Tuesday, March 27, 2012

Building a Banana Republic

History of the United Fruit Company
Minor Cooper Keith

Minor Cooper Keith
Jan. 19, 1848-June 14, 1929. Born in Brooklyn, New York, son of Minor Hubbell Keith, a prosperous lumber merchant, and Emily Meiggs, sister of the railroad builder Henry Meiggs . He was educated in private schools until the age of sixteen, when he moved to Texas to manage a cattle ranch his father bought for him in 1869. However, he abandoned the cattle industry in 1871 when his uncle Henry Meiggs invited him to work in the contract he had with the Costa Rican government to build a railroad from San Jose to the port of Limón, in the Caribbean coast.

Meiggs had succeeded already at building the Callao-Lima Railroad and the Oraeja Railroad in Peru some years before. Keith accepted the invitation enthusiastically and went to Costa Rica with his two brothers to work in the railroad project. During the first twenty five miles of the construction Meiggs and the Keith brothers faced incredible odds. Building in the jungle was much more difficult than calculated -the diseases and the hard working conditions left an incredible high cost: around five thousand men died during the construction, including Meiggs and Minor Keith's brothers.

After the death of them, in 1874, Minor was left in charge of the project and stubbornly continued with it despite of all the difficulties. The large number of deaths made it hard for him to recruit new workers in Central America, so he decided to get them in the jails of New Orleans. From seven hundred murderers and thieves he recruited this way only twenty five survived until the end of the construction. He also brought a boat with two thousand Italian immigrants from Louisiana but many of them rebelled against him when found out how the working conditions were. Many of them decided to run away but sixty of them died lost in the jungle.

By 1882 he had carried the construction of the railroad seventy miles from the coast to Rio Sucio, but he was running out of money and the Costa Rican government had defaulted some promised payments. This obliged Keith to get into a 1.2 million pounds debt which permitted him to finish the railroad to San Jose in 1890. However, once the railroad was finished he faced a new problem: there were not enough passengers to travel on it, so the operating costs could not be paid, not to mention the huge debts Keith had to pay. The only solution he found to keep the business alive was to take hand of the banana trees he had planted as an experiment in 1873 near Limon. The bananas had been used in times of financial crisis to feed the workers and in this new crisis Keith thought of exporting them using the train he had build to transport them to the port.

This new experiment was success and by 1883 Keith owned three banana export companies. By 1890 the train turned into just a mean of transportation of bananas and the new plantations he built surpased in value of the train he had built. After all the hassles he went through when building the railroad, the 1890s looked promising for Keith. He managed to become a very influential and respected man in Costa Rican society; he married Cristina Castro, the daughter of a national President, and worked as the main negotiator of the Costa Rican foreign debt with English banks. This did not mean, however, that he abandoned the railroad business. All the contrary, he was dreaming on building a railroad network to communicate North America with South America.

During a business trip to London he organized the Tropical Trading and Transport Company to co-ordinate the banana business and to provide transportation to his increasing shipments to the United States. In addition, this company managed a chain of stores he had established all along the Costa Rican coasts in which he traded the production of the locals. He also expanded his banana business to the region of Magdalena, Colombia, through the Colombian Land Company, and made a deal to export fruit to the States with the Snyder Banana Company of Panama (at that time Colombian territory). With these deals he dominated the banana business in Central America by 1899, but new problems did not take long to come. In that year Hoadley and Company, a New York broker corporation, against which Keith held $1.5 million in draw bills went bankrupted and Keith lost all his money. The Costa Rican government and several members of the local elite made efforts to help him in this new crisis but, despite of this help, Keith's financial situation remained tough.

This forced him to go to Boston and talk to Andrew Preston, the President of the Boston Fruit Company -his main rival company- and his partner Lorenzo Baker to merge Keith's interests with Preston's. This merge gave birth to the United Fruit Company in March 30th, 1899. The new company had Preston as President and Keith as Vice-president. The interests of both entrepreneurs complemented well. While Keith had his railroad network and plantations in Central America, plus the market in the United States South-East, Preston had plantations in the West Indies, had a steamship fleet (the Great White Fleet), and sold to the United States North-East.

As the company grew Keith continued with his railroad projects in Central America. By 1908 he completed a road in Guatemala from Puerto Barrios to Guatemala City and this helped the United Fruit Company to develop banana plantations in the Guatemalan lowlands. He also bought the Western Guatemala Railroad between Guatemala City and the Pacific Coast creating an intercoastal system; he eventually extended this line to the Mexican border connecting his railroad system with the Mexican lines in 1911.

In 1911 Keith decided to organize all his railway network in a new company called the International Railways of Central America (IRCA), having him as the President. This corporation purchased his Guatemalan lines and one line in El Salvador. And after a hard process, in 1929 he completed the line connecting Guatemala and El Salvador railroads which meant the unification of a system of 800 miles in length, valued in $80 million. Despite this achievements, his dream of completing an Inter-American railway system could never be fulfilled because of his death in 1929. By the time of his death he was considered the most influential citizen of the United States in Central America. A German historian even called him the "un-crowned king of Central America."

His investments in railroads and banana plantations had a deep impact in the region's society in such a way that even in the present days the industry around banana exports represents one of the most important sectors in the region's economy.  

Samuel Zemurray

Samuel Zemurray
Samuel Zemurray (originally Samuel Zmurri) came to the United States as an immigrant from Russia in the late nineteenth century and would make his home in Louisiana. His success in the banana business would make him deserve the nickname of "Sam The Banana Man" among the people of the sector. His first contact with the banana business was as a minor dealer of the fruit in Mobile, buying it from the ships that came from the Caribbean. Throughout the time, he decided to get more closely involved with it, and bought his own ships to transport the fruit. With his first successes he decided to have total control of the whole process and began to buy some lands in Honduras in the early 1910s. Unfortunately, the deals arranged between the Department of State and the Honduran government concerning concessions to foreigners did not allow him to get any concession on lands from the current government of Honduras.

