United Fruit Company

From Wikipedia, the free encyclopedia
  (Redirected from United fruit company)
Jump to: navigation, search
Entrance façade of old United Fruit Building on St. Charles Avenue, New Orleans, Louisiana

The United Fruit Company was an American corporation that traded in tropical fruit (primarily bananas), grown on Central and South American plantations, and sold in the United States and Europe. The company was formed in 1899, from the merger of Minor C. Keith's banana-trading concerns with Andrew W. Preston's Boston Fruit Company. It flourished in the early and mid-20th century, and it came to control vast territories and transportation networks in Central America, the Caribbean coast of Colombia, Ecuador, and the West Indies. Though it competed with the Standard Fruit Company (later Dole Food Company) for dominance in the international banana trade, it maintained a virtual monopoly in certain regions, some of which came to be called banana republics, such as Costa Rica, Honduras, and Guatemala.[1]

United Fruit had a deep and long-lasting impact on the economic and political development of several Latin American countries. Critics often accused it of exploitative neocolonialism, and described it as the archetypal example of the influence of a multinational corporation on the internal politics of the banana republics. After a period of financial decline, United Fruit was merged with Eli M. Black's AMK in 1970, to become the United Brands Company. In 1984, Carl Lindner, Jr. transformed United Brands into the present-day Chiquita Brands International.

Corporate history[edit]

Early history[edit]

In 1871, U.S. railroad entrepreneur Henry Meiggs signed a contract with the government of Costa Rica to build a railroad connecting the capital city of San José to the port of Limón in the Caribbean. Meiggs was assisted in the project by his young nephew Minor C. Keith, who took over Meiggs's business concerns in Costa Rica after his death in 1877. Keith began experimenting with the planting of bananas as a cheap source of food for his workers.[2]

When the Costa Rican government defaulted on its payments in 1882, Keith had to borrow £1.2 million from London banks and from private investors in order to continue the difficult engineering project.[2] In exchange for this and for renegotiating Costa Rica's own debt, in 1884, the administration of President Próspero Fernández Oreamuno agreed to give Keith 800,000 acres (3,200 km2) of tax-free land along the railroad, plus a 99-year lease on the operation of the train route. The railroad was completed in 1890, but the flow of passengers proved insufficient to finance Keith's debt. On the other hand, the sale of bananas grown in his lands and transported first by train to Limón, then by ship to the United States, proved very lucrative. Keith eventually came to dominate the banana trade in Central America and along the Caribbean coast of Colombia.

United Fruit (1899–1970)[edit]

In 1899, Keith lost $1.5 million when Hoadley and Co., a New York City broker, went bankrupt.[2] He then traveled to Boston, Massachusetts, to participate in the merger of his banana trading company, Tropical Trading and Transport Company, with the rival Boston Fruit Company. Boston Fruit had been established by Lorenzo Dow Baker, a sailor who, in 1870, had bought his first bananas in Jamaica, and by Andrew W. Preston. Preston's lawyer, Bradley Palmer, had devised a scheme for the solution of the participants' cash flow problems and was in the process of implementing it. The merger formed the United Fruit Company, based in Boston, with Preston as president and Keith as vice-president. Palmer became a permanent member of the executive committee and for long periods of time the director. From a business point of view, Bradley Palmer was United Fruit. Preston brought to the partnership his plantations in the West Indies, a fleet of steamships, and his market in the U.S. Northeast. Keith brought his plantations and railroads in Central America and his market in the U.S. South and Southeast. At its founding, United Fruit was capitalized at $11,230,000. The company at Palmer's direction proceeded to buy or buy a share in 14 competitors, assuring them of 80% of the banana import business in the United States, then their main source of income. The company catapulted into financial success. Bradley Palmer overnight became a much-sought-after expert in business law, as well as a wealthy man. He later became a consultant to presidents and an adviser to Congress.

In 1901, the government of Guatemala hired the United Fruit Company to manage the country's postal service and in 1913 the United Fruit Company created the Tropical Radio and Telegraph Company. By 1930 it had absorbed more than 20 rival firms, acquiring a capital of $215,000,000 and becoming the largest employer in Central America. In 1930, Sam Zemurray (nicknamed "Sam the Banana Man") sold his Cuyamel Fruit Company to United Fruit and retired from the fruit business. In 1933, concerned that the company was mismanaged and that its market value had plunged, he staged a hostile takeover. Zemurray moved the company's headquarters to New Orleans, Louisiana, where he was based. United Fruit went on to prosper under Zemurray's management;[3][4] Zemurray resigned as president of the company in 1951.

