United Fruit is Not Chiquita
Tobis, David
Money isn't everything. Love is the other two percent. I think this characterizes the United States' relationship with Latin America. U.S. Ambassador to Guatemala, Nathaniel Davis, addressing...
...He has been vice-chairman of the U.S...
...Honduran participation protects the foreign partners from nationalization of their investments, especially since the international financial institutions are involved...
...It is precisely because of these contradictions that UFC has had to develop the new forms of exploitation and "self defense" we have described above...
...with the addition of Minor C. Keith's Costa Rican holdings...
...Just before he assumed the presidency in 1970, Figueres' firms received several very lucrative contracts to produce sacks for the UFC...
...firm Pan American Standard Brands, a firm in which UFC just happens to own a million dollars worth of stock.5 The second competitor is Unisola, a joint venture of Unilever Co...
...Securities and Exchange Commission...
...LAAD plans to carry out these projects through a $6 million loan from USAID at 3 percent interest per year, a rate far below the normal 7-12 percent commanded by loans in Central America...
...B. Multi-Corporate Structures The rise of a socialist Cuba, the impending defeat of U.S...
...3) an intensified promotion of increased dependence of Latin American elites on specific U.S...
...and Fidelity-Phenix Fire Insurance Co...
...In 1969, when he rose to U.S...
...that Walter Bedell Smith, Director of the CIA before Dulles, became president of the UFC after the 1954 venture -probably had no relation to the United States involvement in the overthrow of Arbenz...
...This purchase qualified UFC for all the privileges, benefits and tax exemptions of the CACM...
...Like many U.S...
...Securities and Exchange Commission...
...A central reason for LAAD's investing in these small businesses is to accentuate the development of a dependent small business group to further stabilize Central America and protect against nationalist movements...
...Everett Ford: I would like to ask what effect the unrest in South America will have on the business of United Fruit as a whole...
...For further information, see The Invisible Government by David Wise ana Rhomas Ross and The Great Fear in Latin America by John Gerassi, p. 241...
...and other foreign companies...
...9 Essentially, UFC has created a risk-free means of production under which bourgeois sharecroppers pay with crops for the use of their own country's lands...
...technology while still others have contracted Latin American companies to produce goods which the U.S...
...One company, UFC, finding it can no longer expand at a profitable rate exploiting the same product (in this case bananas) not only reaches out into new areas of investment but at the same time becomes part of a larger entity (United Brands) in a related field...
...This is not to imply that the people who bought all8 international hotel business...
...Recently though, there have been workers' strikes against UFC and growing pressure to force the company to sell GASH which indicates that the company can no longer hide the facts...
...Extensive networks of transportation and utilities were established in each country, to help yield that country's fruits to North American capital...
...he then moved over to board Chairman of the Rockefeller-controlled Chase Manhattan Bank (1953-61...
...companies...
...In effect, Bouscayrol was forced to accept this deal...
...Although foreign firms still pay higher wages than do local firms, to replace the imperialists * Total investment in this case is roughly double net book value...
...And guess who is top banana in Costa Rica...
...Besides, he is a life member of the corporation of the Massachusetts Institute of Technology (MIT...
...In 1954, when Facio was UFC's lawyer in Costa Rica, his company signed yet another favorable contract with the Costa Rican government...
...Johnson, a relative of J. Edgar Hoover, had access to capital...
...UFC has recently bought out a half dozen farms in Florida to produce and market flowering plants, including Cape Farms Inc., C-N-K Corp., Farm Production Corp., Clipper Corp., and Lantana Flower Farms, Inc...
...1 0 This program currently sup- 11 lies the fruit for 52 percent of UFC's banana sales...
...Not surprisingly, Hill is active in Republican Party politics as a major campaign contributor and specifically as an adviser on Latin American affairs for the GOP National Committee...
...The first seven companies above bought out local Guatemalan firms and none of them had factories in Guatemala previously...
...corporations plus ADELA...
...He is also vice chairman of Mt...
...Nor is Japan the only new market UFC is interested in...
...10 Mario Monteforte Toledo, Guatemala, Monografia Sociologica, [Mexico, 1963], p. 518, 11...
...Along with Lorenzo Dow Baker and eight others, he formed the Boston Fruit Co...
...Until recently Costa Rica did not recognize these countries, but it now has done so...
...UFC also owns 100 percent of the voting stock of Bernard Lodge Sugar Company...
...was planned as an investment of at least $77.5 million for the purpose of exploiting Honduras' richest known natural resource -- the three million acre Olancho Forest...
...When the bananas are sold, "the difference between the final selling price and the total cost of production [the profit] is divided equally between the grower and the company...
...Material found on p. 29 and Chart III following p. 25...
...Concealing information on who really owns a company is what U.S...
...In 1957, 11.7 percent of all Latin America's manufactured exports originated from U.S...
...This merger created a gigantic food conglomerate with annual sales of $1.425 billion...
...corporations...
...1. Expansion of Markets in the Underdeveloped World...
...After serving as President of the World Bank (1947-49) he went on to become the U.S...
...International Finance Corporation, "News Release," No...
