The story
Founded by Minor Cooper Keith in 1899.1
Corporate history
Background
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.
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 to continue the difficult engineering project. 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. However, 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. 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 $11.23 million. 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 1900, the United Fruit Company produced The Golden Caribbean: A Winter Visit to the Republics of Colombia, Costa Rica, Spanish Honduras, Belize and the Spanish Main – via Boston and New Orleans written and illustrated by Henry R. Blaney. The travel book featured landscapes and portraits of the inhabitants pertaining to the regions where the United Fruit Company possessed land. It also described the voyage of the United Fruit Company's steamer, and Blaney's descriptions and encounters of his travels.
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 million 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. By then, the company held a major role in the national economies of several countries and eventually became a symbol of the exploitative export economy. This led to serious labor disputes by the Costa Rican peasants, involving more than 30 separate unions and 100,000 workers, in the 1934 Great Banana Strike, one of the most significant actions of the era by trade unions in Costa Rica.
By the 1930s the company owned 3.5 million acres (14,000 km2) of land in Central America and the Caribbean and was the single largest land owner in Guatemala. Such holdings gave it great power over the governments of small countries. That was one of the factors that led to the coining of the phrase "banana republic".
In 1933, concerned that the company was mismanaged and that its market value had plunged, Zemurray 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; Zemurray resigned as president of the company in 1951.
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In addition to many other labor actions, the company faced two major strikes of workers in South and Central America, in Colombia in 1928 and the Great Banana Strike of 1934 in Costa Rica. The latter was an important step that would eventually lead to the formation of effective trade unions in Costa Rica since the company was required to sign a collective agreement with its workers in 1938. Labor laws in most banana production countries began to be tightened in the 1930s. United Fruit Company saw itself as being specifically targeted by the reforms, and often refused to negotiate with strikers, despite frequently being in violation of the new laws.
In 1952, the government of Guatemala began expropriating unused United Fruit Company land to landless peasants. The company responded by intensively lobbying the U.S. government to intervene and mounting a misinformation campaign to portray the Guatemalan government as communist. In 1954, the U.S. Central Intelligence Agency armed, funded, and trained a military force that deposed the democratically elected government of Guatemala and installed a pro-business military dictatorship.
In 1967, United Fruit Company acquired A&W Restaurants.
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 a window from 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. By 2019, the company's main offices left the United States and relocated to Switzerland.
Throughout most of its history, United Fruit's main competitor was the Standard Fruit Company, now the Dole Food Company.
History in Latin America
The United Fruit Company (UFCO) owned huge 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.
One of the company's primary tactics for maintaining market dominance was to control the distribution of arable land. 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 land to peasants who wanted a share of the banana trade. The fact that the UFCO relied so heavily on manipulating land use rights 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 often-corrupt governments created the term "banana republic", which represents a servile dictatorship. The term "Banana Republic" was coined by American writer O. Henry.
Environmental effects
The United Fruit Company's plantation-style agriculture degraded arable land and negatively impacted the environment. Infrastructure used to farm and transport fruit was constructed by clearing out forests, filling in low, swampy areas, and installing sewage, drainage, and water systems. To create farmland, the UFCO would either clearcut forests or drain wetlands to cultivate soil suitable for banana plant growth. Ecosystems that existed prior to the introduction of farming were destroyed, reducing biodiversity. The most common practice in farming was "shifting plantation agriculture," which intensely used soil and hydrological resources before relocating when yields fell and banana plant pathogens appeared.
In addition, non-native species were introduced into the environment. UFCO employees introduced 1,800 largemouth bass into Lake Yojoa in Honduras. From 1954–55 to about 1970, the bass population exploded and negatively impacted native fish populations.
Guatemala
Although UFCO sometimes promoted the development of the nations where it operated, its long-term effects on their economy and infrastructure were often devastating. In Central America, the Company built extensive railroads and ports, provided employment and transportation, and 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 have lessened the profitable transportation monopoly of the railroads under its control. UFCO also destroyed at least one of those railroads upon leaving its area of operation.The expansion of banana plantations in Guatemala also affected Indigenous Maya communities who had lived in the regions where plantations were established. Groups such as the Qʼeqchiʼ Maya experienced displacement and land loss as plantations expanded during the late nineteenth and early twentieth centuries. New laws allowed private owners and foreign companies to acquire land that had previously been held communally by Indigenous communities, furthering the consolidation of land under private ownership.
