been s7ipping bananas from Co+ombia5 Costa $ica5 )anama5 and 'icaragua to 'e/ #r+eans3 &7e demand for bananas /as gro/ing steadi+y3 .y 1,<,5 t7e tota+ importation of bananas from t7e American tropics /as 1- mi++ion stems3 'o more /ere imported on+y because t7is /as t7e tota+ product avai+ab+e3 %inor :eit75 /7o 7ad borro/ed 7eavi+y on s7ort terms from 'e/ *or0 and London financing companies in order to furt7er rai+road construction in Costa $ica5 ran into difficu+ties in meeting 7is ob+igations3 %atters /ere furt7er comp+icated /7en t7e firm of Hoad+ey 2 Company of 'e/ #r+eans5 /7ic7 7ad been 7is distributor for years5 fai+ed5 invo+ving %r3 :eit7 in a +oss of =139 mi++ion3 .ecause of t7e fai+ure of 7is agent5 :eit7 /as compe++ed to ma0e ne/ arrangements for t7e distribution of 7is fruit and entered into negotiations /it7 )reston5 )resident of t7e .oston "ruit Company3 &7is business re+ations7ip gre/ into a conso+idation of t7e interests of t7e .oston "ruit Company and t7e companies contro++ed by :eit73 &7e motivation of t7e merger /as not to e+iminate competition3 &7e .oston "ruit Company5 /it7 production in t7e Caribbean is+ands and mar0eting organi6ations in t7e nort7 eastern United States5 served an entire+y different sector of t7e country t7an t7at covered by :eit73 &7e +atter>s fruit came from Centra+ America and Co+ombia and /as mar0eted t7roug7out t7e Sout7 from 'e/ #r+eans and %obi+e3 Ho/ever5 bot7 sa/ t7e need for e?panding production and a more efficient system of mar0eting3 .ot7 7ad been victims of f+oods5 droug7t5 b+o/ do/ns5 and po+itica+ up7eava+s3 &7ey rea+i6ed t7at a more constant and re+iab+e f+o/ of fruit from t7e tropics cou+d on+y be obtained by spreading t7eir production base to a number of areas so t7at any +oca+ disaster cou+d be counterba+anced by a good crop e+se/7ere3 &7ese /ere t7e obvious and +ogica+ reasons /7y t7ese t/o noncompeting groups of banana companies conc+uded negotiations and /ere conso+idated into a sing+e entity5 t7e United "ruit Company @U"CA3 Incorporated on %arc7 !05 1,<<5 under t7e +a/s of t7e State of 'e/ 8ersey5 United "ruit 7ad an aut7ori6ed capita+ of =20 mi++ion3 &7e company /as aut7ori6ed under its c7arter to acBuire by purc7ase or deve+opment banana and ot7er properties3 Under t7is c7arter5 U"C purc7ased t7e property5 business5 and s7ares of t7e .oston "ruit Company and its associated companies for =9520050005 and from :eit7 and 7is associates a++ t7e properties o/ned by t7e &ropica+ &rading and &ransport Company5 Ltd35 t7e Co+ombia Land Company5 Ltd35 and t7e Snyder .anana Company for about =C mi++ion3 &7e organi6ation of t7e United "ruit Company mar0ed t7e beginning of a

ne/ era t7at converted t7e 7ig7+y peris7ab+e tropica+ banana into an important item of /or+d trade3 After formation of United5 t7e young organi6ation began deve+oping and e?panding ot7er sources of supp+y3 It boug7t +ands in Santo Domingo5 Honduras5 Guatema+a5 )anama5 and Cuba5 and additiona+ acreage in 'icaragua5 8amaica5 and Co+ombia3 .y 1<!05 its capita+ 7ad increased to =219 mi++ion3 Land /as e?ceeding+y c7eap in t7e vast undeve+oped +o/+ands5 and eager governments made avai+ab+e +arge tracts of Dung+e territories for t7e prospect of getting t7em opened to profitab+e deve+opment