...The company has already made tremendous profits from the sale and leasing of land...
...corporations protect them*As part of the Fruit Company's low profile, its annual reports only list "improved" acres, i.e., land actually under cultivation or land with roads or railroads...
...They did have, however, Central American marketing and distribution facilities which gave them a tremendous advantage in gaining control over the processed food supply for the region...
...Agreements of this type range from small scale arrangements between two or three companies to huge investment consortia in which hundreds of giant corporations participate...
...To both North and South Americans the United Fruit Company (UFC) is known as the producer of bananas (Chiquita, etc...
...The Associate Producer program thus serves as a deterrent to nationalization, not only by lowering the profile of the UFC as the owner and exploiter of vast tracts of land but also by creating an interest bloc of Latin Americans whose welfare is tied directly to the continued operations of the company...
...The fruit company, of course, bought up 100 percent of the GASH stock and thus became the owner...
...This is a consortium of 239 of the largest U.S...
...Ambassador to Costa Rica (1953-54), El Salvador (1954-55), Mexico (1957-61) and Spain (1969- ). He was Special Ambassador to inaugurations in El Salvador (1956) and Costa Rica (1953 and 1958) and Special Assistant to the Under Secretary of State for Mutual Security Affairs (1955-56...
...He was chairman of the Board of Regents of the University of Hawaii from 1961 to 1963 and is now a member of the exclusive Pacific Union Club of San Francisco.15 UFC, participating in COPINA indirectly through ADELA and directly as a partner, gains special advantages...
...In addition, UFC owns Right Away Brands salads (pre-packaged salads in neat plastic bowls) and freeze-dried foods...
...style...
...Not surprisingly, negotiations to sell bananas have already begun...
...One of UFC's two Cuban sugar centrals was named after Preston...
...UFC, however, has expanded into other areas in Central America, owning banana puree plants in Panama and Honduras...
...III, No...
...Among these is Standard Fruit, UFC's major banana "competitor...
...The new company not only can use a common distribution network for its products but by diversifying spreads its risks considerably...
...firms, UFC is moving toward a deeper level of world penetration and integration...
...He currently is a director of such corporate giants as Allied Chemical, Westinghouse, American Telephone and Telegraph and the Metropolitan Life Insurance Co...
...These arrangements minimize and often eliminate the need for new capital investment while maintaining a relatively high rate of profit for the U.S...
...This program was put into full swing in Latin America in 1960 just after Cuba's nationalization of 271,410 acres of land "owned" there by UFC...
...Figueres, Costa Rica's current President (he has had this job twice before) and self-styled leader of the staunchly anti-Communist non-revolutionary left in Latin America, is also a close ally of the UFC...
...In addition, like other North American companies, UFC seeks to create a small elite group of Latin American businessmen who will promote its interests...
...banks and industrial corporations...
...and a director of Western Electric...
...17, 1969...
...In the last eight years in Guatemala alone General Mills, Pillsbury, Foremost-McKessen, PanAmerican Standard Brands, Purina, Central Soya, Coca-Cola (with General Foods), Kellogg's Kraft, and CPC International (formerly Corn Products Co...
...Interview with Edward Taylor, General Manager, United Fruit Co., Guatemala, June 1971...
...2 1 Essentially, LAAD is receiving $6 million from the U.S...
...We look forward to doing so for many years to come...
...Net Book Value is total investment minus a large depreciation allowance for tax purposes...
...We have as you know large fixed investments that we cannot move...
...While nationalized lands can be put to immediate productive use, such is not the case with factories...
...UFC also has plans to export processed meat, fish and other seafood products from Central America...
...Like other U.S...
...He is a Harvard graduate and long-time member of the Boston elite...
...Just as the commercial activities of the feudal period cut across feudal states and eventually resulted in national states, the commercial activity of the future, cutting across national states and regional blocks, will eventually call for a different pattern...
...THOMAS MOORE BANCROFT (Director, c.1940-50...
...Honduras, like most Latin American countries, is heavily in debt to these key organizers of foreign capital...
...Thomas E. Sunderland, UFC Chairman, in 1962...
...In addition, in 1967, for example, UFC bought out the largest, oldest and most diversified food company in Mexico, Clemente Jacques...
...Last year the United Fruit Company sold 12 billion bananas to North Americans and Europeans...
...Further, LAAD has been granted a five year grace period and twenty years to repay...
...3) May-June 1970...
...Even if the Central American countries decided to nationalize the UFC's banana lands, the company would not suffer enormously...
...An independent entrepreneur, in 1870 he was the first to sell bananas in Boston...
...UFC has also begun small banana production operations in Ghana, Madagascar and Taiwan...
...By this means it completely by-passes the United States in the process of producing, marketing, and even selling any given product...
...The case of United Fruit argues against the theory that foreign investment creates new jobs...
...2. The New York Times, September 15, 1970...
...For this service he received no less than one million * n 1954 the U.S...
...Therefore, in 1965 it bought out a Costa Rican company which was the largest Central American producer of margarine, mayonnaise, salad oils and shortening...
...When, for one reason or another, he left the spy business, he sold the equipment and used the money as part of the capital for the margarine plant, which was called Numar -- or Ramun spelled backwards...
