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Speaker 1: Today, Robert Smith, we are doing a story about the

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Speaker 1: great forces of history. Capitalism, communism, imperialism.

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Speaker 2: All the isms.

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Speaker 1: Every ism. We got coups, we got revolutions, we got presidents, bankers, gunboats,

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Speaker 1: secret meetings.

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Speaker 2: So good.

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Speaker 1: It's a story about bananas. B-A-N-A-N-A-S. I'm Jacob Goldstein.

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Speaker 2: I'm Robert Smith, and this is Business History, a show

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Speaker 2: about the history of bananas. and the banana business.

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Speaker 1: Yeah, and we're basically going to be focusing on late 1800s,

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Speaker 1: first half of the 1900s, which is a story of

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Speaker 1: the U.S., of Latin America, really of international business in

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Speaker 1: the Western Hemisphere in the 20th century. And, you know,

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Speaker 1: the arc of this story is largely for decades. You

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Speaker 1: have U.S. companies battling in Central America for banana supremacy.

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Speaker 1: But then by the middle of the 20th century, you

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Speaker 1: really start to see the people of Central America fight back.

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Speaker 1: The protagonist of our show, I'm not quite going to

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Speaker 1: call him a hero, is one Sam Zimury. Arguably the

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Speaker 1: most important man in the history of bananas in the

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Speaker 1: United States of America. And there is an extremely entertaining

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Speaker 1: book about Sam Zimury called The Fish That Ate the

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Speaker 1: Whale by Rich Cohen.

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Speaker 2: Which you encouraged me to read long before we did

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Speaker 2: this show. I remember listening to it on a trip

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Speaker 2: to Vermont. It was fantastic.

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Speaker 1: Sam Zimury was born... Shmiel Zmarie in the Russian Empire

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Speaker 1: in 1877. Was it Russia? Kind of. It was Bessarabia,

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Speaker 1: I believe. This is a time and place where there

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Speaker 1: are no bananas. Sam moved to Selma, Alabama when he

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Speaker 1: was 15 or so. His uncle ran a shop there.

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Speaker 1: It's a long way from the Pale of Settlement. And

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Speaker 1: Sam grew up into a big man. He was 6'2,

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Speaker 1: or so, 185, big guy, especially for the time. He

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Speaker 1: worked for his uncle at his shop, also did odd jobs,

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Speaker 1: which apparently included chasing pigs and turning a lathe for

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Speaker 1: a carpenter. Really?

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Speaker 2: They didn't have motors at the time? You just hired

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Speaker 2: the biggest guy you could to rotate the table leg?

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Speaker 1: Well, I was thinking about this. So today, right, so

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Speaker 1: he's an immigrant doing what he can, a very young man,

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Speaker 1: a teenager. So today, you know, you can imagine he

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Speaker 1: would be a delivery driver or maybe a day laborer, right?

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Speaker 1: This is still a thing that happens. People come to

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Speaker 1: this country and they do whatever work they can get.

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Speaker 1: And they save up their money, which is what Sam did.

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Speaker 1: And by the time he's 18 years old, he's got $ 150.

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Speaker 1: There's all this money in the world. And one day

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Speaker 1: in Selma, he runs into a banana jobber. Ooh, a jobber.

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Speaker 2: You don't hear that very much anymore. The jobber. You

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Speaker 2: want to say what it is? It's a wholesaler. It's

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Speaker 2: someone who buys something low and sells it high to

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Speaker 2: someone else. A middleman. A middleman, yeah.

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Speaker 1: Buys bulk and sells to retailers. And Sam's like, oh,

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Speaker 1: this is an interesting play. So he goes down to Mobile, Alabama,

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Speaker 1: port town on the Gulf of Mexico. And this is

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Speaker 1: where the banana action is in his sort of part

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Speaker 1: of the world.

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Speaker 2: I imagine them coming in on nets off the ships

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Speaker 2: and driving the docks.

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Speaker 1: Do they even have nets at this time?

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Speaker 2: I guess so.

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Speaker 1: They definitely... It's not containers yet. We know that. The

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Speaker 1: ships are coming in from Central America, from the Caribbean,

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Speaker 1: and the banana jobbers are buying the bananas and putting

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Speaker 1: them on trains. And almost entirely, the jobbers want green bananas.

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Speaker 2: Because they are hard and you can ship them hundreds

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Speaker 2: of miles away and they'll be fine.

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Speaker 1: They're not going to go bad before they get to market.

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Speaker 1: As a result of this... yellow bananas, ripe bananas are

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Speaker 1: dirt cheap. They are virtually garbage. Nobody wants them.

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Speaker 2: If they're speckled or even a little bit brown, they're

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Speaker 2: probably garbage.

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Speaker 1: They're probably garbage. So Sam decides this is going to

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Speaker 1: be his play. And so Sam bought a bunch, a

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Speaker 1: bunch of bunches of ripe bananas, took a risk, got

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Speaker 1: a deal because nobody else wanted them. And that took

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Speaker 1: most of his money with some of the money he

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Speaker 1: had left. He rented space on a boxcar. He rented

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Speaker 1: a boxcar to go back to Selma to sell the bananas. And,

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Speaker 1: you know, he basically didn't have any money. So he

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Speaker 1: got in the boxcar and, you know, it was like

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Speaker 1: more than a day, I guess, to get to Selma

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Speaker 1: at this point on the train. And so he's going

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Speaker 1: to sleep in the boxcar with the bananas. And I

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Speaker 1: don't know this for a fact, but I imagine it's hot.

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Speaker 2: Imagine the smell.

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Speaker 1: The smell? I like the smell. I like the smell.

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Speaker 1: But it's almost all of his money in the world.

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Speaker 1: And there's this ticking clock, right? Like if he can

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Speaker 1: get there in time, he's going to make money. And

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Speaker 1: if not, he's basically going to lose all the money

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Speaker 1: he saved.

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Speaker 2: This is before you could save them for banana bread

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Speaker 2: or something like that.

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Speaker 1: You could not peel and freeze because you did not

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Speaker 1: have a freezer. And I love this story because, you know,

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Speaker 1: he is trying this move. that we have come across

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Speaker 1: before on the show. Specifically, I thought of the Ice King, right?

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Speaker 1: This guy in Boston, also in the 1800s, who took

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Speaker 1: this thing that had no value.

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Speaker 2: Ice on the lakes of Massachusetts.

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Speaker 1: In the winter. And put it on a ship and

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Speaker 1: sent it to Calcutta. Amazingly, he figured out how to

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Speaker 1: get it to not melt or not all melt. And

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Speaker 1: of course, in Calcutta, it had a huge amount of value.

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Speaker 1: So he's taking this thing nobody wanted that was valueless

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Speaker 1: and giving it value and turning that into a business,

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Speaker 1: which is what Sam is trying to do here.

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Speaker 2: We also talked about it in our Henry Ford show,

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Speaker 2: about how they would have scrap lumber and they turned

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Speaker 2: scrap lumber into charcoal, something valuable.

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Speaker 1: Yes, and in fact, Kingsford Charcoal is the descendant of

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Speaker 1: the brand that Ford started long ago. So Sam has

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Speaker 1: almost all of his money in the world sunk in

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Speaker 1: these bananas.

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Speaker 2: He's up against the clock. He's up against bananas. He's

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Speaker 2: literally in the boxcar with the bananas.

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Speaker 1: And it's taking a long time to get there. And

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Speaker 1: at one point, the train stopped in Meridian, Mississippi, which

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Speaker 1: was surprising to me when I read it because it's

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Speaker 1: going from Alabama to Alabama. But apparently the train went

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Speaker 1: through Mississippi to get there. And this guy who ran

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Speaker 1: the train yard in this town was sympathizing with Sam.

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Speaker 1: Sam's talking to the guy about his problem. And the

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Speaker 1: guy at the train yard is like, it's too bad

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Speaker 1: you can't figure out how to let the people up

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Speaker 1: the line know that you're coming.

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Speaker 2: Right.

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Speaker 1: Because they could just come meet you at the train station.

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Speaker 1: You could sell them your cheap bananas kind of as

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Speaker 1: you're passing through town and you wouldn't have to wait

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Speaker 1: till you get back to Selma. So your bananas wouldn't

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Speaker 1: go bad. And Sam actually told this story to Life

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Speaker 1: magazine later in his life. Here's how he told it.

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Speaker 2: It was about 5 a.m. and the train was almost

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Speaker 2: ready to pull out. Then I saw Western Union office.

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Speaker 2: Remember at the time, telegraph lines ran along railroad lines.

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Speaker 2: So there would have been a telegraph office at every station.

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Speaker 2: So the train's almost ready to pull out. I saw

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Speaker 2: Western Union office. I went in and I asked the

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Speaker 2: man to wire all the other telegraph operators along the line.

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Speaker 2: that if they spread the word I was coming through

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Speaker 2: with bananas, I'd give each one a free bunch. Those

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Speaker 2: messages took my last cent.

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Speaker 1: It worked. Woo! People started coming to the train stations

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Speaker 1: along the way to buy Sam's bananas. I imagine him

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Speaker 1: selling them out of the boxcar.

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Speaker 2: I don't know if that... The bananas are coming! The

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Speaker 2: bananas are coming!

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Speaker 1: And by the time he got back to Selma, according

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Speaker 1: to that Life magazine article, he had... $ 185. Remember, he'd

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Speaker 1: started with $ 150, so $ 35 on $ 150 is a nice turn.

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Speaker 2: Good investment.

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Speaker 1: And so now Sam has an angle. He has a play.

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Speaker 1: And he keeps doing this now. He keeps going, buying

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Speaker 1: the ripe bananas nobody wants, hustling, selling them at a profit. And,

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Speaker 1: you know, we were talking about this before, And there

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Speaker 1: is actually a business in our neighborhood or this little

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Speaker 1: chain of fruit stores in Brooklyn. There's one in my

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Speaker 1: neighborhood and one in yours. The one in my neighborhood

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Speaker 1: is called Mr.

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Speaker 2: Kiwi.

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Speaker 1: They are all Mr. Fruit something, right? What is yours?

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Speaker 2: Mr. Lime.

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Speaker 1: There's a Mr.

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Speaker 2: Cocoa, Mr. Mango, of course. And kind of their business

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Speaker 2: model is out front of the store, they have... good,

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Speaker 2: I should say, good fruits and vegetables that probably have

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Speaker 2: just a few days left in them.

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Speaker 1: A few days is pushing it. They're very cheap, though.

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Speaker 1: You can get like a carton of strawberries for a dollar. And, like,

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Speaker 1: maybe there's one of them in there that's already gone bad,

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Speaker 1: and the others, if you eat them in the next hour,

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Speaker 1: they're amazing. But it's a dollar.

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Speaker 2: But it's the same business model, which is if you're

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Speaker 2: squeezing out the last bit of value from the product,

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Speaker 2: and you're doing it at a bargain for the buyer,

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Speaker 2: and you're doing it at a profit for the seller,

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Speaker 2: it's fantastic.