t7roug7 an enterprise t7at /ou+d supp+y basic rai+road and port faci+ities t7at cou+d be furnis7ed in no ot7er /ay3 )reston deve+oped additiona+ mar0ets a+ong t7e (ast Coast;.a+timore5 )7i+ade+p7ia5 and 'e/ *or03 .y 1<105 United /as s7ipping its bananas to (urope3 &H( .A'A'A SU))#$& I'DUS&$* &7e $ai+/ays &7e construction of rai+roads /as an indispensab+e and integra+ part of t7e deve+opment of banana p+antations in areas not previous+y served by any form of +and transportation3 &7e United "ruit Company /as interested in bui+ding rai+roads for t7e service of its banana operations it /ou+d +ogica++y fo++o/ t7e s7ortest good route from t7e port3 A++ t7e Centra+ American repub+ics5 at one time or anot7er5 dreamed of bui+ding ocean to ocean rai+roads5 ta0ing advantage of t7e narro/ness of t7e continent in Centra+ America3 &7e immense financia+ success of t7e )anama rai+road5 bui+t in 1,905 /as an added incentive3 Some maDor rai+roads 7ad been started before United "ruit came into e?istence5 but t7e roads /ere not comp+eted and t7e dreams of transcontinenta+ rai+roads never came true3 &7e fast gro/ing banana business furnis7ed abundant cargo for t7ese rai+roads /7enever t7ey traversed banana country and in some5 cases t7e revenues from t7e transportation of bananas saved t7e rai+roads from ban0ruptcy3 A++ t7e countries /anted to be connected /it7 rai+roads fast and U"C /ou+d acBuire +and grants as form of payments and in addition nationa+ governments granted e?emptions of port duties and ot7er concessions in order to 7asten t7e construction of rai+ +ines3 S7ipping5 Communications5 And %ar0eting United "ruit s7ipped its fruit on t7e sma++ vesse+s of t7e 'e/ #r+eans5 .e+i6e5 $oya+ %ai+ and Centra+ American Steams7ip Company and of t7e .+uefie+ds Steams7ip Company5 /7ic7 it contro++ed3 In 1<0C5 t7e &ropica+ "ruit Steams7ip Company5 Ltd35 /as organi6ed and t7ree s7ips commissioned for t7e banana trade sai+ed under t7e .ritis7 f+ag3 Andre/ )reston created United>s Great 17ite "+eet3 He sa/ a profit in passenger traffic and in 1,<< c7artered four ne/ s7ips @t7e Admira+ De/ey5 Admira+ Sc7+ey5 Admira+ Sampson5 and t7e "arragutA5 t7at origina++y 7ad been bui+t for t7e 'avy3 (ac7 carried 9! passengers and !95000 bunc7es of bananas5 /7ic7 assured a fast and efficient service from t7e tropics to U3 S3 ports3 In 1<0!5 t7e Eenus5 o/ned by t7e

1einbergers of 'e/ #r+eans and c7artered by United5 /as rigged up for refrigeration5 and as t7e first successfu+ refrigerated s7ip started a ne/ era in ocean transportation3 )reston contracted for t7e bui+ding of t7ree a+most identica+ s7ips5 t7e San 8ose5 Limon5 and (sparta5 t7e nuc+eus of t7e 17ite "+eet /7ic7 gre/ to <9 s7ips by 1<!!3 U'I&(D "$UI&>S C#%)(&I&I#' &7roug7out its gro/t75 United "ruit 7as 7ad competition3 In ear+y years5 t7e .oston "ruit Company 7ad supp+ied bananas for t7e city of .oston and surrounding areas5 but as successfu+ sa+es broug7t in money3 In genera+5 .oston "ruit 7ad been more +uc0y t7an ot7er ear+y banana companies3 &7e banana +ands of 8amaica 7ad not been struc0 by t7e sudden 7urricanes t7at 7ad /iped out so many of t7e banana +ands 7e+d by ot7er sma++ enterprises3 .oston "ruit5 because of its consistent po+icy of maintaining severa+ sources of supp+y5 /as a stab+e and respectab+e +itt+e company /it7 enoug7 capita+ to +oo0 after its interests3 .ut bot7 )reston and .a0er 0ne/ t7at to insure t7eir business t7ey 7ad to e?pand bot7 banana supp+ies and mar0ets3 &7e +argest of t7ese5 after United "ruit5 is t7e Standard "ruit and Steams7ip Company5 /7ic7 imported about !0F of t7e stem vo+ume 7and+ed by United "ruit in t7e mar0et3 'ovember 1<2< mar0ed t7e +ast important merger transaction in United "ruit>s 7istory3 &7at /as t7e date /7en it purc7ased t7e Cuyame+ "ruit Company3 17ic7 /as a re+ative+y sma++er company but /7ic7 cou+d 7e+p conso+idate United "ruits po/er3 H#'DU$AS &7is country /as t7e second +argest banana e?porter in Centra+ America from 1<00 unti+ 1<1-5 and t7e first one after/ards3 &7e first banana companies operating in t7at country got t7eir +and grants during Genera+ &erencio SierraGs dictators7ip @1,<< 1<0!A3 Sierra /as deposed by a rebe++ion /7ose +eader +asted in po/er for Dust si? mont7s before being ousted by Genera+ %anue+ .oni++a /7o remained in po/er unti+ anot7er mi+itary coup in 1<0-3 .oni++aGs aut7oritarian government granted t7e first concession to t7e 'e/ #r+eans based company Eaccaro .rot7ers @+ater 0no/n as Standard "ruit and Steams7ip CompanyA to bui+d rai+/ays and mar0et bananas3 .oni++a stepped do/n after anot7er rebe++ion t7at put Genera+ %igue+ DHvi+a in po/er3 During DHvi+aGs administration @1<04 1<11A5 t7e government approved some pieces of +egis+ation t7at +imited foreign o/ners7ip of Honduran soi+3 &7is attempt5 7o/ever5 /as aborted by anot7er rebe++ion by .oni++a /7o got funding for 7is rebe++ion from Samue+ Iemurray5 7ead of Cuyame+ "ruit Company and future )resident of United "ruit3 1it7 DHvi+a out of po/er t7e rebe+s designated "rancisco .ertrand as provisiona+ president @1<11 1<12A3 .ertrand Buic0+y e+iminated DHvi+aGs timid nationa+ist +and +egis+ation before giving po/er to .oni++a /7o returned as president in 1<1!3 1it7 .oni++a in po/er again5 Iemurray and 7is Cuyame+ "ruit Company got ta? benefits and more generous concessions3 Later5 United "ruit benefited from t7is po+icy by getting concessions for banana production3 United "ruit and Cuyame+ competed /it7 eac7 ot7er unti+ 1<!05 /7en United "ruit acBuired Cuyame+ and named Iemurray as United "ruitGs president3

1it7 an accommodating government and +oca+ e+ite5 t7e on+y possib+e nationa+ist opposition came from t7e /or0ing c+ass3 &7e Honduran +abour movement 7ad never been very strong5 and presidents +i0e .oni++a5 .ertrand5 or even DHvi+a never s7o/ed muc7 sympat7y for it3 &7e first Honduran e?perience /it7 +abour unrest too0 p+ace in 1<1<5 /7en t7e banana /or0ers demanded a /age increase and protested against t7e governmentGs generosity to/ards United "ruit3 &7e stri0e turned e?treme+y vio+ent /7en t7e government tried to repress it and eventua++y t7e /or0ers succeeded in t7eir demands3 As a /ay to avoid t7ese 0inds of protests in t7e future5 United "ruit decided not to obtain ne/ +ands t7roug7 rai+/ay concessions5 but boug7t t7e +ands from private o/ners instead3 J?ii Honduras Labour In 1<!05 a more be++igerent "SH @Honduran Unions "ederation5 or "SHA organi6ed t7e first banana industry stri0e against United "ruit3 &7is stri0e /as a monumenta+ fai+ure3 %ost /or0ers decided not to Doin it5 t7e Army Dai+ed and e?i+ed most of t7e "SH +eaders7ip5 and United "ruit protected itse+f against t7e fe/ stri0ers /it7 its o/n private security3 A simi+ar situation occurred in 1<!23 In 1<!25 Genera+ &iburcio CarKas /on t7e presidentia+ e+ections L/it7 a campaign financed by United "ruit and soon turned 7is government into a dictators7ip t7at +asted for si?teen years3 &7e Great Depression generated a crisis in t7e coffee e?ports and a fa++ in t7e banana prices and consumption of t7e fruit in t7e United States3 United "ruit e?acerbated t7e crisis /7en it tried to compensate t7e fa++ in banana prices by reducing t7e /or0ersG /ages and t7e price it paid to +oca+ p+anters5 somet7ing t7at +ed t7e /or0ers to stri0e3 CarKas too0 po/er5 7e Buic0+y banned t7e Communist )arty5 prosecuted t7e opposition5 and approac7ed United "ruit /7o 7e sa/ as t7e on+y institution t7at cou+d 7e+p Honduras in its economic crisis3 GUA&(%ALA .efore t7e Depression5 Guatema+a s7o/ed t7e most so+id re+ations7ip bet/een t7e government and United "ruit in t7e region3 .et/een 1,<, and 1<215 on+y one president ru+ed Guatema+aM t7e notorious Genera+ %anue+ (strada Cabrera3 In 1<015 7e gave United "ruit a transportation concession over t7e bet/een )uerto .arrios @in t7e At+antic CoastA and 'e/ #r+eans3 In 1<0C5 7e granted t7e I$CA a << year concession over t7e construction and management of a rai+/ay t7at communicated t7e Guatema+a City /it7 )uerto .arrios5 and in 1<0- 7e granted United "ruit a banana production concession3 (strada fe++ from po/er in 1<20 and /as succeeded by a series of s7ort term ru+ers unti+ 1<!15 /7en Genera+ 8orge Ubico too0 po/er3 &7ere fo++o/ed one of t7e most infamous dictators7ips in Latin American 7istory3 Ubico too0 t/o approac7es /it7 t7e +and+ess Indian masses3 He visited t7em in t7eir to/ns and +istened to t7eir comp+aints5 somet7ing for /7ic7 t7e Indians ca++ed 7im Nt7e "at7er3O At t7e same time 7e passed e?treme+y 7ars7 vagrancy +a/s by /7ic7 a++ Indians /7o o/ned +itt+e or no +and /ere ordered to /or0 for +oca+ +ando/ners for at +east one 7undred days a year3 &7e +ando/ners made t7e situation even more difficu+t for t7e Indians by agreeing among t7emse+ves not to compete for t7e +abour force by offering 7ig7er /ages5 and 0ept artificia++y +o/ sa+aries enforced by /ritten contracts t7at t7e i++iterate

Indian popu+ation cou+d not read3 Additiona++y5 Ubico made it +ega+ for t7e +ando/ners to murder stubborn or rebe++ious Indians3 $ampant racism in Guatema+an society made t7ese po+icies Dustifiab+e for t7e /7ite and +adino @mi?ed raceA popu+ation3 Ubico /as a strong a++y of t7e United States and /e+comed foreign investors3 He forbade t7e use of NCommunistO e?pressions +i0e Ntrade union5O Nstri0e5O N+abour rig7ts5O and Npetitions3O He /ent so far as to decree t7e /ord N/or0ersO i++ega+5 rep+acing it /it7 Nemp+oyees5O /7ic7 7ad a +ess subversive connotation3 17en 7e came to po/er5 I$CA s7o/ed t7is to its s7are7o+ders as a positive c7ange3 .et/een (strada and Ubico @1<20 1<!1A5 I$CA constant+y comp+ained of t7e Guatema+an po+itica+ instabi+ity and t7e trivia+ity /it7 /7ic7 t7e Guatema+an government too0 its commitments5 inc+uding t7e repayment of +oans I$CA 7ad provided it3 In 1<!05 7e signed a contract /it7 United "ruit in /7ic7 t7e company committed to bui+d a port in e?c7ange for +and3 Ho/ever5 by 1<!