...has sold or leased much of its land and has switched its new investment into processing, distribution and manufacturing...
...Then he joined the Dole Corp...
...He also was a director of the American Institute for Free Labor Development (AIFLD) and of Investors Diversified Services -- a company which has proven to be a favorite of the Nixon Administration...
...One such method entails the accelerated development of a small Latin American capitalist class whose interests and survival are directly tied to the fate of U.S...
...Information Agency (USIA), sponsoring cultural events to indoctrinate local elites with North American values and promote consumerism U.S...
...r I JSok . sananai ANDREW WOODBURY PRESTON (President and member of the Executive Committee, 1899-1925...
...IV, No...
...In addition, UFC's cash supply made the merger much more attractive for AMK, which needed capital to operate successfully in the temporarily depressed packing business...
...This puppet class represents one major means by which U.S...
...Another argument used to "prove" the "beneficent" nature of foreign investment is that foreign companies pay higher wages than local firms...
...Chamber of Commerce meeting in Guatemala, April 20, 1971...
...3. Promotion of Increased Dependence on U.S...
...There comes a point, though, when people on these continents get tired of buying more bananas...
...firms have established joint ventures with Latin Americans, others have leased U.S...
...firms will protect themselves against nationalization...
...This new company, Numar S.A., which markets under the Clover Brand, has n interesting history...
...To the extent that we are successful over a period of time in changing our banana plantations over to the Associate Producer program, so that nationals operate the farms, w are better off in the kind of conditions you mention...
...Report sent to UFC shareholders from the 1962 annual meeting, p. 16...
...More so in this case since bananas are a high risk crop due to diseases, hurricanes and spoilage...
...It must be remembered that beginning in 1924 when UFC got its first formal land concession in Guatemala, it payed the Guatemalan government only $6,000 (later, $14,000) a year for 25 years of exclusive rights over 30 square kilometers of the richest land in Guatemala...
...Since UFC is an ADELA member, this is but another example of cooperation between seemingly competitive corporate giants...
...businesses euphemistically call "keeping a low profile...
...Facio has served UFC as a lawyer, as he has also done for Allied Chemical, U.S...
...imperialism in Latin America...
...In 1969, the company became part owner of the Christian Science apartment and commercial complex in Boston for which construction began in mid-1970...
...That system is, however, fraught with contradictions...
...6. Gert Rosenthal K., Algunos Apuntes Sobre la Inversion Extranjera Directa en el Mercado Comun Centroamericano, Instituto para la Integracion de America Latina, Buenos Aires, Nov...
...Under the program, UFC sells or leases some of its land to middle and upper middle class locals...
...imperialism in Vietnam and the spread of liberation struggles throughout the Third World, coupled with the underlying economic contradictions of international capitalism have led corporate giants increasingly to coordinate their efforts to preserve and promote their collective inThe central idea behind this type of consortium is to utilize the experience and capital of large U.S...
...This is what is meant by capitalist industrialization...
...Bouscayrol y Cia., Ltda., has agreed to manufacture yeast that Standard Brands will distribute throughout Central America...
...The directors have begun to realize that in Central America alone there are 15 million people who are potential consumers of UFC products...
...2) the accelerated development of an indigenous bourgeoisie to promote U.S...
...At the annual meeting of the UFC in 1961, Board Chairman Thomas Sunderland clearly indicated the import tance of the program in answering a stockholder's question: Q. Mr...
...A recently planned project to develop a pulp, paper and lumber operation in Honduras illustrates how ADELA works in practice...
...UFC has always been an international corporation...
...The money was given indirectly to obscure its origin...
...His father was a director of the First National Bank of Boston for over thirty years and his brother is an investment banker...
...LAAD is projecting a series of ventures in Central America...
...corporations have been forced to restructure their forms of exploitation...
...Coincidentally, UFC had large sugar plantations in pre-revolutionary Cuba, and at one time was the fifth largest producer on that island...
...imperialism...
...1 8 This expansion, aside from allowing easier world distribution, has the added advantage of reducing the chance that nationalization in one area could severely hurt the company's overall banana production...
...of NY...
...This would give the UFC a welcome opportunity to exploit that country's soil once again...
...Similar to ADELA is the Latin American Agribusiness Development Corporation (LAAD), composed of eleven of the largest U.S...
...A majority of the new companies which UFC has absorbed recently are in the food industry...
...As payment for his work in promoting UFC's interests, the company gave him a 17,300 acre estate in Costa Rica in 1964...
...With some of Hooveir's money, Johnson and Dundorf started a margarine factory...
...United Fruit Company: Assets and Employees, 1948-69 1948 1956 1961* 1969 Net Fixed Assets (in thousands of dollars) 167,724 239,260 187,855 242,771 Tropical Employees 91,393 83,760 39,700 45,000 Other Employees 9,012 11,142 10,300 14,000 * The loss of investments in Cuba accounts for the sharp drop in assets between 1956 and 1961...
