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

Posted on by Sloane Snodgrasse
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].


—————————————————————–——————————-———–
✱ 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

Posted on by Sloane Snodgrasse
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]

❖❖❖ ❖❖❖

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]