Banana Republics – US Imperialism through Multinational Corporations

Square

Origins in Honduras

The phrase “Banana Republic,” was conceived by American author O. Henry in his novel “Cabbages and Kings,”[1] to describe The Republic of Anchuria, his fictitious Central American nation, modelled on Henry’s own personal experience of living in Honduras in the late 1890s. On the surface, the phrase is deceptively simple, however in reality it describes US-owned fruit companies who greatly influenced the politics of Honduras and surrounding countries.[2]

Whilst there was good reason to refer to Honduras as a Banana Republic in the late 1890s, with the United Fruit Company (UFCO) known as “El Pulpo,” (The Octopus) by the Honduran people due to its far-reaching influence in Honduras,[3] the label became even more pertinent throughout the first half of the 20th Century.

A rival to the UFCO, the Cuyamel Fruit Company, founded by Sam Zemurray, bought 15,000 acres of land in Honduras in 1910 marking the beginning of a conspiracy to overthrow the government, led by President Miguel R. Dávila, in order to establish a new military government, one which would be friendly to multinational companies. By conspiring with American mercenary Gen. Lee Christmas, the Dávila administration was forcibly removed in 1912 and replaced by Manuel Bonilla, another former President.

The reason behind this coup was due to the fact that Dávila had awarded the UFCO a monopoly contract over Honduran bananas, in exchange for them brokering loans between the governments of Honduras and the USA. However, despite the unjust coup, the US turned a blind eye to it, despite their president, William Taft, being strongly against any forms of foreign intervention in Latin America, as under the Monroe Doctrine.[4]

The coup raised far more issues than it solved:

  • An external debt of US$4 Billion[5]
  • The stagnation of the Honduran economy
  • The implementation of the US dollar as legal tender
  • The increased influence of Foreign Corporations

That final point is the most significant in reference to the notion of Banana Republics. The Honduran economy was collapsing and the only resource it had in which to sell were bananas and other such tropical fruits. Therefore, the country became dependent on it; foreign corporations became the employers of the majority of the population, which allowed them to reinvest into the infrastructure of the country, thus giving them more control over the people than the government. But who were the primary benefactors of this economic dependency? The United States and its multinational corporations. And the victims of such a regime? The underpaid, overworked Honduran people, exploited into labour whilst their country remained in economic turmoil and poverty.

Guatemala

The aforementioned founder of the Cuyamel Fruit Company, Sam Zemurray, had sold his company to the UFCO in 1930. However, due to the Great Depression, its stock fell by 90%[6], encouraging Zemurray to buy a share in the company in 1933, vote out old directors and becoming the UFCO’s President.

By the 1950s, the UFCO had land in many Latin American countries, one of which was Guatemala, which had recently elected left-wing President Jacobo Árbenz. Árbenz, who witnessed atrocities committed by Jorge Ubico, was keen on reforming the country through:

  • Allowing public debate
  • Legitimising political parties
  • Expanding the right to vote
  • Allowing workers unions
  • Agrarian Reform – redistribution of unused large land-holdings to workers experiencing poverty[7]

The latter 2 points particularly infringed on the UFCO, and they lobbied to both the Truman and Eisenhower administrations to overthrow the democratically elected Árbenz. Zemurray ordered a propaganda campaign against the Guatemalan dictator in 1951 and the UFCO maintained that Árbenz was attempting to align himself with the Soviet Bloc. Despite these claims, there was no evidence for an existing connection between the two.

In 1954, Eisenhower and the CIA backed an invading force from Honduras, led by Carlos Castillo Armas, who then toppled Árbenz and implemented a military dictatorship. However, there was a clear conflict of interest between the US policy makers and the UFCO’s desires:

  • US Secretary of State John Foster Dulles privately represented the UFCO
  • Dulles’ brother Allen, the Director of the CIA, was a board member of the UFCO
  • Eisenhower’s personal secretary Ann Whitman was married to the Principal Lobbyist of the UFCO

Various other familial ties also meant that the US Government acted with massive bias towards the UFCO, for their own personal gain in the form of kickbacks and holding power in Guatemala. Like Honduras, not only the workforce, but the infrastructure and political system of Guatemala fell under heavy influence and control of the UFCO and with such close ties to the US Government, the White House could heavily impose its will on the people of Guatemala.

Bringing it all Together

Despite vowing to uphold the Monroe Doctrine and fight against imperialism, the US Government used multinational corporations in order to manipulate lesser developed countries into upholding the US’ political system and funding their exploits. This was a more indirect form of imperialism, yet nevertheless acted no less oppressively.

Such control has not ended either; the UFCO changed its name in 1984 to Chiquita Brands, a hugely rich and powerful multinational based in the US which, to this day, exploits workers and national economies in countries like Colombia and Costa Rica showing little progress from the stories which O. Henry had described over 100 years ago.

Glossary
  • UFCO – The acronym UFCO is a CIA cryptonym and the United Fruit Company is the only company to have one of these, further highlighting their importance.
  • Jorge Ubico – Ruthless Guatemalan dictator 1931-1944 who supported the UFCO and was backed by the US.
  • Soviet Bloc – Describes nations under the influence of Soviet-imposed communism during the Cold War.


References

  1. O. Henry, “Cabbages and Kings,” www.gutenberg.org/files/2777/2777-h/2777-h.htm , 1904
  2. T.W. , Where did banana republics get their name? , The Economist, 21/11/2013
  3. Peter Chapman, Bananas: How the United Fruit Company Shaped the World, Canongate, 2007
  4. James Monroe, The Monroe Doctrine, 2/12/1823
  5. W.S. Valentine, Needs for Capital in Latin America, Annals of the American Academy of Political and Social Science, 1/1/1916
  6. Daniel Grushkin, “Book Review: ‘The Fish That Ate the Whale,’ by Rich Cohen,” Bloomberg BusinessWeek, 7/6/2012
  7. Michael Hunt, The World Transformed, Oxford University Press, 2004

Author

Leave a Comment