United Fruit Company
Chiquita [Spanish for "pretty little girl."] was known first as the United Fruit Company and was reviled in some corners as the creator and perpetuator of "banana republics." US policy toward Central American and Caribbean regimes shaped the economic and political possibilities open to these countries before and after the Cold War. US policies of supporting authoritarian states — regardless of the means they employed — reinforced a deeply embedded pattern in the region that predated the Cold War. Until World War II, US companies operated hand-in-hand with the US government to thwart the possibility that national states might pass laws favoring local capitalists' interests and/or workers' rights to the detriment of foreign businesses. U.S. companies frequently achieved this by securing concessions that gave them monopolies on trade, production, infrastructure, and control over workers on massive estates.
The United Fruit Company (popularly known as El Pulpo, "the Octopus"), now Chiquita Brands International, became a ubiquitous and infamous presence across Latin America as well as the largest landowner in Guatemala, Cuba, and other places. In its efforts to prevent unionization, the United Fruit Company also recruited contract workers extensively across the Caribbean, creating racially and nationally mixed diasporas in plantations from Costa Rica, Panama, and Honduras to Cuba and Jamaica. Galvanized by a work experience that often made them proficient in multiple languages and radical proponents of labor rights, thousands of United Fruit workers made their way to cities such as New Orleans, Mobile, and New York as early as the 1910s. There, former United Fruit workers such as Marcus Garvey championed black pride and social justice, forever transforming the nature and direction of U.S. civil rights struggles in the 20th Century.
The Cold War history of U.S. involvement in Central America is not one to be overly proud of. The role of the United Fruit Company, the CIA, Guatemala’s landholding elite, and others in orchestrating the removal of democratically elected President Jacobo Arbenz Guzman in 1954, the training and equipping of the militaries that carried out scorched Earth campaigns against rebel insurgencies and the rural indigenous populations in the 1970s, ’80s, and ’90s, and policies favoring the financial and political elite who perpetuated the racism, social and economic inequities, corruption, violence, and impunity that persist to this day, are all part of that collective experience.
The Chiquita story began in the late 19th century, when shipping fresh bananas and preventing them from ripening route was a real challenge. The first banana shippers, relying on favorable winds, could only hope that their cargo would not ripen before they reached port. The delicate fruit--coupled with the vagaries of transportation, weather, and prices--made for a particularly risky business. The United Fruit Company was founded through the merger of the Boston Fruit Company, owned by Captain Baker and Andrew Preston, and the Minor C. Keith railroad company, which had planted bananas alongside its tracks.
The United Fruit Company led the fruit-producing and importation industry. In 1903 it became the first company to transport refrigerated cargo. The 'Great White Fleet,' as United Fruit's ocean-going ships were called, was the only dependable furnisher of refrigerated transport of fruit from the tropics. In 1904 it established commercial radio on its ships; and in 1910 it successfully introduced uninterrupted radio service between headquarters in Boston and New York and its various crop-producing outposts.
The United Fruit Company occupied in more than one way a peculiar position among American trusts. While almost all others were active in one field of industry and seek to monopolize the manufacture of one article, the United Fruit Company was an agricultural trust. It engaged mainly in the production and marketing of a natural product, and one, too, that belongs to the Tropics - the banana. The other great staple articles of the Tropics, such as coffee, caoutchouc, and cocoa continued, even in the United States, in free markets.
The banana was the only tropical product that was monopolized by a trust. The banana in America occupied relatively a minor position. As great as the use of bananas was in the United States, it was, nevertheless, inconsiderable when compared with other provisions and delicacies, such as grain, meat, coffee, sugar, -etc. The company nevertheless, was able by continued pursuit of its aim on this relatively small basis, to establish an economic power of the first rank, so that it became the greatest of all purely agricultural enterprises to be found.
The main business of the company consisted of the cultivation and exportation of bananas. In the fiscal year ending September 30, 1905, the company shipped 30,000,000 bunches to North America and England. Further, the company owned extended plantations of sugar cane at Banes Cuba, and managed a sugar mill. Other branches of business of the company were the breeding and exporting of cattle, particularly from Costa Rica to Cuba, also the exporting of oranges (about 300,000 boxes annually), cocoanuts (about 30,000,000), and pineapples to the United States.