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Speaker 1: Yeah, no big grocery store wants to buy these strawberries

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Speaker 1: because they're not going to last. So they're cheap.

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Speaker 2: I buy them.

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Speaker 1: Because I'm cheap. So Sam now has his niche. He

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Speaker 1: moves to Mobile, makes this play again and again. Turn

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Speaker 1: and write bananas, turn and write bananas.

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Speaker 2: I can imagine the moment you smell a banana going off,

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Speaker 2: you're like, you got to call Sam.

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Speaker 1: And it works. He turns his $ 150 into $ 100, 000. Big

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Speaker 1: at the time. Yeah, multimillionaire in today's money. And comes

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Speaker 1: to be known as Sam the Banana Man, which I love.

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Speaker 1: Not because of the obvious rhyme between Sam and man,

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Speaker 1: because of the subtler rhyme of banana, the off rhyme

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Speaker 1: of banana.

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Speaker 2: With both Sam and man. It's poetic. Sam the Banana Man.

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Speaker 2: Sam the Banana Man.

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Speaker 1: Now, Sam the Banana Man starts to vertically integrate. He

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Speaker 1: buys some old ships along with a partner that bring

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Speaker 1: bananas from Central America to Mobile and New Orleans. And then, uh,

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Speaker 1: In 1910, he takes the next step in the value chain.

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Speaker 1: So he's gone from buying the bananas at the dock

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Speaker 1: to owning the ships that bring them from Central America.

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Speaker 1: In 1910, he buys the Cuyamel Fruit Company, a failing

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Speaker 1: banana company with 5,000 acres on the Cuyamel River in Honduras.

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Speaker 1: So now Sam the Banana Man is no longer some

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Speaker 1: hustler on the docks buying ripes that nobody else wants.

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Speaker 1: He is in the banana business for real.

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Speaker 2: He's a banana kingpin.

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Speaker 1: Not yet. He's a small player, and he's competing against

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Speaker 1: the real kingpin, the giant. In Central America, they called

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Speaker 1: it el pulpo.

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Speaker 2: Because of the pulp of the banana.

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Speaker 1: It means the octopus in Spanish. It was really big.

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Speaker 1: Its tentacles were everywhere. Was the U.S. Steel or the

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Speaker 1: National Biscuit or the General Electric of bananas? Ladies and gentlemen...

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Speaker 1: let's give a warm capitalist, imperialist, colonialist welcome to the

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Speaker 1: United Fruit Company of Boston, Massachusetts.

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Speaker 2: So funny that it's of Boston.

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Speaker 1: It is funny that it's of Boston, and that will

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Speaker 1: come into play in the story. Sam was very much

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Speaker 1: not of Boston, and the United Fruit Company very much

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Speaker 1: was of Boston. The people running the company were legit.

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Speaker 1: They had basically created the banana business in the United States.

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Speaker 1: It was a new product.

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Speaker 2: I mean, essentially, it was technology.

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Speaker 1: It was technology to get it to the U.S. in time.

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Speaker 1: If you go back, say, to the mid-1800s, almost nobody

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Speaker 1: in the U.S. would have ever seen a banana before.

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Speaker 1: And what happened, the sort of origin story, part of

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Speaker 1: the origin story of United Fruit is, in 1870, one

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Speaker 1: of the guys who started what ultimately became United Fruit

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Speaker 1: was in Jamaica. This guy's name was Lorenzo Dow Baker.

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Speaker 1: He was a ship's captain from Wellfleet, Massachusetts, lovely town

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Speaker 1: on Cape Cod. And in Jamaica, somebody gave him a banana.

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Speaker 2: Ooh, and Lorenzo pulled out his knife and fork and

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Speaker 2: cut it into pieces and said,- Do I eat the

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Speaker 2: outside part?

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Speaker 1: The outside part is a bit chewy.- Not so flavorful.

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Speaker 2: But the inside, I could do something with this.

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Speaker 1: In any case, he ate his first banana. Unlikely he'd

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Speaker 1: ever seen a banana before. And imagine this. Imagine never

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Speaker 1: having seen a banana before and eating it. It's great!

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Speaker 2: It's amazing.

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Speaker 1: I love a banana. It's sealed.

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Speaker 2: It's a sealed product. You can eat it without touching

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Speaker 2: the fruit. I don't know if he peeled from the

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Speaker 2: top or the bottom or broke it in half. I

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Speaker 2: saw someone break a banana in half the other day. What?

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Speaker 1: I know.

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Speaker 2: You squeeze it? Why do you break it in half?

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Speaker 1: He loves it. He's on his way home anyways, on

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Speaker 1: his way back up the Atlantic. So he buys a

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Speaker 1: bunch of bunches of bananas. He says, let's see if

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Speaker 1: this works. And he races north, makes it to Jersey City,

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Speaker 1: New Jersey. And people go wild for his bananas. It's

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Speaker 1: like he's bringing fruit from the moon. He has bought

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Speaker 1: his bananas for 24 cents a bunch. And in New Jersey,

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Speaker 1: this wild exotic delicacy sells for $ 2 a bunch.

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Speaker 2: A beautiful margin. I mean, a novelty product. And again,

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Speaker 2: the color, you could see the yellow from across the

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Speaker 2: Hudson River.

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Speaker 1: Yeah, did anything look that yellow in New Jersey in 1870?

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Speaker 1: Probably not. Probably not. Only the water. Yeah, maybe the

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Speaker 1: daffodils in spring. Robert, let's talk about the banana for

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Speaker 1: a moment.

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Speaker 2: All day long.

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Speaker 1: It is a wild fruit. It is at the center

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Speaker 1: of today's story. Fun fact, number one, bananas don't grow

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Speaker 1: on trees. Technically, a banana tree is not a tree.

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Speaker 1: It's an herbaceous perennial because it doesn't technically have a trunk.

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Speaker 1: It has a giant stem.

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Speaker 2: It's like a bush or more like a flower.

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Speaker 1: Well, it's called an herbaceous perennial, so I think of

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Speaker 1: an herb. I think of mint. Yeah, rosemary. Rosemary.

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Speaker 2: But big.

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Speaker 1: Side note, bananas are technically berries. I'm not even going

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Speaker 1: to get into that one, but it's a fact.

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Speaker 2: Good to know.

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Speaker 1: More interesting and quite relevant for the banana business is

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Speaker 1: bananas are not cultivated by planting seeds. They're cultivated by

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Speaker 1: taking cuttings from existing plants and replanting them.

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Speaker 2: I guess I've always wondered about banana seeds. You see

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Speaker 2: sometimes the little.

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Speaker 1: Dots in there. I don't know what's going on with that.

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Speaker 2: If somebody tries to sell you banana seeds, do not

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Speaker 2: let them.

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Speaker 1: Do not trade your cow for three banana seeds. This

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Speaker 1: is important, though. This is important for the business of

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Speaker 1: bananas and for our story because what winds up happening

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Speaker 1: is big companies like United Fruit end up planting essentially

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Speaker 1: vast crops of genetic clones, a cutting when you take

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Speaker 1: cutting after cutting of the same plant.

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Speaker 2: It is the same plant.

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Speaker 1: It is the same plant. It is the same genetic structure.

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Speaker 1: And that creates this interesting business scenario that we have

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Speaker 1: talked about before, where you are optimizing in a certain way.

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Speaker 1: You are taking cuttings of this one plant because it's efficient,

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Speaker 1: because it grows fast. At this time, the banana they're

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Speaker 1: growing is called the Grand Michel. the Big Mike. And

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Speaker 1: it's good for a bunch of reasons, no pun intended. Namely, largely,

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Speaker 1: it grows dense, so you get a lot of bananas

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Speaker 1: in a bunch of bunches, and it travels well. You

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Speaker 1: can just throw a bunch of bunches into a ship

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Speaker 1: and send it across the Gulf of Mexico, and they

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Speaker 1: don't get too bruised, and they don't ripen too fast,

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Speaker 1: so they travel well. A classic reason to industrialize a

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Speaker 1: particular strain of fruit.

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Speaker 2: Anyone who's watched a cartoon in the last hundred years

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Speaker 2: knows that if there is a banana peel in the cartoon,

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Speaker 2: your character is going to slip on the banana peel.

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Speaker 2: Something that never seems to happen in real life. But

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Speaker 2: I did read that when the Gros Michel, that first

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Speaker 2: banana came, and there was a banana craze, and people

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Speaker 2: were eating bananas on the street and throwing the peel out,

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Speaker 2: what are you gonna do with them? But apparently, the

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Speaker 2: peel for the Gros Michel was very, very, very slippery.

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Speaker 2: It was notably slippery. and that people would actually injure themselves.

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Speaker 1: I tried to get to the bottom of that one

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Speaker 1: on this, when I was working on this show. I

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Speaker 1: couldn't quite figure it out, but I have heard that story.

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Speaker 1: It is plausible, this story, for one reason that is

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Speaker 1: germane to the bigger idea here. And that is, when

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Speaker 1: you go all in on one thing, you might be

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Speaker 1: optimizing for some set of criteria, but you're also not

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Speaker 1: that resilient. If something goes wrong with your one thing,

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Speaker 1: you're potentially screwed. And in fact, In the 20th century,

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Speaker 1: this disease started destroying the Gros Michel. And it probably

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Speaker 1: wouldn't have been so bad if there was more genetic diversity,

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Speaker 1: but this one clone was really at risk. And so,

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Speaker 1: the banana industry shifted to the Cavendish. The Cavendish banana,

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Speaker 1: which is what we eat today.

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Speaker 2: And we've also talked about this before, this danger of

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Speaker 2: having one product in our Southwest Airlines show. They were brilliant.

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Speaker 2: They bought one kind of airplane, the Boeing 737, which

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Speaker 2: was super efficient. It meant you could swap parts. It

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Speaker 2: means you only had to train your pilots on one

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Speaker 2: kind of airplane. And that's great until there's a problem

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Speaker 2: with the Boeing 737. Yes.

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Speaker 1: It's a really interesting optimization problem. So what it means

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Speaker 1: for the fruit industry at this time, you know, early 1900s,

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Speaker 1: is they are aware of the risk and they respond

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Speaker 1: by diversifying. Diversifying into other crops, like if we're thinking

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Speaker 1: about United Fruit here, which basically is the banana business

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Speaker 1: to a significant degree in the United States, they diversify into,

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Speaker 1: you know, pineapples and sugar cane, but also crucially, they

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Speaker 1: diversify geographically because this disease spreads, you know, from spot

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Speaker 1: to spot over land. And so they don't want to

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Speaker 1: be all in one place. And so by the time

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Speaker 1: Sam Zimuri is getting into the banana farming business, the

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Speaker 1: banana growing business around 1910, United Fruit is growing in Colombia, Cuba, Jamaica,

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Speaker 1: the Dominican Republic, Honduras, Nicaragua, Costa Rica, and Guatemala.