United Brands (1970–1984)[edit]

Corporate raider Eli M. Black bought 733,000 shares of United Fruit in 1968, becoming the company's largest shareholder. In June 1970, Black merged United Fruit with his own public company, AMK (owner of meat packer John Morrell), to create the United Brands Company. United Fruit had far less cash than Black had counted on and Black's mismanagement led to United Brands becoming crippled with debt. The company's losses were exacerbated by Hurricane Fifi in 1974, which destroyed many banana plantations in Honduras. On February 3, 1975, Black committed suicide by jumping out of his office on the 44th floor of the Pan Am Building in New York City. Later that year, the U.S. Securities and Exchange Commission exposed a scheme by United Brands (dubbed Bananagate) to bribe Honduran President Oswaldo López Arellano with $1.25 million, plus the promise of another $1.25 million upon the reduction of certain export taxes. Trading in United Brands stock was halted and López was ousted in a military coup.

Chiquita Brands International[edit]

After Black's suicide, Cincinnati-based American Financial Group, one of billionaire Carl Lindner, Jr.'s companies, bought into United Brands. In August 1984, Lindner took control of the company and renamed it Chiquita Brands International. The headquarters was moved to Cincinnati in 1985.

Throughout most of its history, United Fruit's main competitor was the Standard Fruit Company, now the Dole Food Company.

Reputation[edit]

The United Fruit Company was[when?] frequently accused of bribing government officials in exchange for preferential treatment, exploiting its workers, paying little by way of taxes to the governments of the countries in which it operated, and working ruthlessly to consolidate monopolies. Latin American journalists sometimes referred to the company as el pulpo ("the octopus"), and leftist parties in Central and South America encouraged the company's workers to strike. Criticism of the United Fruit Company became a staple of the discourse of the communist parties in several Latin American countries, where its activities were often interpreted as illustrating Vladimir Lenin's theory of capitalist imperialism. Major left-wing writers in Latin America, such as Carlos Luis Fallas of Costa Rica, Ramón Amaya Amador of Honduras, Miguel Ángel Asturias and Augusto Monterroso of Guatemala, Gabriel García Márquez of Colombia, Carmen Lyra of Costa Rica, and Pablo Neruda of Chile, denounced the company in their literature.

The business practices of United Fruit were also frequently criticized by journalists, politicians, and artists in the United States. Little Steven released a song called "Bitter Fruit" in 1987 in which lyrics referred to a hard life for a company "far away", and whose accompanying video depicted orange groves worked by peasants overseen by wealthy managers. Although the lyrics and scenery are generic, United Fruit (or its successor Chiquita) was reputed to be the target.[5] In 1950 Gore Vidal published a novel Dark Green, Bright Red, in which a thinly fictionalized version of United Fruit supports a military coup in a thinly fictionalized Guatemala.

Diane K. Stanley, a former U.S. diplomat and the daughter of a Welsh-born employee of the United Fruit Co. in Guatemala, argues in the book For the Record: The United Fruit Company's Sixty-six Years in Guatemala, published in 1994, that the negative perception of the company's influence in Guatemala is largely undeserved, and could be due in part to the unwillingness of left-wing journalists and writers to critically examine the legacy of the administrations of Presidents Arévalo and Arbenz. According to her:

Most accounts about the banana company have also failed to describe the significant contribution that United Fruit made to Guatemala's human and economic development. In addition to providing employment to tens of thousands of workers and paying them the nation's best rural wages, the Company also offered its employees excellent medical care, rent-free housing, and six years of free schooling for countless children. By clearing and draining thousands of acres of jungle that are today among the country's most productive farm lands, United Fruit converted Guatemala into a major banana producer, thereby ending the country's unhealthy dependence on its exports of coffee. The Company's pioneering work in eliminating malaria and other tropical diseases early in the 20th century also demonstrated that Guatemala's sparsely inhabited coastal areas offered rich, previously unexploited agricultural zones. Ultimately, the taxes and salaries that the United Fruit Company paid, and the millions of dollars of foreign exchange earnings that it annually generated, impacted in an important way on Guatemala's economy.[6]