Given this situation, Zemurray decided to simply change the Honduran government by organizing a coup against it. As soon as the Department of State got notice of that, they tried to stop Zemurray in his attempt, but they didn't succeed. Zemurray organized a ship with some mercenaries and the man he needed as President of Honduras, Manuel Bonilla, and travelled from New Orleans to Central America evading the American government obstacles. In that ship also travelled famous mercenaries Lee Christmas and Guy "Machine Gun" Molony. This group was successful at invading Honduras and changing the current President. After taking power, Bonilla gave to Zemurray all the concessions he needed to continue with his banana business. Zemurray established in Honduras the Cuyamel Company, that would eventually be the biggest competitor of United Fruit. After several attempts to destroy the company by competition, United Fruit had to resign and decided to buy Cuyamel and accept Zemurray as its President. Since that moment, Zemurray would lead the biggest expansion United Fruit had had up to that moment in Central America and the Caribbean.

 Jacobo Arbenz

Born in 1913 in Quetzaltenango, Guatemala. Son of a Swiss immigrant married to a Guatemalan woman Arbenz grew as a member of the, by then, tiny Guatemalan middle class. His father committed suicide when Jacobo was still very young, probably product of his addiction to drugs, being, therefore, raised only by his mother. The rigid structure the Guatemalan society had at that time left not many options, different from enrolling into the military forces, for those members of the local bourgeoise who wanted to climb the social ladder. Thus, Arbenz chose this career, as many men of his generation. He graduated as sub-lieutenant in 1935, and returned to the academy in 1937 as teacher of science and history. By the time Arbenz was working in the Military Academy Guatemala was under the dictatorship of Jorge Ubico, one of the most picturesque, but at the same time more ruthless, dictators of Central America.

An admirer of Napoleon Ubico considered himself some kind of re-creation of the Emperor in Central America. He ruled his country as a fiefdom with the tacit support of the traditional landowning classes. He took power in 1931 but his arrival did not mean a threshold with what had been done in Guatemala so far -his predecessor, Manuel Estrada, had not been less autocratic. The national political situation, though, was not one of Arbenz main worries during the 1930s. He continued developing his military career, teaching in the Academy, and performing as an outstanding athlete representing his country in international competitions. Arbenz indifference towards politics changed after he met Maria Cristina Vilanova during an athletic competition in El Salvador in 1939. Vilanova was the daughter of a wealthy, traditional Salvadorian family who always refused to accept the roles her society wanted for her in spite of the rigid Conservative education she always got. Her parents wanted her to become a secretary in one of her father's offices until she could find an acceptable husband, but this destiny was not in Vilanova's mind. She secretly began to read books on politics, and while traveling to Mexico she brought classic works on Socialism. The big social inequalities of Salvadorian society shocked her and since very young she decided that she would make a change on that.

Soon after Arbenz and Vilanova met for the first time they decided to marry and Maria moved to Guatemala with her new husband. Once married she began to have a strong political influence on him by talking of her view of the Central American social problems and showing him authors and theories Arbenz had never heard of before. At the beginning they had many arguments because of her political ideas and his reluctance for ideological commitment. However, Arbenz became gradually more and more interested in the political and economic problems of the Guatemalan people. During this time Maria developed a strong friendship with Chilean Communist leader Virginia Bravo and the Salvadorian Communist exile Matilde Elena Lopez. The three women organized political discussions at the Arbenz family home where Jacobo learned more of Socialist ideas, and where he got to know some of the people that would eventually help him in his political projects. It is said that during Arbenz political life, Maria Vilanova was more ambitious for his success than Arbenz himself. By the mid-1940s Arbenz was convinced that some changes were urgently needed in Guatemalan society. In the early 1940s Ubico was losing power in his country. The US government, his main supporter until then, began to distrust him because of his lax attitude towards the German immigrant population in Guatemala. In addition, he kept ignoring the rising middle class that did not find a space in a country made for a land-owning oligarchy. The turning point for his regime came in the Teachers' Day Parade scheduled for June 30,1944. In this occasion the teachers refused to march in the parade demanding better wages for their work. They found a quick and strong solidarity from students and others who went massively to the streets demonstrating against the government. This had no precedent in Guatemala's history. On June 29, the largest demonstration this country had ever witnessed was organized in Guatemala city. Although the teachers were the main force a wide range of middle class people of other professions demanded changes to the President. Ubico's response was to send the Army and finish the demonstration violently. Around two hundred people were killed and wounded. One of the casualties was the leader of the teachers' union movement, Maria Chinchilla. She immediately became into a national martyr for the anti-Ubico movement.

The massacre, however, did not discourage the opposition. A few days later, a group of 311 teachers, lawyers, doctors, and businessmen handed a petition to Ubico in which they said that the demonstrators' petitions were legitimate and they had the group's sympathy. These circumstances led Ubico to resign and he gave power to General Francisco Ponce. Ponce tried to give a more democratic facade to his government and called to Presidential elections, in which he himself also ran as candidate. The opposition chose Juan Jose Arevalo as its candidate. They called Arevalo, a former school-teacher exiled in Argentina, to come back to Guatemala and run against Ponce. However, Ponce felt threatened by Arevalo's popularity and ordered his arrest a few days after Arevalo arrived.

At this point Captain Jacobo Arbenz and Major Francisco Arana decided to revolt against Ponce. The two young officers killed their superior officers in Fort Matamoros and distributed arms to some anti-Ponce students. They were quickly joined by other militaries and made attacks against the pro-Ponce military and police forces. Ponce and his friend Ubico were forced to abandon the country and Arbenz and Arana created a provisional junta with businessman Jorge Toriello, and promised free and democratic elections soon. Under the junta rule the Guatemalan Bar Association wrote a new liberal constitution. Censorship was finished, the presidents could not be elected for two periods in a row, men and women were declared equal before the law, racial discrimination was declared a crime, higher education was free of governmental control, private monopolies were banned, workers were assured a forty-hour labor week, payment in coupons was forbidden, and labor unions were legalized.