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Speaker 2: And it's really hard to compete with them because they

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Speaker 2: have put the infrastructure into these countries.

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Speaker 1: A wild amount of infrastructure. They have built their own railroads.

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Speaker 1: They have built radio transmission systems. They have bribed and

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Speaker 1: controlled many government officials. You're saying they have.

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Speaker 2: Their tentacles in many places. El pulpo.

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Speaker 1: Sam, on the other hand, had just bought 5,000 acres,

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Speaker 1: a tiny fraction of what United Fruit had. He's deep

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Speaker 1: in debt. He has to start selling bananas to get out.

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Speaker 1: He's going to have to sell a lot of bananas.

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Speaker 1: And so he goes to Honduras. He physically goes to Honduras,

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Speaker 1: starts living there a lot of the time. And he

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Speaker 1: follows what by this point is a relatively clear playbook

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Speaker 1: for building your banana business. Step one, pay bribes and

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Speaker 1: kickbacks to the government and in exchange basically pay no taxes.

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Speaker 1: Which you had to do. He had to do that

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Speaker 1: to compete with United Fruit because they were already doing this.

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Speaker 1: And there is this interesting idea here of a corrupt equilibrium.

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Speaker 1: It's a bad equilibrium in a way, but if The

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Speaker 1: biggest company is corrupt, is already paying bribes. And you're

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Speaker 1: not corrupt, you're going to lose. You're not going to

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Speaker 1: be able to go into business. So that's step one.

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Speaker 1: Step two is clear the jungle and plant banana trees.

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Speaker 1: A lot of the workers who did this were immigrants

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Speaker 1: from other parts of the Caribbean. So they were often

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Speaker 1: badly treated both by the fruit companies and by the

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Speaker 1: local authorities. And then step three, build a plantation town.

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Speaker 1: for the workers, for the bosses. And step four, ship

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Speaker 1: the bananas to the United States, dot, dot, dot, profit.

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Speaker 1: So it's the summer of 1910. Sam is somewhere between

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Speaker 1: steps two and three.

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Speaker 2: Clearing the land and building the town.

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Speaker 1: Building the town. He's getting going. And a problem arose.

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Speaker 1: It was a big kind of international conflict of imperial

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Speaker 1: powers kind of problem since 1910, you know, great era

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Speaker 1: for conflicts of imperial powers. And what happened was this.

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Speaker 1: Honduras earlier in the 1800s had sold bonds in London

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Speaker 1: to borrow money to build a railroad. Now, they never

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Speaker 1: got much of a railroad. But they still had that debt.

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Speaker 1: By 1910, Honduras owed more than $ 100 million to bondholders

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Speaker 1: in London.

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Speaker 2: Ouch.

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Speaker 1: And Honduras was not in a position to repay the debt.

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Speaker 1: And you know what the British might do in 1910

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Speaker 1: if you were a small country and you said you

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Speaker 1: couldn't pay them back? Send in the Royal Navy. They

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Speaker 1: didn't want you to not pay them back.

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Speaker 2: They skipped over the lawyers. They skipped over the court rulings.

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Speaker 2: They went straight to the gunboat.

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Speaker 1: I mean, potentially.

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Speaker 2: Potentially.

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Speaker 1: I bet they didn't skip over the lawyers or the

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Speaker 1: court rulings. But they were not afraid of the gunboat. Now,

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Speaker 1: the Hondurans obviously didn't want British gunboats coming to force

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Speaker 1: them to pay. But interestingly, the United States also didn't

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Speaker 1: want this to happen. Because, you know, yes, Britain was

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Speaker 1: the global imperialist power of the day. But Central America

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Speaker 1: is the United States' backyard. It's America's little imperialist play, frankly.

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Speaker 1: You know, the Monroe Doctrine goes way back by this point.

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Speaker 1: Robert Smith, the last time on our show when I

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Speaker 1: did a pop quiz and asked you who was president

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Speaker 1: in a given year, a listener wrote in and said,

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Speaker 1: don't play dumb on the show. Surely you know who

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Speaker 1: was president in 1877. And I did not know, to

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Speaker 1: be honest, that it was Rutherford B.

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Speaker 2: Hayes.

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Speaker 1: Could I have guessed it? You gave me a few guesses, maybe,

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Speaker 1: but I didn't know. So let me ask you now, honestly,

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Speaker 1: who was the president of the United States in 1910?

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Speaker 2: William Howard Taft.

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Speaker 1: Very good.

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Speaker 2: So.

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Speaker 1: Thank you. William Howard Taft decides to do something about

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Speaker 1: this British Navy Honduras debt problem. Taft had a policy

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Speaker 1: he called dollar diplomacy. He called... substituting dollars for bullets.

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Speaker 1: And it's specifically in this sort of Monroe Doctrine context.

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Speaker 1: And so, to make dollar diplomacy work in Honduras, Taft

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Speaker 1: brings in the king of the dollar, charter member of

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Speaker 1: the business history all-stars, the banker, the tutti bankers.

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Speaker 2: When you need some money in 1910, one man. You

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Speaker 2: call up J.P. Morgan.

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Speaker 1: You call up J.P. Morgan. William Howard Taft.

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Speaker 2: You stand in line. The president stands in line with

435
00:23:51,950 --> 00:23:56,080
Speaker 2: everyone else in the economy asking for five minutes with J.P. Morgan.

436
00:23:56,400 --> 00:23:58,820
Speaker 1: And Morgan gives it to him. And they come up

437
00:23:58,840 --> 00:24:02,440
Speaker 1: with a plan. And the plan is that Morgan will

438
00:24:02,560 --> 00:24:06,740
Speaker 1: buy up those Honduran bonds that they're holding in London.

439
00:24:06,760 --> 00:24:08,510
Speaker 1: Of course, they'll buy them for cents on the dollar

440
00:24:08,530 --> 00:24:11,790
Speaker 1: because everybody knows they're not going to be redeemed at par.

441
00:24:12,730 --> 00:24:16,210
Speaker 1: And Morgan will also lend millions of dollars to the

442
00:24:16,250 --> 00:24:19,570
Speaker 1: Honduran government. That's Morgan's side of the deal. The Taft

443
00:24:19,630 --> 00:24:22,830
Speaker 1: side of the deal is, okay, we will sign an

444
00:24:23,050 --> 00:24:27,510
Speaker 1: international treaty between the United States and Honduras that says,

445
00:24:28,150 --> 00:24:30,650
Speaker 1: as part of the deal, people who work for J.P.

446
00:24:30,690 --> 00:24:35,560
Speaker 1: Morgan will go to Honduras and run the customs offices

447
00:24:35,820 --> 00:24:40,919
Speaker 1: so that when the taxes on imports and exports are collected, J.P.

448
00:24:40,980 --> 00:24:44,100
Speaker 1: Morgan's minions can make sure that Morgan and his people

449
00:24:44,420 --> 00:24:47,160
Speaker 1: get their cut. And they will then remit the rest

450
00:24:47,380 --> 00:24:48,419
Speaker 1: to the good people of Honduras.

451
00:24:48,520 --> 00:24:51,900
Speaker 2: This is genius. The big question with bonds is always, like,

452
00:24:51,960 --> 00:24:54,180
Speaker 2: how do I make sure they're going to pay me back? Well,

453
00:24:54,240 --> 00:24:58,910
Speaker 2: if you're collecting tariffs from the country, if your people,

454
00:24:58,950 --> 00:25:05,090
Speaker 2: if your bank employees are collecting tax money in Honduras, well,

455
00:25:05,150 --> 00:25:07,409
Speaker 2: you know you're going to get paid back. Get paid first.

456
00:25:09,210 --> 00:25:10,670
Speaker 2: The Hondurans don't like the looks of this.

457
00:25:10,760 --> 00:25:18,470
Speaker 1: No. Uh... But also, also, Sam Zimuri doesn't like the

458
00:25:18,490 --> 00:25:22,320
Speaker 1: looks of it because remember step one of setting up

459
00:25:22,380 --> 00:25:26,100
Speaker 1: your banana business in Honduras, you bribe the local officials

460
00:25:26,140 --> 00:25:28,780
Speaker 1: so that you don't have to pay taxes.

461
00:25:29,460 --> 00:25:31,540
Speaker 2: And there's one man you can't bribe.

462
00:25:31,600 --> 00:25:34,600
Speaker 1: No. JP Morgan. JP Morgan. No, it's not going to work.

463
00:25:35,640 --> 00:25:39,689
Speaker 1: If he has to pay taxes... his bananas will be

464
00:25:39,750 --> 00:25:42,869
Speaker 1: more expensive than United Fruit bananas, and he will go

465
00:25:42,910 --> 00:25:47,190
Speaker 1: out of business. So this is an existential problem for him.

466
00:25:47,840 --> 00:25:51,500
Speaker 1: And of course, he starts out by lobbying in the U.S.

467
00:25:51,619 --> 00:25:55,840
Speaker 1: and lobbying in Honduras. And it gets to the point

468
00:25:55,960 --> 00:25:59,770
Speaker 1: where the Secretary of State of the United States, one

469
00:26:00,220 --> 00:26:06,490
Speaker 1: Philander Knox, summons Sam Zamore, this upstart, to Washington, D.C.,

470
00:26:07,470 --> 00:26:10,429
Speaker 1: And basically tells him to stay out of it. Mr.

471
00:26:10,520 --> 00:26:11,420
Speaker 2: Banana Man.

472
00:26:11,440 --> 00:26:13,859
Speaker 1: Well, here we have, so we have Sam telling the

473
00:26:13,900 --> 00:26:15,780
Speaker 1: story to a reporter years later of what happened.

474
00:26:16,520 --> 00:26:19,040
Speaker 2: I was doing a small business buying, oh, I'm just

475
00:26:19,080 --> 00:26:22,220
Speaker 2: a small businessman from the South. I was doing a

476
00:26:22,280 --> 00:26:25,570
Speaker 2: small business buying fruit from independent planters, but I wanted

477
00:26:25,609 --> 00:26:28,290
Speaker 2: to expand. I wanted to build railroads and raise my

478
00:26:28,330 --> 00:26:31,510
Speaker 2: own fruit. The duty on railroad equipment was prohibitive, a

479
00:26:31,710 --> 00:26:34,470
Speaker 2: cent a pound. And so I had to have concessions

480
00:26:34,490 --> 00:26:37,470
Speaker 2: that would enable me to import that stuff duty-free. I

481
00:26:37,560 --> 00:26:42,300
Speaker 2: told him, Mr. Secretary, I'm no favorite grandson of Mr.

482
00:26:42,340 --> 00:26:42,760
Speaker 1: Morgan's.

