Belterra and the Demise of Henry Ford’s Brazilian Rubber ‘Empire’

Biographical, Economic history, Geography, International Relations, Regional History

16F41C5C-69E8-4946-87A1-FC4CA093EDA7By the 1930s it was apparent to all concerned that Fordlândia, Henry Ford‘s rubber plantation in the Amazon, had been a costly, massive underachiever. Ford however, to the unending frustration of his family, doggedly refused to pull the plug and walk away from the Amazon fiasco counting his losses. In 1934, instead of ditching the failing Fordlândia operation altogether, he retained it and at the same time poured a fresh pile of money and resources into a second Amazonian rubber plantation site.

Learning from failure
The new rubber plantation, at Belterra, was better positioned geographically in relation to the main regional city of Santarém (just 40 km south of it). The plantation site selected this time was a more judicious choice, unlike the uneven ground of Fordlândia, the site comprised a flat topography, much better terrain for moving equipment around and for planting✱. The more favourable physical conditions at Belterra meant that Ford’s agrarian labourers were over a period of several years able to cultivate some 19 square miles of land for the planting of rubber trees (not a gigantic quantity by any reckoning, but a significant advance on the pitiful returns from Fordlândia)  [‘Belterra, Pará’, Wikipedia, http://en.m.wikipedia.org].

9D6EF65F-8330-40D7-93A7-9DCDBC8E9034Improvements in local agronomy
The horticulturalists at Belterra were conscious of the need not to replicate the monoculture prevailing at Fordlândia – which had made the rubber plants vulnerable to infection. By planting hardwoods this time and employing new breeding methods which used local varieties, the planters were able to avoid the scourge of Fordlândia – the Amazon leaf disease. The downside of this method however was that it was very labour-intensive and expensive [ibid.].

Infrastructure, variety and man-management
One of the clear lessons of Fordlândia was that living conditions for migrant workers in the camp were not conducive to creating a happy workforce. Again, as at Fordlândia, the migrant employees (based on the precedent of Ford’s American plant workers) were paid much higher than the going rate elsewhere in Brazil…but the company had learnt from the Fordlândia plantation that this was not enough of itself to get the desired worker performance. This time Ford’s managers delivered an enhanced town infrastructure…the drawing board for Belterra included three well-staffed hospitals (a critical area of shortage at Fordlândia) and three major (and two minor) schools◊. The sanitation system was much improved on the earlier settlement (arguably it was better than anywhere else in rural Brazil at that time). The street layouts were better planned and more uniform (straighter streets, more systematic street grid and more effort put into ‘greening’ the environment). The Belterra management gave workers more options for their leisure time – construction of football fields⍟ and playground equipment, movie and dance nights (exclusively folk dancing, another obsession of Henry Ford!). The upshot was to give the plantation town something akin to a suburban feel [‘Dearborn in the Jungle: Why Belterra Flourished Where Fordlandia Failed’, Past Forward: Activating the Henry Ford Archive of Innovation, (blog), www.thehenryford.com].

Whereas Fordlândia had catered exclusively for single men in its Brazilian work force, the Ford managers (eventually) adopted a more realistic, far-sighted policy, recruiting an increasing number of migrant families to the plantation…showing that Ford (or his management team) were serious about addressing the staff problem that had plagued Fordlândia, a high rate of turnover of the work force [ibid.].

Some relaxation of Ford’s tight reins
Other efforts were made to appease the plantation’s migrant work force to make them more compliant with company target objectives. The imposition of American food on Brazilian work force, which had been the bane of (a large slice of) the dissension in Fordlândia, was lifted. The Brazilian tappers and labourers were allowed to retain their traditional, local eating habits. In addition, in a further relaxation of conditions, musical instruments (an integral part of the Brazilian lifestyle) were allowed in the camp [ibid.].

Ford’s American ‘civilising’ mission for the “undeveloped world”
Despite a relaxing of some of the rules governing the running of Ford’s new industrial town in the Amazon, there were certain things Henry would not compromise on.  Ford was always big on “moral education”…part of his rationale for getting into the Brazilian jungle was to fulfill a mission to realise a peculiarly idiosyncratic idea of his concerning “racial progress’. As Elizabeth Esch describes it, driving Ford was a patronising impulse to “proletarianise and civilise” the uneducated rubber tappers of Amazonia, to make them into “something better”※. In the carmaker’s eyes, melding the workforce into an more efficient unit went hand-in-hand with educating them.

Belterra school girls and boys in Ford’s uniforms, ca.1940 | THF56937 | by the Henry Ford (Flickr)  🔽

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Midwest “old school” values
School was compulsory at Belterra – for all! Adult workers had to attend night school classes. Schoolchildren were strictly schooled and imbued with discipline along American lines of education…all workers’ children were issued with uniforms (which made the boys look like boy scouts or cadets). Every school day started with the ceremonial raising of the US flag. Some observers have noted how Ford’s installing of rigid educational and moral discipline at Belterra mirrored his own value system…to whit, tantamount to a kind of  sociological experiment to “Americanise Belterra youth” along the lines of a “Mid-western small town model” [‘Dearborn in the Jungle’, loc.cit.].

Global war, disruption and end-game
Ford established a tyre manufacturing plant in Dearborn in 1937 which by 1940 had the capacity to build 5,000 tyres, unfortunately for Ford NOT ANY of the raw rubber was sourced by that time from the company’s Brazilian plants [Ford Richardson Bryan, Beyond the Model T: The Other Ventures of Henry Ford, (1997)].

