The Flag Follows the Dollar:

1
The Flag Follows the Dollar
The Banana Men and American Expansionism in
Central America       
2
Exporting the Social Problems

• Panic of 1893
• Over 500 banks close.
• 15,000 companies go out of business.
•  Approximately 30 percent of the rail system
  jeopardized by company closures.
• The unemployment figures stood at over 14 for
  the civilian labor force and over 25 for
  non-farm workers.
• Even Theodore Roosevelt, then the civil service
  commissioner, had to sell four acres of land to
  keep his family out of insolvency.

3

•  The continuing influx of immigrants only
  contributed to the massive employment problems,
  as more and more people competed for fewer and
  fewer jobs. .
• Workers strikes most notable was the Pullman
  strike in Chicago.

4

• Consensus that the solution to America's problems
  is obtaining access to more foreign markets.
• Markets of Latin America are perfect reciprocity
  would provide a source of cheap raw materials
  without jeopardizing the American domestic market
  with cheap imported products.                    
  
•                      
• Secretary of State Blaine helps author a
• proviso that offers free trade in sugar.

5
With the new markets being made available,
American businessmen began to move into Central
America. Initially, it is to build overland
routes across the isthmus to speed up the
shipping of goods to the American west coast and
the Asian markets.
6

• Americas eye had been cast on Latin America
  since the days of the American Revolution.
• Thomas Jefferson was so sure that America was
  destined to rule the southern part of the
  continent that he once recommended that
  government officials should learn Spanish.
• Central America, with its potential for an
  isthmus route to the Pacific, drew the most
  attention of the American government and American
  entrepreneurs over the years.
• First overland route was built as a result of a
  treaty negotiated by the American chargé to
  Colombia, Benjamin Bidlack, that gave the United
  States the right to establish a route across
  Panama.

7

• William Aspinwall created the Pacific Mail
  Steamship Company in 1846. A year later,
  Cornelius Vanderbilt opened his overland route
  crossing Nicaragua.
• Entrepreneurs soon began to flood into Central
  America, investing in railroads, shipping
  interests, coffee, and bananas.
• American involvement in the area continued to
  grow at a slow but steady rate over the next few
  decades, but the years following the Panic of
  1893 would be the years of the Banana Men

8

• American businessmen heading towards Latin
  America were aided by U.S. foreign policy, as
  both had the same basic needs new markets,
  increased trade.
• A metropole society must
• control the trade situation
• when dealing with nations
• on the periphery.

9

• Order in the periphery areas must also be ensured
  as disorder was a threat to U.S. owned businesses
  and, hence, a threat to American domestic well
  being.
• Thus, American military often drawn in the
  "merchant marine andNavy were joint apostles"
  of the American market expansion into Latin
  America.

10
The Big Stick

• Theodore Roosevelt's Big Stick 1905 Corollary
  to the Monroe Doctrine--America would assume the
  role of policeman in the hemisphere in order to
  maintain order.

11

• All the United States required of Central
  America, and other countries, was for them to "be
  happy and
• prosperous and they cannot be happy and
  prosperous
• unless they maintain order within their
  boundaries and behave with a just regard for
  their obligations toward outsiders."
• This declaration by Roosevelt marked a shift in
  the way the Monroe Doctrine was to be implanted.

12

• William Taft, Roosevelts successor, continued to
  search for ways to implement Roosevelts "Big
  Stick" policy.
• Taft Americans would not "be content until
  they have secured some formal right to compel
  the peace between those Central America
  Governments," and he reserved "the right to knock
  their heads together until they should maintain
  peace between them."

13

• Secretary of State, Philander C. Knox, suggested
  that the United States find a legal means to
  seize the customhouse receipts of other nations
  to prevent that money from falling into the hands
  of revolutionaries. This idea was incorporated as
  Dollar Diplomacy.