483
00:26:43,119 --> 00:26:46,120
Speaker 2: Mr. Morgan has never heard of me. I just wanted

484
00:26:46,160 --> 00:26:51,199
Speaker 2: to protect my little business. This is textbook how to

485
00:26:51,260 --> 00:26:55,020
Speaker 2: approach the government. I'm just a small business. I had

486
00:26:55,100 --> 00:26:56,020
Speaker 2: to avoid taxes.

487
00:26:56,080 --> 00:26:59,380
Speaker 1: I had to bribe people. We had to have a cartel.

488
00:26:59,440 --> 00:27:03,270
Speaker 1: We If we didn't work together, we would all have failed.

489
00:27:03,330 --> 00:27:05,050
Speaker 2: I mean, we all love small business, and I'm a

490
00:27:05,090 --> 00:27:05,969
Speaker 2: small businessman.

491
00:27:06,590 --> 00:27:10,189
Speaker 1: Secretary of State doesn't buy it. Tells Sam to mind

492
00:27:10,250 --> 00:27:13,369
Speaker 1: his business, to stick to bananas and stay out of

493
00:27:13,410 --> 00:27:19,660
Speaker 1: international affairs. But of course, bananas are international affairs.

494
00:27:19,820 --> 00:27:22,220
Speaker 2: At this point, they're using the term Banana Republic.

495
00:27:22,560 --> 00:27:25,300
Speaker 1: Banana Republic is a term by this point, actually coined

496
00:27:25,359 --> 00:27:28,360
Speaker 1: by O. Henry, the famous writer O. Henry, who fled

497
00:27:28,400 --> 00:27:33,300
Speaker 1: to Honduras... around 1900, and coined the term Banana Republic. Yes,

498
00:27:33,420 --> 00:27:36,459
Speaker 1: the core idea of this whole show is you cannot

499
00:27:36,540 --> 00:27:42,520
Speaker 1: separate international affairs from the banana business. And so, in

500
00:27:42,560 --> 00:27:45,570
Speaker 1: a minute, after the ad break, we will talk about

501
00:27:45,619 --> 00:27:58,260
Speaker 1: how Sam Zimuri gets involved in international affairs. The ads

502
00:27:58,300 --> 00:28:01,129
Speaker 1: are over. Unless you subscribe to Pushkin Plus, in which

503
00:28:01,170 --> 00:28:03,090
Speaker 1: case you didn't hear an ad. If you want to

504
00:28:03,130 --> 00:28:07,070
Speaker 1: subscribe to Pushkin Plus, you can go to pushkin.fm.

505
00:28:07,609 --> 00:28:11,840
Speaker 2: It's like time travel. The year is 1910.

506
00:28:11,840 --> 00:28:14,419
Speaker 1: Sam Zimri has a problem. The governments of Honduras and

507
00:28:14,440 --> 00:28:16,520
Speaker 1: the United States are about to make a deal that

508
00:28:16,540 --> 00:28:21,619
Speaker 1: will raise his taxes, leaving him unable to compete with

509
00:28:21,640 --> 00:28:26,800
Speaker 1: the octopus, United Fruit. So Sam Zimri decides, okay, I

510
00:28:26,840 --> 00:28:30,389
Speaker 1: can't get the government of to go along with me

511
00:28:30,470 --> 00:28:33,530
Speaker 1: to do what I want? I'm gonna change the government

512
00:28:33,690 --> 00:28:34,330
Speaker 1: of Honduras!

513
00:28:35,230 --> 00:28:38,230
Speaker 2: It seems like a big leap, but I understand that

514
00:28:38,290 --> 00:28:41,500
Speaker 2: he is a practical man who solves practical problems, and

515
00:28:41,580 --> 00:28:44,200
Speaker 2: this is the only solution for his banana empire.

516
00:28:44,220 --> 00:28:49,080
Speaker 1: And he's obviously wildly ambitious. And perhaps not moral in

517
00:28:49,120 --> 00:28:50,900
Speaker 1: the way that we would think about being moral.

518
00:28:51,810 --> 00:28:52,370
Speaker 2: So....

519
00:28:53,530 --> 00:29:00,560
Speaker 1: Conveniently for Sam, The president of Honduras had been deposed

520
00:29:00,740 --> 00:29:06,459
Speaker 1: just a few years before. His name was General Manuel Bonilla.

521
00:29:06,960 --> 00:29:08,900
Speaker 2: I feel like in many of these Central American countries,

522
00:29:08,940 --> 00:29:12,420
Speaker 2: there is some deposed president waiting in Miami or New

523
00:29:12,480 --> 00:29:14,090
Speaker 2: Orleans to take over again.

524
00:29:15,030 --> 00:29:18,850
Speaker 1: And all of them, or substantially all of them, want

525
00:29:18,910 --> 00:29:23,090
Speaker 1: to take power back, want to depose the deposers, to

526
00:29:23,150 --> 00:29:27,700
Speaker 1: overthrow the overthrowers. And Bonilla definitely... to get back in power.

527
00:29:29,440 --> 00:29:32,260
Speaker 1: And he has followers. You know, he was a real general.

528
00:29:32,300 --> 00:29:34,010
Speaker 1: He was a real leader. There are people who would

529
00:29:34,050 --> 00:29:36,190
Speaker 1: back him. But he needs money.

530
00:29:36,210 --> 00:29:39,690
Speaker 2: Oh, if only there was someone with money who wanted

531
00:29:39,710 --> 00:29:41,390
Speaker 2: to help to change the government in Honduras.

532
00:29:42,220 --> 00:29:45,660
Speaker 1: Bonilla and Zemuri made a deal. Zemuri would put up

533
00:29:45,680 --> 00:29:49,660
Speaker 1: the money and Bonilla would do the fighting, basically. And

534
00:29:49,700 --> 00:29:53,380
Speaker 1: give Zemuri his tax-free arrangement back.

535
00:29:53,480 --> 00:29:54,880
Speaker 2: It's just another contract to Zemuri.

536
00:29:54,900 --> 00:29:58,900
Speaker 1: It's another deal. This is pretty clear from the historical record, although.

537
00:30:00,620 --> 00:30:03,420
Speaker 1: There's this great detail, which is Bonilla's writing all these

538
00:30:03,460 --> 00:30:06,440
Speaker 1: letters to various supporters and whatever at the time. As

539
00:30:06,480 --> 00:30:09,420
Speaker 1: far as we can tell, he never puts Zimri's name

540
00:30:09,560 --> 00:30:14,620
Speaker 1: in writing. He generally refers to Zimri as el amigo.

541
00:30:15,360 --> 00:30:18,420
Speaker 2: Here's a little quote from Bonilla. Without the decided assistance

542
00:30:18,500 --> 00:30:21,340
Speaker 2: of el amigo, I do not rise in arms against

543
00:30:21,400 --> 00:30:22,330
Speaker 2: General Dávila.

544
00:30:23,480 --> 00:30:26,550
Speaker 1: General Dávila was the president of Honduras at the time,

545
00:30:26,690 --> 00:30:31,540
Speaker 1: the guy who Bonilla wanted to depose. And in the

546
00:30:31,620 --> 00:30:37,900
Speaker 1: summer of 1910, Bonilla got the decided assistance of El Amigo.

547
00:30:38,900 --> 00:30:42,800
Speaker 1: And he did rise in arms against General Davila. And

548
00:30:42,820 --> 00:30:47,740
Speaker 1: he lost. According to one version that I read, one

549
00:30:47,760 --> 00:30:50,320
Speaker 1: of Bonilla's generals got drunk and attacked too early and

550
00:30:50,340 --> 00:30:53,460
Speaker 1: the Hondurans knew they were coming. But in any case,

551
00:30:53,620 --> 00:30:56,740
Speaker 1: it seems like the, the or a, I think the

552
00:30:56,880 --> 00:31:02,730
Speaker 1: Honduran Navy gunboat was chased Bonilla and his sort of core,

553
00:31:03,250 --> 00:31:08,770
Speaker 1: you know, followers away. And Bonilla eventually, after this defeat,

554
00:31:09,430 --> 00:31:13,730
Speaker 1: wound up in New Orleans and talked to Zimri. And

555
00:31:13,790 --> 00:31:18,270
Speaker 1: when Zimri heard what had happened, basically his response to

556
00:31:18,310 --> 00:31:21,910
Speaker 1: Bonilla was, you're going to need a bigger boat. So

557
00:31:21,990 --> 00:31:26,090
Speaker 1: Zimri secretly funded the purchase of a 160-foot gunboat called

558
00:31:26,190 --> 00:31:35,120
Speaker 1: the Hornet. originally built in 1890 for Henry Flagler, Rockefeller's

559
00:31:35,200 --> 00:31:38,650
Speaker 1: partner at Standard Oil, and who famously built a train

560
00:31:39,030 --> 00:31:41,070
Speaker 1: all the way to Key West, which, if you have

561
00:31:41,270 --> 00:31:44,930
Speaker 1: ever been to Key West, is an absurd move because

562
00:31:45,010 --> 00:31:47,570
Speaker 1: it's an island at the end of a chain of islands.

563
00:31:48,470 --> 00:31:52,320
Speaker 1: The Hornet got bought by the Navy and served in

564
00:31:52,360 --> 00:31:58,320
Speaker 1: the Spanish-American War, and now it was moored in New Orleans. And...

565
00:31:59,820 --> 00:32:03,780
Speaker 1: This was not a secret. It was an open secret.

566
00:32:04,300 --> 00:32:05,800
Speaker 2: I feel like at the time in New Orleans, there's

567
00:32:05,840 --> 00:32:09,060
Speaker 2: probably lots of ships and lots of deposed presidents and

568
00:32:09,100 --> 00:32:11,070
Speaker 2: lots of people raising armies at the time.

569
00:32:11,570 --> 00:32:15,710
Speaker 1: And to be clear, it's illegal if you're an American

570
00:32:15,770 --> 00:32:18,410
Speaker 1: citizen to buy a gunboat so that somebody can go

571
00:32:18,550 --> 00:32:20,910
Speaker 1: invade a foreign country that the U.S. is not at

572
00:32:21,010 --> 00:32:25,060
Speaker 1: war yet. You can't do that. But of course, at

573
00:32:25,100 --> 00:32:28,900
Speaker 1: this point, it hasn't invaded yet. Still, federal agents actually

574
00:32:28,980 --> 00:32:31,610
Speaker 1: go and like inspect the Hornet and try and figure

575
00:32:31,660 --> 00:32:35,830
Speaker 1: out what's going on. But they don't find anything. And

576
00:32:36,190 --> 00:32:40,590
Speaker 1: on December 22nd, the Hornet steamed out of New Orleans.

577
00:32:41,170 --> 00:32:43,750
Speaker 1: His paper said it was bound for Nicaragua to pick

578
00:32:43,790 --> 00:32:45,300
Speaker 1: up a shipment of iron ore.

579
00:32:45,900 --> 00:32:46,940
Speaker 2: Perfectly legitimate.