🔽 Henry Ford tinkering (Photo source: The Ford UK Co)

63462031-6AB2-4C20-85DE-E247F66364D3The Amazonian rubber venture by 1941 nevertheless did seem to be making some headway, there was in excess of three-and-a-half million rubber tree planted (mostly at Belterra), which by the following year had yielded 750 tons of latex  [ibid.]. The Ford Company was optimistic enough to announce that it expected to produce 30 to 40 million pounds of high quality rubber from the Amazon by 1950 [Esch, op.cit.]. One thing in its favour, as a consequence of the world war extending to the Pacific, was that British, Dutch and French Far Eastern rubber plantations were now in the hands of enemy Japan and no longer commercial entities.

Ultimately though the war rebounded on the Ford Company as on commerce generally with an increasing drain on the US economy for the war effort.  The motor company’s finances were not in great shape during the war years…incredibly the increasingly ‘flaky’ Ford Senior had axed the global company’s Accounting Department! [G Grandin, Fordlândia: The Rise and Fall of Henry Ford’s Forgotten Jungle City, (2010)]) . The domestic situation in Brazil was not helping Ford’s rubber plants…although powerful Brazilian President Getúlio Vargas had given approving nods in the public eye to the company’s presence in Brazil, labour law reforms in the country were not advantageous to Ford. The Brazilian government also restricted the export of lumber during the war. To exacerbate matters even more, the rubber plantations were hit with a return bout of the dreaded leaf blight infestation [Bryan, op.cit.].

Synthetic rubber – the future!
Ford’s son Edsel✜ and grandson Henry II had for several years been badgering the bewilderingly stubborn and by now ailing and declining industrialist to bring the wasteful Amazon fiasco to an end. What possibly clinched it in the end was a technological breakthrough, by 1945 synthetic rubber production was a superior and more economical method of getting latex than natural rubber. Moreover, with WWII now over, Britain and the other European powers had regained control of their lucrative Far Eastern rubber estates, and would once again provide the Ford rubber plants with very stiff competition [ibid.]. In December 1945 Ford finally sold the Fordlândia and Belterra plantations back to the Brazilian government, losing over US$20 million in the deal [‘Belterra, Pará’, Wikipedia, http://en.m.wikipedia.org]. The  dragged-out, ill-fated Amazon venture of Ford, which perpetually “had teetered between failure and farce” was over [Esch, op.cit.].BAEEFE61-81ED-45EE-8E6B-3B17AE5397C8

PostScript: Fordlândia and Belterra redux
Belterra today is in much better nick than Fordlândia, this is largely because the Brazilian government has kept the Belterra plant operational, although it has never been particularly profitable. Fordlândia on the other hand bears many of the characteristic scars of a ghost town. When Companhia Ford Industrial Do Brasil ceased operations in 1945, the Americans cut and ran, leaving things pretty much as they were…pieces of equipment and machinery abandoned, left lying idle, to rot or to be stolen or to be vandalised (contemporary Fordlândia has been described as a “looters’ paradise”◘), furniture, door knobs and other fittings, whatever that was movable, was taken. Most of the original buildings though have survived✥, as well as the plantation sawmill, the generator and such industrial relics, left rusting in the jungle for the past 73 years.

The most striking physical industrial remnant at Fordlândia today is the Torre de água – the 50m-high Water Tower…it still stands, like a symbol of the lost town, and like most of the fixtures at Fordlândia, built in Ford’s Michigan and shipped to the Amazon. Greg Grandin describes its still erect form as a reminder of what it once personified, “a utilitarian beacon of modernity for Ford’s ‘civilising’ project” [Grandin, op.cit.].

15330077-3C7C-4A29-BF29-2D8033DE644D__________________________________________________________
✱ botantist expert James R Weir, brought in to ‘troubleshoot’  the company ‘s dismal performance in trying to grow rubber at Fordlândia, came up with the idea of a second plantation in the Amazon (and then promptly left the project altogether!)
◊ named after Henry Ford’s three grandsons, Edsel, Benson and Henry
⍟ Ford had banned the playing of football (soccer) at Fordlândia
※ there was lots of talk at Dearborn about “taming savages” and more disturbingly, of pseudo-racial categories – creating a  “Latin-Saxonian unity” that supersedes the ‘Indian’ and mestizo groupings, E Esch, ‘Whitened and Enlightened’: The Ford Motor Company and Racial Engineering in the Brazilian Amazon’, in OJ Dinius & A Vergara [Eds.], Company Towns in the Americas: Landscape, Power and Working Class Communities, (2011)
✜ Ford heir Edsel predeceased his father, dying in 1943
◘ Simon Romero, ‘Deep in Brazil’s Amazon, Exhibiting the Ruins of Ford’s Fantasyland’, New York Times, 20-Feb-2017, www.nytimes.com]
✥ but not the crumbled mess of the town hospital

Fordlândia: The Dearborn Carmaker’s Amazon Folly

Biographical, Economic history, Geography, International Relations, Regional History

Pioneering American industrialist Henry Ford built his first commercial automobile in 1901, and went on in the years following to revolutionise the motor vehicle industry with his eponymous Model T Ford and his innovative assembly line production techniques. With the advent of Fordism (a system involving modern technological machinery and standardised production in high volumes) Ford was paying his auto industry employees an (at the time) unprecedented $5 a day! However it came with very consequential strings (a dehumanisation of the workplace and the loss of workers’ individual autonomy).

By the 1920s Ford was pursuing a plan to harness the waters of the Tennessee River to power a proposed 75-mile long mega-city, which the car-maker proclaimed would be a “new Eden” in northwest Alabama. A concerted campaign by political opponents within the US however blocked Ford’s efforts to get the scheme off the ground ‘[‘Valley of Visions’, (Adam Bruns), Site Selection Magazine, May 2010, www.siteselection.com]. Vexated but undaunted, Ford turned to the remote Amazon jungle for his next big project.