- United "ruit dropped t7e port proDect so as not to compete /it7 its affi+iate I$CA3 &7e port /as never bui+t5 but Ubico permitted t7e company to 0eep its +and and not pay any reparations3 A sma++ but gro/ing Guatema+an midd+e c+ass5 composed of sc7oo+teac7ers5 government officia+s and s7op0eepers fe+t t7at a country contro++ed by a +and o/ning o+igarc7y +eft no room for t7em3 In 1<CC5 a group of young officia+s +ed by Co+3 8acobo Arben6 supporting stri0ing sc7oo+teac7ers overt7re/ Ubico and organi6ed e+ections for 1<C93 In %arc7 1<91 7e succeeded to t7e presidency5 supported by t7e army and t7e +eft /ing po+itica+ parties5 inc+uding t7e Guatema+an Communist )arty3 Arben6 made agrarian reform t7e centra+ proDect of 7is administration3 &7is +ed to a c+as7 /it7 t7e +argest +ando/ner in t7e country5 t7e U3S3 based United "ruit Company5 /7ose id+e +ands 7e tried to e?propriate3 He a+so insisted t7at t7e company and ot7er +arge +ando/ners pay more ta?es3 As t7e reforms advanced5 t7e U3S3 government5 cued by Secretary of State 8o7n "oster Du++es5 became increasing+y a+armed5 fearing t7e t7reat to si6ab+e American banana investments and to U3S3 ban0 +oans to t7e Guatema+an government as /e++3 A+so of concern to t7e United States /ere t7e increasing+y c+ose re+ations bet/een Guatema+a and t7e communist b+oc of nations3 A pub+ic re+ations campaign painted Arben6 as a friend of communists S7ort+y fo++o/ing t7e c7ange of po/er in Guatema+a5 CIA Director A++en 13 Du++es met /it7 (isen7o/er to discuss t7e detai+s of ).SUCC(SS3 During t7e presidentia+ briefing5 Du++es and ot7er CIA officia+s e?aggerated t7e efficiency of t7e program5 c+aiming on+y one U3S3 bac0ed so+dier peris7ed5 /7en in rea+ity5 at +east forty eig7t men +ost t7eir +ives in t7e attac03 ConseBuent+y5 (isen7o/er and +ater American presidents came to re+y on covert operations /7en faced /it7 t7e t7reat of communism in Latin AmericaP based on t7e fau+ty assumption t7at t7e overt7ro/ of Arben6 /as Buic0 and b+ood+ess5 ).SUCC(SS became t7e mode+ for future CIA actions in t7e region3 An instructiona+ guide on assassination found among t7e training fi+es of t7e CIA>s covert Q#peration ).SUCC(SS5Q /ere among severa+ 7undred records re+eased by t7e Agency on %ay 2!5 1<<4 on its invo+vement in t7e infamous 1<9C coup in Guatema+a3 Arben6 /as e+ected )resident of Guatema+a in 1<90 to continue a process of socio economic reform t7at t7e CIA found disdainfu+3 &7e first CIA effort to overt7ro/ t7e Guatema+an president too0 p+ace and CIA co++aboration /it7 'icaraguan dictator Anastacio Somo6a to support a disgrunt+ed genera+ named

Car+os Casti++o Armas and codenamed #peration )."