580
00:32:47,620 --> 00:32:50,130
Speaker 1: And the government was so skeptical that there was at

581
00:32:50,170 --> 00:32:52,770
Speaker 1: least one federal agent on board the ship as it

582
00:32:52,810 --> 00:32:57,070
Speaker 1: headed down the Mississippi. Then at the mouth of the Gulf,

583
00:32:57,110 --> 00:32:59,510
Speaker 1: you know, nothing had happened, whatever. It was just a ship.

584
00:32:59,630 --> 00:33:03,540
Speaker 1: The federal agent got off and the ship steamed away

585
00:33:03,560 --> 00:33:09,200
Speaker 1: into the Gulf. Two days later, General Bonilla and some

586
00:33:09,220 --> 00:33:12,740
Speaker 1: of the guys working with him met our man Sam

587
00:33:12,760 --> 00:33:16,040
Speaker 1: Zimuri and on Zemuri's own yacht. To be clear, not

588
00:33:16,060 --> 00:33:17,270
Speaker 1: the Hornet, just a yacht.

589
00:33:17,290 --> 00:33:18,570
Speaker 2: Yeah, yeah.

590
00:33:18,610 --> 00:33:21,430
Speaker 1: Back in New Orleans. And the yacht at this moment

591
00:33:21,530 --> 00:33:25,730
Speaker 1: is stocked with rifles and ammunition and machine gun. One

592
00:33:25,750 --> 00:33:27,690
Speaker 1: of the guys who was working with Bonilla's nickname was

593
00:33:27,770 --> 00:33:30,320
Speaker 1: Machine Gun. good nickname guy to have with you.

594
00:33:30,600 --> 00:33:32,560
Speaker 2: At any point, does Zemuri just say, wait a minute,

595
00:33:32,880 --> 00:33:36,430
Speaker 2: I was in a boxcar with bananas, and now I'm

596
00:33:36,490 --> 00:33:38,230
Speaker 2: in a yacht filled with machine guns?

597
00:33:38,250 --> 00:33:39,990
Speaker 1: I feel like when he was in the boxcar full

598
00:33:40,010 --> 00:33:42,330
Speaker 1: of bananas, he was already imagining the yacht full of

599
00:33:42,370 --> 00:33:46,490
Speaker 1: machine guns somehow. One machine gun. And Zemuri and these

600
00:33:46,570 --> 00:33:49,750
Speaker 1: guys and the weapons, they head down into the Gulf,

601
00:33:49,990 --> 00:33:53,320
Speaker 1: and they meet up with the Hornet, and the men

602
00:33:53,340 --> 00:33:56,000
Speaker 1: in the weapons get on the Hornet, and Sam, the

603
00:33:56,040 --> 00:33:59,110
Speaker 1: banana man... goes back to New Orleans. I want to

604
00:33:59,130 --> 00:34:02,770
Speaker 1: be clear here. It's not a secret what was going on. Literally,

605
00:34:02,890 --> 00:34:05,690
Speaker 1: the New York Times reports that at the same time

606
00:34:05,770 --> 00:34:10,069
Speaker 1: the Hornet left town, General Bonilla and several Americans who

607
00:34:10,130 --> 00:34:14,730
Speaker 1: have seen service in Central American wars disappeared from this city.

608
00:34:15,550 --> 00:34:20,250
Speaker 1: And indeed, the Hornet took Bonilla and his men to Honduras.

609
00:34:20,739 --> 00:34:23,880
Speaker 1: And remember, he was the former president of the country.

610
00:34:23,900 --> 00:34:27,700
Speaker 1: He had followers, so at the same time, Supporters brought

611
00:34:27,719 --> 00:34:31,920
Speaker 1: other boats from Guatemala and other followers invaded from El Salvador.

612
00:34:32,640 --> 00:34:36,600
Speaker 1: And Dávila, the current president, fought back. But the Dávila

613
00:34:36,660 --> 00:34:42,320
Speaker 1: government lost this time. Bonilla won. It happened fairly quickly.

614
00:34:42,560 --> 00:34:46,239
Speaker 1: There was a transition period that took a while, the interregnum,

615
00:34:46,980 --> 00:34:52,450
Speaker 1: but new elections were held. General Bonilla once again became

616
00:34:52,750 --> 00:34:56,850
Speaker 1: president of Honduras. I'm sure in his mind, the rightful president.

617
00:34:57,800 --> 00:35:00,779
Speaker 1: And now it was time for the general to pay

618
00:35:00,840 --> 00:35:07,030
Speaker 1: back el amigo. Sam Zimuri got his tax-free status back.

619
00:35:07,890 --> 00:35:11,130
Speaker 1: And as a bonus, he got another 25,000 acres to

620
00:35:11,170 --> 00:35:12,969
Speaker 1: grow bananas to be claimed later.

621
00:35:13,070 --> 00:35:14,310
Speaker 2: The general's very generous.

622
00:35:15,450 --> 00:35:19,700
Speaker 1: Sam is back in business, still smaller than United Fruit,

623
00:35:19,739 --> 00:35:23,460
Speaker 1: but in the game. He's growing bananas. He's buying more boats,

624
00:35:24,080 --> 00:35:29,069
Speaker 1: diversifying into pineapples and sugarcane. And now the next phase

625
00:35:30,110 --> 00:35:34,840
Speaker 1: is this fight, this big, long-running fight between Sam and

626
00:35:34,880 --> 00:35:39,240
Speaker 1: his company, Cuyamel, and United Fruit. They fight over land.

627
00:35:39,380 --> 00:35:42,460
Speaker 1: They fight over control of governments. And just to give

628
00:35:42,480 --> 00:35:44,890
Speaker 1: you a flavor, just to give you a flavor of

629
00:35:44,930 --> 00:35:48,710
Speaker 1: this fight, I want to tell one story that Sam

630
00:35:48,830 --> 00:35:55,520
Speaker 1: told to Life magazine later. In the 1920s, Sam's company

631
00:35:55,600 --> 00:35:59,620
Speaker 1: bought some land in Honduras in a region in the

632
00:35:59,680 --> 00:36:02,500
Speaker 1: northern part of the country that United Fruit thought of

633
00:36:02,739 --> 00:36:06,500
Speaker 1: as their turf. To them, this is like an aggressive incursion.

634
00:36:07,570 --> 00:36:11,530
Speaker 1: And to get the bananas to port from this land,

635
00:36:12,469 --> 00:36:16,130
Speaker 1: Sam's company had to build a bridge across a river. Now,

636
00:36:16,150 --> 00:36:20,669
Speaker 1: by this point, Bonilla, Zimri's man, is gone. He's not

637
00:36:20,989 --> 00:36:24,200
Speaker 1: running the country anymore. And United Fruit has more influence

638
00:36:24,239 --> 00:36:27,719
Speaker 1: in the government. So, United Fruit gets the government of

639
00:36:27,760 --> 00:36:31,920
Speaker 1: Honduras to block construction of the bridge that Sam needs. So,

640
00:36:31,940 --> 00:36:34,040
Speaker 1: now he has land to grow bananas on, but no

641
00:36:34,100 --> 00:36:39,680
Speaker 1: way to get them to market. So, somebody's like, okay, okay,

642
00:36:39,700 --> 00:36:42,040
Speaker 1: you wanna do that? Here's what he does. He has

643
00:36:42,080 --> 00:36:45,930
Speaker 1: his engineers build, like, jetties or piers on either side

644
00:36:45,950 --> 00:36:47,589
Speaker 1: of the river, kind of reaching out toward the middle

645
00:36:47,610 --> 00:36:48,620
Speaker 1: of it. Nothing wrong with a pier.

646
00:36:48,660 --> 00:36:50,609
Speaker 2: It's a very long pier, yeah, but sure.

647
00:36:50,650 --> 00:36:53,380
Speaker 1: But it doesn't go all the way across. In the middle,

648
00:36:53,480 --> 00:36:58,060
Speaker 1: to connect the jetties, he has the engineers build a

649
00:36:58,180 --> 00:37:01,680
Speaker 1: removable bridge. And it's big, right? You can run a

650
00:37:01,760 --> 00:37:05,379
Speaker 1: train full of bananas across it. But when the inspectors

651
00:37:05,480 --> 00:37:08,319
Speaker 1: come to look at the river, you can take the

652
00:37:08,360 --> 00:37:10,620
Speaker 1: bridge down and say, no, no, it's just a river

653
00:37:10,680 --> 00:37:15,469
Speaker 1: with jetties on it. So this is like shenanigans. This

654
00:37:15,550 --> 00:37:20,430
Speaker 1: is high level of shenanigans. But as the years go on,

655
00:37:20,890 --> 00:37:26,330
Speaker 1: this conflict between United Fruit and Zimuri kind of ramps up.

656
00:37:26,489 --> 00:37:29,090
Speaker 1: At some point, Zimuri gets in trouble for trying to

657
00:37:29,130 --> 00:37:33,860
Speaker 1: ship weapons to Honduras again. And by the late 1920s,

658
00:37:34,090 --> 00:37:37,790
Speaker 1: it looks like the tension between Zimuri and United Fruit

659
00:37:37,850 --> 00:37:43,090
Speaker 1: could lead to a full-on border war between Guatemala and Honduras.

660
00:37:43,530 --> 00:37:46,370
Speaker 1: And there were always border tensions between the countries. It

661
00:37:46,390 --> 00:37:49,060
Speaker 1: wasn't just the fruit companies, but the fruit companies were

662
00:37:49,100 --> 00:37:55,370
Speaker 1: making it worse. And so the United States State Department

663
00:37:55,410 --> 00:38:00,890
Speaker 1: gets involved again. They're like, this is our backyard. You're

664
00:38:00,930 --> 00:38:04,460
Speaker 1: making us look bad. We can't have fruit companies starting

665
00:38:04,580 --> 00:38:09,500
Speaker 1: border wars in Central America. You guys got to get along.

666
00:38:10,340 --> 00:38:13,480
Speaker 1: But of course, they can't get along. The fundamental DNA

667
00:38:13,520 --> 00:38:16,430
Speaker 1: of Zimery and United Fruit is that they are competitors,

668
00:38:16,550 --> 00:38:19,330
Speaker 1: that they fight together. And so they decide the only

669
00:38:19,410 --> 00:38:23,529
Speaker 1: way to not start a war is to merge, is

670
00:38:23,590 --> 00:38:28,290
Speaker 1: to combine. And they negotiated for a long time, back

671
00:38:28,330 --> 00:38:32,630
Speaker 1: and forth. Eventually, Sam Zimri agrees to merge his company

672
00:38:32,870 --> 00:38:37,339
Speaker 1: into the United Fruit Company. And in exchange, he will

673
00:38:37,380 --> 00:38:41,700
Speaker 1: get around $ 30 million worth of stock in the United

674
00:38:41,760 --> 00:38:44,940
Speaker 1: Fruit Company, making him one of the largest shareholders in

675
00:38:44,960 --> 00:38:48,650
Speaker 1: the company, and one of the richest men in America.