In 1954, the Guatemalan government of Colonel Jacobo Árbenz, elected in 1950, was toppled by forces led by Colonel Carlos Castillo Armas who invaded from Honduras. Commissioned by the Eisenhower administration, this military operation was armed, trained and organized by the U.S. Central Intelligence Agency (see Operation PBSuccess). The directors of United Fruit Company (UFCO) had lobbied to convince the Truman and Eisenhower administrations that Colonel Árbenz intended to align Guatemala with the Eastern Bloc. Besides the disputed issue of Árbenz's allegiance to communism, UFCO was being threatened by the Árbenz government's agrarian reform legislation and new Labor Code. UFCO was the largest landowner and employer in Guatemala, and the Árbenz government's land reform program included the expropriation of 40% of UFCO land. U.S. officials had little proof to back their claims of a growing communist threat in Guatemala; however, the relationship between the Eisenhower administration and UFCO demonstrated the influence of corporate interest on U.S. foreign policy. United States Secretary of State John Foster Dulles, an avowed opponent of communism, was also a member of the law firm, Sullivan and Cromwell, which had represented United Fruit. Many individuals who directly influenced U.S. policy in Guatemala in the 1950s also had direct ties to UFCO.
After the overthrow of Árbenz, a military dictatorship was established under Carlos Castillo Armas. Soon after coming to power, the new government launched a concerted campaign against trade unionists, in which some of the most severe violence was directed at workers on the plantations of the United Fruit Company.
Despite UFCO's government connections and conflicts of interest, the overthrow of Árbenz 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 its Guatemalan holdings after over a decade of decline.
Cuba
By the early 20th century, the UFCO began its operations in Cuba by controlling large tracts of land and influencing local governance and labor markets. In the early 1920s, the UFCO established its central hub for operations in the Cuban city of Banes where the banana plantations were run by the antillano population: migrants from the British Caribbean, specifically from Jamaica and Haiti. With the introduction of the UFCO in Banes, the city was transformed socially and economically, due to an increase in employment, better infrastructure, and more law enforcement.
The United Fruit Company also had an impact on local communities in Cuba, especially in the eastern province of Oriente. The company obtained massive land areas and developed farming facilities in the area. New plantation work attracted masses of workers, including immigrant workers from neighboring countries.
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. Castro warned the U.S. that "Cuba is not another Guatemala" in one of many combative diplomatic exchanges before the U.S. organized the failed Bay of Pigs Invasion of 1961.
Infrastructure in Costa Rica
In the 20th century, many parts of Latin America were not positively operated and invested in compared to the region of Costa Rica. The United Fruit Company, according to researchers, made positive impacts in the region that continued past the bankruptcy and ceasing of production in 1984.
Since 1880 with the first initial U.S. investment in 4% of the country's territory, the UFCO grew in Costa Rica to develop around 7% of their labor force. With a growing labor force and plantations expanding, camps for farmers and families emerged. With the emergence of the workforce came the construction of commissaries, schools, electric plants, sewage systems, hospitals, and recreation facilities all funded by the UFCO.
According to Yale Insights, the impact of the infrastructure still persists today in astonishing numbers. In 1973, households living within the boundaries of UFCO were 26% less likely to be poor compared to outside households. A most recent research statistic in 2011 states that only 63% of the poverty gap had closed by 2011. The impact of the UFCO investment in capital among families had statistically paid off as outside work options had around a 1% increase in probability of being poor in 2011 since 1973 compared to the 0.73% lower probability on a UFCO location.
The development of banana plantations in Costa Rica also had a huge social and environmental impact on the local communities. The need to produce large quantities of bananas compelled massive clearings of the tropical forests along the Caribbean lowlands, heavily altering the ecosystem. Migration to other regions of Central America was also a major contributor to plantation agriculture. This formed ethnically diverse, though economically divided societies in places like Limón. Although the banana industry supported many people by offering them jobs, it linked the lives of many local people to the success of the plantations owned by foreigners and the prices in the international banana market.
Colombia
In the early to mid-20th century, the UFCO dominated the banana industry throughout the northern regions. The introduction of this multinational corporation meant that small farmers needed to be displaced. The UFCO acquired their land for their plantations in regions such as Urabá and Magdalena through deals with local elites and the government, which often displaced these small farmers living and working on the land. These farmers had little recourse in these land disputes, because of the close relationship that the UFCO had with the national government, the legal systems often favored corporate interests. Additionally, as peasants left haciendas to stake new land claims on public land that would be used for cultivation, however, land sharks and the Colombian government would encroach on their land with fabricated property titles to claim ownership of their land. This forced displacement of small farmers created resentment throughout Colombia which led to numerous resistance movements.
