I can’t understand a word you say.” The former immigrant stepped out of the room, but only to return a few moments later clutching the majority share of proxies he had collected beforehand. “You gentlemen have been f---ing up this business long enough,” Zemurray informed the board slowly and precisely. “I’m going to straighten it out.”37
The investing public was more than pleased; the price of United Fruit stock shot up, doubling during the fortnight after the corporate coup.38 Confidence in Zemurray’s leadership turned out to be entirely justified. For example, he had learned from conversations with the company’s ship captains prior to the January 1933 takeover that all vessels had been ordered to cruise at half speed. While this measure reduced expenditures on fuel, it also caused much more fruit to spoil while in transit, so the policy was reversed and all ships were authorized to travel at full speed soon after United Fruit’s old president and former chairman of the board were sacked.39 Changes of this sort not only had a positive impact on United Fruit’s bottom line, but probably saved the company from going under in the 1930s.
Latin Americans Take On El Pulpo
Just as United Fruit acquired agricultural land and strove to dominate its commercial rivals, every firm in the industry sought to exercise tight control over agricultural labor. Wages offered by the multinationals and benefits such as food sold in company stores at below-market prices and medical care provided free of charge in company hospitals were superior to the rural norm in countries such as Ecuador and Honduras.40 But at the same time, unionization was opposed vigorously.
Transnational firms did not win every battle with organized labor. For example, plantation workers in Honduras struck successfully in 1920 for a daily wage of $1.75, with double pay for overtime;41 this level of compensation was well above the sixteen to fifty cents per day earned by laborers on coffee farms elsewhere in the same country.42 However, workers and unions also suffered crushing defeats. An unusually bloody confrontation occurred in 1928 in northeastern Colombia, where United Fruit had arrived at the turn of the twentieth century. Opposed to the labor-contracting system the company used not just in Colombia but on all its plantations, strikers demanded regular employment and recognition of their union. The authorities in Bogotá responded by deploying a military force, which on 6 December 1928 killed sixty to seventy-five protesters in the city of Ciénaga.43 This woeful incident achieved lasting notoriety once Gabriel García Márquez featured the confrontation and a wildly exaggerated death count in his novel, One Hundred Years of Solitude.
Events such as the Ciénaga massacre caused opinions about the tropical fruit industry to shift. Gone were the encomia published during the early 1900s. In their place were indictments consistent with the anti-corporate attitudes that gained wide circulation in the United States during the 1930s. Representative of the new literature was a frequently-quoted denunciation of United Fruit penned by Charles D. Kepner and Jay Soothill:
[This] powerful company has throttled competitors, dominated governments, manacled railroads, ruined planters, choked cooperatives, domineered over workers, fought organized labor, and exploited consumers. Such usage of power by a corporation of a strongly industrialized nation in relatively weak foreign countries constitutes a variety of economic imperialism.44
This denunciation, which did not even concede that cheap bananas were a boon to consumers, resonated in Latin America. Most famously, Chilean poet Pablo Neruda condemned El Pulpo (The Octopus) in his Canto General of 1950 for “reserving for itself the juiciest part” of the Western Hemisphere, staging an “opera buffa” in the banana republics it spawned, and making off with “the treasure of our sunken lands.”45
However, exercises of power by the company or its local allies did not cement the multinational’s hegemony over the tropical lands that were the source of its produce. To the contrary, opposing forces were often galvanized. As Marcelo Bucheli notes in his history of Colombia’s banana industry, public revulsion over the killings in Ciénaga helped bring down the conservative regime that had been in power since 1904 and had provided tax waivers, cheap land, and other inducements to foreign investors. President Enrique Olaya, the center-left victor in the 1930 election, disappointed his radical supporters by not instituting a tax on banana exports and by extending United Fruit’s lease on a railroad serving its zone of operations. However, President Alfonso López, who succeeded Olaya and was from the same political party, signed Colombia’s first agrarian reform law, which among other things strengthened the property rights of peasants who had occupied the uncultivated fringes of large estates. Unions received support as well, including in the banana sector.46
After World War II, multinationals’ prerogatives were even trimmed back in Central America, where national authorities formerly had spared no effort to propitiate foreign investors in the fruit industry. Costa Rica and Honduras modified old concession agreements, which had exempted foreign investors from taxes on their profits, in 1949. In 1943, Costa Rica instituted a labor code that established the rights of all workers, including in rural areas, to organize and strike; similar codes were adopted in Nicaragua in 1945 and in Guatemala in 1947.47 Honduras did not follow suit immediately, although a strike in 1954 resulted in the recognition by United Fruit and Standard Fruit of a single union representing all the employees of the two multinationals.48
During the late 1940s and early 1950s, regimes preoccupied with communist influence, especially within the labor movement, came to power in most of Central America. The leading exception was Guatemala, where Jacobo Arbenz, a former army officer with leftist sympathies, was elected president in 1951. Not content with raising duties on fruit exports and introducing taxes on industry profits, as was happening in neighboring countries, Arbenz’s government opted for “a head-on clash with [United Fruit] over land reform and financial compensation for expropriated land.”49 To be specific, an order was issued in 1952 that uncultivated areas in holdings larger than 269 hectares be redistributed to rural households with little or no land. The previous owners of confiscated properties, including United Fruit, were to be paid off with bonds valued according to those owners’ tax declarations (which invariably amounted to a small fraction of the market value of real estate), paying annual interest of 3 percent, and maturing in twenty-five years.50
All told, Arbenz’s agrarian reform redistributed 600,000 idle hectares to 100,000 rural families. Of those 600,000 hectares, 160,000 were taken from United Fruit, which formerly had possessed 220,000 hectares in Guatemala but kept 85 percent of its holdings in reserve. Even though the company insisted that its land was worth $185 per hectare or more, it only received bonds with a face value of approximately $7.50 per hectare in compensation.51 In response, The Octopus mounted an aggressive publicity campaign aimed at convincing U.S. leaders that Guatemala had become a hotbed of communist subversion.52 Whether or not the campaign was as influential as some writers claim, the U.S. government grew much more antagonistic toward Arbenz after the inauguration of President Dwight Eisenhower in 1953. The following year, the Central Intelligence Agency (CIA) engineered a coup d’état that drove the Guatemalan leader into permanent exile.53
Enter the Ecuadorians
Despite close collaboration between United Fruit and the U.S. government before and during the Guatemalan coup, antitrust charges were filed against the company a few months after Arbenz’s overthrow. Four years of litigation ensued, finally culminating in a consent decree signed in 1958 that obliged United Fruit to spin off railroads in Central America and marketing operations in the United States. The decree also required the divestiture of one-third of the industry leader’s agricultural holdings.54
United Fruit had to deal with the antitrust lawsuit and other challenges without Samuel Zemurray. Seventy-seven years old and suffering from Parkinson’s disease, the last of the banana industry’s pioneers had no choice but to step down in 1954, this time never to resume the career he had embarked on at eighteen.
