United Fruit Company

Entrance façade of the old United Fruit Building at 321 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

Early history

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)

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)

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

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

The United Fruit Company was 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]

The integrity of John Foster Dulles' "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' 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.[6][7] Recent research has uncovered the names of multiple other government officials who received benefits from United Fruit:

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.[6]

History in Central America

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.[8]

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".[9] The term "Banana Republic" was coined by American writer O. Henry.[10]

Environmental Effects

The United Fruit Company's entire process of creating a plantation to farming the banana and the effects of these practices created noticeable environmental degradation when it was a thriving company. Infrastructure built by the company was constructed by clearing out forests, filling in low, swampy areas, and installing sewage, drainage, and water systems. Ecosystems that existed on these lands were destroyed, devastating biodiversity.[11] With a loss in biodiversity, other natural processes within nature necessary for plant and animal survival are shut down.[12]

Techniques used for farming were at fault for loss of biodiversity and harm to the land as well. In order to create farm land, the United Fruit Company would either clear forests (as mentioned) or they would drain marshlands in order to reduce avian habitats and to create "good" soil for banana plant growth.[13] The most common practice in farming was called the "shifting plantation agriculture". This is done by using produced soil fertility and hydrological resources in the most intense manner, then relocating when yields fell and pathogens followed banana plants. Techniques like this destroy land and when the land is unusable for the company, then they move to other regions.

Guatemala

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.[14]

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[15] who invaded from Honduras. Assigned by the Eisenhower administration, this military opposition was armed, trained and organized by the U.S. Central Intelligence Agency[16] (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.[17] UFCO was the largest Guatemalan landowner and employer, and the Arbenz government’s land reform included the expropriation of 40% of UFCO land.[17] U.S. officials had little proof to back their claims of a growing communist threat in Guatemala;[18] however, the relationship between the Eisenhower administration and UFCO demonstrated the influence of corporate interest on U.S. foreign policy.[16] United States Secretary of State John Foster Dulles was an avowed opponent of Communism, and his law firm, Sullivan and Cromwell, had represented United Fruit.[19] 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.[19] Many individuals who directly influenced U.S. policy towards Guatemala in the 1950s also had direct ties to UFCO.[17] 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.

Cuba

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 seaborne invasion of Cuba directed from the United States.[20] 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

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 3000. 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.

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.

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."[21]

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."[22]

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."[23]

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."[24]

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.

Aiding and abetting a terrorist organization

In March 2007 Chiquita Brands pleaded guilty in a United States Federal court to aiding and abetting a terrorist organization, when it admitted to the payment of more than $1.7 million to the United Self-Defense Forces of Colombia, (AUC) a group that the United States has labeled a terrorist organization since 2001. Under a plea agreement, Chiquita Brands agreed to pay $25 million in restitution and damages to the families of victims of the AUC. The AUC had been paid to protect the company's interest in the region.[25]

This most recent episode in the history of what used to be the United Fruit Company highlights the staying power and influence of large international agricultural monopolies in the governance and politics of a small developing nation. As seen elsewhere in Central and South America, American business interests have swayed enough power to determine the outcome of presidential elections, regional elections, even how the country's laws are enforced and against whom. In this latest federal trial Chiquita Brands admitted to paying AUC operatives to silence union organizers, to intimidate farmers into selling only to Chiquita Brands, and even providing weapons (3,000 AK 47's) to this terrorist organization in order to carry out their objectives. On the plea agreement, Chiquita Brands were allowed to keep secret the names of the U.S Citizens who brokered this agreement with the AUC, by the Colombian Government, in exchange for relief to 390 families.

