thereby preventing foreign monopolization of exports.
Making sure that their country would never become a banana republic, the authorities in Quito imposed restrictions on United Fruit in the late 1930s. However, it would be a mistake to infer from these restrictions that Ecuadorian opposition to foreign investment in the tropical fruit sector was ever categorical or unanimous. To the contrary, many national leaders pursued that investment assiduously, no less than foreign companies once tried hard for grants of land throughout the Caribbean Basin.
Ecuador Woos El Pulpo
The campaign to interest transnational fruit companies in Ecuador began in the early 1920s, when the cacao business was suffering a sharp decline. Output contracted because of a pair of fungal diseases: Witches’ Broom, caused by Crinipellis perniciosa, and Frosty (or Monilia) Pod Rot, caused by Moniliophthora roreri.5 Simultaneously, the prices Ecuadorian growers received for their diminished harvests fell because of increased cacao production elsewhere in the Western Hemisphere as well as in Africa.6
United Fruit would not have been able to establish new operations in Ecuador or anywhere else a few years earlier because a large segment of the company’s maritime fleet (the most sizable collection of vessels at the time in the United States aside from the U.S. Navy) had been requisitioned during World War I to carry troops and supplies to Europe. But with its ships returned after the Armistice of November 1918, United Fruit could consider an expansion of its business—including south of the Panama Canal, which had been completed in 1914.
The company had ample motivation for such an expansion. Panama Disease, which was a constant menace in the Caribbean Basin, had yet to make an appearance in Ecuador during the 1920s and would not do so for several more years.7 Also, the rarity of tropical storms in the costa was an important consideration because Gros Michel plants, which would not be replaced for another four decades, were tall with shallow roots and therefore were easily blown over—particularly right before stems of fruit weighing forty kilograms or more had been cut. Before the switch to the Cavendish variety in the Caribbean Basin, up to one-third of the banana harvest was destroyed every year because of hurricanes.8 Yet another attraction of western Ecuador was that prevailing wages were low, no higher than compensation levels in other banana-growing regions.
One person who understood that United Fruit might be attracted to Ecuador and that this would be beneficial for the country was José Luís Tamayo, an attorney and self-made businessmen from Guayaquil whose most significant achievement in the private sector was to serve as legal counsel and a member of the board of directors for the Banco Comercial y Agrícola (BCA). Created to serve the cacao sector, the BCA played a pivotal role in the national economy—not least because it had been given the authority in 1915 to print the currency it lent to the national government, which lacked a monetary authority of its own and which became more indebted to the bank as the years passed.
Elected to a four-year presidential term in 1920, Tamayo assigned J. Cicerón Castillo, who at the time was managing an oil field west of Guayaquil, the task of convincing United Fruit to buy land in the costa, provide shipping, and introduce better technology for banana production. In February 1922, a letter written by Castillo reached Victor M. Cutter, the acting vice president of the multinational. In response to this letter, which stressed the advantages for United Fruit of growing bananas in Ecuador for shipment to California, Cutter provided a list of fifty-one questions for Castillo to answer so that the company could decide about sending down one of its technical specialists to carry out a definitive evaluation.9
Castillo responded in short order with a thorough report, one based on wide-ranging observations in the field and reaching the conclusion that western Ecuador was “ideal” for banana production. Guayaquil’s deficiencies for modern shipping were acknowledged. For one thing, the Río Guayas was barely seven meters deep in front of the port city. For another, a sandbar between the river’s mouth and Guayaquil blocked the passage at low tide of vessels displacing more than 4,000 tons. In contrast, Castillo sang the praises of Puerto Bolívar, farther south and in the vicinity of Machala. A natural harbor able to accommodate ships of any size, Puerto Bolívar also had road and rail linkages to inland areas well suited to agriculture.10
Castillo emphasized land quality—in particular, the depth and fertility of soils in the southern costa as well as their porosity, which facilitates the thorough drainage that banana plants require. Precipitation in the area was reported to be in line with the hydrologic requirements of fruit production for most of the year; at other times, water for irrigation was readily available from rivers and streams originating in the Andes, not too far from the coast. Finally, banana plants in Ecuador, which were used to shade cacao trees in addition to supplying food, exhibited no signs of wind damage, which was a normal feature of Central American and Caribbean plantations.11
Thanking Castillo for his “very excellent report,” Cutter dispatched one of United Fruit’s ablest experts, Charles W. Sinners, to inspect land, irrigation possibilities, navigable rivers, and coastal harbors. Sinners was also instructed to determine needs for railroad construction and to gauge real estate prices. Discretion was required since revealing the true purpose of this work would have caused the owners of farmland, which had lost value because of plant diseases and low cacao prices, to demand more for their properties. So as long as he was able, Sinners let people think he was mainly interested in untapped deposits of petroleum, which along with all other subsurface resources would belong to the state and not to individuals with surface land rights. This subterfuge was maintained for a while because he traveled with Castillo, who was mainly known as a mining engineer and geologist.
The report Sinners submitted in 1922 was enthusiastic and United Fruit’s headquarters in Boston cabled him to remain in Guayaquil, to await orders about how to proceed. After those orders arrived, Sinners journeyed to Quito in August for a meeting with Tamayo.12 During that meeting, Sinners was shown a draft of a law authorizing creation of banana concessions. Steve Striffler speculates that the law, enacted later in 1922, was perhaps “generated” by United Fruit, although he offers no evidence to support his suspicions.13 In fact, the law was unexceptional in many respects. For example, access was guaranteed to harbors suitable for oceangoing ships. Also, private investors were authorized to construct railroads and other infrastructure. In addition, the law included a two-year exemption from export duties, which was not overly generous given the monetary outlay needed to ramp up operations.
The duties to be applied after the exemption expired were not out of line with export taxes during the 1920s in Central America, although Striffler’s characterization of those duties as “very low” is not off base. He also states that “virtually unlimited quantities of land” were made available in Ecuador.14 What Striffler does not mention, though, is that all the areas offered by Tamayo were undeveloped and none were within reach of Guayaquil, Puerto Bolívar, or any other seaport. Such areas appealed little to United Fruit, which had its sights set on properties in accessible settings that had been cleared during the cacao boom. That Tamayo’s offer to the company did not extend to these properties, more than four-fifths of which were in the hands of Ecuadorians,15 revealed that national authorities actively pursuing foreign investment would only go so far, even as the country’s leading export sector was reeling. Since there would be no official intervention in real estate markets on United Fruit’s behalf, the banana sector would never develop in Ecuador as it had earlier in Central America—in enclaves obtained for little or no money by foreign companies.
Denied in Ecuador the opportunities it had seized in countries such as Guatemala and Honduras, United Fruit maintained a presence in the South American nation by signing an agreement with the government in July 1923 to continue preparing for the production and export of tropical fruit.16 This work went forward at a leisurely pace.
Prolonged Crisis
Had United