676
00:38:48,890 --> 00:38:51,509
Speaker 2: Probably still has the yacht. He can just sail around

677
00:38:51,530 --> 00:38:52,290
Speaker 2: for the rest of his life.

678
00:38:52,350 --> 00:38:55,410
Speaker 1: He buys a big mansion in New Orleans and he retires.

679
00:38:56,930 --> 00:38:58,500
Speaker 1: Nobody ever retires on this show.

680
00:38:59,140 --> 00:39:00,939
Speaker 2: No, no, not with one act left to go.

681
00:39:00,960 --> 00:39:05,780
Speaker 1: In this case, what brings him back is the Great Depression.

682
00:39:06,360 --> 00:39:07,900
Speaker 2: Great Depression.

683
00:39:08,180 --> 00:39:13,130
Speaker 1: Classic turn in any business history story. The stock market collapses.

684
00:39:13,489 --> 00:39:17,440
Speaker 1: Zimri's $ 30 million stake in United Fruit is now worth

685
00:39:17,480 --> 00:39:19,160
Speaker 1: something like $ 3 million.

686
00:39:19,260 --> 00:39:21,600
Speaker 2: Oh, he's going to have to sell bananas on the

687
00:39:21,640 --> 00:39:22,820
Speaker 2: street for 10 cents.

688
00:39:23,080 --> 00:39:26,629
Speaker 1: To Zimri, this collapse in the share price seems excessive. Yes,

689
00:39:26,670 --> 00:39:29,790
Speaker 1: the market is down, but it's not like United Fruit

690
00:39:29,850 --> 00:39:32,240
Speaker 1: is some go-go tech company.

691
00:39:32,260 --> 00:39:35,440
Speaker 2: It wasn't RCA, Radio Corporation of America.

692
00:39:35,460 --> 00:39:38,790
Speaker 1: No, it wasn't some bank that was leveraged up to

693
00:39:38,850 --> 00:39:41,089
Speaker 1: its banana peels. It was a fruit company that was

694
00:39:41,110 --> 00:39:42,290
Speaker 1: still selling fruit. Yeah.

695
00:39:42,950 --> 00:39:45,830
Speaker 2: Good bananas, shipped, sold at a reasonable price.

696
00:39:46,650 --> 00:39:50,640
Speaker 1: So Sam starts to figure out what's going on. He

697
00:39:50,700 --> 00:39:53,000
Speaker 1: wants to know why has this company that I built,

698
00:39:53,300 --> 00:39:55,140
Speaker 1: that is the source of my wealth, why has the

699
00:39:55,180 --> 00:39:58,360
Speaker 1: stock collapsed? And he's talking to banana people.

700
00:39:58,390 --> 00:40:00,870
Speaker 2: I love how he thinks about it as my company,

701
00:40:01,390 --> 00:40:03,210
Speaker 2: even though it's still United Fruit in name.

702
00:40:03,530 --> 00:40:04,430
Speaker 1: Yeah, it's understandable.

703
00:40:04,489 --> 00:40:05,470
Speaker 2: He's that kind of guy.

704
00:40:05,510 --> 00:40:08,050
Speaker 1: He is that kind of guy. And he did build,

705
00:40:08,110 --> 00:40:11,029
Speaker 1: you know, he built his part of the company. It's

706
00:40:11,070 --> 00:40:14,170
Speaker 1: been his life's work to this point. And so he

707
00:40:14,210 --> 00:40:18,460
Speaker 1: decides he doesn't like the way United Fruit is running

708
00:40:18,500 --> 00:40:21,400
Speaker 1: the company. You know, he was always down there in

709
00:40:21,460 --> 00:40:23,940
Speaker 1: Central America, they're always way up there in Boston.

710
00:40:23,960 --> 00:40:26,469
Speaker 2: He was in the boxcar, he was in the jungles,

711
00:40:26,610 --> 00:40:28,410
Speaker 2: he was on the removable bridge.

712
00:40:28,890 --> 00:40:31,350
Speaker 1: So he goes, I like the idea of him on

713
00:40:31,370 --> 00:40:33,450
Speaker 1: the removable bridge when it's getting removed, he's kind of

714
00:40:33,950 --> 00:40:37,350
Speaker 1: pinwheeling his arms. He goes up to Boston as a

715
00:40:37,430 --> 00:40:41,649
Speaker 1: major shareholder to a director's meeting to tell them what

716
00:40:41,670 --> 00:40:46,990
Speaker 1: he thinks. And at this meeting, he watches before he speaks,

717
00:40:47,150 --> 00:40:52,820
Speaker 1: as they debate this particular request from a manager in Guatemala.

718
00:40:53,440 --> 00:40:56,920
Speaker 1: The guy wants $ 10, 000 for some irrigation project. It's a

719
00:40:56,960 --> 00:40:59,719
Speaker 1: lot of money. It's the Depression. So the directors are

720
00:40:59,860 --> 00:41:03,140
Speaker 1: analyzing the request, trying to figure out whether to grant it.

721
00:41:03,160 --> 00:41:05,279
Speaker 2: Seems like there's lots of water in Guatemala. I don't

722
00:41:05,300 --> 00:41:06,480
Speaker 2: know if we should believe this guy.

723
00:41:06,520 --> 00:41:10,160
Speaker 1: And Zemuri is there, and he speaks up. He says,

724
00:41:10,860 --> 00:41:13,839
Speaker 1: you know, the manager is in the field. He knows

725
00:41:13,900 --> 00:41:14,600
Speaker 1: what's going on.

726
00:41:15,760 --> 00:41:18,739
Speaker 2: He says, if you trust him, the manager, if you

727
00:41:18,800 --> 00:41:21,240
Speaker 2: trust him, trust him. If you don't trust him, fire

728
00:41:21,280 --> 00:41:23,489
Speaker 2: him and get a man you do trust in the job.

729
00:41:24,180 --> 00:41:28,630
Speaker 1: This is according to an interview that Zimri gave in 1933,

730
00:41:28,630 --> 00:41:33,390
Speaker 1: by the way. Also at this meeting, Zimri said, let

731
00:41:33,430 --> 00:41:35,610
Speaker 1: me help. I'm down there. I'm on the docks. I

732
00:41:35,630 --> 00:41:38,730
Speaker 1: spent my life. Let me come be an advisor. And

733
00:41:38,750 --> 00:41:40,710
Speaker 1: the people at United were like, no, thank you, Sam.

734
00:41:40,730 --> 00:41:42,270
Speaker 1: Please go enjoy your money.

735
00:41:42,810 --> 00:41:46,529
Speaker 2: Totally understandable if you are an old director in a

736
00:41:46,650 --> 00:41:49,340
Speaker 2: suit sitting in Boston and you don't want the guy

737
00:41:49,410 --> 00:41:51,219
Speaker 2: who runs gunboats back in the company.

738
00:41:51,239 --> 00:41:52,420
Speaker 1: Yeah, or if you're the president of the company. If

739
00:41:52,440 --> 00:41:54,339
Speaker 1: you're any exec, you don't want this guy looking over

740
00:41:54,360 --> 00:41:56,700
Speaker 1: your shoulder. You did this deal so you didn't have

741
00:41:56,719 --> 00:41:58,940
Speaker 1: to think about Sam Zimmer anymore. Last thing you want

742
00:41:58,960 --> 00:41:59,319
Speaker 1: is Sam Zimmer.

743
00:41:59,340 --> 00:42:00,739
Speaker 2: That's what the money was for.

744
00:42:00,780 --> 00:42:05,270
Speaker 1: That's what the money's for. So they say no to Zimmery.

745
00:42:06,350 --> 00:42:10,419
Speaker 1: And his response is to go out into the world

746
00:42:10,520 --> 00:42:14,850
Speaker 1: and start talking to other big United Fruit shareholders who

747
00:42:15,170 --> 00:42:20,230
Speaker 1: presumably are disgruntled. Their share price is way down. And Sam, essentially,

748
00:42:20,290 --> 00:42:22,150
Speaker 1: his pitch is, these guys in Boston don't know what

749
00:42:22,170 --> 00:42:24,830
Speaker 1: they're doing. I know what I'm doing. I can fix

750
00:42:24,870 --> 00:42:29,950
Speaker 1: the company. And these other shareholders back him. They say, okay,

751
00:42:30,110 --> 00:42:32,759
Speaker 1: we will vote with you. And remember, you know, the

752
00:42:33,010 --> 00:42:36,359
Speaker 1: way a publicly traded company works is, generally, unless there's

753
00:42:36,380 --> 00:42:38,590
Speaker 1: some weird share structure, which there was not in this case,

754
00:42:39,030 --> 00:42:41,770
Speaker 1: the shareholders vote. One share means one vote. It is

755
00:42:41,830 --> 00:42:46,569
Speaker 1: a kind of capitalist democracy. And so with these other

756
00:42:46,610 --> 00:42:50,469
Speaker 1: big shareholders and his own holdings, Sam now controls a

757
00:42:50,690 --> 00:42:56,060
Speaker 1: majority of the shares. He controls the company. And so

758
00:42:56,760 --> 00:43:00,879
Speaker 1: he goes back a few months later to another board

759
00:43:00,900 --> 00:43:04,200
Speaker 1: of directors meeting in Boston and And he hasn't yet

760
00:43:04,340 --> 00:43:08,330
Speaker 1: told the directors that he has a controlling interest now.

761
00:43:10,010 --> 00:43:14,190
Speaker 1: He wants to convince them without that to run the

762
00:43:14,230 --> 00:43:17,230
Speaker 1: company better in his mind. And so he makes his

763
00:43:17,330 --> 00:43:20,700
Speaker 1: pitch to the directors again. He says basically, give the

764
00:43:20,739 --> 00:43:23,960
Speaker 1: local managers more autonomy. Stop trying to pinch every penny.

765
00:43:24,960 --> 00:43:27,640
Speaker 1: In one telling of the story after this, the chairman

766
00:43:27,660 --> 00:43:30,140
Speaker 1: of the board takes a swipe at Zimri's accent. Remember,

767
00:43:30,180 --> 00:43:33,900
Speaker 1: he was an immigrant. And this, you know, Boston Brahmin

768
00:43:33,940 --> 00:43:38,260
Speaker 1: type says, unfortunately, Mr. Zimri, I can't understand a word

769
00:43:38,300 --> 00:43:43,640
Speaker 1: you say. And then Zimri springs it on the board.

770
00:43:43,660 --> 00:43:47,000
Speaker 1: He says, I'm in control now. I have enough votes

771
00:43:47,480 --> 00:43:51,549
Speaker 1: to do whatever I want with this company. And he

772
00:43:51,640 --> 00:43:53,210
Speaker 1: says to the board this.