With the UFCO interfering with local issues throughout Colombia, the Liberal Party often fought back against the Conservative party for supporting the exploitation of multinational corporations towards the Colombian people. Not only did the majority of liberal Colombians have strong criticisms against tax and railway concessions from the UFCO, but it also led to Liberal newspapers expressing their opposition to their operations throughout the region. Many Colombians were upset that UFCO received numerous tax breaks from the Colombian government, as the UFCO didn't contribute to the national treasury while simultaneously profiting off of Colombian resources. The Liberal Party favored policies that promoted domestic industry and reduced foreign influence in Colombia, which is why they wanted to oust the UFCO's monopolistic practices. The opposition from the Liberal Party put pressure on the UFCO and its government backed allies to create a more equitable society, however their disregard for the Colombian people often led to labor strikes such as the Banana Massacre.
The expansion of banana plantations also changed everyday life in the Colombian banana zones. Plantation regions developed towns that were dominated by companies. Workers relied on commissaries for necessities. This system tied workers and their families to the plantations, making it difficult for them to leave employment even when wages were low or conditions were poor. As a result, entire communities became socially and economically dependent on the banana industry.
Not only was the UFCO known for monopolizing land and resources along with sidelining Colombian farmers, but their workers often experienced exploitative and inhumane labor conditions. From the 1960s to the 70s, UFCO plantation workers were subjected to grueling working schedules and a lack of basic amenities such as water and housing while living on company property. The majority of workers worked up to twenty hours each day, often leading to physical exhaustion and long-term health issues. The UFCO provided camps for workers to live in, however, the company exercised significant control over their workers' social conditions and access to resources. Lack of basic infrastructure such as clean drinking water and electricity meant that workers lived in unsanitary conditions, which could further exacerbate existing health issues. The UFCO perpetuated cycles of poverty and violence towards their workers, which led to violent repression ultimately leading to its demise in Colombia in the early 1970s.
Banana multinational establishment and expansion
The granting of land ownership in exchange for the railroad concession started the first official competitive market for bananas and giving birth to the banana republic. Cuyamel Fruit Company and the Vaccaro Bros. and Co. would become known as being multinational enterprises. Bringing western modernization and industrialization to the welcoming Honduran nation. All the while Honduran bureaucrats would continue to take away the indigenous communal lands to trade for capital investment contracts as well as neglect the fair rights of Honduran laborers. After the peak of the banana republic era, resistance eventually began to grow on the part of small-scale producers and production laborers, due to the exponential rate in growth of the wealth gap as well as the collusion between the profiting Honduran government officials and the U.S. fruit companies (United Fruit Co., Standard Fruit Co., Cuyamel Fruit Co.) versus the Honduran working and poor classes.
Due to the exclusivity of the land concessions and lack of official ownership documentation, Honduran producers and experienced laborers were left with two options to regain these lands—dominio util or dominio pleno. Dominio util—meaning the land was intended to be developed for the greater good of the public with a possibility of being the granted "full private ownership" versus dominio pleno was the immediate granting of full private ownership with the right to sell. Based on the 1898 Honduran agrarian law, without being sanctioned the right their communal lands, Honduran villages and towns could only regain these lands if granted by the Honduran government or in some cases it was permitted by U.S. companies, such as United Fruit Co., to create long-term contracts with independent producers on devastatingly diseased infested districts. Even once granted land concessions, many were so severely contaminated with either the Panaman, moko, or sigatoka, that it would have to reduce the acreage used and the amount produced or changed the crop being produced. Additionally, accusations were reported of the Tela Railroad Company placing intense requirements, demanding exclusivity in distribution, and unjustly denying crops produced by small-scale farmers because they were deemed "inadequate". Compromise was attempted between small-scale fruit producers and the multinationals enterprises but were never reached and resulted in local resistance.