...In Guatemala, for example, foreign companies employ twice as many people per dollar of capital investment in agriculture as they do in manufacturing In the last ten years, while foreign investment has doubled the unemployment level (currently over 20 6 vercent) has not decreased significantly...
...A less important competitor is La Fabrica de Manteca y Jabon Atlantida in La Ceiba, Honduras, in turn 51 percent owned by Standard Fruit and Steamship Company...
...These include: the technical training of local businessmen (who then manage local branch offices...
...8. Theodore Price Co., Report on United Fruit Company, December 18, 1931...
...One specific example is the Atlantic Community Group for the Development of Latin America, the ADELA Investment Company...
...After leaving Chase he rejoined his law firm (Milbank, Tweed, Hadley McCloy) and took over the chairmanship of the Ford Foundation...
...6) August 1964...
...It also negotiated with Hotel Corporation of America and Swiss Chalet, Inc., to become partners in the WHAT IS THE UNITED FRUIT CO...
...JOHN J. MC CLOY (Director, c.1955...
...ROBERT CHARLES HILL (Director and Consultant, c.1960-65...
...His main corporate affiliation was with Sears, Roebuck and Co...
...the proud creator of the Banana Republics...
...These bases were engaged in training men for a future invasion of Cuba...
...He is also a director of Arthur D. Little, a leading consulting firm...
...European countries...
...Although seemingly inconsequential, lettuce accounts for one percent of the total grocery store sales which reach $6 billion annually, or some $60 million and UFC 2 produces about 18 percent of total lettuce sales...
...In 1948 for example, total investment before depreciation allowances was $325,603,000...
...One further note on the subject of nationalization should be added...
...These new forms constitute the most recent strategy for solving, in the short run, contradictions which ultimately are non-resolvable...
...Assistant Secretary of State for Inter-American Affairs, he was also compelled to resign (temporarily, one assumes) from the boards of Gillette Co., Allstate Insurance Co., the Republic National Bank of Dallas, Philadelphia National Bank and Dow Jones, Inc...
...Before serving as Ambassador in Costa Rica and later in El Salvador, he was an executive of W.R...
...Bancroft is a director and major stockholder in this bank...
...Field research in Guatemala, 1971...
...5) September 1970...
...and, often in conjunction with the U.S...
...There is another reason, however, related directly to a new imperial strategy behind U.S...
...He was also a director of the First National Bank of Boston (which has historically played a major firancial role in the United Fruit Company's operations), c.1910-29...
...1 9 Business Week (July 11, 1970) has estimated that ADELA will mobilize close to $1 billion of investment in Latin America...
...life...
...Since most U.S...
...giants, UFC is increasingly using cheap labor and resources available in the Third World as a base for exporting manufactured (processed) products to both developed and underdeveloped countries...
...terests...
...Herbert K. May, The Effects of United States and Other Foreign Investment in Latin America, prepared for the Council of the Americas (New York, January 1971) p. 29...
...3. The reference to all United Fruit Co...
...In 1968 UFC had 227,000 acres of such land.12 selves by increasing the dependence of local corporations on U.S...
...He and his business partner, a Cuban exile, set up a holding company called San Cristobal to administer their two coffee farms, a natural fiber (sisal) factory and a synthetic fiber (polypropylene) factory...
...Companies do not have to pay import duties on machinery or raw materials brought into the country and there are no taxes on profits for five to ten years...
...companies from expropriation and nationalizaation...
...Guatemala: Employment and Salaries in Foreign Firms Sector Agricultural Industrial Percent employed by foreign firms* 5.7 20.7 Percent salaries paid 11.3 31.9 * This data applies only to workers covered by social security benefits...
...capital abroad was primarily concerned with extracting raw materials (agricultural goods and minerals) from its "spheres of influence" in the underdeveloped world...
...and foreign firms in joint ventures...
...corporations decrease risk still further by leaving certain manufacturing entirely in Latin American hands...
...Capital Assistance Paper, Proposal and Recommendations for the Review of the Development Loan Committee, ROCAP/Latin American Agribusiness Development Corporation, USAID, DLC/P-972...
...government to buy out or participate in Central American companies.* Due to its sheer size, LAAD's minority interest in these companies will prove to be a powerful factor in control...
...In addition, he is a trustee of John Hopkins University whose press publishes the World Bank's special reports...
...UFC's expansion and diversification did not stop here...
...GEORGE PEABODY GARDNER, JR...
...ADELA's partners in COPINA were the International Paper Company, the Honduran National Development Bank, the Central American Bank of Economic Integration, the International Finance Corporation (of the World Bank group), the Standard Fruit Company and UFC...
...The company's major competitors in oil and margarine are Productos Golden and Dely S.A...
...Foreign Service (1943-45) and subsequently served as U.S...
...imperialism...
...Furthermore, since technology and machinery is of U.S...
...penetration and control of Latin America's economy...
...Ambassador to Guatemala, Nathaniel Davis, addressing the U.S...
...To solve this problem, UFC has expanded its operations in both North and South America, developing for each region distinct new ranges of products and ventures designed, for the most part, to create artificial new consumer "needs...
...5. United Fruit Co...
...The table which follows illustrates this process in Guatemala...