Arevalo won the first elections and attempted to begin an age of reforms in Guatemala. Breaking with the past was not an easy task for Arevalo. In addition some of his supporters -as Arbenz- thought he was not radical enough. In 1949 Major Arana, one of the men who rebelled against Ponce, was killed in what many people considered a product of a rivalry between Arevalo and Arana, or Arbenz and Arana. The assassination, however, did not stop Arbenz to consider the possibility of running for the 1950 presidential elections. His rival was Manuel Ygidoras, a friend of Ubico's, who did not stop accusing him during the campaign of Arana's death. However, this did not impede the triumph of Arbenz with 65% of the votes for him. Arbenz took power in March 15, 1951. Arbenz began his government with several innovative projects. One was the construction of a government-run port to compete with United Fruit's Puerto Barrios. He also wanted to break IRCA's transportation monopoly by building a highway to the Atlantic and planned to build a national hydroelectric plant to offer a cheaper energy alternative different from the American-controlled electricity monopoly.

In addition, Arbenz was the first Guatemalan President to think of the creation of an income tax, something that faced a strong opposition at the Congress, which only approved a weak version of Arbenz' original project three years later. Although these projects were some of his most important economic programs his biggest ambition was to develop an agrarian reform in Guatemala. He considered that the unequal land distribution in a country with a predominate rural society was the main obstacle for economic development. He considered the latifundio system as a backward legacy of the colonial times and justified his project as the only way to create a real capitalistic society. He said in his own words that the country needed "an agrarian reform which puts an end to the "latifundios" and the semi-feudal practices, giving the land to thousands of peasants, raising their purchasing power and creating a great internal market favorable to the development of domestic industry."

Arbenz agrarian reform was approved in 1952 with the Decree 900 which empowered the government to expropriate only uncultivated portions of large plantations. Farms smaller of 223 acres were not subject to this law. Nor were those of 223-670 acres which at least two thirds cultivated. And farms of any size that were fully worked could not be expropriated either. In case of an expropriation the government would pay with twenty-five-year government bonds with a 3% interest rate. The valuation of the land was to be determined from its declared taxable worth as of May 1952. The expropriated lands would be distributed only to landless peasants in plots not bigger of 42.5 acres each, and the new owners were not authorized to sell them or speculate with them in the land market. The new owners would pay to the government a rental fee of 5% the value of the food produced, when living in an expropriated private land, and 3% in the case of the so-called "national farms" -these were farms confiscated to the German immigrants during WWII. The Agrarian Reform managed to give 1.5 million acres to around 100,000 families for which the government paid $8,345,545 in bonds. Among the expropriated landowners was Arbenz himself -who became into a land-owner with the dowry of his wealthy wife- and his later Foreign Minister, Guillermo Toriello. Around 46 farms were given to groups of peasants who organized themselves in cooperatives. The project, however, could not be developed as smoothly as Arbenz wished.

Some radical members of the Communist Party encouraged some peasants to invade lands before they were legally distributed to them and eventually clashed with the police. Nevertheless, the biggest obstacle to Arbenz' agrarian reform was the opposition of the United Fruit Company. United Fruit Company had been present in Guatemala since its first year of existence. Minor Keith, one of the founders of the company bought lands and built railways in this country since the late nineteenth century. The company had received land and communication concessions from the rulers prior to Arbenz, controlled one of the two main Guatemalan export goods, and was one of the largest landowners as well.

Although the company made investments in transportation, communications, housing, and other export infrastructure, some Guatemalans saw it with suspicion as an extremely strong foreigner in their own country. In fact, during Arevalo's government he took advantage of this unpopularity to support the banana workers in their strikes making use of his newly-created labor code. The company owned 550,000 acres in the Atlantic coast, from which a 85% was not cultivated, so it became into Arbenz's agrarian reform main target. The expropriations of United Fruit lands began in March 1953 when 209,842 acres of uncultivated land were taken by the government which offered a compensation of $627,572 in bonds. One month later the US Department of State complained to Arbenz demanding a $15,854,849 compensation for one of the two sized lands.

While the Guatemalan government valued $2.99 per acre, the American government valued $ 75 per acre. The Guatemalan government refused to pay that amount and continued with the project expropriating more United Fruit's lands in October 1953 and February 1954 offering the company $500,000 for them. Arbenz attitude began to create diplomatic problems between his country and the United States which saw his initiatives as too left-wing oriented. United Fruit manager Samuel Zemurray endorsed an anti-Arbenz campaign in the American media and the U.S. Congress in order to show President Arbenz as a Communist threat in the Western Hemisphere. Arbenz also faced a strong internal opposition by the conservative landowner class and some members of the Army.

Among the latter was Colonel Carlos Castillo Armas, a man who never stopped suspecting of Arbenz' participation in Arana's murder and went to exile after Arbenz took power. Castillo prepared a rebel army in neighboring Nicaragua with the total support of this country's President Anastasio Somoza. In the meantime the Eisenhower's administration criticisms of Arbenz policies increased while the American media continued showing Guatemala as the foothold of Soviet expansion in the Americas. Additionally, after a speech and lobby of US Secretary of State Dulles the Organization of American States accepts a resolution condemning the Communist infiltration in the Americas. In June, 1954 the troops of Carlos Castillo crossed the Nicaraguan-Guatemalan border and began their attack against Arbenz government.

By the time this happened not only was Arbenz internationally isolated but also he did not find much support from his own army and peasant population. Young Argentinean doctor Ernesto Guevara attempted to create some civil resistance militias together with a few members of the Communist Party. However, most of the Guatemalans felt they were in a very weak position compared to the invading Army so they simply resigned to be defeated by Castillo. Arbenz himself was morally destroyed when the invasion began. When realizing any kind of resistance would only bring more deaths and no triumph for his movement he decided to talk to the Guatemalans over the radio giving his resignation.

