Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

My Thoughts

The Banana Wars: plundering Central America for fruit

The strangest series of conflicts in America’s history were the so-called Banana Wars of the 20th Century. Essentially, American corporations conquered large stretches of Central America for bananas.

At the turn of the 20th Century bananas were Big Business. Bananas were Big Business because they were the ideal fruit for the Gilded Age.  

Bananas are among the healthiest and most nutritious of fruits. Each banana is a good source of fiber, potassium, Vitamin B-6, Vitamin C, antioxidants, and phyotonutrients.

More importantly, a banana is a fruit you do not have to cut to eat. All you need to do is peel it and start eating. Hence, bananas were the perfect fruit for the Industrial Revolution. A factory worker or a miner could stick one into his lunch pail and have a complete meal or snack.

Finally, bananas were a cheap and nutritious luxury everybody could afford. Bananas were an imported exotic fruit immigrant shopkeepers, sharecroppers, Pullman Porters, factory workers, and streetcar conductors could buy.

Moreover, any immigrant could make a few extra bucks peddling bananas in the streets. One of those peddlers was Sam “the Banana Man”  Zemurray, the person who launched the Banana Wars.

Conquering Honduras for Bananas

Zemurray was a Russian Jewish immigrant who settled in Selma, Alabama. In the South, Zemurray made a fortune buying and selling ripe bananas nobody else wanted.

By 1911, Zemurray realized that the best way to make money from bananas was to control the supply. Hence, Zemurray’s Cuyamel Fruit Company began buying banana plantations along the Cuyamel River in Honduras.

However, the Honduran government threatened Zemurray’s profits by putting a two cent tax on bananas. Strangely, the government levied the tax at the request of American super banker J.P. Morgan. To explain, Morgan owned Honduras’s debts and the Honduran government taxed one American to pay another.

Instead, of paying the tax, Zemurray overthrew the Honduran government. Honduras’ former dictator Manuel Bonilla was living in New Orleans but planning a return to power.

Zemurray helped Bonilla by providing a ship, arms, and a colorful crew of mercenaries. After sneaking past the U.S. Secret Service; which was under orders to stop the coup, the plotters sailed to Honduras.

The coup was successful. Bonilla rewarded his friend Zemurray by granting the Cuyamel Fruit Company a monopoly and ending the tax.

El Pulpo: United Fruit the Octopus of Bananas

Zemurray was not the biggest player in bananas, however. The dominant force in the industry was the United Fruit Company.

United Fruit was so rich and powerful, Central Americans called it El Pulpo; Spanish for “the Octopus.” The Octopus is a reference to another powerful American monopoly of the Gilded Age; John D. Rockefeller Sr.’s Standard Oil. In its heyday in the 1920s, United Fruit owned 1.6 million acres of land and employed 67,000 people.

The Nation’s Emily Biuso estimates United Fruit was worth $100 million in the 1920s. In comparison, the CPI Inflation Calculator estimates $100 million in the 1920s dollars is $1.285 trillion in 2020 dollars.

Hence, United Fruit’s value at its height rivaled Apple’s (NASDAQ: AAPL) value today. Apple had a market capitalization of $1.42 trillion on 29 January 2020.

Consequently, United Fruit’s power was immense. The U.S. military invaded Honduras seven times to protect American interests; mainly banana plantations, in the early 20th Century, Allthatisinteresting claims.

Ironically, United Fruit’s value could not save it from the Great Depression. In collapse, United Fruit turned to its arch rival Sam “the Banana Man” Zemurray who merged United Fruit and Cuyamel Fruit. Zemurray then reorganized and saved United Fruit and served as its President until 1951.

High-Class Muscle for Big Business the Marines in the Banana Wars

Additionally, the United States military intervened in Nicaragua between 1909 and 1933 to protect banana interests.

For instance, in 1910, 250 U.S. Marines provided security in Bluefields, a major banana center. The troops were there to guarantee the safety of U.S. corporations and their property. The biggest company was United Fruit.

The Banana Wars left a terrible taste in many Americans’ memories. For example, U.S. Marine Corps Major General Smedley Butler wrote, “I spent 33 years and four months in active military service and during that period, I spent most of my time as a high-class muscle man for Big Business, for Wall Street and the bankers.” As a young Major, Butler commanded the Marines who provided security in Bluefields in 1910.

Complaints; such as Butler’s, led President Franklin D. Roosevelt (D-New York) to end the Banana Wars and implement the Good Neighbor Policy of non-intervention in Latin America in 1933.

Another reason the US military pulled out of Central America in the 1920s was a near war between the United Fruit Company and Cuyamel Fruit. To explain, United Fruit tried to seize Cuyamel Fruit’s water supply in Honduras. The two companies were close to fighting, when the conflict ended.

Interestingly, they named Nicaragua’s Sandinista government for Augusto César Sandino. Sandino was a guerrilla commander who fought U.S. Marines during the Banana Wars.

The CIA and the Last Banana War

Strangely, the last Banana War was one of the earliest and oddest battles of the Cold War.

By the early 1950s, times had changed and blatant American imperialism for profit was no longer acceptable. Yet the Cold War, offered an alternative United Fruit could protect its interests by claiming to fight Communism.

During the early 1950s, Guatemalan president Jacobo Arbenz angered United Fruit by seizing banana plantations and redistributing the land to peasants. Arbenz, was no Communist, but he gave United Fruit an opening by buying weapons from Czechoslovakia; then a Soviet puppet state.

No Russian soldiers accompanied the weapons but United Fruit claimed Guatemala was turning Communist. That persuaded the Central Intelligence Agency (CIA) to launch a coup to overthrow Arbenz in 1954.

One reason the CIA believed the claims of Communism in Guatemala was that U.S. Secretary of State John Foster Dulles was the United Fruit Company’s former attorney. Additionally, CIA Director Allen Foster Dulles was John Foster Dulles’ brother.

The coup led by Colonel Castillo Armas was successful. Armas commanded a small force of “freedom fighters” financed by the CIA. Fearing American invasion, Arbenz resigned and fled the country in June 1954.

Some historians blame the coup for the start of decades of civil war in Guatemala that led to 200,000 deaths. The coup, labeled Operation Success, had an unintended influence on history.

One visitor to Guatemala in 1954, was Argentine Communist traveller Che Guevara. After observing Arbenz’s demise first hand, Guevara convinced his friend Fidel Castro to seek help from the Soviet Union after the successful Cuban Revolution in 1959. Part of that “help” included nuclear weapons that triggered the Cuban Missile Crisis and nearly caused World War III.

Ironically, the coup in Guatemala could have sealed United Fruit’s doom. To prove his administration was not favoring big business, President Dwight D. Eisenhower (R-Kansas) ordered an anti-trust investigation of United Fruit.

Over the next two decades, United Fruit sold its Central American assets to protect itself from anti-trust allegations. United Fruit was so controversial the company even changed its name to Chiquita Banana.

The memory of the Banana Wars and the term Banana Republic for a small corrupt country live on. The Banana Wars show that waging war is a bad policy for corporations.

Source: The Fish That Ate the Whale: The Life and Times of America’s Banana Kingby Rich Cohen