14
Dollar Diplomacy

• A way for the American government to maintain
  control over Latin America countries by
  overseeing their massive international loans,
  arranging and guaranteeing those loans which were
  secured via U.S. banks.
• This was, "dollars for bulletBy this policy we
  shall help the people of these rich countries to
  enjoy prosperity instead of almost incessant
  revolution and devastation. We shall do a noble
  work." Knox (Taft's Sec. of State)

15
A Short History of the Banana in the United
States

• Bananas were virtually unknown in the United
  States until around 1870, when they were first
  imported.
• They were considered a rare exotic treat, as they
  were hard to transport before they became too
  ripe.
• In 1876, bananas were sold wrapped in tin foil
  for ten cents each in Philadelphia at an event
  commemorating the 100th anniversary of the
  signing of the Declaration of Independence.

16

• When bananas first began to be imported in
  quantity, the American people were so unfamiliar
  with it that an article appeared in the Domestic
  Cyclopaedia of Practical Information instructing
  how one was to eat a banana "Bananas are eaten
  raw, either alone or cut in slices with sugar and
  cream, or wine and orange juice. They are also
  roasted, fried or boiled, and are made into
  fritters, preserves, and marmalades."

17

• Today, bananas account for 41 percent of fruit
  imported from Latin America, with an import value
  of over 1.1 billion dollars.
• In 2002, Americans consumed an average of twelve
  pounds of bananas per person that works out to
  about 75 bananas per person per year

18
Banana Men Extraordinaire

• Two main companies competing in Central America
• United Fruit Company (UFCO)
• and
• Cuyamel Fruit Company

19
United Fruit Company (UFCO)  

• First large company to emerge from the activities
  of the Banana Men
• Three men combined to form UFCO in 1899

• Lorenzo Baker
• Baker was the first to import bananas from
  Jamaica into Boston in 1871, where he sold them
  for a profit of 2.00 a bunch.

 
20

• Andrew Preston  

21

• Minor Cooper Keith

22

• UFCO held the most influence in Guatemala, where
  they owned most of the railroad and the countrys
  communication network. They also provided loans
  to the various dictators who ensured to keep it
  business as usual for UFCO. All imported material
  coming into Guatemala came through UFCO owned
  ports.
• The company was exempt from paying real estate
  taxes and tariffs to Guatemala for over 99 years,
  and it was granted exclusive right to transport
  mail between America and Guatemala.

23

• Eventually, UFCO would own almost eighty percent
  of Guatemala, over 550,000 acres of land in a
  country that is smaller than Tennessee in which
  only 12.5 percent of land is arable.

24
Cuyamel Fruit Company

• The company had its origins on the docks of
  Mobile, Alabama.
• He joined with Ashbel Hubbard, and they purchased
  a rusty steam ship to begin importing their own
  bananas via the Honduran port of Omoa.

25

• Business was good, and Zemurray expanded,
  gradually making minor inroads into UFCOs areas.
  
• In 1910, Sam bought out Cuyamel Fruit Company and
  sold over 1.75 million bunches of bananas.
• He would eventually pull off the financial move
  of the century, secretly buying up UFCO stock,
  selling Cuyamel Fruit to UFCO, then announcing
  that he had enough stock in UFCO to control the
  company.

26

• Dollar Diplomacy began to create problems for
  Zemurray.
• Under Dollar Diplomacy, the American government
  had convinced several American bankers to work
  with Honduras and assume its 70 million dollar
  railroad debt owed to Britain.
• With the help of the American government, then
  President of Honduras, Miguel Davila, secured the
  loans, placed control of Honduras customhouses
  under the American banks, and discontinued the
  policy of tariff exemptions that Zemurray and
  UFCO had been enjoying for years.

27

• Zemurray had intended the banana companies to
  take over the debt, thus placing Honduras under
  even tighter control of the Banana Men, and this
  action by the American government foiled his
  plans.
• Not only that, but now he was expected to pay
  tariffs on everything he imported, which was
  unacceptable.

28

• Zemurray decided that the answer lay with a new
  president for Honduras, one who would see things
  his way.
• In 1908, he made every effort to bring about a
  change of power.
• Soon after this, Davila began to lose favor with
  Washington over his dealings with the
  anti-American President of Nicaragua. Hence, the
  American government was not too sorry, privately
  at least, to see Zemurray make his move.

