In 1952, the United Fruit Company made the elected government of Guatemala a simple offer: If y’all want democratic self-government so badly, you can have it—for a small fee. It’ll cost you about $19,355,000.
If you’re just joining us, this is the second installment of “How Much Could a Banana Republic Cost?” The previous post introduced the goal of the series, which is to identify the rulers of the world. Are our lives run by Big Guns (armies and mafias), Big Green (multinational corporations and investors), or by Big Graphs (technocrats and tech companies)? The central question of the series suggests one way of finding out: by figuring out how much it actually costs to be the boss. The story that answers this question might also help explain why a sitting, elected national government was in the position of having to buy its own country.
Before we dive into comparing the Big Green, Big Guns, and Big Graphs theories, we should take a second to appreciate why we’d bother with any of them. All are ways of sidestepping the elephant in the room: the formal power structures of our elected governments. Many people assume that the formal “government”—those people with official titles in the state’s institutions—are also the true holders of power in society. Yet none of our three theories necessarily focus on elected officials. In 1952, Guatemala had its fair share: an elected president, Jacobo Arbenz, as well as an elected national Congress. The story of the United Fruit Company helps clue us in on what we’d be missing if we thought you could figure out who was in power just by looking at who was in office. We will need this larger kind of story, and the shadowy characters it involves, to find out who is really in charge of the world and how much a banana republic actually costs.
The history of banana republics gives us examples of the kind of thing that this approach might be missing. In the 20th century, you didn’t have to be a conspiracy theorist to suspect that official government positions didn’t name the actual shot callers—at least, not all of them. Long before it marked a preppy clothing brand, the term “banana republic” was widely used to refer to the authoritarian regimes propped up by US companies like the United Fruit Company (known today as Chiquita).
If you ask historian Marcelo Bucheli, it all starts around the end of the Spanish-American War in 1898. Three years of fighting in the Cuban War of Independence eventually drew in the United States, which joined in the fighting against the Spanish empire. With their imperial rival chased out of the region, American businesses piled into Mexico, Central America, and the Caribbean, leaving a “leaf storm” of political violence and instability in their wake.
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One of these businesses was, of course, the United Fruit Company. In 1899, immediately following the Spanish-American war, the three largest American banana importers merged, like the American states before them, to form United Fruit. The resulting conglomerate did not rest on its laurels, but also used its monopoly power and scale to buy or muscle out competitors, including the Jamaican Banana Producers Association smallholders cooperative.
The conglomerate pursued an aggressive “vertical integration” strategy, aiming to own and control every aspect of banana production and distribution from tree to market. It acquired railroad and telegraph companies as subsidiaries, which it used to pitch itself as a credible partner for development and modernization, which helped it win land concessions. Through a subsidiary company, the United Fruit Company owned and controlled not just the banana business and the land the plantations were on, but much of the countries’ most important infrastructure: railways, hospitals, ports, and telegraph lines.
Historian John Soluri reminds us that the many of the forests and grasslands targeted for export agriculture in the region were predominantly inhabited by the racially marginalized and the outsiders: Indigenous people, poor mestizos, and Black maroons, alongside Asian “coolies.” Displacing them by grabbing land in the name of modern economic progress was deemed not only permissible but essentially philanthropic. These same groups showed up among the workers exploited by these companies, as evidenced by historian Elisavinda Echeverri-Gent’s investigation of the Black West Indians and Black Garifuna banana workers who were pivotal to the rise of the sector in countries like Honduras and Costa Rica. All told, United Fruit’s strategy led to profitable partnerships with local business elites as well as military strongmen in the region, including infamously nasty characters like General Trujillo of the Dominican Republic and the House of Somoza in Nicaragua.
But by the 1940s, powerful forces in Guatemala were done playing ball. A military junta in 1944 wrote up a liberal constitution that ended censorship, and banned racial discrimination. But the really dangerous things that the emboldened Guatemalan government attempted to do aimed to break the back of corporate ownership of its country. It decriminalized labor unions and built public infrastructure to compete with the private infrastructure built by the fruit company. Perhaps most dangerously of all, a 1952 agrarian reform law was poised to expropriate and redistribute 1.5 million acres of land to 100,000 Guatemalan families.
It could have been worse. The government offered to pay the United Fruit Company $1,185,000 for the land: precisely what the company had said the land was worth when calculating its value for taxation. But the company knew what was actually at stake: political control over the land and people of Guatemala. So it claimed that the land was actually worth a much larger figure than its own assessment: $19,355,000. When the government refused to relent, the fruit company called US President Eisenhower for backup, and he approved a clandestine operation to clarify who was in charge. The result overthrew the country’s elected president Jacobo Arbenz and rolled back many of the reforms.
The president of Guatemala was Arbenz, not Eisenhower, yet it was Eisenhower who teamed up with the United Fruit Company to exercise a little “judicial review” on the 1952 agrarian reform act. No serious investigation of who ruled in Guatemala could leave out these supposedly external forces, no matter what the 1944 Constitution named or didn’t name as an “official” branch of government.
But it’s possible to take this too far, as sociologist Darío A. Euraque argues: Focusing too much on what the United Fruit Company and the US government are up to makes us likely to ignore local, national, and regional political developments. After all, if Washington and the fruit company were really in charge of everything, it would be hard to explain why an agricultural reform law threatening to expropriate them could pass in the first place. We have a tough balance to strike in sifting through the various Big Guns, Big Green, and Big Graphs theories. On the one hand, we have to acknowledge asymmetries between the levels of power and influence of all the different groups of would-be leaders: from the local general to the multinational CEO to the CIA operative.
But we did get something out of this detour other than a cautionary tale about the theories we’re about to look into. We now have an estimate to start from. Converting the 1952 sum demanded by the United Fruit Company into 2021 dollars, we can put our first answer to the question “how much could a banana republic cost” at a hefty $202,014,343.21.