...The leaseholders, called "Associate Producers," sell their entire production to the UFC...
...Before examining this process in Latin America, one should look at the North American side...
...UFC, however, achieved its goals by convincing the company, privately held at the time, to go public and sell its stock on the open market under the name TRANSPORTE INTERNACIONAL GASH, S.A...
...His daughter Bessie married Eugene W. Ong who held various executive positions with United Fruit (c.1910-20...
...will shortly begin to export edible oils and margarine to Czechoslovakia and Israel...
...2 0 This combination of international corporations, international financial organizations, and, in this case, a Honduran Government organization, serves to tie Honduras closer to the international capitalist system...
...UFC now conducts business through no less than 145 whollyowned subsidiaries, as well as under its own name...
...In the late 1960's the company became the proud owner of 2,200 AW Root Beer drive-ins and 655 Baskin Robbins ice cream stores stretching across the United States and Canada...
...The new company's largest branch is John Morrell and Co., the third largest meat processer and distributor in the United States, with sales of $870 million...
...To accomplish this end, the United Fruit Co., and other major U.S...
...Therefore, as all companies, the UFC must expand if it is to continue to exist...
...In the past, however, its prime activity has been to extract raw materials from the underdeveloped world...
...Grace Co...
...This bank merged in 1961 with Manufacturers Trust to form Manufacturers Hanover Trust Co...
...With these plants, the company became the largest margarine seller in Central America...
...On that occasion Facio said, Operating agreements such as that which the Costa Rican government has just completed with the United Fruit Co...
...and Hector Melo and Israel Yost, "Funding the Empire: Part II, The Multinational Strategy," NACLA Newsletter (Vol...
...That John Foster Dulles, the United States Secretary of State at the time, was the legal representative of the UFC through his law firm, Sullivan Cromwell...
...To protect itself against such moves, UFC * Shortly thereafter, UFC and the CIA organized an invasion of Guatemala, bombed the National Palace and overthrew the government of Arbenz...
...By 1963, there were a total of 1,115 Associate Producers in six South American countries, and all the banana acreage in Colombia, the Dominican Republic and Ecuador which the UFC has developed in the last 65 years is presently under the associate Producer program...
...This trend is due to the shift of foreign investment from the agricultural sector to the industrial sector...
...10K report on file with the U.S...
...Although UFC's net fixed assets (book value)* have increased 45 percent (or $75 million) since 1948, the number of persons employed in the tropics where most of the company's investments are located has actually fallen by 50 percent...
...corporations use North American technicians in key positions, local people lack the training to operate and repair factory equipment...
...In other words, the wage differential between foreign and local firms is less in the industrial sector and as the total of foreign investment in that sector increases, the overall difference between the two will decrease correspondingly...
...The UFC's "Associate Producer" program fits neatly into the pattern of forming puppet capitalists...
...Keeping this aspect of UFC in mind, we can now turn to its operations in Latin America...
...Some U.S...
...While he was Ambassador to Washington (appointed in 1962) the U.S...
...contractor then markets...
...To get an Associate Producer started the UFC lends him money for an initial investment and provides technical assistance if needed...
...As foreign investment moves from the agricultural into the industrial sector, unemployment will intensify...
...This project, called COPINA (Compania Pino Celulosa de Centro America, S.A...
...firms in the area have begun to produce for a local market and increasingly dominate and control the industrial production of the region...
...To complement this acquisition, the company has also absorbed several smaller lettuce producers: Demco Farms, Inc., Earl Meyers Co., Nunes Bros., Peter Stolich, Inc., Toro Farms, Monterey Ice and Development Co., Consolidated Growers, Inc., Jerome Kantro Enterprises, and Salinas Valley Vegetable Exchange...
...not only prove the falsity of the Communist charges of Yankee Imperialism, but they show how our government and peoples may profit by the cooperative attitude of American enterprise.*7 And profit he did...
...In 1965, Numar S.A...
...12 Connected with this program is the sharp drop in UFC's land holdings...
...Stacy May and Galo Plaza, United States Business Performance Abroad: The Uni-tedFruit Company in Latin America, prepared for the National Plannii g Association (1958) p. 80 and interview with Tom McCann, Division of Public Relations, UFC, October 1971...
...company involved...
...As capitalism has advanced and its economic contradictions have intensified at home, the underdeveloped world has been forced to assume an everincreasing role in resolving those contradictions...
...The changes in the United Fruit Company's global strategy fit into the larger, coordinated system of world capitalism...
...firms based in Latin America, but by 1966 the corresponding figure was 41.2 percent.l 6 In the case of the UFC, its subsidiary Numar, S.A...
...UFC, in particular, has begun to enter into joint ventures with other'major firms which at one time might have been considered its competitors, either real or potential...
...from 1939 to 1969...
...In early 1970 Facio became Foreign Minister of Costa Rica...
...Fred Goff, "Bank of America Has a Man on the Spot in Latin American Agribusiness," NACLA Newsletter (Vol...
...a subsidiary of Castle and Cooke, which has a substantial Latin American operation), becoming vice president in 1955 and president and director from 1958-63...
