This document provides a summary of the history of the United Fruit Company (UFCo) in Guatemala between 1870-1954. It discusses how UFCo gained control over the banana trade and became the single largest landowner in Guatemala through partnerships and acquisitions. In 1951, Guatemala passed an agrarian reform law threatening UFCo's control. In response, UFCo lobbied the US government, which staged a coup to overthrow the Guatemalan government and reinstate policies favoring UFCo. The coup destabilized Guatemala's economy and led to decades of civil war.

1. -Presented by
Vishnu Tandi
& Team

2. History in brief
• The banana trade began in 1870.
• Boston Fruit Company was formed.
• Minor Keith was building railroads through Latin
America, and grew bananas alongside.
• The two joined forces in 1899 to form United Fruit
Company.
• In 1915, UFCo bought out its biggest rival, Cuyamel Fruit.
• In the mid-1950s UFCo represented the merging of
approximately 21 once-independent banana companies.
• Power in the hands of UFCo.

3. UFCo. Vs. Govt.
• The United Fruit was the single largest landowner in the
country.
• It had close ties with dictators such as Jorge Ubico, the
company was promised low taxes, duty-free imports, and
low wages for workers.
• In 1951, President Jacobo Arbenz got elected. He passed the
agrarian reform law Decree 900.
• This angered UFCo because they no longer were granted
their one-sided concessions

4. “Operation Success”
• UFCo. hired Edward Bernays.
• The US Government agencies began a covert operation to
support a military coup and install a new Government .
• They overthrew the democratically elected government.
• UFCo got their land back and banana trade unions were
banned.

5. (A) Was UFCo justified in its actions? Give valid
reasons and principles to support your answers.
Not justified.
“Entrepreneurs give security
to other people; they are
generators of social
welfare”
-Carl J. Schramm

6. •Entrepreneurs create new businesses,
generating jobs for themselves and those they
employ.
•Large companies have the tendency to dictate
the terms of government economic policies. Here
UFCo not only dictated the terms but used that
for creating a monopoly in that business.
•Once a company’s existence becomes an
important criteria for the economy of the
country, their responsibility automatically gets
enhanced.

7. • Criticism of the United Fruit
Company became a staple of the
discourse of the communist parties
in several Latin American countries.
• Major left-wing writers in Latin
America denounced the company in
their literature.
• Such criticisms were the result of
corruption and wrong policies which
are followed by UFCo.

8. (B)(a) What could the Guatemalan
authorities have done to prevent the takeover
of the economic interests by monopolistic
forces?
(b) How could have Guatemalan authorities
protected their jurisdiction on business
matters?

9. Ways to prevent monopolistic
forces from taking over the
economic interest.
• Increased Competition
• Anti-trust Laws

10. Increased Competition
Entry of new firms into the Banana
Industry

11. Anti-trust Laws
• The Federal Trade Commission Act
• Shermann Antitrust Act 1890

13. In order to prevent the takeover by monopolistic
forces government should have taken initiatives
at an early stage.
When UFCo. was emerging as the largest
landowner, government should have taken steps
to curtail it and to prevent it from interfering
into their economic and political policies.
The government should have taken meticulous
measures such as imposing high export duty,
facilitating new entrants into the industry by
providing them subsidies or tax benefits etc.

14. (C) Were these developments good for the economy of
Guatemala?
Track the path of the Guatemalan economy and
development from various public sources and discuss
the impact of the failure to protect the economy from
predatory players.

15. Developments in Guatemalan
Economy
• UFCo had a significant amount of economic influence in
the Guatemalan Economy.
• President Jacobo Arbenz got elected.
• Passed the Decree 900 & seized the unused land held by
UFCo.
• UFCo, along with US government staged a coup &
overthrew the government formed by President Arbenz.
• Castillo Aramas made the new President who repealed the
Decree 900 and made other policies in favor of UFCo.

16. SUBSEQUENT CHANGES
• Castillo Aramas regime resulted in a civil war in Guatemala
which continued from 1960-96 in which more than
2,00,000 people were dead.
• The economy of Guatemala was shattered.
• The regime of Castillo Aramas – most repressive &
corrupt- highly inappropriate for Guantemala.

17. CONCLUSION
The changes in the country on
account of uncontrolled growth
of large companies like UFCo
had a very serious impact on the
country and it’s people and left it
shattered.

18. (D)Were US Foreign policy interests
served in the short term and the long
term?
How does foreign policy support impact
business interests of entrepreneurs?
How far should a Government go to
support its entrepreneurs?

19.  Short term and long
term interest-
• May have been served in
short term but not in long
term.
 Impact of Foreign
Policy-
• Should not harm the
company and beneficial
for the domestic worker.

20.  Government’s support for the
Entrepreneurs-
• Generally not bothered about the welfare
of the company but in case of unfair
treatment government can intervene.

21. (E) What are your groups recommendations for any
country to protect itself against such an approach by
a dominant foreign monopolistic business group?
Recommendations:
• Prevention is better than cure
• Media
• Economic Policies (Initial Stage)
• Political instability

22. • Muscle power overrules all above mentioned
recommendations.
Irrespective of the quality of a country’s economic policies,
muscle power overrules everything. US being the big fish, is
fond of eating small fishes in the name of terrorism, chemical
weapons, communalism, restoring democracy etc.
The 7 Governments the U.S. has
Overthrown
• Iran, 195 3
• Guatemala, 1954
• Congo, 1960
• Dominican Republic, 1961
• South Vietnam, 1963
• Brazil, 1964
• Chile, 1973

23. What is the possible solution
then?
Entrepreneurship:
“If you want to build a ship, don’t
drum up the men to gather wood,
divide the work, and give orders.
Instead, teach them to yearn for
the vast and endless sea.”
-Antoine de Saint-Exupéry

24. • Conclusion:
Entrepreneurship is the most important key to economic
and national development and thus there is a need to realize
its importance and work accordingly so that MNCs and big
nations don’t swallow up these small resource rich nations in
absence of proper entrepreneurship skills to generate
employment within and not to be dependent on outsiders.
It can be achieved by:-
• Institutions Infrastructure
• Economic Stability
• Health & Primary Education
• Higher Education & Training
• Goods & Labor Market Efficiency
• Financial Market
• Entrepreneurial Finance
• Entrepreneurship Education
• R&D Transfer etc.

25. (F) What are the basic limits that entrepreneurs,
businesses and governments need to observe so
that a level playing field can be created for
competition, labor rights, taxation of profits,
national and local developmental needs?

26. Situation in Guantamala:
(1) UFCo. monopolized transportation and trade of
bananas.
(2) UFCo. viewed this political opening as their chance to
improve their working conditions.
(3) They focused on measures to correct the current
account deficit; the slowdown of industrial growth.
(4)UFCo and its supporters combined to diminish the
workers' and government's leveraging positions

27. Problem solving:
• Large volumes of information - financial records,
interactions with customers.
• Responsibilities and tasks can be delegated as your
business grows.
• Every entrepreneur should not only concentrate
on gaining profits .

28. Government:-
• Tax Policy: Governments use
taxes to raise money.
policymakers need to balance the
goals of raising revenue and
promoting entrepreneurship.
• One of the reasons that US invaded the country
was because there was rampant corruption.
• Power to obtain very favorable policies from
foreign governments. Only few of them get the
benefits.

29. Problem solving:
• They should have not simply passed law decree
900
• They should have either restricted the excessive
growth of bananas or promote the growth of other
agricultural products.
• They should have stopped the press campaign at
the very first stage by making a statement against
it.