In his dramatic speech.
"They have used the pretext of anti-communism. The truth is very different. The truth is to be found in the financial interests of the fruit company and the other US monopolies which have invested great amounts of money in Latin America and fear that the example of Guatemala would be followed by other Latin countries.... I was elected by a majority of the people of Guatemala, but I have had to fight under difficult conditions. The truth is that the sovereignty of a people cannot be maintained without the material elements to defend it.... I took over the presidency with great faith in the democratic system, in liberty and the possibility of achieving economic independence for Guatemala. I continue to believe that this program is just. I have not violated my faith in democratic liberties, in the independence of Guatemala and in all the good which is the future of humanity....."

(quoted by Schlessinger & Kinzer, Bitter Fruit,1990: 200) 
 When giving his resignation Arbenz chose his friend Colonel Carlos Diaz as his replacement and asked for asylum in the Mexican Embassy. The President's attitude disappointed many of his followers who expected more dignity and courage of their leader. These critics said that the way he dealt with the invasion showed that he never stopped being a bourgeois reformer who could not go with a revolution until the last consequences. Diaz government did not last much when Castillo's forces controlled the Guatemalan territory. After his triumph Castillo and his allies organized a new government in a meeting in San Salvador, naming Castillo as the head of it. President Eisenhower recognized this new government as the legitimate Guatemalan government soon, and Castillo set back Arbenz reforms as quickly as he could.

His main targets were the Agrarian Reform Law and the legalization of union activities. In July 19 he created the National Committee of Defense Against Communism and decreed the Preventive Penal Law Against Communism to fight against those who supported Arbenz when he was in power. After his defeat Arbenz began a tortuous life as an exile. He and his family went to Mexico and then to Switzerland, where Arbenz hoped to get the residency as the child of a Swiss citizen. However, the Swiss government told him he could only stay in that country if he renounced to his Guatemalan citizenship, something he refused to do. Then they were forced to leave and went to Paris, where he lived under a constant watchful eye of the French police. After one month living there he was offered asylum in any Soviet-bloc country, so he chose Czechoslovakia for considering it the most cosmopolitan country of Eastern Europe. However, the Czechs did not welcome him and he had to move to Moscow with his wife, while their children studied in a school for foreigners 400 miles from the city.

The Arbenz family could not adapt to Russia and did everything to go back to Latin America. The only country that accepted to give him asylum was Uruguay, only if he promised not to take a job, not to become involved in politics, and to report to the police once a week. He accepted the conditions and lived in Montevideo from 1957 to 1960. In that year, the new Cuban President Fidel Castro invited him to live in Cuba and he accepted immediately. The kind of life he had in Uruguay was depressing him and he was turning into a heavy drinker. Living in Cuba, however, did not improve Arbenz's fait. He was having serious personal and family problems and disliked the way Castro was doing his revolution. In addition, he felt irritated when Castro warned the US against any kind of intervention by saying "Cuba is not Guatemala." But, at that time, his main problems were at home. His eldest daughter, Arabella, refused to follow him in his exiled life and decided to stay in Paris studying to be an actress. She always was a rebel in the family and was a critic of his father insistence on educating the children in exclusive private schools in spite of his socialist discourse and irritated her Soviet teachers by refusing to join the Communist youth organizations.

When traveling with her boyfriend around Latin America Arabella had a strong argument with her boyfriend in a restaurant in Bogota, Colombia. This had a dramatic end when she pulled a gun from her purse and killed herself in front of him. Arbenz was devastated by the death of his twenty-five year old daughter and lost the little interest that still remained in him in politics. In 1970 Mexico gave him permanent asylum and one year later he died drowning in his bathtub at the age of fifty-eight. After his death, his wife Maria Cristina Vilanova returned to El Salvador to make peace with her family after three decades and decided to settle in that country. Her enthusiasm for politics decreased as well as her political radicalism. When the civil war broke in El Salvador, she left the country and moved to Paris.

BIBLIOGRAPHY: William Griffith, "Jacobo Arbenz" in Helen Delpar (ed), Encyclopedia of Latin America (New York: McGraw-Hill, 1974); Stephen Schlesinger & Stephen Kinzer, Bitter Fruit (New York: Anchor Press, 1990); Thomas McCann, An American Company: The Tragedy of the United Fruit (New York: Crown, 1976)  