...His mother belongs to the politically active and wealthy Saltonstall family while his grandfather on the other side was a key figure in Theodore Roosevelt's administration...
...The alternative to imperialism is socialism...
...Standard Brands has its own factory in Guatemala which could be turned to yeast production, and since Bouscayrol does not have marketing facilities outside of Guatemala itself, it could not hope to compete with Standard Brands...
...It is not only individuals like Gonzalo Facio and "Pepe" Figueres whose friendship and good will the UFC cultivates to serve its interests...
...UFC holds $250,000 of the $17.5 million of stock initially issued by ADELA...
...Grace Co., another powerful U.S...
...The brother of the owner of the Guatemalan yeast company, Jose Luis Bouscayrol, was Minister of the 013 Economy in 1969.15 4. The Creation and Expansion of Multinational/ Multicorporate Structures...
...As part of its expansion into other geographical areas, UFC is setting up banana plantations in the Phillipines in order to supply the large and growing Japanese market -- recently a prime target for UFC...
...Several means are used in this process of creating a dependent Latin American elite...
...Further, and more importantly, any country that did nationalize would be left with the task of marketing and distributing bananas, areas which UFC monopolizes along with a couple of other North American companies...
...He began as a Vice Consul in the U.S...
...IV, No...
...Inter-American Council and a trustee of the Carnegie Endowment for International Peace...
...UFC began for a time to move into real estate ventures both in the United States and abroad...
...A graduate of the Harvard Law School, he served as Assistant Secretary of War (1941-45) and then became a member of the corporate law firm, Milbank, Tweed, Hope, Hadley & McCloy (whose clients include several Rockefeller interests...
...In 1954 the Guatemalan government caused UFC a momentary shudder by trying to nationalize 200,000 acres of idle land owned by the company.* In 1960, when the Cuban government successfully nationalized 271,000 acres of land and two sugar mills (Preston and Boston) held by UFC in Cuba, the company became frantic and the stockholders hysterical...
...David Tobis * This loan was originally given by USAID (Regional Office for Central America and Panama) to the Central American Bank of Economic Integration but was "tied" specifically for this project...
...corporations it has begun to turn toward the large and relatively untapped markets in Eastern Europe and the Soviet Union...
...Such a strategy makes nationalization considerably more difficult...
...Besides reducing the risk of nationalization, the deal has the added advantage of giving Standard Brands an indirect channel to the highest circles of government...
...While investment has been increasing, employment has been decreasing...
...colones ($170,000) while 75,000 Costa Rican students and workers demonstrated against the company...
...Pan American Standard Brands, for example, has set up one such arrangement in Guatemala...
...We have played an important role in furthering inter-dependence between the good earth of Middle America and the markets of North America...
...Herbert C. Cornuelle President, UFC October 15, 1968 A. Multi-National Structures...
...Paul Deutshman, "United Fruit: Partners to Campesinos," Latin American Report (Vol...
...Since bananas sell for a penny a piece in the countries where they are grown, UFC cannot expand its sales by marketing whole bananas there...
...The company subsequently established a second margarine plant in Honduras and acquired 77 percent of a third plant in Nicaragua called Aceitera Corona...
...As a result, GASH is usually thought of as locally-owned rather than as another tentacle of the United Fruit Company...
...An additional aspect of the drive to create a dependent capitalist class comes to light when one examines the wide range of extracurricular programs and "social service" activities engaged in by U.S...
...Once President, Figueres repaid this generosity with tremendous government concessions and benefits to UFC which amply remunerated UFC for the favorable contracts he had given them...
...In 1969 the company merged with AMK Corporation to become United Brands...
...He is a trustee of the Institute for Defense Analyses (IDA), the World Peace Foundation and the Escuela Agricola Panamericana in Honduras...
...8 More recently, Facio represented ALCOA in its succesful attempt to gain exclusive rights to exploit Costa Rica's vast bauxite deposits...
...Although the COPINA project has been temporarily shelved because difficulties in CACM have delayed financing, it is a prototype of the kind of venture that multi-corporate entities like ADELA are planning for the future...
...Ambassador to Costa Rica was Robert C. Hill...
...In the four Central American countries where it had investments (Costa Rica, Guatemala, Honduras, and Panama) and where its holdings in 1954 were equal to 20.4'percent of the total crop land, the total (not including Associate Producer lands) has fallen from 1,726,000 acres in 1954 to 672,000 acres in 1971.*13 Some of this land has been sold off to banana producers no less dependent upon the company than the Associate Producers, while much of the rest has been leased under the Associate Producer program...
...In May of that year, speaking to a rally of Cuban exiles in Miami, he urged the governments of Latin America to unite to overthrow the revolutionary government of Cuba...
...These Latin American puppets perform several vital functions as junior partners of foreign capital...
...He married Edith, the daughter of William Woodward, Jr., from the leading family in the Hanover Bank of NY...
...UFC has had difficulties with nationalizations in the past...
...Increasingly, U.S...
...As these huge investment.consortia begin to coordinate and rationalize a larger and larger portion of international investment capital, they will make the monopolies and conglomerates of today look small by comparison...
...boxes...