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The rubber market and “latex gold”
Rubber was in high demand by car manufacturers like Ford and his American rivals General Motors and Chrysler. Rubber is the source of latex, which is vulcanised to create car tyres and for a range of other vehicle parts (eg, valves, gaskets, hoses, electrical wiring). The problem for Ford and other manufacturers was that the European colonial powers, France, the Netherlands and (especially) Britain, had an established monopoly on the production of rubber through their profitable South-East Asian colonies (Malaysia, the East Indies, Vietnam, Ceylon). Ford was particularly concerned that the British, spearheaded by its secretary for colonial affairs Winston Churchill, was intent on creating a rubber cartel to further monopolise the valuable product for the Europeans. The industrialist therefore was looking round for a cheaper way of sourcing rubber…he briefly considered planting rubber trees in the Florida Everglades but that didn’t turn out to be promising. His focus eventually fixed on Brazil and its vast Amazon Basin (see also the Footnotes).

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Eyes on Brazil

From 6,000 km away in Ford’s Dearborn  car ‘empire’ headquarters, the Amazon looked a logical location for a rubber plantation. It was after all the original (and therefore seemingly the natural) environment for producing latex, being the home of the plant Hevea brasiliensis, used to make the most elastic and purest form of latex!

Ford’s idealistic and ideological vision
Clearly Henry Ford saw the long-term business advantages of securing a consistent supply of latex at the most favourable prices, but in his public pronouncements he let it be known that he viewed the Brazilian project as something grander than an attempt to corner a resource market  – “a civilising mission” no less! Ford regularly couched his intervention in Amazonia in terms of it being an act of “benevolence to help that wonderful and fertile land” [‘Lost cities #10: Fordlandia – the failure of Henry Ford’s utopian city in the Amazon’, (Drew Reed), The Guardian, 19-Aug-2016, www.theguardian.com]. While some of the car manufacturer’s overblown utterances may have been an indulgence in PR, the Amazonian venture (and the fact that he persisted with it long, long past its use-by-date) suggests that the idea of Fordlândia represented something in his core that was deeply idealistic. Greg Grandin in his epic study of the Fordlândia experiment, has noted that despite the runaway success of his Detroit-based business empire, Ford had become increasingly disatisfied with modern American society and culture as he saw it, there was a whole catalogue of things that he abhorred…including war, unions, alcohol, cigarettes, cow’s milk(!), modern dance, Wall Street financiers, Jews, the creeping intervention of government into business and into American life as a whole [Fordlândia: The Rise and Fall of Henry Ford’s Forgotten Jungle City, (2010)].

A blinkered idealism
Ford saw in the challenge of carving a viable city out of the Brazilian wilderness, a potential antidote to all he disliked about his homeland – a way to recreate “a vision of Americana that was slipping out of his grasp at home” [ibid.]. Another driver in Ford’s Amazonian quest was the unflinching faith in his capacity to replicate the Dearborn business success elsewhere, including the Amazon jungle. This idealism led Ford, even when things went “pear-shaped” in Fordlândia “to deliberately reject the expert advice” and blindly cling to his peculiarly personal notion of trying “to turn the Amazon into the Midwest of his imagination” [ibid.]. Moreover, Grandin notes, that the greater the reverses of  Henry’s rubber enterprises in the Amazon, the more the carmaker would describe his ‘mission’ in Brazil in idealistic terms – Fordlândia would, he stressed repeatedly, bring economic stability and increases in the standard of life to the impoverished people of the Brazilian interior; the new city would support 10,000 people, etc [ibid.].

Initially, the government and it seems, the Brazilian people in the main, welcomed Ford’s Amazonian industrial city. Brazilian officials, especially consul José de Lima, went to great pains to woo the American carmaker once his interest in the Amazon became known. Some Brazilian officials even heaped overly-lavish, religiously evocative praise on Ford , calling him the “Jesus Christ of Industry”, the “Moses of the Twentieth Century” and “the salvation of Brazil’s long-moribund rubber industry” [ibid.].

By the terms of the business deal, Ford would pay the Brazilian government about US$125,000 for 5,625 square miles of land and the company was to be exempt from taxes. Under the concessions Ford’s city was to be granted an autonomous bank, police force and schools, to many observers it was a violation of Brazilian sovereignty…”it was as if Ford had the right to run Forlândia as a separate state”. The sceptical Santarém (local) press mockingly referred to the Dearborn (Michigan) car manufacturer as “São Ford” (“St Ford”) [ibid.].

The blueprint for Fordlândia
Ford poured a massive amount of resources into his (new) utopian ‘dream’ city. The plant was equipped with “state-of-the-art” processing facilities. No expense was spared on constructing the American village (known locally as Vila Americana) which was reserved for American management. It was equipped with a swimming pool, a golf course, tennis courts, a library, schools and a hospital. Not surprisingly, the de luxe conditions of the Americans’ village was in grotesque contrast with that of the Brazilian workers whose rudimentary houses lacked even running water [ibid.].

Setbacks and drawbacks
The jungle site picked out for Ford’s prefabricated industry town was Aveiro on the River Tapajós, in the state of Pará.  From the get-go in 1928 things did not go well! First off, clearing the dense jungle for the site was really hard (and dangerous) work…even with Ford’s promise to pay high wages to the locals, labour was in short supply. The project’s logistics provided another headache, the location’s communications and transportation had serious shortcomings, The location was hilly and there were no roads to Aveiro so movement was by boat up and down the river, and seasonal climatic conditions tended to impede access (also latter on hindering the cargo vessels trying to reach Fordlândia to load up the latex).

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“Agri-ignorance”
The task of planting rubber trees was thoroughly error-ridden. Ford’s managers used antiquated planting techniques, the team lacked basic knowledge of tropical agriculture. A fundamental flaw that proved critical was the company’s  practice (ignoring the advice of Brazilian botanists) of planting the rubber trees too close to each other, this resulted in making the plantings susceptible to disease (enabling the destructive South American leaf blight to move easily from tree to tree) [ibid.].