This table summarizes the most relevant events in the history of the United Fruit Company or events that affected the environment in which this company made its businesses.
Jan. 19.
Minor Copper Keith is born in Brooklyn, New York
Captain Lorenzo Dow Baker buys 160 bunches of bananas in Jamaica for a shilling each bunch and sells them in Jersey City for $2 each. After this success he and the Bostonian entrepreneur Andrew Preston join efforts to develop a banana market in Boston.
Keith travels to Costa Rica to work in the railroad project his uncle Henry Meiggs was building for the national government
Keith makes his first experiments at growing bananas planting some trees close to the railroad tracks, looking for a cheap way to feed his workers.
The extremely hard conditions in which the people involved in the construction lived had a very high cost in human lives. Around 5,000 men died including Meiggs. Keith is left in charge of the project
Samuel Zmurri is born in Besarabia, Russia. When immigrating to the United States he changed his name to Samuel Zemurray.
The Boston fruit market grows to such an extent that Baker and Preston establish the Boston Fruit Company. Preston was in charge of all the tropical operations while Baker controlled the management in Boston.
After facing incredible difficulties Keith finishes the railroad from San Jose to Puerto Limon. However, the little number of passengers using the train made it unprofitable. Keith decides to use it to export bananas from the plantations he had created in the early 1870s. The first shipments proved to be a great success.
Young Samuel Zemurray arrives to the United States from Besarabia. He settles with his family in Selma, Alabama
Zemurray enters in the banana business marketing the fruit in Mobile, Alabama
Keith purchases a 50% of the share in the Snyder Banana Co. which produced bananas on 6,000 acres at Bocas del Toro, Panama.
Spanish-American war. The United States defeats Spain and occupies Cuba and Puerto Rico.
Hoadley and Company goes bankrupted. Keith loses $1.5 million. In order to solve his difficult financial situation, Keith goes to Boston and arranges a merger between his company and the Boston Fruit Company with Andrew Preston. Prior to the negotiation Preston, Baker, and Keith controlled 75% of the banana market in the U.S already.
In March 30th they establish the United Fruit Company.
April. The new-born United Fruit Company acquires seven independent companies that had been operating in Honduras until then.
The government of Guatemala hires United Fruit Company to manage the country's national post service. Elders & Fyffes Co. is established in Great Britain. Its purpose was the shipment and distribution of Jamaican bananas in the United Kingdom. It had the support of the British government and turned into a serious competition to United Fruit
The Hubbard-Zemurray Company is established in New Orleans.
After a series of weather catastrophes and financial problems, plus a strong competition from United Fruit, the directors of Elders & Fyffes decide to sell part of its stock to the American company. United Fruit eventually acquired 50% of Elders & Fyffes stock opening, in this way, a door to the European market. November. Some separatist groups of the Colombian state of Panama declare this territory's independence with the support of the American government. The US government sends part of its Navy to frustrate any attempt of the Colombian government to recover this state. Once the independence of Panama is assured the US gets sovereignty on the lands surrounding the area in which the Panama Canal was eventually built. 1904
Guatemalan dictator Manuel Estrada Cabrera granted United Fruit a ninety-nine year concession to operate and finish the country's main rail line from Guatemala City to Puerto Barrios
Zemurray goes to Honduras to study the possibility of creating his own banana export corporation.
United Fruit purchases 50% of the shares of the Vaccaro Brothers Company which operated in Honduras. Vaccaro had organized export plantations in that country as part of the contract to build a railway between La Ceiba and the interior of the country. The United States Army invades Cuba. The American occupation government remains there until 1909.
Using the Anti-trust legislation the American government obliges United Fruit to sell its Vaccaro shares. 1909
The United States Army invades Nicaragua.
With a loan of two thousand dollars Zemurray buys five thousand acres in the lands of the Cuyamel River in Honduras to establish his plantations. He named his new company Cuyamel Fruit Company which would eventually become into the most serious competitor of United Fruit. However, after having invested in purchasing the lands he found out that the current Honduran President, Miguel Davila, would not grant him the tax, land, and transportation concessions he was expecting from him. Then he decided to organize and finance a military coup against Davila in order to replace him with the President's rival Manuel Bonilla. Zemurray's military expedition sailed from New Orleans led by the legendary American mercenaries Lee Christmas and Guy "Machine Gun" Molony. The operation was successful and Zemurray and Bonilla got rid of Davila. When Bonilla became the new Honduran President he granted the Cuyamel Fruit Company with all the concessions Zemurray was expecting. United Fruit buys the remaining Elders & Fyffes stock it had not purchased in 1903. This same year Elders & Fyffes had acquired 8,000 acres of banana lands in the Canary Islands.
The Hubbard-Zemurray Company changes its name to Cuyamel Fruit Company
Keith's Guatemala Railroad Company changes its name to International Railways of Central America (IRCA) After a fierce price competition against the United Fruit Company, the Atlantic Fruit Company goes bankrupted. Atlantic had been United Fruit main competitor in Costa Rica; after the bankrupcy United Fruit gets the monopoly in banana exports.
United Fruit gets two railway and land concessions in Honduras. They are managed by the company's subsidiaries the Tela Railroad Company and the Truxillo Railroad Company. Thanks for these concessions the company began to produce bananas in large scale in Honduras.The concessions included 162,000 hectares of land from which 71,000 were granted in change of the railroad construction.
Zemurray becomes into the most serious competitor of United Fruit. The United States Army invades Haiti.
The United States Army invades the Dominican Republic.
The workers of the banana plantations in Northern Colombia go on strike. They demand six-day labor week and eight-hour labor day plus health care. The strike did not succeed.
The Vaccaro Brothers re-organize their old company and establish the Standard Fruit Company
November 7.
The Guatemalan government gives a concession to United Fruit of all the uncultivated lands in a 100 kilometers territory.
The Vaccaros change the name of their company from Standard Fruit Company into Standard Fruit and Steamship Company. 1927 The Guatemalan government establishes a $14,000 annual rent for the 100 kilometers it gave to United Fruit in 1924. United Fruit purchases the California-Guatemala Fruit Corporation which exported fruit from the Guatemalan Pacific Coast to Western USA
The workers of the banana plantations in Colombia go on strike in December. They demand a written contract, labor day of eight hours, labor week of six days and the elimination of the payment with food coupons and its replacement with cash. The strike eventually became into the largest strike the country had ever faced, having the radical members of the Liberal Party and members of the Socialist and Communist Party a strong participation. The national labor union bigwigs Carlos Mahecha and Maria Cano traveled to the banana zone to organize the strike. They counted with the help of Italian and Spanish anarchist immigrants for this. This year writer Gabriel Garcia Marquez is born in the town of Aracataca, in the banana zone.
The strike of the Colombian banana workers gets national attention encouraged by the opposition Liberal Party. The Conservative Government decided to send the Army to the banana zone in January to end with the strike. During a demonstration in the main plaza of the city of Cienaga the army, commanded by General Jorge Eliecer Gaitan denounced the government's action in the National Congress, the radio, and public speeches. This was fatal for the reputation of the Conservative Party and helped to its defeat in the next year's presidential elections
After an unsuccessful price war against Zemurray's Cuyamel Fruit Company, United Fruit decides to merge with it. United Fruit sold Zemurray $31,500,000 in the company's stocks in return for all Cuyamel stock. After this operation Zemurray became into the biggest shareholder of United Fruit.
Louisiana's governor Huey Long denounces Samuel Zemurray in the U.S. Senate for being involved in corrupted businesses in Central America
The United Fruit transfers its railroad in Colombia to the national government, which, in turn, leased it to the company for thirty more years.