29

• Zemurray contacted former Honduran President
  Manuel Bonilla, enlisted him in his plan, and
  outfitted him with a surplus gunboat, the Hornet,
  purchased from the U.S. Navy.
• Zemurray also provided any needed funds and hired
  Lee Christmas, fresh from fighting in Guatemala,
  to oversee the operation.

30

• Lee Christmas was the epitome of a filibuster
• Originally from New Orleans--had come to Central
  America when he heard of the opportunities
  available for a brash young American.
• He became known as a man who could handle a gun
  and was great in a fight.

31

• Zemurray backed forces won battle after battle in
  the coming months.
• Davila, in a desperate situation from which he
  saw no escape, pleaded with the American
  government to intervene, even offering to vacate
  the Presidency for a man of their choosing.
  However, in light of his recently lost favor, the
  offer was declined.

32

• As Christmas and his men prepared to take the
  capital city, the U.S. government finally decided
  to step in and take action.
• In February 1911, as part of the plan to pacify
  the entire Central America isthmus, it demanded a
  cease-fire and ordered both parties to attend
  armistice talks.

33

• It was decided that Davila would step down and
  Dr. Franciso Bertrand would assume the
  Presidency. Bertrand was selected from a list of
  candidates provided by the Zemurray backed
  forces.
• After only a year in office, Bertrand held an
  election, which was supposedly fixed to ensure
  the Bonilla would win.

34

• One of Bonillas first acts as President was to
  appoint Christmas the commander-in-chief of the
  Honduran Army, and one of Christmas men, Guy,
  "Machinegun" Maloney, also from New Orleans, as
  the chief lieutenant in charge of maintaining
  order amongst the banana workers.

35

• Zemurrays rewards for his backing of Bonilla
  included a grant of almost 25,000 more acres of
  land and restoration of the right to import any
  needed material tariff free.
• Later, Bonilla would grant Zemurray another
  25,000 acres of land near the border with
  Guatemala.

36

• UFCO was not out of the picture, however. Both
  companies realized that officials could be bought
  for a cheap price.
• Cuyamel Fruit had the majority of the Liberal
  Party of Honduras on its payroll, while UFCO
  backed the Conservatives.

37

• Zemurray once remarked that, in Honduras, "a
  mule is worth more than a congressman

38

•  Party differences became nonexistent as the
  groups were used as mere tools by the Banana Men
  to attempt to win control of the government for
  its side.
• In 1925, civil war even broke out between UFCO
  forces and Cuyamel men over the right to use a
  certain railroad.
•  It would take most of the reminder of the
  century before Honduras was able to get out from
  under the control of the Banana Men. However,
  their power has only diminished slightly.

39

• It is difficult to discern how much of a role
  Zemurray did play in the overthrow of the
  Honduras government.
• Some think that it was UFCO and not Zemurray who
  was the power behind Bonilla and Christmas.

40

• The matter is further clouded by the fact that
  Bonilla and Christmas never named their
  benefactor in communiqués between themselves,
  referring only to a mysterious "El Amigo."

41

• "I was doing a small business buying fruit from
  independent planters, but I wanted to expand. I
  wanted to build railroads and raise my own fruit.
  The duty on the railroad equipment was
  prohibitive-a cent a pound-and so I had to have
  concessions that would enable me to import that
  material duty free.

42

• If the banks were running Honduras and
  collecting their loans from customs duties, how
  far would I have gotten when I asked for a
  concession? I told him Knox "Mr. SecretaryI
  just wanted to protect my little business. Manolo
  sic Bonilla and I were working for the same
  thing. Why shouldnt I help him"? 

43
Conclusion

• The United States had managed to transform
  itself in a little over 100 years.

44

• Unfortunately, the nation that had fought to
  free itself from being part of an empire
  proceeded to create its own to rule.

45

• The Banana Men, however fair some of them may
  have been to their host countries and their
  laborers, served to further the causes of the
  American metropole.
• In their quest for individual fortunes, they
  developed skewed ideas about what was good for
  their host countries versus what was good for the
  banana companies.