773
00:43:53,110 --> 00:43:59,990
Speaker 2: Famous line, explicit language warning, you gentlemen have been fucking

774
00:44:00,110 --> 00:44:02,950
Speaker 2: up this business long enough I'm going to straighten it out.

775
00:44:03,910 --> 00:44:06,700
Speaker 1: That quote, by the way, comes from a 1933 story

776
00:44:06,800 --> 00:44:08,560
Speaker 1: in Fortune magazine. Ooh.

777
00:44:09,360 --> 00:44:09,760
Speaker 2: Spicy.

778
00:44:11,340 --> 00:44:14,140
Speaker 1: So, Zimri starts to straighten it out. He goes back

779
00:44:14,200 --> 00:44:18,000
Speaker 1: to work, he gives himself the title Managing Director of Operations,

780
00:44:18,620 --> 00:44:20,680
Speaker 1: gets rid of a bunch of board members, fires the

781
00:44:20,700 --> 00:44:25,480
Speaker 1: guy who was running United Fruit, travels to Guatemala, Nicaragua,

782
00:44:25,520 --> 00:44:29,200
Speaker 1: Costa Rica, Panama, Mexico, Cuba, fires a lot of people,

783
00:44:29,680 --> 00:44:34,740
Speaker 1: hires other people, And the stock price comes back. Company recovers,

784
00:44:35,239 --> 00:44:39,960
Speaker 1: starts growing, continues to be the octopus, dominating huge swaths

785
00:44:40,040 --> 00:44:42,200
Speaker 1: of the Caribbean, of Central America.

786
00:44:42,520 --> 00:44:43,880
Speaker 2: But now it's Sam's octopus.

787
00:44:44,160 --> 00:44:49,810
Speaker 1: Now it's Sam's octopus. And the world is about to

788
00:44:49,950 --> 00:44:54,110
Speaker 1: change in a way that's going to be important for

789
00:44:54,630 --> 00:44:59,589
Speaker 1: Sam and United Fruit. Because up until this point... This

790
00:44:59,630 --> 00:45:04,190
Speaker 1: has largely been the story of U.S. companies and, to

791
00:45:04,210 --> 00:45:07,290
Speaker 1: some extent, even the British government. And we have not

792
00:45:07,330 --> 00:45:09,330
Speaker 1: heard so much from the people who are actually living

793
00:45:09,410 --> 00:45:12,620
Speaker 1: and working in the Caribbean and in Central America. But

794
00:45:12,760 --> 00:45:17,640
Speaker 1: this is about to change in a profound way. We'll

795
00:45:17,660 --> 00:45:28,350
Speaker 1: talk about that in a minute. As the 20th century

796
00:45:28,390 --> 00:45:32,219
Speaker 1: goes on, The United Fruit Company goes from being this

797
00:45:32,960 --> 00:45:37,200
Speaker 1: huge commercial and political force in Latin America to being

798
00:45:37,960 --> 00:45:42,990
Speaker 1: a mythological force in Latin America. The poet Pablo Neruda

799
00:45:43,190 --> 00:45:47,110
Speaker 1: writes a poem called The United Fruit Co. In Spanish,

800
00:45:47,489 --> 00:45:51,870
Speaker 1: La United Fruit Co. And of course, Gabriel Garcia Marquez

801
00:45:52,050 --> 00:45:54,940
Speaker 1: writes A Hundred Years of Solitude, one of the most

802
00:45:55,060 --> 00:45:58,239
Speaker 1: famous novels of the 20th century in any language from

803
00:45:58,280 --> 00:46:03,170
Speaker 1: any region. that is set in a town dominated by

804
00:46:03,190 --> 00:46:07,490
Speaker 1: a fictionalized version of the United Fruit Company. Unsurprising because

805
00:46:07,530 --> 00:46:10,230
Speaker 1: Garcia Marquez grew up in a town that had been

806
00:46:10,250 --> 00:46:13,859
Speaker 1: dominated by the United Fruit Company. The novel includes this

807
00:46:13,950 --> 00:46:18,500
Speaker 1: moment when workers striking for better conditions are massacred. That's

808
00:46:18,540 --> 00:46:22,980
Speaker 1: actually based on a historical event. And you really see

809
00:46:23,160 --> 00:46:28,220
Speaker 1: as this mythology is growing after World War II, a transformation.

810
00:46:29,020 --> 00:46:34,660
Speaker 1: This is the moment when anti-colonialism is growing around the world.

811
00:46:35,140 --> 00:46:41,440
Speaker 1: And in Latin America, anti-colonialism often means anti-United Fruit. And

812
00:46:41,780 --> 00:46:45,950
Speaker 1: one place you see this particularly clearly is Guatemala. And

813
00:46:45,989 --> 00:46:49,870
Speaker 1: so to close the show today, I want to talk

814
00:46:49,910 --> 00:46:55,750
Speaker 1: about what happened in Guatemala in the years after World

815
00:46:55,790 --> 00:46:59,100
Speaker 1: War II. What happened with United Fruit, and also with

816
00:46:59,340 --> 00:47:03,080
Speaker 1: the Central Intelligence Agency because this event, it sets the

817
00:47:03,140 --> 00:47:06,239
Speaker 1: tone for the end of Sam Zimri's career and in

818
00:47:06,280 --> 00:47:10,049
Speaker 1: a broader way for the rest of the 20th century

819
00:47:10,140 --> 00:47:12,110
Speaker 1: or most of the rest of the 20th century in

820
00:47:12,170 --> 00:47:18,270
Speaker 1: Latin America. So in the 1930s and 40s, Guatemala was

821
00:47:18,410 --> 00:47:25,259
Speaker 1: run by a violent right-wing dictator He banned unions, he

822
00:47:25,340 --> 00:47:30,049
Speaker 1: forced landless peasants to go work for big landowners. And,

823
00:47:30,090 --> 00:47:33,570
Speaker 1: you know, this was a guy Samson Marin United Fruit

824
00:47:34,070 --> 00:47:35,589
Speaker 1: could work with and did work with.

825
00:47:35,770 --> 00:47:36,770
Speaker 2: And the United States government.

826
00:47:37,070 --> 00:47:37,989
Speaker 1: And the United States government.

827
00:47:38,010 --> 00:47:38,509
Speaker 2: They wanted him there.

828
00:47:39,330 --> 00:47:42,570
Speaker 1: They didn't mind. And United Fruit was growing lots of

829
00:47:42,590 --> 00:47:45,100
Speaker 1: bananas in Guatemala in the 30s and 40s. The company

830
00:47:45,120 --> 00:47:48,460
Speaker 1: was the biggest private landowner in the country at the time.

831
00:47:49,120 --> 00:47:54,450
Speaker 1: And then in 1944, that dictator was overthrown. A new

832
00:47:54,489 --> 00:47:58,279
Speaker 1: president was elected. He allowed the workers to unionize. This

833
00:47:58,300 --> 00:48:01,960
Speaker 1: is definitely a shift. And then in 1950, another new

834
00:48:02,020 --> 00:48:04,279
Speaker 1: president was elected, a guy we're going to be talking

835
00:48:04,300 --> 00:48:11,610
Speaker 1: a lot about, Jacobo Arbenz. And Arbenz goes even further.

836
00:48:11,710 --> 00:48:14,989
Speaker 1: He issues a decree, Decree 900, number 900. And the

837
00:48:15,330 --> 00:48:15,810
Speaker 1: decree says, big.

838
00:48:20,360 --> 00:48:24,960
Speaker 1: Uncultivated land holdings will be expropriated by the state and

839
00:48:25,040 --> 00:48:29,980
Speaker 1: given to landless peasants to farm. It's land reform. The

840
00:48:30,020 --> 00:48:33,090
Speaker 1: government would pay the landowners for the land in the

841
00:48:33,110 --> 00:48:36,250
Speaker 1: form of 25-year Guatemalan bonds. Can I interest you in

842
00:48:36,270 --> 00:48:40,129
Speaker 1: some 25-year Guatemalan bonds? You know who had a lot

843
00:48:40,170 --> 00:48:44,350
Speaker 1: of big uncultivated land holdings and was absolutely not interested

844
00:48:44,410 --> 00:48:47,540
Speaker 1: in exchanging them for 25-year Guatemalan bonds? United Fruit.

845
00:48:47,560 --> 00:48:48,120
Speaker 2: United Fruit.

846
00:48:48,160 --> 00:48:53,859
Speaker 1: United Fruit. And in a truly delightful twist, United Fruit

847
00:48:53,920 --> 00:48:58,819
Speaker 1: had undervalued their land holdings in their official filings for

848
00:48:58,860 --> 00:49:01,799
Speaker 1: years so that they wouldn't have to pay property.

849
00:49:01,520 --> 00:49:02,380
Speaker 2: Tax, essentially.

850
00:49:02,440 --> 00:49:03,779
Speaker 1: So they could underpay their property tax.

851
00:49:03,940 --> 00:49:06,820
Speaker 2: And so it's kind of genius if you are offering

852
00:49:06,900 --> 00:49:09,660
Speaker 2: to bot offering. I'm putting that in quotes because you're

853
00:49:09,690 --> 00:49:11,450
Speaker 2: the government. You're saying, we're going to take your land.

854
00:49:11,469 --> 00:49:13,270
Speaker 2: We're going to pay you the value of the land.

855
00:49:13,650 --> 00:49:16,489
Speaker 2: What is it you wrote down? Oh, that tiny number?

856
00:49:16,550 --> 00:49:18,509
Speaker 2: That's what you think your land is worth? Well, I

857
00:49:18,950 --> 00:49:22,320
Speaker 2: guess we'll see. give you the money. In 25-year quadribolodon.

858
00:49:24,440 --> 00:49:29,910
Speaker 1: And kind of amazingly, Arbenz follows through, starts taking away

859
00:49:30,450 --> 00:49:35,750
Speaker 1: uncultivated land from United Fruit, giving it to formerly landless peasants.

860
00:49:36,670 --> 00:49:40,900
Speaker 1: And there's a pretty clear move here. If it is

861
00:49:40,920 --> 00:49:45,080
Speaker 1: the 1950s and you are United Fruit and somebody is

862
00:49:45,180 --> 00:49:48,049
Speaker 1: taking away your land and giving it to peasants, what

863
00:49:48,070 --> 00:49:48,740
Speaker 1: do you scream?

864
00:49:50,130 --> 00:49:50,650
Speaker 2: Communism.

865
00:49:50,730 --> 00:49:56,330
Speaker 1: Communists! You blame it on the communists. This is United

866
00:49:56,370 --> 00:49:59,890
Speaker 1: Fruit's move. Let me turn your attention first to an

867
00:50:00,410 --> 00:50:07,299
Speaker 1: educational film called... Why the Kremlin Hates Bananas. I thought

868
00:50:07,320 --> 00:50:09,719
Speaker 1: it wasn't real. There's a lot of lore. When I

869
00:50:09,739 --> 00:50:12,239
Speaker 1: was putting this together, a lot of stories didn't make

870
00:50:12,280 --> 00:50:15,180
Speaker 1: it because they were so clearly lore. This one is real.