Despite calls from Colombian authorities and human rights organizations to extradite the U.S Citizens responsible for war crimes and aiding a terrorist organization, the U.S. Department of Justice has refused to grant the request citing 'conflicts of law'. As with other high-profile cases involving wrongdoing by American companies abroad, the U.S. State Department and the U.S. Department of Justice are very careful to hand over any American citizen to be tried under another country's legal system, so for the time being Chiquita Brands International avoided a catastrophic scandal, and instead walked away with a humiliating defeat in court and eight of its employees fired.[26]

The Great White Fleet

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

References

  1. ↑ Opie, Frederick Douglass (July 2009). Black Labor Migration in Caribbean Guatemala, 1882–1923. Florida Work in the Americas. University of Florida Press.
  2. 1 2 3 "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". YouTube. Archived from the original (video) on October 19, 2013.
  6. 1 2 Cohen, Rich (2012). The Fish that Ate the Whale. New York: Farrar, Straus & Giroux. p. 186.
  7. ↑ Ayala, Cesar J (1999). American Sugar Kingdom. Chapel Hill, NC: University of North Carolina Press.
  8. ↑ Frasinetti, Antonio M (1978). Enclave y sociedad en Honduras (in Spanish). Tegulcigalpa.
  9. ↑ The Independent (24 May 2008). "Big-business greed killing the banana". The New Zealand Herald. p. A19.
  10. ↑ MacLean, Malcolm D (1968). "O. Henry in Honduras". American Literary Realism, 1870–1910. 1/3. pp. 36–46.
  11. ↑ Tucker, Richard P. (2000). Insatiable Appetite: The United States and the Ecological Degradation of the Tropical World. University of California. pp. 43–78.
  12. ↑ "Archived copy". Archived from the original on 2016-03-10. Retrieved 2015-04-23.
  13. ↑ Putnam, Lara (2002). The Company They Kept: Migrants and the Politics of Gender in Caribbean Costa, 1870-1960. pp. 35–111.
  14. ↑ Chapman, Peter (2007). Bananas: How the United Fruit Company Shaped the World. Canongate Books. ISBN 1-84195-881-6.
  15. ↑ Schoultz 1998, p. 343.
  16. 1 2 Schoultz 1998, p. 340.
  17. 1 2 3 Schoultz 1998, p. 337.
  18. ↑ Schoultz 1998, p. 342.
  19. 1 2 Schoultz 1998, p. 338.
  20. ↑ 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.[...]"
  21. ↑ US Bogotá Embassy (5 December 1928). "Telegram from US Bogotá Embassy to the US Secretary of State, dated December 5, 1928". icdc.com. Colombia. Archived from the original on 9 June 2012. Retrieved 14 July 2015.
  22. ↑ US Bogotá Embassy (7 December 1928). "Telegram from US Bogotá Embassy to the US Secretary of State, dated December 7, 1928". icdc.com. Colombia. Archived from the original on 6 June 2012. Retrieved 14 July 2015.
  23. ↑ US Bogotá Embassy (29 December 1928). "Dispatch from US Bogotá Embassy to the US Secretary of State, dated December 29, 1928". icdc.com. Colombia. Archived from the original on 26 July 2002. Retrieved 14 July 2015.
  24. ↑ US Bogotá Embassy (16 January 1929). "Dispatch from US Bogotá Embassy to the US Secretary of State, dated January 16, 1929". icdc.com. Colombia. Archived from the original on 6 June 2002. Retrieved 14 July 2015.
  25. ↑ "Colombia seeks eight in Chiquita terrorist scandal". CSMonitor.com. 2007-03-22. Retrieved 2016-01-16.
  26. ↑ "Colombia May Seek Chiquita Extraditions". Washingtonpost.com. Retrieved 2016-01-16.
  27. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Carl, Robert, Capt. USNR (December 1976). "The Banana Navy". Proceedings. Annapolis, MD: United States Naval Institute: 50–56. ISSN 0041-798X.
  28. ↑ MARAD Vessel Status Card: Tivives.
  29. ↑ "SS Tivives (+1943)". Wrecksite.eu. Retrieved 6 July 2015.
  30. 1 2 3 4 5 6 7 8 9 Silverstone, Paul H (1968). US Warships of World War II. New York: Doubleday & Co. p. 329.
  31. ↑ Lloyd's Register, Steamers & Motorships (PDF). London: Lloyd's Register. 1931. Retrieved 23 May 2013.

Sources

Further reading

Media related to United Fruit Company at Wikimedia Commons


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