Stanley also argues that while the company did orchestrate "an effective media campaign against the Arbenz government, it is clear that the Eisenhower administration was intent on ousting what it considered to be a Communist beachhead that threatened US national security. Spurred on by John Foster Dulles, his vehemently anti-Communist secretary of state, President Eisenhower would have moved to depose Arbenz even if the United Fruit Company had never operated in Guatemala."[6]

The integrity of John Foster Dulles's "anti-Communist" motives have been discredited, since Dulles and his law firm of Sullivan & Cromwell negotiated the land giveaways to the United Fruit Company in Guatemala and Honduras. John Foster Dulles's brother, Allen Dulles, also did legal work for United Fruit and sat on its board of directors. Allen Dulles was the head of the CIA under Eisenhower. In a flagrant conflict of interest, the Dulles brothers and Sullivan & Cromwell were on the United Fruit payroll for thirty-eight years.[7][8] In fairness to the Dulles brothers, recent research has disclosed other passengers on the United Fruit gravy train:

John Foster Dulles, who represented United Fruit while he was a law partner at Sullivan & Cromwell – he negotiated that crucial United Fruit deal with Guatemalan officials in the 1930s – was Secretary of State under Eisenhower; his brother Allen, who did legal work for the company and sat on its board of directors, was head of the CIA under Eisenhower; Henry Cabot Lodge, who was America's ambassador to the UN, was a large owner of United Fruit stock; Ed Whitman, the United Fruit PR man, was married to Ann Whitman, Dwight Eisenhower's personal secretary. You could not see these connections until you could – and then you could not stop seeing them.[7]

History in Central America[edit]

The United Fruit Company (UFCO) owned vast tracts of land in the Caribbean lowlands. It also dominated regional transportation networks through its International Railways of Central America and its Great White Fleet of steamships. In addition, UFCO branched out in 1913 by creating the Tropical Radio and Telegraph Company. UFCO's policies of acquiring tax breaks and other benefits from host governments led to it building enclave economies in the regions, in which a company's investment is largely self-contained for its employees and overseas investors and the benefits of the export earnings are not shared with the host country.[9]

One of the company's primary tactics for maintaining market dominance was to control the distribution of banana lands. UFCO claimed that hurricanes, blight and other natural threats required them to hold extra land or reserve land. In practice, what this meant was that UFCO was able to prevent the government from distributing banana lands to peasants who wanted a share of the banana trade. The fact that the UFCO relied so heavily on manipulation of land use rights in order to maintain their market dominance had a number of long-term consequences for the region. For the company to maintain its unequal land holdings it often required government concessions. And this in turn meant that the company had to be politically involved in the region even though it was an American company. In fact, the heavy-handed involvement of the company in governments which often were or became corrupt created the term "Banana republic" representing a "servile dictatorship".[10] The term "Banana Republic" was coined by American writer O. Henry.[11]

UFCO had a mixed record on promoting the development of the nations in which it operated. In Central America, the Company built extensive railroads and ports and provided employment and transportation. UFCO also created numerous schools for the people who lived and worked on Company land. On the other hand, it allowed vast tracts of land under its ownership to remain uncultivated and, in Guatemala and elsewhere, it discouraged the government from building highways, which would lessen the profitable transportation monopoly of the railroads under its control. UFCO had also destroyed at least one of those railroads upon leaving its area of operation.[12]

In 1954, the democratically elected Guatemalan government of Colonel Jacobo Arbenz Guzmán was toppled by U.S.-backed forces led by Colonel Carlos Castillo Armas[13] who invaded from Honduras. Assigned by the Eisenhower administration, this military opposition was armed, trained and organized by the U.S. Central Intelligence Agency[14] (see Operation PBSUCCESS). The directors of United Fruit Company (UFCO) had lobbied to convince the Truman and Eisenhower administrations that Colonel Arbenz intended to align Guatemala with the Soviet Bloc. Besides the disputed issue of Arbenz's allegiance to Communism, UFCO was being threatened by the Arbenz government’s agrarian reform legislation and new Labor Code.[15] UFCO was the largest Guatemalan landowner and employer, and the Arbenz government’s land reform included the expropriation of 40% of UFCO land.[15] U.S. officials had little proof to back their claims of a growing communist threat in Guatemala;[16] however the relationship between the Eisenhower administration and UFCO demonstrated the influence of corporate interest on U.S. foreign policy.[14] United States Secretary of State John Foster Dulles was an avowed opponent of Communism, whose law firm Sullivan and Cromwell had represented United Fruit.[17] His brother Allen Dulles was the director of the CIA, and a board member of United Fruit. United Fruit Company is the only company known to have a CIA cryptonym. The brother of the Assistant Secretary of State for InterAmerican Affairs John Moors Cabot had once been president of United Fruit. Ed Whitman, who was United Fruit’s principal lobbyist, was married to President Eisenhower's personal secretary, Ann C. Whitman.[17] Many individuals who directly influenced U.S. policy towards Guatemala in the 1950s also had direct ties to UFCO.[15] The overthrow of Arbenz, however, failed to benefit the Company. Its stock market value declined along with its profit margin. The Eisenhower administration proceeded with antitrust action against the company, which forced it to divest in 1958. In 1972, the company sold off the last of their Guatemalan holdings after over a decade of decline.