...It does not matter whether a company is U.S.-owned or owned by Central Americans because any company plant in the area is eligible for all the benefits of the Common Market if it is involved in intra-regional trade...
...4 As a producer of raw bananas, a good not traded in the Common Market, UFC did not qualify for CACM's tax benefits...
...This operation complimented the company's traditional growing and processing of sugar, marketed under the Revere label, which accounted for $58 million dollars worth of sales of refined sugar in 1966...
...Anglo-Dutch) and the millionaire de Sola family of Salvador...
...Thus, even though the company's actual holdings have shrunk, its penetration into the economy, through indirect control and direct investment in both agricultural and industrial sectors, has grown...
...In the past year, Costa Rica has begun to sell several million dollars worth of coffee to Eastern...
...Source: Gert Rosenthal, Algunos apuntes sobre la inversion extraniera directa en el Mercado Comun Centroamericano, (Buenos Aires: Instituto para la Integracion de America Latina, 1969), p. 30...
...6A, Gert Rosenthal K., unpublished thesis in progress Chapter III, "Magnitude and Principal Characteristics of Direct Foreign Investment in the Central American Common Market" and Valentin B. Suazo, Jr., Job Creation in Central America and Panama, of the Central American Office of the American Institute for Free Labor Development, 1971, p. 4. 7. Report sent to UFC shareholders from the 1962 annual meeting...
...Business Week, February 22, 1969...
...interests and to protect U.S...
...financing technical schools to teach business skills, later to be used in company service...
...have all set up food processing plants...
...CHARLES APPLETON MEYER (Director, c.1960-69...
...UFC would turn to alternative sources of supply and, no doubt aided by its "competitors," would refuse to handle any bananas from nationalized lands...
...9) January, 1970 for more information on the Central American Common Market...
...companies, represent them before government bureaucracies, serve as their lawyers, and, of course, grow wealthy as a result of the presence of their North American benefactors...
...I' AIF-Orl9 As a complement to this burgeoning network of consumer-oriented goods stretching from Mexico to Panama, the UFC bought a locally-owned plastic bag firm in Costa Rica, Polymar S.A., and attempted to buy a relatively large Costa Rican trucking company called Transporte Gash, Limitada...
...I am referring particularly to nationalization...
...1949-53) and director of Canadian International Power Co., Monterrey Railway Light and Power Co...
...Military Governor and the High Comissioner for Germany (1949-52...
...Thus, through ADELA, companies that once competed or had conflicting interests now work harmoniously together to exploit the wealth of Latin America...
...A member of the financial oligarchy, Gardner comes from a family of Boston bankers...
...In 1967, for example, the company sold no bananas in Japan, but by 1969 i 7 controlled 10 percent of the banana market there...
...The listing is given in terms of 40 lb...
...companies and to invest with other U.S...
...origin, supplies of spare parts and replacements can be easily cut off, and new machinery from other sources is often difficult to integrate with the existing plant...
...Kenneth H. Redmond President, UFC July, 1954 As the threat of nationalization in Latin America increases, U.S...
...subsidiaries and holdings comes from various annual reports or from the 10K reports of United Fruit filed with the U.S...
...organizing and paying for trips11 to the United States, to impress Latin Americans with North America's size and to show them the affluent side of U.S...
...firms...
...9. Report sent to UFC shareholders from the annual meeting in July 1961...
...While it may be true that because of more advanced technology, greater efficiency, "cheaper" financing and economies of scale they can afford to do so, the difference between local and foreign companies' pay scales is diminishing...
...in Guatemala and Aceitera Centro America in Costa Rica, all three owned by the U.S...
...Steel, American Bridge and, more recently, ALCOA...
...Corporations...
...Other than to note the importance of sugar to the company, much less now since it lost its properties in Cuba, this aspect of the company will not be discussed here...
...A government official, Hill proved a very influential addition to the United Fruit board...
...More importantly, UFC also bought out Inter-Harvest Lettuce, the largest lettuce grower in the United States and a major producer of celery and cauliflower...
...As an integral part of its overall corporate strategy, UFC has begun to look for new markets and investments, turning its eyes towards Japan and Mexico as well as towards the area of its principal overseas operations, Central America...
...companies control the processing, distribution, and marketing of food destined for the Latin American consumer sector...
...those bananas did not enjoy their feast, but it becomes increasingly difficult for the fruit company to sell more and more bananas in those same areas...
...In addition, Hill was an assistant vice president of W.R...
...2. The Development of a Domestic Bourgeoisie...
...This acquisition which took place at the time of the 1969 presidential election created a great furor in Costa Rica, and popular opposition to the purchase caused the company to cancel its plan to buy Gash outright...
...In 1960 Hill was named to the Board of Directors of United Fruit...
...Their early exploitation, going back to the 19th century, was typical of the first stages of U.S...
...The result is a new corporate giant which can successfully compete with the other entities in the field...
...This process of change has been marked by four characteristics: 1) the creation and expansion of diversified markets in the underdeveloped countries...
...The company also has bought out J. Hungerford Smith, which produces syrups, toppings, and ice cream flavorings...