Illness caused by the harsh tropical location wreaked havoc with the work force (especially the migrant workers but also affecting the American staff). Workers went down with various ailments (malaria, VD, yellow fever, beriberi, parasites, snake bites, etc) placing a strain on the already overwhelmed company health services [ibid.].

Subverting worker morale
Ford imposed strict conditions of behaviour on the work force – in keeping with his personal puritanical code. A prohibition ban was imposed (to match the prevailing injunction on alcohol in the US at the time). In light of the severely harsh conditions they were working under, Ford’s “absolutely no tolerance” liquor policy was totally unrealistic. Workers were forced to endure a regime of rigid conformity – regimentation of plantation life, adhering to strict standards of discipline and hygiene. And to make things even more onerous, Ford introduced the same, notorious heavy-handed yolk of enforcement he employed in the River Rouge automobile plant in Detroit. Ford’s “Big Brother” like Service Department men were employed to carry out highly intrusive spot searches on workers’ quarters to ensure compliance with the edicts.

7405683B-B783-423E-B198-22948C4EDE1CAmericanisation overkill
Ford insisted that the migrant workers at Fordlândia adhere to Americanised conditions of work and services which ignored the local realities and cultural norms. This meant everyone got American-style housing with metal roofs which were conductors of the already intense tropical heat (in preference to the more sensible natural thatch roofs they were used to in Brazil). Another “First World” error by Ford was to build workers’ houses close to the ground…the locals in the Amazon knew to build high up on stilts so that they didn’t get overrun with animals and insects! Ford was insistent on interfering with the Brazilians’ diets, workers were fed unfamiliar food like hamburgers, whole-wheat bread and unpolished rice, and they were encouraged to plant flowers and vegetables on their plots. The American managers, with scant regard for the workers, forced them to work in the middle of the day in full tropical sun. Inevitably, the migrant workers staged a revolt against the management practices, known as Quebra-Panelas (the “Breaking Pans”). They rioted in late 1930, protesting against Ford’s imposed conditions, and the Brazilian army had to intervene to restore order (with management making some concessions with regard to the food) [ibid.].

Erratic managerial direction
Part of the problem with Fordlândia was with the management. They’re was a rapid turnover of managers in the first two years of the settlement.  Ford’s often wrong-headed policies were not easy to implement, but some managers were not up to the task and others just couldn’t hack it in the extremely challenging and arduous Amazon and quit. Unsurprisingly, with mismanagement morale plummeted, the American staff increasingly engaged in wild parties and drunken revelry.  It wasn’t until Scot Archibald Johnston was put in charge at the end of 1930 that progress started to be made at Fordlândia.  Johnston was able to improve the infrastructure, enhance the lifestyles of employees’ – new entertainments and recreations – film and dance nights, gardening, football games (overturning Ford’s earlier ban) and more education options. Grandin feels that under Johnston’s management, the city “came closest to Ford’s original ideal”. But still the yields of latex didn’t come remotely close to the company’s anticipated returns.

4412DA21-392C-47AA-85D1-E3A2E8B393CFWith the lack of commercial success, the original Brazilian government enthusiasm for Ford’s project waned badly. Even from the start there had been critics of the done deal that was vague on many details and required Ford to use only 40 % of his land grant for the production of latex. Eventually, there was a loss of credibility for Fordlândia – with the situation showing little improvement, the Brazilian middle classes ultimately could not square Ford’s “self-promoted reputation for rectitude and efficiency” with the reality of the plantation’s dismal track record [ibid.]

FN 1: British ‘Bio-piracy’
The European monopoly on rubber had its origins in the unscrupulous actions of British botanist Henry Wickham who clandestinely pilfered Hevea seeds out of the Amazon in the late 19th century. These were propagated successfulyl in Asia, putting the three colonial powers in a frontline advantageous economic position in the trade. The sale of latex, especially to the US auto industry which needed rubber for the expansion of the burgeoning industry, helped Great Britain and France pay off its (WWI) war debts [Grandin, op.cit.].

FN 2: The “latex lords”
Before the rise of the Asian rubber plantations, Brazil was the dominant world supplier…in the second half of the 19th century, processed rubber accounted for 40% of Brazil’s total exports. The Amazon’s big towns, Manaus and Belem, profited spectacularly from the rubber boom as witnessed by the magnificent BeauxArts palaces and grand neoclassical municipal buildings that sprang up. By the early 1920s however, the country’s rubber industry had bottomed out and Brazil was bankrupt [ibid.].8AA4C2F1-C6C5-485B-B7E9-59AF6443F91A
••••——••——•••——••——•••——••———••——•••——••——••——••——•••———••——••——••••
so successful that the Ford Motor Company had captured over half the US auto sales market by 1921
rubber cultivation thrived in South-east Asia due to a combination of factors – the parasites (insects and fungi) that feed off the rubber in Brazil were not present; the cross-breeding of trees led to increased yields of sap. The plantations were close to ports (cf. Brazil), reducing the transportation costs. Lastly, the cost of labour (principally derived from China) was significantly lower [Grandin, op.cit.]

as it transpired, the deal was not as great as the Detroit carmaker thought …”swindled by a Brazilian con artist” Ford paid around three-times the value of the land [G Grandin, Empire’s Workshop: Latin America, The United States and the Rise of the New Imperialism, (2005)]

  a hardship compounded by the company providing the clearers with very poor housing conditions
and impossible to fully enforce…plantation workers got round the prohibitions (Ford’s ‘puritanism’ extended to bans on women in the town, on smoking and on the playing of football as well) by establishing illicit bars, nightclubs and brothels on the so-called “Island of innocence”, [‘Fordlândia’, Wikipedia, http://en.m.wikipedia.org]
leading some Brazilians to speculate that Ford’s real motives for intervening were to seek oil, gold and political leverage [Grandin, op.cit.].