During the first years of the Great Depression the shares' price of United Fruit fell dramatically and its profits decreased from $44.6 million in 1932 to 6.2 in 1932. The members of the board of directors vote to name Zemurray general director of the company. Two weeks after the price of the company's stock doubled. Zemurray's first move was to replace the existing tropical managers with experienced managers from the tropics and former employees of Cuyamel. He also improved transport and intra-company communication while reorganizing the company with a clear hierarchy with a specialization of the employees within the different parts of the company.
During the 1930s Zemurray used his fortune in several philanthropic works such as a big donation to the New Orleans Child Guidance Clinic and backed financially the creation and survival of The Nation magazine
United Fruit Company signs an ninety-nine year concession with Guatemala President General Jorge Ubico to open its second plantation in the country in the region of Tiquisate.
United Fruit merges with Minor Keith's International Railways of Central America (IRCA)
Samuel Zemurray, President of the United Fruit, establishes the Escuela Agricola Panamericana in Honduras. This was a free higher-education school paid by the company for the locals and specialized in agricultural research.
During World War II United Fruit was obliged to reduce its operations to the minimum level because of the presence of German submarines in the Caribbean
Juan Jose Arevalo takes power as the new President of Guatemala. He pressures United Fruit to improve the working conditions at its plantations. The company makes some concessions after a series of strikes from its workers
The Guatemalan government establishes a Labor Code. This is denounced by the company as "Communistic" and threatens to leave Guatemala. The code obliged the company to make further concessions to the workers in the strikes that followed
Samuel Zemurray lets one of the company's ships to participate in the settlement of Jews in Palestine after the war. The ship was re-baptized with the name of Exodus and carried the first wave of Jewish immigrants to the Middle East.
Senators Claude Pepper (Florida), Alexander Wiley (Wisconsin), and Mike Mansfield (Montana) accuse the Guatemalan government for its failure to safeguard United Fruit's businesses in that country.
Nobel-awarded Chilean writer Pablo Neruda publishes his epic work "Canto General" about the history of Latin America. One of its chapters is entitled "The United Fruit Company."
Jacobo Arbenz wins the Presidential election in Guatemala and promises to change the agrarian structure of the country.
The Guatemalan Congress approves the Decree 900, the Agrarian Reform Act.
Using the Agrarian Reform Act Arbenz government declares that 209,842 acres of uncultivated lands of United Fruit should be expropriated and distributed to landless peasants. The Guatemalan government promises the company an idemnification of $627,572 in governmental bonds. The value of this idemnification was based on the company's declared tax value of the land. During this year Zemurray hired a public relations company to begin an aggressive campaign against Arbenz in the American media. Standard Fruit introduces the first experimental plantings and shipments of the Panama disease resistant Cavendish-type banana. This type eventually adapted by United Fruit to replace the Gross Michel type in the 1960s.
April 20.
United States Secretary of State John Foster Dulles sends a protest note to Arbenz declaring that the idemnification value calculated by the Guatemalan government was not fair. Arbenz, however, continued with his Agrarian Reform Program. Dulles calls John Peurifoy, the American ambassador in Guatemala, to get detailed information of the Guatemalan situation. Peurifoy said to the Congress that Guatemala was spreading "Marxist tentacles" in Central America. Zemurray approves the publication of a book called "Report on Guatemala" which claimed that Arbenz Agrarian Reform had been planned in Moscow. The book was distributed to Congressmen March. The Conference of the Organization of American States in Caracas finishes with a resolution in which the member countries show their concern about the "Communistic infiltration" in the continent.
June, 18.
Using military bases in Nicaragua Guatemalan Colonel Carlos Castillo Armas attacks Guatemala in what his supporters called "the Liberation war against Communism." The operation was backed by all the other Central American governments and the United States. Castillo succeeded at forcing Arbenz to go on exile and immediately ended the legal actions against United Fruit under the Agrarian Reform Law. Twenty-five year old Argentinean Ernesto Guevara (later known as el "Che") witnesses the coup and gets convinced that radical changes in Latin America were only possible through an armed revolution. Guevara was living in Guatemala at that time working as a doctor and book-seller and volunteered to organize resistance militias against Castillo's army. When facing an inevitable defeat he escaped from Guatemala to Mexico where he met another political refugee who became into one of his closest friends: Cuban Fidel Castro.
July 2.
A US Court begins legal action against the United Fruit Company for having violated the Sherman Anti-trust Act and the Wilson Act.
July 13.
The United States President Dwight Eisenhower gives official recognition to Castillo's government.
July 19.
Castillo establishes the National Committee of Defense Against Communism to trace Arbenz followers in the government and the rest of the country and to set back the labor laws created under Arbenz government. Arbenz begins his life as an exiled in Mexico, France, Switzerland, Soviet Union, China, Cuba, Uruguay, and Mexico. HONDURAS:
May 5.
The workers of the United Fruit Company go on strike demanding higher wages and were followed by the Standard Fruit workers. This strike paralized all banana operations and had 25,000 striking workers at its peak (around 15% of all the country's labor force) The Honduran President Manuel Galvez expells immediately two Guatemalan consuls charging them of instigation.
May 9.
The American ambassador in Honduras says that the country's strike had been inspired by Guatemalan communists. .
July 9.
The banana workers' strike in Honduras finishes. The strikers did not manage to get what they wanted at the beginning. After a hurricane that came thereafter United Fruit fired 10,000 workers 1958 The United States Government uses the anti-trust legislation against United Fruit and obliges it to sell its Guatemalan holdings. The company sells some of them to Standard Fruit but most of it to Guatemalan entrepreneurs. United Fruit acquires rights to explore petroleum and natural gas in Colombia, Panama, and Ecuador. November. Fidel Castro takes power in Cuba after a successful guerrilla war against President Fulgencio Batista. Batista leaves the country.
Fidel Castro begins his agrarian reform and seizes the sugar properties of United Fruit in that country. Thomas Sunderland becomes the new President of the United Fruit Company. His main targets were to reduce costs and to face efficiently the competition of Standard Fruit, the Ecuadorian corporations, and the antitrust laws in the United States. Sunderland innovated at promoting the cultivation of the Cavendish bananas instead of the Gross Michel (the traditional kind they had marketed up to that year). With the Cavendish United Fruit began to transport the fruit in cardboard boxes. He also started the strategy of making United Fruit's bananas different from others by putting the "Chiquita" sticker on them. The second half of the 1950s witnessed a process of divestiture of the company which began to get rid of many of its plantations in Latin America and gradually concentrated its efforts in marketing.
Nov. 2.
First serious strike of the banana workers in Panama. The workers of the Bocas del Toro Division demanded higher wages and better working conditions. Short time afterwards they are joined by the Armuelles workers. The strikers paralyzed all the export activities for two months after which United Fruit gave recognition to the ellected union leaders as the workers' legitimate representatives.
Colombian writer Alvaro Cepeda Samudio publishes his novel "La Casa Grande" inspired in the banana workers strike of 1928 in Magdalena, Colombia.
Herbert Cornuelle becomes the new President of the United Fruit Company. He begins a process of diversification of United Fruit's investments in order to reduce its dependence on bananas. During this process the company acquired A&W Root Beer Company, Foster Grant
AMK, originally a producer of milk-bottle caps acquired a third of the common shares of John Morrell & Company, a meat packer. By the end of that year, AMK acquired John Morrell completely. AMK's President Eli Black began an aggressive campaign to control the American food market. 1967 After its acquisition of the West Indies Fruit Company Del Monte Corporation enters into the international banana market. Gabriel Garcia Marquez publishes the first edition of Cien A–os de Soledad (One Hundred Years of Solitude) in Buenos Aires, Argentina. Castle & Cook Corporation acquires the Standard Fruit and Steamship Company.
Sept. 24. Eli Black made the third largest transaction in Wall Street history up to that moment by buying 733,000 shares of United Fruit in a single day becoming himself into the largest shareholder of the company.