The landed property of the company was scattered in six trop1cal countries - it covered about 130,000 hectares. Its total cap1tal invested in foreign countries was about eighteen to nineteen million dollars, almost half of which was invested in Costa Rica. Exportation was carried on from seven tropical points: Jamaica (Port Antonio). Santo Domingo (Sanchez), Cuba (Banes), Colombia (Santa Marta), Panama (Bocas del Toro), Costa Rica (Limon), and Honduras (the Republic and British Honduras). There were also three stations in the West Indies, three in Central America, and one in South America.
The United Fruit Company controlled not only the raising and exportation of bananas, but also controlled the necessary means of transportation therefor. It was one of the principles of the great American trusts to make themselves as far as possible independent from the source of production to the close of consumption, and so bananas remained from their planting to the point of entry in the United States in the hands of the United Fruit Company or its dependent companies.
A characteristic of the shipment of bananas was that they required considerable room and must be transported quickly to avoid loss. The sh1ppmg ports of the United Fruit Company had thereby a trade of relatively large, fast. vessels and a conven!ent connection with the United States, which was far from corresponding with its economic importance in other respects. The number of banana ships of the United Fruit Company annually coming to the United States was by 1908 almost a thousand. During the height of the season as many as forty steamers were sent weekly to North American. ports. The cities of Boston, New York, Philadelphia, Baltimore, Mobile, and New Orleans were supplied with fruit directly from the vessels. Shipments for the interior were sent by way of New Orleans and Mobile and thence by rail.
The United: Fruit Company, a New Jersey corporation, was formed in 1899. It was the successor of the Boston Fruit Company, a corporation which had previously absorbed a number of independent fruit companies, and which was doing an interstate and foreign business, chiefly to the port of Boston, and chiefly in bananas. Prior to the organization of the United Fruit Company there was a large number of independent importers who carried bananas from the West Indies and Central America. into the Atlantic and Gulf ports of the United States, and there sold to jobbers throughout the country, making their shipments by rail to such jobbers. Competition existed between them, both at the points of purchase of fruit abroad and at the various points of sale in the United States.
The United Fruit Company, at the outset, combined by merger or otherwise, with some ten fruit companies, most of which were large importers. These included the Boston Fruit Company, of Boston, the Buck man Fruit Company, of Baltimore, the American, Dominican, and Monumental fruit companies, together with a number of others. During the years following its organization the United Fruit Company became the owner of a controlling interest in the stock of the principal importers who had not already become associated with the United Fruit Company. Thus it purchased a controlling interest in the Bluefields Steamship Company, which brought bananas from various Central~American ports into New Orleans, and sold them throughout the United States.; the Orr-Laubenheimel Company, which conducted a similar business; the Camors-McConnell Company; the Thacker Brothers Steamship Company, and the Belize Royal Mail and Central American Company.
In each case the stock held by the United Fruit Company was either one-half or one share- more than one-half, with the exception of certain instances in which the whole, or a great majority, of the stock was purchased. In no case did the United Fruit Company for any length of time remain the holder of a minority interest in any company. A great deal of the stock was held in the names of various officers, especially Andrew W. Preston, its president, and Minor C; Keith, its vice-president. Indeed, in the majority of the companies acquired subsequent to 1899 the name of the United Fruit Company did not appear as a stockholder. In some few instances, doubtless, the stock held by its officers was owned by them individually, but in a great majority of instances it was held for account of the United Fruit Company.
The Boston Fruit Company, prior to the formation of the United Fruit Company, had organized a selling agency known as the Fruit Dispatch Company, and this was retained and its operation greatly extended by the United Fruit Company, which owned all its stock. The Fruit Dispatch Company became the exclusive selling agent of the United Fruit Company in its southern ports, and sold, the majority of its fruit in the northern ports. It also handled the entire importations of the allied companies, with the exception of the Thacker Brothers Steamship Company and the Atlantic Fruit Company. During its existence since 1899 it had full control of the sales and prices of the fruit imported by all the corporations named, which comprised altogether some 80 to 90 percent of the importations into the entire country.
From time to time since the existence of the United Fruit Company the Fruit Dispatch Company deliberately destroyed fruit for the avowed purpose of maintaining the market price which it desired to establish. This was done even when the fruit destroyed was in good condition and saleable at a profit, although at a price less than that fixed by the Fruit Dispatch Company's pricing committee. From time to time, too, the amount of fruit to be imported by subsidiary companies was restricted at the direction of the United Fruit Company, in order to avoid overstocking the market and preventing the competition which ensues from such a condition. There were instances where fruit was given away by the Fruit Dispatch Company, in order to prevent the independents from selling what they had imported. After the formation of the combination, there were a number of independent operators left outside it. Practically all of these had been put out of business in one way or another by 1910.