The United Fruit Company: Neocolonial Elites, Banana Monopolists and Oligarchs in the Tropical Americas, Part 2

Economic history, International Relations, Popular Culture, Regional History, Social History

In Part 1 we saw how robust intervention of the United Fruit Company and other commercially aggressive American companies in Central and South America brought about the socio-economic conditions that led to the characterisation of some of the countries therein  as “banana republics”. This second part will focus on the experience of one particular country in the region, British Honduras (modern-day Belize), which, although a different type of polity to the other neighbouring states at the time, nonetheless exhibited the same or similar patterns of disruption and exploitation from the North American banana barons.

Pre-conditions for the banana importers
British Honduras in 1900 was a British crown colony, a status it had since 1862. At the head of the colony, the Crown’s representative, was the governor [‘British Honduras’, Wikipedia, http://en.m.wikipedia.org]. Before bananas, the prized commodity in BH was timber – logwood, cedar, chicle, and above all mahogany. Moberg notes that despite the abolition of slavery in 1838, the conditions peculiar to British Honduras (BH) continued to perpetuate a debt servitude of rural workers to an oligarchy of local and immigrant land-holders. Nineteenth century BH economy was dependent on mahogany exports, a situation which created what has been described as an elite ‘forestocracy’ made up of timber companies and merchants (both domestic and foreign) [CH Grant]. This bound generations of forestry workers in BH to the powerful employer-class…one resident colonial secretary described the plight of the workforce as being “virtually enslaved for life”. Moberg’s case study describes the role of the British authority in this status quo as one of aiding and abetting the goals of the timber and mercantile elites [Moberg 1996].

Br.Honduras mahogany exports

The debt peonage that the unskilled BH farm workers were forced into (known locally as the “advance-truck” system), helped create a climate favourable to industry (ie, cheap and docile labour force) in the later American intervention by banana companies. Banana industry workers on plantations inherited similar harsh working conditions, including being subjected to the draconian ‘Masters and Servants’ Acts. Checks on what the United Fruit Co (UFCo) could do within British Honduras resided at least on paper with the colonial chief official, the governor (after 1884), (formerly the lieutenant governor 1862-1884, who during which time was subordinate to the governor of Jamaica). As Moberg’s study shows, the will to resist United Fruit’s incursions into the colony varied considerably from governor to governor. Early governors like Goldsworthy earned the ire of the resident elites who agitated for more political power. Under pressure from the business elites and oligarchs, the Colonial Office (in London) was forced to curb the power of governors in the 1890s and give the Legislative Council (and especially its five ‘unofficial’ members) a right of veto over the governor. In the 1900s governors like Sweet-Escott and Swayne made token efforts to dilute the members’ clout on council (with minimal success), but most governors ultimately conceded power to the elites [ibid.].

Acceding to the demands of big foreign capital
The governors discovered that the interests of foreign capital in British Honduras  – initially through British mercantile and timber firms but increasingly through a burgeoning of US investors – could not be ignored. By around 1900 bananas represented 71% of the value of exports to the US. It amounted to increasingly significant revenue for the colony’s coffers. The British Honduras government saw it as vital to the colony’s economy. Moberg indicates that “despatches from the governors to the Colonial Office reveal an eager accommodation to the banana multinational”. One of the most compliant, Governor Wilson, proposed to his masters in London that the government build railroads in the colony as an incentive for United Fruit to invest. Governor Swayne, undergoing a 180° turn from his earlier opposition to UFCo, started to act like a “virtual agent for the company in London”, negotiating the approval of incredibly generous land concessions to UFCo…under its terms United Fruit was asked to pay only $1 an acre compared to between $3 and $8 an acre required of small landholders (and UFCo was largely exempted from standard land tax). Sometimes UFCo received land gratis or for virtually nothing in exchange for the company’s promise to build railroads in the tropical lowlands (which of course benefitted UFCo’s business!) [ibid.].

United Fruit Co’s corporate muscle-flexing
On the rarer occasions that the BH government were reluctant to automatically lay down and do the American banana giant’s bidding, UFCo’s immediate reflex was to engage in bullying tactics against the government and threaten retaliatory action. When United Fruit asked the government for the unprecedented control of the British Honduras wireless (a very “banana republic” situation by which the British Central American colony’s entire radio communications would be held in foreign hands!), the Colonial Office declined its request. UFCo responded by withdrawing its steamship passenger line from service until the Colonial Office finally caved in to its demands for control of the radio system in 1911. UFCo took the same measure with its service on another occasion (which deprived the colony of mail delivery for over a month) in order to extract a higher subsidy payment from the government [ibid.].

United Fruit Co’s strategy in BH: Beginnings of the ‘Musaocracy’
When it commenced business as a buyer of bananas in Central America (1899/1900), UFCo embarked on a strategy that envisaged a monopoly situation end-game. One of the first moves was into transport. In 1900 UFCo acquired majority ownership of six Caribbean coast steamship lines, this also gave it the government mail contract as well (the Belize Royal Mail). The strategy to maximise its stake in the colony’s bananas was clinical and precise: UFCo first raised the price it was paying to independent growers, this allowed it to eventually crush all competition from other buyers…a monopoly of the market achieved, the company was now free to “dictate ruinous prices and conditions to private growers”. At the same time United Fruit thwarted the marketing efforts of independent growers, thus denying them alternate sources for the sale of their produce [ibid.].