46

• The people and countries of Central America
  suffered under the control of the Banana Men for
  many years, and repercussions are still being
  felt to this day.
• It is still one of the poorest areas in the
  world, and still heavily reliant on America for
  products and financial help.
• The age of the Banana Men may have long past, but
  their legacy still lives on in the nations of
  Central America.

47

• In an attempt to escape United Fruit's shameful
  record, executives changed its name to United
  Brands in 1970.
• In 1975 the Chairman of the Board, Eli Black, got
  caught bribing President Arellano and other
  Honduran officials 1.25 million to lower banana
  export taxes. With the lower tax, United Brands
  saved 7.5 million in the first year alone.

48

• When the bribes became public, the Honduran
  legislature deposed Arellano. Eli Black flung his
  briefcase through his sealed office window.
• He then followed it 44 floors to his death on
  the pavement of New York City

49

• The Cincinnati-based Lindner family took control
  of United Brands in 1987 and in 1990 changed the
  name to Chiquita Brands International.
• The Honduran government had sold 3,000 acres to
  United Fruit in 1936 for one dollar as part of a
  railroad concession.

50

• In 1995, as a cost-cutting measure, Chiquita
  decided to close the land and evict the people.
  The land would be sold.
• When the people refused to leave,  Chiquita
  gained the approval of President Carlos Roberto
  Reina and the Honduran judiciary to send in the
  police and military.

51

• Twenty-five-thousand plantation workers from 12
  developing countries are currently suing
  Chiquita and other companies for using DBCP, a
  pesticide that causes cancer, birth defects, and
  sterility, years after the U.S. banned it from
  the United States.

52
Modern Banana Wars

• Beginning in 1999, the United States and the
  European Union were involved in a modern banana
  war.

53

•  The United States, backed by five Latin American
  banana-exporting nations, argue that the European
  Union's banana import rules favored former
  European colonies in Africa and the Caribbean at
  the expense of the Latin American growers and
  U.S. marketing companies, like Chiquita.

54

• Chiquita supplies 50 of the EU's banana imports
  each year, but wanted an even larger market
  share.
• Chiquita grows no bananas in the US, but few days
  after the corporation donated 500,000 to the
  Democratic Party the Clinton/Gore administration
  filed a complaint with the WTO on behalf of
  Chiquita.
• The WTO ruled in favor of the U.S. and Chiquita.
  The EU initially refused to comply with the WTO
  ruling

55

• Chiquita then donated 350,000 to the Republican
  Party, and the Republican-dominated Congress
  prepared legislation to impose tariffs on goods
  imported from the EU as punishment for refusing
  to comply with the WTO's ruling.

56

• In 2001, the U.S. and the EU came to terms
• Under the terms of the deal, the U.S. has agreed
  to drop a 100 tariff on 191.4 million worth of
  EU export items in nine categories that was
  imposed in 1999 as retaliation for the EU's
  banana policy.
• Those tariffs, which were backed by the World
  Trade Organization (WTO), covered mostly European
  export luxury items such as British linens,
  Danish hams and French handbags.

57
A Soldier's View

• Major General Smedly Butler fought in every
  campaign in Latin America during the early part
  of the century, winning 2 Medals of Honor during
  his career
• The trouble with America is that when the dollar
  only earns 6 percent over here, then it gets
  restless and goes overseas to get 100 percent.
  Then the flag follows the dollar and the soldiers
  follow the flag

58

• I helped make Mexico, especially Tampico, safe
  for American oil interests in 1914. I helped make
  Haiti and Cuba a decent place for the National
  City Bank boys to collect revenues in. I helped
  in the raping of half a dozen Central American
  republics for the benefits of Wall Street.

59

• The record of racketeering is long. I helped
  purify Nicaragua for the international banking
  house of Brown Brothers in 1909-1912. I brought
  light to the Dominican Republic for American
  sugar interests in 1916

60

• During those years, I had, as the boys in the
  back room would say, a swell racket. Looking back
  on it, I feel that I could have given Al Capone a
  few hints. The best he could do was to operate
  his racket in three districts. I operated on
  three continents.

61

• Seen from the viewpoint of someone who had been
  on the fighting side of dollar diplomacy,
  Americans policy no longer seems the noble work
  that it had been declared.

62
The End