Even as the Arbenz government was being overthrown, in 1954 a general strike against the company organized by workers in Honduras rapidly paralyzed the country and thanks to the United States' concern about the events in Guatemala, was settled more favorably for the workers in order to gain fuller leverage for the Guatemala operation.

Company holdings in Cuba, which included sugar mills in the Oriente region of the island, were expropriated by the 1959 revolutionary government led by Fidel Castro. By April 1960 Castro was accusing the company of aiding Cuban exiles and supporters of former leader Fulgencio Batista in initiating a seaborn invasion of Cuba directed from the United States.[18] Castro warned the U.S. that "Cuba is not another Guatemala" in one of many combative diplomatic exchanges before the failed Bay of Pigs invasion of 1961.

Banana massacre[edit]

Main article: Banana massacre

One of the most notorious strikes by United Fruit workers broke out on 12 November 1928 on the Caribbean coast of Colombia, near Santa Marta. On December 6, Colombian Army troops allegedly under the command of General Cortés Vargas, opened fire on a crowd of strikers gathered in the central square of the town of Ciénaga. Estimates of the number of casualties vary from 47 to 2000.[clarification needed] The military justified this action by claiming that the strike was subversive and its organizers were Communist revolutionaries. Congressman Jorge Eliécer Gaitán claimed that the army had acted under instructions from the United Fruit Company. The ensuing scandal contributed to President Miguel Abadía Méndez's Conservative Party being voted out of office in 1930, putting an end to 44 years of Conservative rule in Colombia. The first novel of Álvaro Cepeda Samudio, La Casa Grande, focuses on this event, and the author himself grew up in close proximity to the incident. The climax of García Márquez's novel One Hundred Years of Solitude is based on the events in Ciénaga, though the author himself has acknowledged that the death toll of 3,000 that he gives there is greatly inflated.[19]

General Cortés Vargas, who issued the order to shoot, argued later that he had issued the order because he had information that US boats were poised to land troops on Colombian coasts to defend American personnel and the interests of the United Fruit Company. Vargas issued the order so the United States would not invade Colombia. This position was strongly criticized in the Senate, especially by Jorge Eliécer Gaitán, who argued that those same bullets should have been used to stop the foreign invader.[citation needed]

The telegram from Bogotá Embassy to the U.S. Secretary of State, dated December 5, 1928, stated: "I have been following Santa Marta fruit strike through United Fruit Company representative here; also through Minister of Foreign Affairs who on Saturday told me government would send additional troops and would arrest all strike leaders and transport them to prison at Cartagena; that government would give adequate protection to American interests involved."[20]

The telegram from Bogotá Embassy to Secretary of State, date December 7, 1928, stated: "Situation outside Santa Marta City unquestionably very serious: outside zone is in revolt; military who have orders 'not to spare ammunition' have already killed and wounded about fifty strikers. Government now talks of general offensive against strikers as soon as all troopships now on the way arrive early next week."[21]

The Dispatch from U.S. Bogotá Embassy to the U.S. Secretary of State, dated December 29, 1928, stated: "I have the honor to report that the legal advisor of the United Fruit Company here in Bogotá stated yesterday that the total number of strikers killed by the Colombian military authorities during the recent disturbance reached between five and six hundred; while the number of soldiers killed was one."[22]

The Dispatch from U.S. Bogotá Embassy to the U.S. Secretary of State, dated January 16, 1929, stated: "I have the honor to report that the Bogotá representative of the United Fruit Company told me yesterday that the total number of strikers killed by the Colombian military exceeded one thousand."[23]