Restrictive competitive practices 101: United Fruit achieves vertical integration in bananas
After securing a stranglehold over the exporting side of the banana game in Belize and having established its own rail network to transport the produce, UFCo’s next step was to create its own banana plantations in the colony’s south at Stann Creek and Toledo. As a major BH producer United Fruit consolidated its position in several stages, it set about monopolising the land available for cultivation. By 1930, the land area of Belize cultivated by the company comprised 139,000 acres, but UFCo also held over 20 times this area of unused land in BH, seriously limiting the area of cultivable land available to competing planters. United Fruit’s price-fixing had the ultimate effect of decimating the local banana growers [ibid.]
Fusarium wilt (‘Panama disease’) ⬆️

Industry reversals and exit strategy
In the 1910s the banana business in British Honduras was hit by a series of natural and climatic disasters…heavy rains causing flooding with loss of 90% of banana crop; infectious diseases especially the Panama disease (a soil-borne fungus), particularly devastating to UFCo’s Middlesex and Stann Creek estates; poor cultivation techniques exacerbated the losses (reliance on primitive milpa cultivation). The persistence of Panama disease further depressed production and United Fruit gradually reduced its banana operations in BH and in some cases, in locations like South Stann Creek, eventually replaced banana cultivation with citrus fruit [ibid.].

UFCo promotional booklet (Source: JJ Burns Library, Boston College)

Successive Belize colonial governments were repeatedly outwitted by United Fruit negotiations leaving it in a default position vis-á-vis the US company that was inferior and subordinate. One weakness stemming from the contractual arrangements was the governors’ abject failure to make UFCo keep its side of bargains. When things started to go “belly-up” for United Fruit in the banana colony, UFCo in imperious contempt of their contractual obligations simply pulled the plug. To compound the folly, subsequently, the colonial officials meekly bought back the key Middlesex estate from United Fruit, incredibly and bizarrely on terms which allowed the withdrawing company to make a profit! [ibid.].

United Fruit’s activities in British Honduras were typical of its approach throughout the Caribbean littoral. Large-scale integration into the local economy with massive infrastructure, using its economic clout to manipulate the local authorities into making advantageous concessions banana market…control of the market in bananas allowed it to set artificial low prices which Belize suppliers were obliged to accept because they were bereft of alternate viable markets. BH, being a colony of the British, varied from the prevailing pattern in other Central and South American countries in only one respect, a lack of personal graft. Unlike the banana republics, UFCo had no recourse to bribery with the colony’s British career diplomats, but bluff and intimidation usually produced the results it sought. As Moberg noted, “Colonial officials acted on behalf of the multinational not from venality or corruption…rather (it) reflected an ascendant US political and economic influence…one that officials found increasingly difficult to resist” [ibid.].

Tentacles of ‘El pulpo’ (“the octopus”)
United Fruit was particularly adept at playing one country off against another. When British Honduran officials kicked back against the demands of the company, UFCo would make clear that not acquiescing to what it wanted, had serious consequences. A standard ploy was to pit British Honduras against neighbouring states. On the occasions that the BH governor would deviate from his default submissive position to UFCo demands, the company manager in Belize Town would drop none-too-subtle hints about moving the centre of United Fruit’s Central American banana operations to Puerto Cortés in Hondurus. Similarly, United Fruit would also periodically issue threats to both Guatemala and British Honduras that it would switch its investments from one to the other [ibid.]

PostScript: Modern Belize
Tiny British Honduras was one of the last crown colonies in the Americas to shed the shackles of European colonialism. It achieved self-governing status in 1964, renamed Belize in 1973, it finally gained full independence from Britain in 1981. Mestizos, Creoles, Maya and Garifuna make up around 90% of the population. Belize’s much delayed passage to full independence largely stems from its neighbour Guatemala’s long-standing claim on the territory of Belize (or part thereof). Guatemala’s largely military regimes have aggressively pursued its claim (including making a number of threats to invade Belize and border-massing of troops since the 1940s), with Guatemala refusing to recognise the new nation in 1981. Accordingly the UK maintained armed forces in Belize after independence (till 2011) [‘Belizean-Guatemalan territorial dispute’, Wikipedia, http://en.m.wikipedia.org].


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although as far back as 1783 a local British presence had existed following the Treaty of Versailles which gave them the right to cut logwood between the Hondo and Belize Rivers
the following, outlining what transpired in British Honduras in particular between 1900 and 1920, is heavily based on a case study by Mark Moberg [Moberg, Mark. “Crown Colony as Banana Republic: The United Fruit Company in British Honduras, 1900-1920.” Journal of Latin American Studies, vol. 28, no. 2, 1996, pp. 357–381. JSTOR, JSTOR, www.jstor.org/stable/157625]
by the early 1900s US capital had attained a hegemonic position in BH (overtaking British capital) as it was in the rest of the Caribbean littoral
at the same time the Belize mahogany trade was starting to taper off
UFCo’s passenger and cargo ships were known as the Great White Fleet. The ships were painted white apparently to keep the shipment of bananas cooler! [‘United Fruit Company: The Great White Fleet’,https://visitpuertoarmuelles.com]
tactics replicated elsewhere in the region with similar results – the independent Jamaican growers, the Jamaican Banana Producers’ Association, resisted the United Fruit Co dominance of the Caribbean island’s market for a time but in the end couldn’t compete in a price war
United Fruit established very large plantations in different countries (known as ‘divisions’), when Panama disease hit, it would abandon the farm and relocate…each time UFCo would “systemically destroy the infrastructure (railroads, bridges, telephone lines, etc) to prevent competitors from being able to renew production on a smaller scale” [PI Bourgois, Ethnicity at Work, cited in Moberg]
these days United Fruit Co goes under the banner of ‘Chiquita Brands International’ (still extensively in bananas)

