What is a transnational business? How was the United Fruit Company a transnational business? Why was the United Fruit Company a “state within the Guatemalan state”? How were Arévalo and Arbenz different than previous Guatemalan leaders?
What is a transnational business? How was the United Fruit Company a transnational business? Why was the United Fruit Company a “state within the Guatemalan state”? How were Arévalo and Arbenz different than previous Guatemalan leaders?
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What is a transnational business? How was the United Fruit Company a transnational business?
Why was the United Fruit Company a “state within the Guatemalan state”?
How were Arévalo and Arbenz different than previous Guatemalan leaders?
Transcribed Image Text:In the late 19th and early 20th centuries, the United States practiced neocolonialism in
Latin America. In neocolonialism a state uses economic or political means to pressure
or control other states - but without directly conquering them like in imperialism.
Military dictators, instead of democratically elected leaders, led a number of Latin
American governments.
The United Fruit Company (UFCO), an
extremely successful American company that
profited greatly from investments it made in
OUT OF THIS WORLD
for QUALITY
and FLAVOR
Guatemala. The UFCO was a transnational
business. A transnational business is a
company based in one country that produces
and markets goods in more than one country.
CHIQUITA BANDED BANANAS
The business of United Fruit was bananas, and
from bananas it had built a business empire in the Central American nations of
Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.
The United States government was also interested in bananas, and had sponsored
initiatives to promote the fruit in the American diet. Guatemala became known as a
"banana republic," a pejorative term for developing countries that relied on a single
cash crop, such as bananas, and were ruled by corrupt governments.
1
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BY) license
Under the Guatemalan dictator Jorge Ubico, the United Fruit Company gained control
of 42% of Guatemala's land, and was exempted (excused) from paying taxes and import
duties. Seventy-seven percent of all Guatemalan exports went to the United States; and
65% of imports to the country came from the United States. The United Fruit Company
was, essentially, a state within the Guatemalan state. It not only owned all of
Guatemala's banana production and monopolized banana exports, it also owned the
country's telephone and telegraph system, and almost all of its railroad track (those
technologies help the company communicate about and move its product).
The United Fruit Company was well connected to the United States' President
Eisenhower administration. Secretary of State John Foster Dulles and his New York law
firm, Sullivan and Cromwell, represented the UFCO company. Allen Dulles, the director
of the Central Intelligence Agency (CIA) and brother of John Foster Dulles, had served
on UFCO's Board of Trustees and owned shares (part) of the company. Ed Whitman, the
company's top public relations officer, was the husband of Ann Whitman, President
Eisenhower's private secretary. Ed Whitman produced a film, Why the Kremlin Hates
Bananas, which depicted UFCO fighting on the front line of the Cold War.
The company's efforts paid off. It picked up the expenses of journalists who traveled to
Guatemala to learn the company's side of the crisis, and some of the most respected
North American publications, including the New York Times, Christian Science Monitor,
New York Herald Tribune, and New Leader, ran stories that supported the actions of the
UFCO in Guatemala.
The Guatemalan Revolution of 1944 forced the resignation of the right-wing dictator,
Ubico, who by then had ruled the nation for 13 years. The country held what many
believed was the first true election in its history, popularly electing Dr. Juan Jose
Arévalo to the presidency. A new constitution, based on that of the United States, was
adopted. Arévalo, a liberal politician and educator, built over 6,000 schools and made
great progress in education and health care. Arévalo was followed by Colonel Jacobo
Arbenz, who became president in democratic elections in 1951. After Arbenz came to
power, he extended political freedoms, allowing Communists in Guatemala to
participate in politics. In a country of three million people, only 4,000 were registered
as Communists.
President Arbenz proposed "Decree 900," to
redistribute undeveloped lands held by large
property owners to landless farmers, which
constituted 90% of the population. By 1952,
Arbenz had expropriated (taken from its owners)
3 225,000 acres and made them available to rural
workers and farmers. At the time, just two
percent of landowners owned 70% of useable
agrarian lands, and farm laborers were kept in a
form of debt slavery.
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