The years from 1935 to 1940 saw the United Fruit company at both the height of its power and the beginning of its decline. By the 1930s United Fruit had consolidated its power as the world’s dominant banana producing and marketing company. The company had eliminated most of its competitors through aggressive acquisitions and price wars. By the 1920s, United Fruit controlled more than 70% of the banana business.1 By 1935 the effects of the Great Depression were lifting and demand for bananas was rising. Thus, 1935 might be considered the year when the United Fruit company was at its’ most powerful. For example, in 1936 the Guatemalan dictator Ubico signed a contract with the UFC in 1936 which offered the UFC significant lands in return for the construction of a port. However, when the UFC failed to complete the port, it kept the land with no consequences.2
The later 1930s were also a period when the company sawsignificant problems immerge and grow. New diseases, for example, emerged which threatened banana production. Sigatoka disease swept through export banana farms much more quickly than Panama disease. United Fruit researchers devised an effective but expensive system to stop the disease that added significantly to production costs and complicated the process of abandoning unproductive plantations.3 These developments lead to an increase in cost for the UFC and an increase in labor problems because of the loss of jobs due to diseases.
Labor movements and protests also grew to become major issues for the UFC during this time period. Previously such movements had not been able to challenge the UFC because of the support the company had from the US and Central American governments. Many of the Central American dictators were pro UFC due to the support the company provided their administrations, For example, in 1940 Batista, a staunch supporter of the UFC, was elected president of Cuba.4 Similarly, in 1936 the US put it’s support behind the first of three different Somozas as dictators of Nicaragua.5 However, during the 1930s some of these relationships became less reliable as political leaders exerted greater independence from the company. For example, in Honduras Tiburcio Carías Andino, who was president from 1993 to 1938, was not a simple client dictator running the typical banana republic.6 Andino was not afraid to pressure the Company to deliver more benefits to his administration, and he also used his connections to the US to leverage a border dispute in 1937.7 While he did often help the UFC in the end he was not afraid of seeking what was in his own interest.
This period also saw a hesitancy for the Roosevelt Administration to take overt action in support of United Fruit. For example, in 1938 Roosevelt accepted the Mexican nationalization of petroleum installations owned by US and British companies.8 This precedent encouraged Central American and Caribbean leaders to take action against corporations without the certainty that the US might take military or diplomatic action.
Another challenge for the company during this time frame was the ongoing unpopularity of monopolies, including the UFC. In a 1936 study by Kepner and Soothill the author’s explained how United Fruit’s shipping fleet, combined with its control over railroads and port facilities, enabled the company to squeeze out would-be competitors by giving preference to bananas produced on its own farms. They argued that company also benefited from the fact that its ships were virtually always guaranteed two-way cargoes: ships carried bananas from the tropics and returned with construction materials or finished goods, that would be sold in company stores. The company’s vertical integration translated into guaranteed profits.9 Monopolies in the US had faced popular resentment and growing federal efforts to regulate their activities for decades. The UFC, however, had managed to avoid the laws because much of their business was conducted outside of the US, as well as by allowing a minimum of competition to survive. Nonetheless, the UFC was increasingly viewed as monopoly and this, combined with growing awareness of their various labour practices they were popular and political support in the US.
1 Bucheli, Marcelo. “Multinational Corporations, Totalitarian Regimes and Economic Nationalism: United Fruit Company in Central America, 1899-1975.” Business History 50, no. 4 (July 2008): 433–54. doi:10.1080/00076790802106315., 440
2 Bucheli, 441-442
3 Soluri, 399
4 Lockhart, James, and Roger A. Kittleson. “Socialism, Communism, Fascism.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 23 Jan. 2019, http://www.britannica.com/place/Latin-America/Socialism-communism-fascism.
5 “Time Line of US-Latin American Relations.” Timeline of US-Latin American Relations since 1823, faculty.chass.ncsu.edu/slatta/hi216/hi453time.htm.
6 Fenner, Adam. “Puppet Dictator in the Banana Republic? Re-Examining Honduran–American Relations in the Era of Tiburcio Carías Andino, 1933–1938.” Diplomacy & Statecraft 25, no. 4 (December 2014): 613–29. doi:10.1080/09592296.2014.967126., 613
7 Fenner, 620
8 Lockhart
9 Soluri, John. “Accounting for Taste: Export Bananas, Mass Markets, and Panama Disease.” Environmental History 7, no. 3 (2002): 386-410. Accessed March 30, 2020. www.jstor.org/stable/3985915., 391