For example, the firm of Henry Bayer & Co. had carried bananas into the United States for some thirty years, running chiefly to the port of Charleston, SC. The United Fruit Company began to run its steamers there, the importations being handled by the Fruit Dispatch Company. Jobbers in the vicinity were warned that the Fruit Dispatch Company would not tolerate purchases from Bayer. Each time one of Bayer's ships arrived, the Fruit Dispatch Company would drop its prices far below the margin of profit, and thus compel the sale of the independent fruit at a loss, since, owing to its perishable character, it was necessary to dispose of it without delay. When Bayer & Co. had disposed of its cargo, the Fruit Dispatch Company's prices would at once go up to a very high figure, to be held there until the next independent cargo arrived.
While this meant doing business at a loss for the combination as well as for the independent, the large resources of the United Fruit Company, and the large profits which it was able to make at places where there was no competition, enabled it to push competition with independents to an extreme, and to bring about a condition where it was merely a question of which side could stand the loss of money longest. Practically all of the independents, being small concerns, were forced to suspend. Bayer & Co. were successively, driven out of Charleston and Galveston. The Alabama Fruit Company was driven, by similar methods, out of Mobile and, like Bayer, forced to go out of business, and the Vedey Fruit Company, which ran to Providence, met the same fate.
In 1944, the compnay launched its single greatest public relations campaign with the creation of the "Chiquita Banana Song" for radio. Soon such notables as Xavier Cugat, the King Sisters, and Carmen Miranda transformed the Calypso jingle into a long-running, nationwide hit. More importantly, the name Chiquita (meaning "little one") became imprinted in the American consciousness and domestic banana consumption rose rapidly. In 1947 the company solved the problem of distinguishing their bananas from the competition's with the colorful Chiquita sticker. In so doing, United made advertising history by creating a branded premium product out of what was essentially a common commodity.
The US Department of Justice, as long ago as 1908, commenced an investigation of the activities of the United Fruit Company in relation to the anti-trust laws. In 1913, a staff recommendation in the Anti-Trust Division called for civil and criminal action against the United Fruit Company; however, no action was taken. Again in 1937, a staff recommendation called for the institution of proceedings against the Company, but no action was taken. In 1946, following a Federal Trade Commission investigation, the Justice Department investigation was renewed, but action was again postponed.
By 1953, the US Department of Justice had completed an investigation disclosing evidence of violations of United States anti-trust laws by the United Fruit Company. In the absence of foreign policy and national security considerations, the Department of Justice would proceed to file a civil complaint charging the Company with such violations and asking broad remedies, including divestiture by the Company of certain of its overseas assets. The present investigation, renewed in 1951, had been completed, and a civil suit against the United Fruit Company was ready to be instituted. The Justice Department stated that the violations of law by the Company are pervasive, including price-fixing, allocation of domestic markets, dumping in order to decrease prices to injure competitors, and reservation of unused shipping space by the Company in order that competitors may not transport their bananas. The remedies sought would be broad, including divestiture by the Company of certain of its assets abroad.
The National Security Council Planning Board concluded that the institution of anti-trust action against the United Fruit Company at this time, regardless of the merits of the action under US law, would adversely affect US national security interests in several respects.
It would tend substantially to consolidate the position of the Communist-dominated Arbenz government of Guatemala, a major center of anti-U.S. influence in Latin America. The Arbenz government within the past year had seized three quarters of the Company’s land under the guise of agrarian reform, and made its struggle against the Company the central point in its appeal to the people. For the U.S. Government to brand the Company as an offender against U.S. law would, under these circumstances, appear to justify Arbenz’ position completely, and would thus greatly strengthen his hand.
Elsewhere in Central America, institution of the action would greatly stimulate movements to nationalize the properties of the Company. Such nationalization was threatened to some degree in all countries in which the Company operated, particularly in Costa Rica through the possible accession to the presidency of Jose Figueres, who was not a Communist but was openly speaking of nationalization. To the extent such nationalization was achieved, it would not only affect a private company, but would have direct and far-reaching repercussions on the US strategic position.