The United Fruit Company: Neocolonial Elites, Banana Monopolists and Oligarchs in the Tropical Americas, Part 1

Economic history, International Relations, Popular Culture, Social History, Society & Culture

Banana republic: In politics the term “banana republic” describes a politically unstable country with an economy dependent upon the exportation of a limited-resource product such as bananas or minerals. The term was coined in 1901 by American author O. Henry as a depiction of Honduras and neighbouring countries under intense economic exploitation by US corporations as typified by the United Fruit Company of Boston [‘Banana Republic’, Wikipedia, http://en.m.wikipedia.org]

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When I first heard the saccharine, content-lite melodies of “Bubblegum Pop’s” 1910 Fruitgum Company, I didn’t realise that the name of this innocuous, syrupy 1960s musical group was a corny pun on a historic commercial entity that I did not know of at the time…this commercial enterprise was in fact something much less edifying and infinitely more sinister and consequential – the United Fruit Company of Boston, Mass. As the following will show, the United Fruit Co would come to epitomise the high degree of hegemony established by US business interests in the tropical regions of the Americas after the late 1890s.

Boston Fruit C°’s ‘Golden Vale’ plantation, Jamaica From railroads to plantations
The United Fruit Company had its origins in 1899 from a merger of various fruit exporting concerns (including the Boston Fruit Company which had already embedded itself in the banana trade in Jamaica) controlled by American railroad constructor and entrepreneur Minor Cooper Keith. Earlier Keith stumbled into the banana trade virtually by accident. In 1872 Costa Rica defaulted on it’s bank loans and was unable to pay Keith for constructing the country’s railroad. In lieu of part of what it owed Keith, he was granted over 5% of vacant Costa Rican land. Accordingly the American used the land to establish banana farms alongside his newly finished railroad. The crops when yielded had a ready-made, on-the-spot transport line to carry the produce to port. Keith’s early banana experiments in Costa Rica proved a lucrative earner and paved the way for United Fruit’s later role as producer and exporter of the fruit. From that base in Costa Rica Keith the banana trader looked further afield in Latin America for other openings.

Monopoly, oligarchy? Other players in the tropical banana trade
Although classically monopolistic in its practices, United Fruit Co (UFCo) was not the only player (American or foreign) in the Central American/Caribbean banana game. In fact at the turn of the 20th century there was plenty of competition in bananas, in 1899 some 114 firms were engaged in importing bananas to the US via New Orleans [Davies 1990, cited in S Striffler et al, (Eds.), Banana Wars: Power, Production, and History in the Americas, (2003)]. UFCo grew by acquisition, quickly adding 20 smaller banana export firms to its list of business holdings.

United Fruit’s main rival during this time was the Standard Fruit Company. This company was first known as the Vaccaro Bros & Co. The Vaccaros began by importing fresh produce – initially coconuts and then bananas – from Honduras. After establishing a beachhead in the region the company diversified into operating steamships and eventually provided the ice for onboard refrigeration. In 1924 Vaccaros Bros reformed into the Standard Fruit Company (in 1926 renaming itself ‘Standard Fruit and Steamship Co)…during this period Standard Fruit and United Fruit maintained competitive relations with each other for the lucrative banana trade in New Orleans – the principal marketplace in the US for banana sales. Like its gargantuan rival United Fruit, Standard Fruit’s profound impact on the economies of Latin American countries like Honduras courtesy of the high degree of control it was able to exert over the supposedly sovereign governments, contributed to the perception of these nations as banana republics. Hondurus was particularly vulnerable to the Banana barons with its banana monoculture and economic reliance on a single export crop. In the 1960s Standard Fruit was acquired by the Castle & Cooke Corporation (which in 1991 was renamed the Dole Food Company). [‘Standard Fruit Company’, Wikipedia, http://en.m.wikipedia.org; [‘Vaccaro brothers’, Wikipedia, http://en.m.wikipedia.org]

United Fruit Co soon extended its tentacles (the Latin American press was fond of labelling the firm El pulpo – “The Octopus”) beyond the Caribbean littoral, establishing banana exporting concerns in Columbia, Panama, Spanish Honduras, British Honduras (Belize), Jamaica and elsewhere in the region. Everywhere it invested, UFCo would rely on its famous “dollar diplomacy”  to induce the local elites to grant it concessions which allowed the company ever increasing  monopoly control over the banana trade.

Rivalry with mutual benefits
In addition to Standard Fruit, another US rival of United Fruit was the Cuyamel Fruit Company. Cuyamel started in transportation as the Hubbard-Zemurray Steam Ship Co and morphed into a large New Orleans-based agricultural corporation (see ‘Sam the Banana Man’ below). The three American companies in the Central and South American banana business (United Fruit, Standard Fruit and Cuyamel) were separate business entities, each in competition for bananas et al products from the same tropical region. And yet there was something slightly schizophrenic about the relationship between the three…concurrently with the earnest rivalry was the existence of a cartel-like cooperation between the companies – which was of mutual benefit financially, eg, being able to launch joint business efforts in advertising and in increasing banana agricultural outputs in Honduras. United Fruit Co’s dominant position in the triangle (always the senior player) facilitated this arrangement…it had both a 60% stake in Cuyamel and a 50% stake in Vaccaro Bros [Ralph Lee Woodward Jr, Central America, a Nation Divided (3rd ed. 1999), cited in ‘Cuyamel Fruit Company’ (Wikipedia entry].

‘Sam the Banana Man’
Schmuel Zmurri was an immigrant from the Russian Empire (born in Bessarabia, in modern Moldova) who changed his name to Samuel Zemurray after coming to the United States. Zemurray was to become a major player and shaper in the banana republic phenomenon, a seminal figure who contributed to the massive imprint left on the tropics by American banana barons.