The Banana massacre is said to be one of the main events that preceded the Bogotazo, the subsequent era of violence known as La Violencia, and the guerrillas who developed in the bipartisan National Front period, creating the ongoing armed conflict in Colombia.[citation needed]

The Great White Fleet[edit]

1916 advertisement for the United Fruit Company Steamship Service
USS Taurus, which was built as San Benito in 1921, may have been the World's first turbo-electric merchant ship
SS Abangarez, a United Fruit banana boat, circa 1945

Miscellaneous[edit]

The company plays a main part in the novel Das grüne Ungeheuer published in 1959 by East German author Wolfgang Schreyer as the "Green Monster".

The United Fruit Company is satirised in the Tropico series of videogames as Fruitas Ltd. The Tropico games focus on tropical economies and banana republics, Fruitas plays a similar role in many campaign missions as United Fruit did in many Latin American countries.

Footnotes[edit]

  1. ^ Opie, Frederick Douglass (July 2009). Black Labor Migration in Caribbean Guatemala, 1882–1923. Florida Work in the Americas. University of Florida Press. 
  2. ^ a b c "Minor Cooper Keith (1848–1929)". United Fruit Historical Society. 2001. 
  3. ^ Cohen, Rich (June 6, 2012). "The Birth of America’s Banana King: An excerpt from Rich Cohen’s The Fish That Ate the Whale". Slate.com. 
  4. ^ "Samuel Zemurray (1877–1961)". United Fruit Historical Society. 2001. 
  5. ^ "Little Stephen – Bitter Fruit" (video). YouTube. [dead link]
  6. ^ a b Stanley, Diane K. "Preface". For the Record. 
  7. ^ a b Cohen, Rich (2012). The Fish that Ate the Whale. New York: Farrar, Straus & Giroux. p. 186. 
  8. ^ Ayala, Cesar J (1999). American Sugar Kingdom. Chapel Hill, NC: University of North Carolina Press. 
  9. ^ Frasinetti, Antonio M (1978). Enclave y sociedad en Honduras (in Spanish). Tegulcigalpa. 
  10. ^ The Independent (24 May 2008). "Big-business greed killing the banana". The New Zealand Herald. p. A19. 
  11. ^ MacLean, Malcolm D (1968). "O. Henry in Honduras". American Literary Realism, 1870–1910 1/3. pp. 36–46. 
  12. ^ Chapman, Peter (2007). Bananas: How the United Fruit Company Shaped the World. Canongate Books. ISBN 1-84195-881-6. 
  13. ^ Schoultz 1998, p. 343.
  14. ^ a b Schoultz 1998, p. 340.
  15. ^ a b c Schoultz 1998, p. 337.
  16. ^ Schoultz 1998, p. 342.
  17. ^ a b Schoultz 1998, p. 338.
  18. ^ Oliver Stone, The Untold History of the USA, episode 6 after 6 minutes and 38 seconds: "[...]Ambassador Adlai Stevenson, in an embarrassing prequel to Colin Powell's performance at the UN over Iraq in 2003, showed a photograph of a plane supposedly flown by a Cuban defector, but quickly exposed as belonging to the CIA. The assault has begun on the dictatorship of Fidel Castro. Almost 1600 Cuban exiles arrived at the Bay of Pigs in 7 ships, 2 of them owned by United Fruit.[...]"
  19. ^ Bucheli 2005, p. 132.
  20. ^ Telegram from Bogotá Embassy to the US Secretary of State, dated December 5, 1928
  21. ^ Telegram from Bogotá Embassy to Secretary of State, date December 7, 1928
  22. ^ Dispatch from US Bogotá Embassy to the US Secretary of State, dated December 29, 1928
  23. ^ Dispatch from US Bogotá Embassy to the US Secretary of State, dated January 16, 1929
  24. ^ a b c d e f g h i j k l m n Carl, Robert, Capt. USNR (December 1976). "The Banana Navy". Proceedings (Annapolis, MD: United States Naval Institute): 50–56. ISSN 0041-798X. 
  25. ^ a b c d e f g h i Silverstone, Paul H (1968). US Warships of World War II. New York: Doubleday & Co. p. 329. 
  26. ^ Lloyd's Register, Steamers & Motorships. London: Lloyd's Register. 1931. Retrieved 23 May 2013. 

References[edit]

Further reading[edit]

External links[edit]