Among these must be counted loss of United States control of the largest communications and transport network in the area, represented by the United Fruit Company’s freight and passenger ships, ownership and management of ports, docking facilities and warehouses; its 43 percent participation in the International Railways of Central America, the only railroad system in these countries; and its direct ownership of the Tropical Radio Company, the only commercial wireless communication service. These essential facilities, in friendly American hands, constitute a strategic interest in time of war which, if lost to the United States through withdrawal of this American enterprise, could not be counted on with the same security as in the direct control of American citizens.
Jeopardy to that part of the supply of abaca (a strategic cordage commonly known as Manila hemp) now grown by the United Fruit Company under contract with the Reconstruction Finance Corporation. Loss of Far Eastern sources of supply would make the United States almost completely dependent on Central America as a source of supply to supplement the strategic stockpile. The United Fruit Company was the only concern which had in existence the organization and facilities for supplying these needs.
Institution of the action would provide a propaganda weapon generally to Communists and leftists in Central America. Moreover, to the degree that it would promote governmental seizure, it would assure the placement of extremists in charge of the former Company properties, and would thus increase the power of elements opposed to the United States in Central America, possibly including Panama, and make uncertain the cooperation of the governments of the area with the United States. Finally, it might contribute to the spread of the Guatemalan example and to the eventual overthrow of four Central American governments now friendly to the United States, which would transform the present security in the Caribbean into a dangerous threat at the US backdoor.
In Latin America generally, nationalization of the United Fruit Company properties would further stimulate the already serious movement for similar action against the U.S. companies, which have properties with an established value of $5 billion in Latin America, including strategic industries in the fields of mining and petroleum. This effect would be increased to the extent that the Guatemalan and other governments were able to avoid the payment of just compensation to the Company. Action by one branch of the U.S. Government against one private company, as a monopoly, would make most difficult the successful defense of that company’s legitimate interests by the Department of State, and weaken very seriously the ability of that Department to oppose the tide of nationalization of other American properties in the entire area and elsewhere. Increased nationalization of U.S. properties would not only deprive the United States and U.S. nationals of a degree of control of strategic resources, but would be contrary to the policy declared in NSC 144, of encouraging Latin American countries to take measures to attract private investment.
In view of these circumstances, the filing of an anti-trust suit at this time would affect adversely the national security, particularly the conduct of the foreign relations of the United States. The National Security Council Planning Board proposed that anti-trust proceedings against the United Fruit Company should be postponed without prejudice for the present, and the situation should be reviewed by the National Security Council within six months. During this six-months postponement, the Department of Justice should negotiate with the Company for elimination of practices deemed to be inconsistent with U.S. anti-trust laws.
The United Fruit Company was re-branded as the United Brands Company in 1970. In 1972 it was forced by the government to sell its Guatemalan operations to Del Monte. Perhaps the sale came as a relief--Guatemala had been the company's most politically volatile producer. Yet the transaction also signaled a weakening of the once monolithic food company that, unlike fruit-producers Del Monte or Dole, was still largely dependent on a single, highly perishable cash crop.
In 1990 the company changed its name to Chiquita Brands International, Inc., and ushered in a new age of aggressive, food-related business acquisitions. The Chiquita label began to appear on a wide variety of fruits, including kiwis, melons, and pineapples; fresh produce, though limited to 45 percent of the company's sales, was contributing some 90 percent to operating profits.
Chiquita made payments for years to the violent, right-wing terrorist organization United Self-Defense Forces of Colombia – an English translation of the Spanish name of the group, "Autodefensas Unidas de Colombia" (commonly known as and referred to hereinafter as the "AUC"). For over six years – from sometime in 1997 through Feb. 4, 2004 – Chiquita paid money to the AUC in two regions of the Republic of Colombia where Chiquita had banana-producing operations: Urabá and Santa Marta. Chiquita made these payments through its wholly-owned Colombian subsidiary known as "Banadex." By 2003, Banadex was Chiquita's most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month. In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million.
The AUC had been designated by the U.S. government as a Foreign Terrorist Organization ("FTO") on Sept. 10, 2001, and as a Specially-Designated Global Terrorist ("SDGT") on Oct. 31, 2001. These designations made it a federal crime for Chiquita, as a U.S. corporation, to provide money to the AUC. In April 2003, Chiquita made a voluntary self-disclosure to the government of its payments to the AUC.
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