1970 United Fruit chairman John Fox and Eli Black negotiate the merger of United Fruit and AMK-John Morrell. After negotiations with the Federal Trade Commission they made the merger and incorporated the new enterprise with the name of United Brands Company in June 30th. This year the company reports operation losses of two million dollars. Black cuts all the research expenses

January 27.
Jacobo Arbenz dies in exile in Mexico City at the age of fifty-eight. The company reports a loss of 24 million dollars; the highest in its history December: The U.S government orders United Brands to divest themselves of a complete banana-producing division capable of 9 million stems alleging violations of the Sherman Act. The company sells its division Compania Agricola de Guatemala to West Indies Co. (a Del Monte subsidiary) 1972 In an attempt to pay its high debts United Brands began to sell several of the companies that comformed the conglomerate and more lands in the tropics. That year and earthquake destroyed the capital city of Nicaragua, Managua. Black organizes a United Brands sponsored aid to the victims.
Black manages to have $16 million in profits this year giving the hope of some recovery for the company. 1974
The governments of Honduras, Costa Rica, and Panama sign the Panama Agreement which imposed banana export taxes of $1 per 40 pound box. United Brands confronts this initiative considering it unfair. July-September: United Brands Company goes on strike and refuses to export bananas from Panama unless the local government stops considering the option of nationalizing the company's assets. This meant an interruption of 45% of the total of Panama's exports.

September 17.
The governments of Costa Rica, Colombia, Honduras, Guatemala, and Panama form the Union de Paises Exportadores de Banano (UPEB) -Organization of Banana Export Countries- to defend the interests of the member countries, raise and mantain high prices, and adopt common policies. United Brands threatened unsuccessfully to pull out. Ecuador, the world's largest producer, decides not to join the organization. September 18. Hurricane Fifi destroys 70% of company's plantations in Honduras and causes losses of more than $20 million. The hurricane declined the country's annual exports from 45.4 million boxes in 1973 to 35.3 in 1974, and 20.4 million in 1975. Black organized relief teams to help the victims of Fifi but could not recover from the financial losses. United Brands' subsidiary John Morrell reported losses of $6 million. The total losses of United Brands that year were $70 million. In a new attempt to alleviate the company's troubles Black sells on December Foster Grant for almost $70 million in an operation that was considered a great success

1975 February 3. Black commits suicide jumping from his office in Panam building in New York. The investigations around his death revealed a bribery scandal in which Black and United Fruit were involved.