871
00:50:15,320 --> 00:50:19,000
Speaker 1: It was commissioned by United Fruit. And you can see

872
00:50:19,060 --> 00:50:23,410
Speaker 1: it on YouTube. It's this guy sitting at a desk

873
00:50:23,489 --> 00:50:25,350
Speaker 1: with a bowl of bananas next to him and a

874
00:50:25,510 --> 00:50:29,770
Speaker 1: map of Central America behind him. And he's delivering a

875
00:50:29,810 --> 00:50:33,620
Speaker 1: pretty straightforward message. First of all, Central America is the

876
00:50:33,660 --> 00:50:38,440
Speaker 1: United States' backyard. Quote, a few minutes by guided missile

877
00:50:39,120 --> 00:50:39,740
Speaker 1: from the U.S.

878
00:50:40,239 --> 00:50:43,670
Speaker 2: And when the Kremlin comes first for the bananas, next, obviously,

879
00:50:43,710 --> 00:50:46,490
Speaker 2: they're going to put missiles there and threaten the American homeland.

880
00:50:47,210 --> 00:50:51,490
Speaker 1: And the fundamental message of this video, give us the quote.

881
00:50:52,570 --> 00:50:56,669
Speaker 2: The agents of international communism have selected the United Fruit

882
00:50:56,710 --> 00:50:59,210
Speaker 2: Company as a prime target of attack.

883
00:51:00,030 --> 00:51:02,100
Speaker 1: The enemies of the United Fruit Company.

884
00:51:02,760 --> 00:51:04,940
Speaker 2: First they come for United Fruit Company, then they come

885
00:51:04,960 --> 00:51:05,580
Speaker 2: for Peoria.

886
00:51:07,260 --> 00:51:10,200
Speaker 1: Zemuri had been working with a great PR guy for

887
00:51:10,239 --> 00:51:14,009
Speaker 1: a while at this point, Edward Bernays, famous figure in

888
00:51:14,050 --> 00:51:16,950
Speaker 1: the time. And he is out there cultivating this story

889
00:51:16,989 --> 00:51:20,270
Speaker 1: that the communists were afoot in Guatemala. And maybe more

890
00:51:20,310 --> 00:51:24,450
Speaker 1: important than that was the fact that United Fruit, by

891
00:51:24,489 --> 00:51:28,430
Speaker 1: this point, was the establishment. This is the great era

892
00:51:28,510 --> 00:51:32,340
Speaker 1: of the establishment. in America, you know, a small coterie

893
00:51:32,360 --> 00:51:36,359
Speaker 1: of powerful people. And the U.S. government and United Fruit

894
00:51:36,440 --> 00:51:40,270
Speaker 1: are very bound up. A former president of the company

895
00:51:40,469 --> 00:51:44,910
Speaker 1: worked at the State Department at this time. Eisenhower's personal

896
00:51:45,010 --> 00:51:48,450
Speaker 1: secretary was married to a senior executive at United Fruit.

897
00:51:49,570 --> 00:51:55,370
Speaker 1: And so, with the encouragement of United Fruit, the United

898
00:51:55,390 --> 00:52:01,800
Speaker 1: States government, the CIA, foments a coup against Jacobo Arbenz,

899
00:52:01,880 --> 00:52:05,590
Speaker 1: the democratically elected leader of Guatemala.

900
00:52:06,270 --> 00:52:09,050
Speaker 2: The verb foments really is a CIA term.

901
00:52:09,790 --> 00:52:12,330
Speaker 1: Do you foment anything but.

902
00:52:13,110 --> 00:52:14,270
Speaker 2: Revolutions? Yeah.

903
00:52:14,670 --> 00:52:15,570
Speaker 1: You don't foment.

904
00:52:16,310 --> 00:52:16,610
Speaker 2: Dinner.

905
00:52:17,030 --> 00:52:21,400
Speaker 1: You don't foment dinner. You don't foment water. So the

906
00:52:21,480 --> 00:52:25,160
Speaker 1: coup is going down, and who should be in Guatemala

907
00:52:25,200 --> 00:52:30,660
Speaker 1: City at this moment but one Ernesto Che Guevara. Che,

908
00:52:30,860 --> 00:52:31,440
Speaker 1: Che Guevara.

909
00:52:31,580 --> 00:52:32,759
Speaker 2: He's got his beret.

910
00:52:32,780 --> 00:52:36,719
Speaker 1: He's got his beret. He's already leaning left, and this

911
00:52:36,950 --> 00:52:39,310
Speaker 1: only pushes him farther left. And in fact, a few

912
00:52:39,350 --> 00:52:42,629
Speaker 1: years later, he will team up with Fidel Castro, whose

913
00:52:42,710 --> 00:52:46,969
Speaker 1: own father worked for United Fruit in Cuba, the octopus.

914
00:52:47,750 --> 00:52:51,990
Speaker 1: And of course, Castro, after the revolution, will nationalize United

915
00:52:52,050 --> 00:52:56,650
Speaker 1: Fruit's land in Cuba. But we're in Guatemala now, where

916
00:52:56,670 --> 00:53:02,410
Speaker 1: the CIA-backed coup happens. Arbenz is forced out. And the

917
00:53:02,469 --> 00:53:07,030
Speaker 1: day he resigns, he gives this speech and he spells

918
00:53:07,150 --> 00:53:12,790
Speaker 1: out exactly what is happening. Workers, peasants, patriots.

919
00:53:13,370 --> 00:53:16,890
Speaker 2: Guatemala is going through a hard trial. A cruel war

920
00:53:16,969 --> 00:53:22,259
Speaker 2: against Guatemala has been unleashed. The United Fruit Company and U.S. monopolies,

921
00:53:22,300 --> 00:53:25,420
Speaker 2: together with U.S. ruling circles, are responsible.

922
00:53:26,750 --> 00:53:30,290
Speaker 1: The United Fruit Company is responsible. He's saying it.

923
00:53:30,430 --> 00:53:34,450
Speaker 2: He's saying that banana that you are eating in Jersey

924
00:53:34,489 --> 00:53:37,430
Speaker 2: City is bringing down this country.

925
00:53:38,739 --> 00:53:44,100
Speaker 1: Arbenz flees the country. And before too long, Guatemala has

926
00:53:44,160 --> 00:53:47,259
Speaker 1: a new leader backed by the U.S. government. And that

927
00:53:47,300 --> 00:53:52,300
Speaker 1: leader takes most of the land that had been taken

928
00:53:52,440 --> 00:53:54,960
Speaker 1: from United Fruit and given to peasants to farm and

929
00:53:55,040 --> 00:53:59,459
Speaker 1: gives it back to to United Fruit. When I think

930
00:53:59,520 --> 00:54:02,259
Speaker 1: about this story more broadly, the story we've been telling

931
00:54:02,280 --> 00:54:04,719
Speaker 1: for the whole show, you know, there's this idea that

932
00:54:04,760 --> 00:54:08,360
Speaker 1: comes to mind, which is we often think, oh, the

933
00:54:08,400 --> 00:54:11,120
Speaker 1: government's over here and private companies are over there, and

934
00:54:11,140 --> 00:54:15,390
Speaker 1: maybe there's some, like, regulation linking them. But this is

935
00:54:16,230 --> 00:54:20,570
Speaker 1: not the case. When you look at history, very, very often,

936
00:54:20,590 --> 00:54:23,750
Speaker 1: the governments and companies are all bound up with each other.

937
00:54:23,770 --> 00:54:26,400
Speaker 1: I mean, you see it in oil. You see it, obviously,

938
00:54:26,420 --> 00:54:29,120
Speaker 1: in the early trading companies. You see it in all

939
00:54:29,200 --> 00:54:30,239
Speaker 1: kinds of industry.

940
00:54:30,460 --> 00:54:33,460
Speaker 2: Even in the most simple of commodities. Even a yellow

941
00:54:33,500 --> 00:54:35,399
Speaker 2: fruit that grows on a tree. Sorry, not a tree.

942
00:54:36,219 --> 00:54:38,450
Speaker 1: Also, we had gone the whole time without calling it

943
00:54:38,469 --> 00:54:43,870
Speaker 1: a yellow fruit. The banana business and the U.S. government

944
00:54:43,989 --> 00:54:48,250
Speaker 1: in the 20th century were all bound up with each other. And,

945
00:54:48,310 --> 00:54:52,529
Speaker 1: you know, if you remember earlier in the show, The

946
00:54:52,670 --> 00:54:55,610
Speaker 1: first time Sam Zimuri wanted to sell a coup so

947
00:54:55,660 --> 00:54:59,319
Speaker 1: he could sell more bananas, the U.S. government tried to

948
00:54:59,360 --> 00:55:02,239
Speaker 1: stop him, told him not to do it. By the

949
00:55:02,300 --> 00:55:05,660
Speaker 1: end of his career, he helped convince the U.S. government

950
00:55:06,100 --> 00:55:11,279
Speaker 1: to foment the coup. Sam Zimuri had arrived. I want

951
00:55:11,320 --> 00:55:13,680
Speaker 1: to thank the listeners who suggested that we do a

952
00:55:13,719 --> 00:55:19,740
Speaker 1: show about United Fruit, who included Patrick Bowman and Jacob Wolfson.

953
00:55:20,810 --> 00:55:22,930
Speaker 1: Is there another fruit we should do a show about?

954
00:55:23,210 --> 00:55:26,350
Speaker 2: Johnny Appleseed? Oranges in Florida?

955
00:55:26,670 --> 00:55:33,260
Speaker 1: Email us at businesshistoryatpushkin.fm or find us on Twitter. It'll

956
00:55:33,300 --> 00:55:35,520
Speaker 1: always be Twitter to me. I'm at Jacob Goldstein.

957
00:55:35,719 --> 00:55:38,640
Speaker 2: I'm at Radio... What was that?

958
00:55:38,880 --> 00:55:43,319
Speaker 1: You slowed down. We're on LinkedIn. Turn it up to 2x.

959
00:55:44,140 --> 00:55:49,910
Speaker 2: And already down to. 5. You're screwed with people now.

960
00:55:50,920 --> 00:55:54,580
Speaker 1: Today's show was produced by Gabriel Hunter-Cheng, who brought us

961
00:55:54,640 --> 00:55:57,960
Speaker 1: a beautiful bunch of Chiquita bananas. Chiquita, by the way,

962
00:55:58,080 --> 00:56:02,410
Speaker 1: is the descendant of United Fruit. Our editor and showrunner

963
00:56:02,570 --> 00:56:04,230
Speaker 1: is Jake Harper. I'm Jacob Goldstein.

964
00:56:04,750 --> 00:56:06,530
Speaker 2: I'm Robert Smith. Thanks for listening.