In the 1950’s, the United States was the most powerful country in the world and tended to believe an American investment in any country needed to be protected. This has always been a strange idea, because it does not say the investment needs to be protected because it represents the best of the country, just an investment. In the Central American country of Guatemala, United Fruit had an investment in over 500,000 acres of land to grow bananas, as well as it owned the railroad, ran the ports, and telegraph. The story of how the rest of the story plays out is outlined in the book Bitter Fruit by Stephen Schlesinger and Stephen Kinzer published by Doubleday, NY, 1982

When democratic countries invade other countries they just cannot make the decision to send troops. The government needs the will of the people. For many in the US, besides knowing Guatemala is south of them, they probably could not tell you very much. In all likelihood, they would confuse Panama with Guatemala – Panama has the canal and is 800 miles south. To begin the process United Fruit hired lobbyists and PR people to tell a story, that would not lie, but not exactly tell the truth, after all United Fruit while delivering bananas to the US was not a perfect corporate client. It did bribe the government; it did treat pay labor slightly better than minimum but hated unions or threats of unions; employment was seasonal; there was little regard for health and safety when spraying the crops; the company paid little in taxes and sent most of its money to Boston or head quarters; it did what it wanted to in the country for the benefit of United Fruit or the benefits for Guatemala were marginal.

The lobbyist and PR people sent information to all the newspapers. The information polished the good image of the company. The company being from Boston tapped into its Board and connections to Washington for the House and Senate representatives to comment on the situation. If the Senator talks about the issue, it will be reported on by others. During the 1950’s McCarthyism was building or being afraid of communists – the government in Guatemala was left leaning (not communists) however this could be the first place where communism could start – need to stop it. The anti-communism tact had friendly faces in some newspapers or magazines and stories began to appear. One magazine was called The New Leader. The editor wrote a book called Red Design for the Americas and the company bought and sent copies to opinion leaders.

Newsletters was designed to create an atmosphere of deep suspicion and fear and when those arrive they begin to formulate a plan of action. In the meantime, the government of Guatemala did little to present its side of the story. The phases grew with a report by Clements Associates (who were close to the CIA and military) to write a report about Communists infiltration in the Guatemalan government. The report was called Report on Guatemala 1952 was sent to all members of the US Congress; the Report on Central America 1954 was sent to the CIA and the solution was a change in government. The cost for United Fruit was $ 500,000 a year. Likely if they had used the money to improve working conditions different results might have happened. Eventually the US decided to act, but found few communists.

In retrospective, trying to distance himself from United Fruit, the Eisenhower administration Department of Justice had reached the conclusion that United Fruit monopoly on banana exports from countries like Guatemala was a violation of American antirust laws. The agreement was settled in 1958 which United Fruit had to sell to local companies so there would be competition. In another lawsuit, United Fruit had to sell the railroad and in 1972 sold its lands in Guatemala to the Del Monte corporation.

Linking to dividend paying stocks, for a long time United Fruit was a wonderful company to own for it held a monopoly on bananas as well being vertically integrated owning a railroad, a fleet of white ships and ports. When the monopoly was broken, it was time to exit the company. Sometimes the focus is on other things than the operations of the company, when you see this become nervous.

There are more questions than answers, till the next time – to raising questions.