In April the SEC accused United Fruit for having being bribing the President of Honduras, Osvaldo Lopez Arellano with $1.25 million, with the promise of another $1.25 million later, in exchange for a reduction in the export taxes Honduras committed under the light of UPEB rules. The investigation also revealed that during Black's presidency United Brands bribed European officials for $750,000. The trade of United Brands stock was halted for almost a week, and some shareholders suited the company. In the meantime, the Honduran Army removed the President on suspicion of participating in the bribe, despite Lopez allegations of innocence. The scandal made the Costa Rican President threat United Brands with a cancellation of all contracts if the company did not reveal all the names of local officials involved in bribes. Finally, a federal grand jury brought criminal charges against United Brands May. Wallace Booth, chairman of United Brands Company succeeded in a series of reforms that included tightening management control, streamlining banana delivery systems, and updating meat-packing technology at John Morrell.
Carl Lindner, one of the biggest investors of the company becomes the new President. January. A federal judge grants SEC permanent access to United Brands records to avoid further violations of the law from this company. April. United Brands sells 190 miles of railroad track to the Honduran government for $0.50 and then lease it back for $250,000 a year. It also committed itself to the maintenance and operation of the railroad line.
United Brands admits that it had paid a bribe of $2.5 million to the former Honduran minister of economy, Abraham Bennaton Ramos. The company is fined with $15,000 and the case is closed.
Lindner increases dramatically his stake in the company
Strong storms in Panama and Costa Rica damaged the banana business. United Brands faced this at the same time it was dealing with strong losses of John Morrell.
August. Lindner takes over as chairman of United Brands. He changed the company from its large, diversified operations toward a narrower focus on profits throughout stable the company.
With a new team of directors Lindner doubles the company's cash flow from 1985 to 1988. Lindner sells some of the company's operations, such as soft drinks, animal feeds, and international telecommunications. He moved the company's headquarters from New York to Cincinnati. Lindner widens the use of the name "Chiquita" to other fruits such as grapefruits and pineapples. He manages to recapture the first place in banana trade from Dole.
The workers of John Morrell meat packing houses in the United States go on strike. The conflict is settled only one year after.
John Morrell workers suit the company claiming that they were not paid for work involving safety equipment that they were required to perform on their own time. The Labor Department's Occupational Safety and Health Administration proposed a fine of $4.3 million.
Lindner decides to change the name of the company from United Brands Company into Chiquita Brands International Incorporated. He justified this by saying that the name "Chiquita" was the most widely known brand of the corporation so it made more sense to use it for the whole conglomerate.
The collapse of the Communist regimes in Eastern Europe brings hopes to the different banana companies of a larger market. Chiquita begins to invest in buying land again, after a long process of divestiture that began in the 1950s
The European Union establishes a quota system for banana imports giving preference to those produced in their former colonies in Africa. Given that Chiquita did not have any investment in the African producing areas accuses the European initiative as unfair. Senator Robert Dole says in the U.S. Senate that the European initiative was going against the most basic rules of free market and proposed retaliation. During his presidential campaign against Bill Clinton, Dole received a $155,000 contribution from Chiquita and used a company's airplane for his campaign tour around the United States.

This table was prepared by Marcelo Bucheli. The sources used can be found in the Bibliography plus Lisa Mirabile (ed), International Directory of Company Histories (London: St. James Press, 1990) and John Ingham (ed), Biographical Dictionary of American Business Leaders (Westport, CT: Greenwood Press, 1983)  

Henry Meiggs Keith

In 1871 the railroad to the Atlantic started being built. Henry Meiggs Keith, an English man hired by the Costa Rican government, was in charge of this monumental ordeal. He insisted in utilizing blacks for clearing the forest and building the railroad tracks. Several workers arrived from the Caribbean, Panama and other countries, but in 1872 the first group of Jamaicans entered the country. These Jamaicans and their descendants would become the main inhabitants of the region, thus providing the basis for a culture that was entirely different from any other in the country.

The two large Jamaican migrations occurred at the time of the railroad construction and in the next century, for the banana plantations owned by the United Standard Fruit Company. If it hadn't been for this influx of black population, Costa Rica wouldn't have become the world's largest producer of bananas in 1911.

October 6, 1854

"Honest Henry" Meiggs, a prominent citizen, was accused of forging city warrants, and fled the city.  

The Wharf that Transformed the Life of Henry Meiggs

Henry Meiggs was one of the biggest "hustlers" in San Francisco during the early '50's, a pioneer promoter of his day. He didn't overlook anything, and like most men of his day and generation he made his word good. He was forever pushing some enterprise. When he landed in the city in 1850 all the vessels entering the Golden Gate anchored in Yerba Buena cove at the foot of what was then Washington, Commerical and Jackson streets. Wharves were extended into the bay water there, and residents generally recognized that locality as the city's only shipping point. Harry Meiggs had other ideas.

A year or two later he boomed North Beach and built a road around the base of Telegraph Hill to Clarke's Point on the north shore, where he had invested a pot of money in real estate. He ran out a wharf 2,000 feet long from the foot of Powell Street, graded and extended the streets in that quarter, and started a real estate boom. His object was to induce ship owners to make use of his facilities for their warehouses. He urged that his dock was closer to the Golden Gate, and its inducements superior to the old anchorage. He plunged heavily into debt trying to swing this big scheme.

Meiggs knew every game being played in the city, political, social, financial and otherwise. At that time street work was paid for in warrants on the public treasury, signed by the Mayor and Controller. The Controller had fallen into the easy habit of signing entire books of blank warrants, and the Mayor, being a good fellow, followed suit. Meiggs knew their system and though a pliable subordinate got possession of one of these books properly signed for issue. There was no money in the street fund at the time, but that did not disconcert Meiggs. He knew that the money lenders of the town would bite at them, not knowing the situation, a sharp commentary on the way the city business was conducted. Before any one had an inkling, Meiggs had scattered enough warrants among money lenders to raise his monthly interest to $30,000.

Meiggs was safely in flight when the storm broke. How much money he carried to Valparaiso, Chili, was never discovered. Meiggs later declared that he landed with only $8,000. He lost this in speculation, and had to pawn his watch. South America at that period proved a gold mine for a man of Meiggs' irrepressible and resourceful character. Eventually he accumulated a fortune estimated at $100,000 by building railroads in Peru and handling government contracts in adjacent countries. From his earnings he paid back every cent he owed his creditors in California. Eventually he made overtures to return here, but failed.

Meiggs Racetrack in Peru

Peruvian racing started in last century at a small racetrack called Cancha Meiggs, named in honor of the Engineer Meiggs. He had been responsible for the construction of the highest Ferrocarril of the world. From 1938 these races were contested at Santa Beatriz's old race track where great horses like Postin, Rio Payanga, Parsing and Pamplona were the biggest stars of the firmament. Beginning December 19, 1960, these races were transferred to the modern and majestic race track of Monterrico. This was the race track where horses as Santorim, Maidenform, Snow Court, Tenacious, Lutz, El Duce, La Union, Stach, Madame Eqquis and Grosny demonstrated all of their considerable potential.

1 comment:

Anonymous said...

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