The U.S. fruit corporations were choosing rural agriculture lands in Northern Honduras, specifically using the new railroad system for their proximity to major port cities of Puerto Cortes, Tela, La Ceiba, and Trujillo as the main access points of transport for shipments designated back to the United States and Europe. To get an understanding of the dramatic increase in amount of bananas being exported, firstly "in the Atlantida, the Vaccaro Brothers (Standard Fruit) oversaw the construction of 155 kilometers of railroad between 1910 and 1915...the expansion of the railroad led to a concomitant rise exports, from 2.7 million bunches in 1913 to 5.5 million in 1919." Standard Fruit, Cuyamel, and the United Fruit Co. combined surpassed past profit performances, "In 1929 a record 29 million bunches left Honduran shores, a volume that exceeded the combined exports of Colombia, Costa Rica, Guatemala, and Panama."
Resistance and reformation
Labor resistance, although was most progressive in the 1950s to the 1960s, there has been a consistent presence of abrasiveness towards multinational enterprises such as United Fruit. General Bonilla's choice to approve the concessions without demanding the establishment of fair labor rights and market price, nor enforce a comprise between small-scale fruit producers and the conglomerate of U.S. fruit enterprises would create the foundation in which strife would ensue from political, economic, and natural challenges. The first push for resistance began from the labor movement, leading into the Honduran government's turn towards nationalism, compliance with Honduran land and labor reformations (1954–1974)*, and the severance of U.S. multinational support in all host countries' governmental affairs (1974–1976)*. As United Fruit battles with Honduran oppositions, they also fight similar battles with the other host Central American nations, let alone their own Great Depression and the rising threat of communism.
Labor unionization
From 1900 to 1945, the power and economic hegemony allotted to the American multinational corporations by host countries was designed to bring nations such as Honduras out of foreign debt and economic turmoil all the while decreasing the expenses of production, increasing the levels of efficiency and profit, and thriving in a tariff-free economic system. However, the growing demand for bananas surpassed the supply because of challenges such as invasive fruit diseases (Panama, sigtaoka, and moko) plus human illnesses from extreme working conditions (chemical toxicity and communicable diseases).
Laborers began to organize, protest, and expose the conditions in what they were suffering from at the location of their division. Small-scale fruit producers would also join the opposition to regain equality in the market economy and push for the redistribution of the taken communal lands sold to American multinational corporations. Referencing to the Honduran administrations from 1945 to 1954, business historian Marcelo Bucheli interpreted their acts of collusion and stated "The dictators helped United Fruit's business by creating a system with little or no social reform, and in return United Fruit helped them remain in power". As the rise of dictatorship flourished under Tiburcio Carías Andino's national administration (1933–1949) and prevailed for 16 years until it was passed onto nationalist President Juan Manuel Gálvez (a former lawyer for the United Fruit Company).
The General Strike of 1954 in Tela, Honduras was largest organized labor opposition against the United Fruit company. However, it did involve the laborers from United Fruit, Standard Fruit, along with industrial workers from San Pedro Sula. Honduran laborers were demanding fair pay, economic rights, checked national authority, and eradication of imperialist capitalism. The total number of protesters was estimated at greater than 40,000. On the 69th day, an agreement was made between United Fruit and the mass of protesters leading to the end of the General Strike. Under the administration of Galvez (1949–1954) strides were taken to put into effect the negotiated improvements of workers' rights. Honduran laborers gained the right for shorter workdays, paid holidays, limited employee responsibility for injuries, the improvement of employment regulation over women and children, and the legalization of unionization. In the summer of 1954 the strike ended, yet the demand for economic nationalism and social reform was just beginning to gain even more momentum going into the 1960s–1970s.
Nationalist movement
By legalizing unionization, the large mass of laborers were able to organize and act on the influences of nationalist movement, communist ideology, and becomes allies of the communist party. As like in the neighboring nation of Cuba and the rise communism led by Fidel Castro, the fight for nationalism spread to other Latin American nations and ultimately led to a regional revolution. Americans struggled to maintain control and protect their capital investment while building tensions grew between America, the communist, and nationalist parties.
The 1970s energy crisis was a period where petroleum production reached its peak, causing an inflation in price, leading to petroleum shortages, and a 10-year economic battle. Ultimately the United Fruit Company, among other multinational fruit enterprises, would attempt to recover capital lost due to the oil crisis through the Latin American nations. The United Fruit's plan for recovery would ensue by increasing taxation and reestablishing exclusivity contracts with small-scale farmers. "The crisis forced local governments to realign themselves and follow protectionist policies" (Bulmer-Thomas, 1987). The fight to not lose their control over Honduras and other sister host nations to communism failed, yet the nature of their relationship did change to where the national government had the higher authority and control.
From Wikipedia’s article on United Fruit Company, shared under CC BY-SA 4.0.3