#$&U'(3 &7is /as aut7ori6ed by )resident &ruman in 1<923 As ear+y as "ebruary of t7at year5 CIA HeadBuarters began generating memos /it7 subDect tit+es suc7 as QGuatema+an Communist )ersone+ to be disposed of during %i+itary #perations5Q out+ining categories of persons to be neutra+i6ed Qt7roug7 (?ecutive Action3 &7e QAQ +ist of t7ose to be assassinated contained 9, names a++ of /7ic7 t7e CIA 7as e?cised from t7e dec+assified documents3 U'I&(D "$UI& C#%)A'* D(CLI'( &7e 1<90s and 1<-0s5 s7o/ed important c7anges in t7e banana mar0et3 "irst5 banana consumption decreased in t7e United States5 given t7at Americans /ere rep+acing fres7 fruits for canned fruits3 Second5 United "ruit /as forced to comp+y /it7 t7e anti trust regu+ations by getting rid of some of its +ands3 And t7ird5 despite Arben6Gs overt7ro/n5 t7e company remained suspicious and cautious of t7e po+itica+ deve+opments in t7is area3 United "ruit faced its first permanent e?propriations after t7e triump7 of "ide+ Castro in t7e Cuban $evo+ution in 1<9<3 A+t7oug7 its investments in Cuba /ere not very important5 t7e company feared t7at CastroGs success cou+d be used as an e?amp+e by ot7er countries3 In t7at same year5 Costa $ica passed a ne/ +egis+ation t7at forced United "ruit to significant+y increase its /ages3 &7ese t/o events5 in addition to t7e previous prob+ems in Guatema+a made t7e financia+ ana+ysts of %oodyGs Investors Services to c+assify United "ruit as a ris0y investment3 %oodyGs negative ana+yses improved as +ong as t7e company so+d its production assets in Centra+ America3 In t7is /ay5 %oodyGs to+d potentia+ investors t7at t7e ris0 of e?propriation or destruction decreased somet7ing t7at made t7e company +ess profitab+e but a+so +ess ris0y3 &7e companyGs ris0 ratio5 usua++y above t7e average5 fe++ be+o/ t7e average of t7e top 200 companies traded in 1a++ Street3 .y 1<405 t7e company 7ad divested most of its p+antations in Centra+ America and transferred t7em to +oca+ gro/ers or governments3 In 1<40 United "ruit merged /it7 A%: Corporation creating a ne/ companyM United .rands3 United "ruit t7en became part of a giant food cong+omerate t7at inc+uded processed foods and meatpac0ing3 Conc+usion &7e United "ruit Company did bui+d rai+/ays5 ports and broug7t in communication systems3 A++ t7ese introductions +ed to some deve+opment in t7ese countries3 &7ese countries /ere agrarian countries and didnGt 7ave t7e capabi+ity to bui+d a++ t7is faci+ities3 So deve+opment /as introduced to t7ese p+aces by t7e various fruit companies @U3"3C3 or S3"3C3A &7ere is c+ear+y good intent in t7e beginning on bot7 sides i3e3 /it7 t7e dictators or t7e company3 As time passed by t7e bot7 rea+ised t7ey /ere practica++y sitting on a rene/ab+e go+d mine bot7 stated to get avaricious and started e?p+oiting man and +and3 &7e U3"3C3 sa/ t7at t7ey 7ad t7e U3S3 government be7ind t7em providing t7em support a+ong t7e /ay5 and 7ence pursued t7eir interests re+ent+ess+y3

&7ere is a c+ear ne?us bet/een t7e oppressing company and dictators3 &7e more a government /ou+d be dictatoria+ t7e more t7ey /ou+d /ant to be good /it7 t7e U3"3C3 and t7e American government3 .ot7 needed eac7 ot7er5 t7e United "ruit Company needed t7e dictators for t7eir oppression and t7e dictators needed t7e United "ruit Company for +egitimacy from t7e U3S3

.ib+iograp7y &7e (?perience of t7e Guatema+an United "ruit Company A+eDandra .atres University of &e?as ///3g/u3eduRSnsarc7ivR'SA(..R'SA(..CR &7e George 1as7ington University ///3britannica3comR(.c7ec0edRtopicR!22<CR8acobo Arben6 (ncyc+opaedia .ritannica Good dictator5 bad dictator %arce+o .uc7e+i University of I++inois at Urbana &7e case of United "ruit Company in Latin America L Stacy %ay and Ga+o )+a6a