Zemurray, establishing himself in Honduras around 1908, was to have a career as a “recidivist Yankee intervener” that made him one of the most controversial figures in the Central American banana republics’ tainted and sorry history. When the current Honduran regime favoured the rival Vaccaro Bros over Cuyamel, Zemurray agitated to foment a series of coups against President Dávila. The first coup failed but Zemurray in 1911 having chosen former president Manuel Bonilla to replace the elected Dávila government, bankrolled two Americans (“soldier of fortune” Lee Christmas and New Orleans gangster Guy “Machine Gun” Molony) to overthrow Dávila. With the malleable Bonilla back in charge, Zemurray’s Cuyamel was soon the beneficiary of generous land and tax concessions [‘The ousting of the president of Honduras, 1911’, (Stephen Kinzer), www.libcom.org]. Zemurray’s unconscionable incursion into the domestic politics of an independent state by hijacking its political process was to set a dangerous precedent for other banana republics.

Zemurray’s company made deep inroads into the Honduran banana trade (Zemurray became universally known as “Sam the Banana Man”), but at great cost to the national sovereignty of the country and to the detriment of the local economy. In 1930 Zemurray was able to sell his company to United Fruit for $31.5M in stock, after a short retirement he returned to active banana involvement, managing to join the board of UFCo and eventually take the helm of it (CEO and president until retiring for good in 1951) [K Norsworth & T Barry, Inside Honduras, (2nd Ed. 1994), cited in ‘Cuyamel Fruit Company’ (Wikipedia entry)].

United Fruit “a state within the state” of Guatemala: another intervention by Zemurray in the banana republics
Although no longer UFCo president, Zemurray wasn’t quite finished meddling to gain a financial advantage for United Fruit, he had one last contribution to the destabilisation of Central American regimes. The Guatemala banana trade had long been one of United Fruit’s most prized possessions…from the early 1900s President Manuel E Cabrera’s cosy relationship with UFC saw him grant the company a 99-year concession in Guatemala. United Fruit’s role in Guatemala has been described as “a state within a state” [William Blum, cited in ‘1954 Guatemalan coup d’être’, Wikipedia, http://en.m.wikipedia.org]. In 1953 Zemurray enlisted UFCo in a US State Department propaganda campaign to overthrow the left-leaning but democratically elected Guatemalan government of Colonel Jacobo Arbenz. The campaign together with the active intervention of the CIA paved the way for a coup the following year which ousted Arbenz and replaced it with a military junta which immediately reversed Arbenz’s decision to expropriate a portion of the unused land owned by the United Fruit Co [‘Sam Zemurray’, Wikipedia, http://en.m.wikipedia.org]. The fallout from the 1954 coup – for which the contribution of Zemurray and UFCo was no small part – was long-term destabilisation for the Guatemalans. The country, through a succession of military rulers, descended into three decades of civil war, 200,000 deaths including genocidal outrages against the native population [‘Ghosts of Guatemala’s Past’, (Stephen Schlesinger), New York Times, 04-Jun-2011, www.nytimes.com

United Fruit thrives in neo-colonial conditions
UFCo and Zemurray’s banana export and production triumph in the equitorial Americas owed in no small measure to the compliance of the countries’ political elites. In some instances, compliance, especially from right-wing authoritarian/military regimes, was bought. The neo-colonial charge against the banana republics and against UFCo as an employer, also concerned a claim of exploitative treatment of its labour force. In Part 2 I will focus on a case study of the United Fruit Company in one country which is instructive in detailing the pattern of how United Fruit went about securing and consolidating its “banana hegemony” in much of the region in the period.

PostScript: Banana Wars
The banana as a metaphor for the region lends itself to the pattern of American imperialist intervention in Latin America over the course of the 20th century. Coined by Lester D Langley in the early 1980s, the “Banana Wars” descriptor has been applied collectively to a sequence of ‘backyard’ US military occupations and police actions – these include the ‘1000 Days War’ (American intervention in support of Panamanian independence from Columbia/protection of US future interests in construction of the Panama Canal); the Spanish-American War (US invasion and occupation of Cuba and Puerto Rico); Dominican Republic (ongoing and intermittent occupations between 1903 and 1924); Nicaragua (an in/out pattern of occupation 1912-1933); the Border War with Mexico (1910-1919, including the occupation of Veracruz 1914); Haiti and the 1st and 2nd Caco Wars (occupation 1915-1934); and Honduras (seven interventions between 1903 and 1925). Aside from that, between 1869 and 1897 the US sent it’s warships a total of 5,980 times into Latin American waters to protect its national commercial interests [Greg Grandin, Empire’s Workshop: Latin America, The United States and the Rise of the New Imperialism, (2005)].

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in political taxonomy, ‘republics’ they may (nominally) be, but in practice most so-called banana republics are grotesquely dysfunctional ‘republics’, typically, thinly masking what effectively are dictatorships and or regimes of ruthless military juntas
the founders being three Italian-American businessmen brothers from Sicily (and their brother-in-law)
expansion of fleet ownership was achieved by buying surplus steamships at a discount…by 1935 Standard Fruit had 35 ships in operation
ultimately earning company president Joseph Vaccaro the sobriquet “Ice King”
this was a characteristic stratagem of United Fruit’s upward trajectory in Central America…the stake-holdings in Cuyamel and Vaccaro’s enterprises in Honduras were an initial import foothold on the path to becoming a direct producer in its own right – when United Fruit later acquired its own Honduran plantations in Trujillo and Tela [Woodward]
as a disadvantaged party in its business dealings with UFCo, Honduras was worse off than all other banana republics in that it was unable to either urbanise or diversify its economy beyond the banana industry (for which its equatorial location was ideal) [Norsworth & Barry]