...This merger typifies several processes in the development of contemporary capitalism...
...Vernon Mills of Baltimore, a member of the executive committees of Niagara Fire Insurance Co...
...One main area of LAAD's activity so far, is the distribution, warehousing and marketing of food products...
...Subsequently, UFC withdrew from the Christian Science complex in Boston and the hotel ventures since the company made a decision to concentrate its efforts in the food industry...
...Source: Annual Reports, 1949, 1956, 1965, 1969.10 with local capitalists would merely be to establish a less efficient hierarchy of exploitation...
...From the end of the 19th century to the beginning of the 20th, U.S...
...T 4 Without access to new capital in volume or to new capital goods and replacement parts, nationalization would prove too costly...
...Though the Morrell and UFC divisions of United Brands are operated autonomously, they are part of one enormous food empire...
...HERBERT CUMMING CORNUELLE (Executive Vice President and Director, 1963-67, President, 1967- ). Cornuelle was executive vice president of the Foundation for Economic Education of NY State (1946-49), and a liaison officer of the Volker Fund of Burlingame, California (1949-53...
...Ong was also a partner in the law firm of Storey, Thorndike, Palmer Dodge which has served UFC in various capacities for over 40 years...
...Director, c.1955- , Chairman of the Board, c.1960-65, Chairman of the Executive Committee, c.1965...
...capitalism, maintain an "apolitical, low profile" position to disguise their "united front" with U.S...
...We have been proudly engaged for half a century in a useful enterprise...
...became a subsidiary of the UFC and Richard Johnson became a vice-president of the company in Boston...
...which in 1899 became the Banana Trust (better known as the United Fruit Co...
...any other alternative is anachronistic...
...useful to the American public and to foreign countries...
...In addition, the production and distribution of bananas has become three times more capital intensive in the last ten years...
...company exploiting Latin America...
...Recently, like most large U.S...
...Mexico) and North East Airlines...
...What is happening in the processed food industry is typical of what is happening in the entire industrial sector of Central and South America...
...By encouraging nationals to enter the banana industry we do not only contribute to the development of stable conditions in the tropics -- aid the creation of a growing middle class -- but also gain partners who will be valuable allies in developing our own interest...
...It is obvious that one reason the company decided to expand in this area is that it had developed skills, contacts, outlets, and control from 70 years of experience in the field...
...1. United Fruit Co., Annual Report, 1969...
...A Danish technician named Tom Dundorf came to Central America in the late 1930's and hooked up with a North American, Richard C. Johnson...
...government financed and organized Cuban exile military bases in Costa Rica at Tortuguero and Saripiqui...
...With the establishment of the Central American Common Market (CACM) a decade ago, goods produced in any one of the five republics can be sold in the others without payment of tariffs...
...A. Chairman Sunderland: We watch areas of unrest very carefully...
...A story told in Central America is that a third partner, a man named Ramun was also involved with the margarine factory's founding...
...International banks, despite their subservience to international and U.S...
...and 4) the creation of multinational and multicorporate structures for better economic coordination and control...
...The analysis of the four characteristics of the process will attempt to make clear the new thrust of U.S...
...The United Fruit Company's new economic strategy reflects the broader, underlying changes and needs of capitalism in general...
...Whereas formerly Standard Fruit and UFC, the two largest banana producers in the world, competed for control of Central American land and world markets, now they have combined their interests and work together to exploit Central America's resources...
...But, before discussing these four points, a brief description of the United Fruit Company is necessary...
...that John Moors Cabot, then Assistant Secretary of State for Inter-American Affairs, was a large shareholder of the UFC...
...that Henry Cabot Lodge, the United States Ambassador to the United Nations at the time, was on the board of directors of the UFC...
...Two examples of the above are Gonzalo Facio and Jose "Pepe" Figueres in Costa Rica...
...4. See NACLA Newsletter (Vol...
...As impoverished Latin Americans increasingly demand control over their own lives and a greater share of their national wealth, North American companies have developed new and more sophisticated methods to defend their empire...
...The company accounts for eight percent of the sales of all freeze-dried foods in the United States -most of which it sells to institutional customers and the United States military...
...Company t of Margarine Market in Central America Numar 41 Unisola 30 Pan Am Standard Brands (Golden and Dely) 24 All Others 5 Thus, four foreign companies control 95 percent of the Central American margarine business along with a junior partner from the national bourgeoisie, the de Sola family...
...George, Jr., was also a director of the First National Bank of Boston (c.1930) and has been a partner of Paine, Webber, Jackson Curtis since 1955...
...69/2, February 4, 1969...
...After opening an outlet in Havana, he was in charge of their Bogota, Colombia subsidiary and then became vice president in charge of Latin American operations...
...They administer the offices and plantations of U.S...
...A Nazi spy who came to Costa Rica in the late 1930's as part of the extensive German pre-World War II espionage network, he had brought large supplies of espionage equipment (mostly photographic) with him...
...UFC Proxy Report, 1969 and UFC 10K Report, 1968...
...The following chart shows the share of market for each company as noted in a survey conducted by Pan American Standard Brands...
Vol. 5 • October 1971 • No. 6
