The C.I.A. In Guatemala

5/5/86: history paper from high school junior year

On the basis of a variety of primary and secondary sources, this paper will show that 1) the United Fruit Company of Boston took a political and economic interest in Guatemala from 1900 to the 1950's solely to profit from banana exports, 2) it, in conjunction with Minor Keith's railroad, gained economic and political control over Guatemala, 3) that although the government had submitted to the company in the past, President Jacobo Arbenz, elected by the people, began reforms from which the country benefited, while the supreme power of the United Fruit Company began to weaken and 4) The United Fruit Company went to the CIA for help, and the CIA in cooperation with the state department engineered an overthrow of the government in order to protect American economic interests.

The United Fruit Company began in 1870 when Lorenzo Dow Baker, captain of a cargo ship, took some bananas from Jamaica to the United States because he had some extra space. The bananas sold well, and Baker dropped his other cargoes for bananas. Together with his new shipping agent Andrew Preston and nine other men, Baker formed the Boston Fruit Company. By 1898 the Fruit Company and several smaller firms were exporting 16 million bunches of bananas every year. Soon Jamaica, Cuba, and Santo Domingo could not support the demand and thus new sources had to be found. They found a man named Minor Keith, called at times the Uncrowned King of Central America, who exported Costa Rican bananas to pay for a railroad he was building throughout Central America. They combined forces and thus had control over 112 miles of railroad in Central America. The new firm now controlled 212,394 acres of land in the Caribbean and Central America. The company used Guatemala, Panama, Honduras, Nicaragua, Colombia, Jamaica, Cuba, and Santo Domingo to produce this popular United States import. The local rulers usually had no other use for great quantities of their acreage and were happy to be paid anything for it.

United Fruit became the largest employer in Guatemala as well as the largest landowner and exporter, and the Company became used to exemption from internal taxation, duty free exportation and guaranteed cheap labor under the jurisdiction of the Guatemalan administration. In 1901 the Company obtained the contract to carry mail from Guatemala on its ships, and in 1904 the Guatemalan dictator offered to let the Company continue one of the only Guatemalan railroads and extend it across the whole country, connecting Guatemala City in the west of Guatemala to Puerto Barrios on the Atlantic coast. The company owned the town and most of its port facilities, and controlled the schedule and rates of the railroad, and thus excercised enormous economic power over all international imports or exports coming through the Atlantic.

The company's power occasionally came to the public eye as an issue in American politics. When Governor Huey Long ran for United States Senate in 1930 he said that he only hoped the United States would not send troops to Latin America in order to protect the interests of Sam Zemurray, the most prominent figure in the United Fruit Company at that time.

In 1944 General Jorge Ubico's fourteen year dictatorship in Guatemala came to an end. People had begun to organize against him, basing their goals on speeches heard over shortwave radio by President Franklin D. Roosevelt on the "Four Freedoms" - the declaration that "all humanity was entitled to freedom of speech, freedom of religion, freedom from want and freedom from fear." Roosevelt became a Guatemalan hero and his New Deal "convinced many Guatemalans that they deserved a government actively devoted to the public good."

Because of the growing number of petitions and riots, Ubico placed one of his military commanders, General Federico Ponce, into power for an indefinite time period. Ponce, however, did not have control over the people. The protests continued on a slightly smaller scale, so Ponce decided to declare a free election to insure his position, never thinking a suitable candidate could be found to oppose him. The Guatemalans found their ideal figure living in exile in Argentina, a professor of philosophy, Dr. Juan José Arévalo Bermejo whose goal was to "spread the principles of the New Deal throughout Latin America."

A sudden uprising, costing less than 100 lives, led by Major Francisco Arana and Capitan Jacobo Arbenz Guzmán forced Ponce to hide at the Mexican Embassy for his own safety. Arana and Arbenz, alongside a prominent businessman Jorge Toriello, announced that free elections were to be held under a new democratic constitution.

In December of 1945 the strongly anti-communist Arévalo was elected. "Censorship of the press was forbidden, the right to organize was sanctified, and voting rights were expanded." Equal pay for men and women became the law, and racial discrimination became a crime. A maximum forty four hour work week and a new social security program were implemented. More books were imported and printed in Arévalo's six year term than had been in the last 50 years.

During the Arévalo administration, a group of strikes broke out; the people demanded better wages and conditions. The company complied with minor grumblings, and threatened to withdraw from Guatemala if the further growth of the company was impeded.

Similar to Roosevelt's first 100 days, however, after Arévalo's first year unrest began to grow. The people were no longer happy with Arévalo and were showing they were ready for a new leader as the six year term ended. Arana and Arbenz's "behind the scenes battles" for the next election typified the end of the term of Arévalo. The people supported Arbenz, and he took the presidency from the disenheartened Arévalo in the following elections.

Arbenz's goals were to make Guatemala economically independent from world coffee prices and United States corporations. He wished to develop domestic industry and to raise the standard of living in the process. Agrarian reform was vital to Arbenz; he wished to eliminate the "latifundios" -giant privately owned farms- and cultivate more of the unused land. Of 4 million acres, under 25 percent was being cultivated, and 2.2 percent of the landowners owned 70 percent of the arable land. The agrarian reform bill was passed, allowing the government to expropriate uncultivated portions of large plantations. All lands were to be paid for by 25 year government bonds at a 3 percent interest rate according to the value of the declared taxable worth. This very much disturbed the huge United Fruit company since it had undervalued its land as a matter of policy in order to reduce its tax rates. The Fruit company had been offered $627,572 for land seized, while the Company claimed $15,854,849 saying that the government offer bore "not the slightest resemblance to a just evaluation."

Arbenz also had suggested building a highway to the Atlantic as well as building an electric power plant in order to end the Company's monopolies.

Thomas McCann who worked for the company for 20 years said of the country:

    Guatemala was chosen as the site for the Company's earliest development activities at the turn of the century because a good portion of the country contained prime banana land and because at the time we entered Central America, Guatemala's government was the region's weakest, most corrupt and most pliable. In short, the country offered an 'ideal investment climate,' and United Fruit's profits flourished there for fifty years. The something went wrong: a man named Jacobo Arbenz became President.

With all of these new restrictions: unions permitted, land taken away, monopolies broken, laborers complaining, the United Fruit Company had to do something to keep its enormous profits out of danger. At that time, Dwight Eisenhower was president, and what seemed almost like another Red Scare was making uprising. Looking a copy of the New York Times one could find evidence that the fear of Communism was a large issue during Eisenhower's administration. "Columbia Seizes Top Communists," "Soviet Aim Held Scientific State - Reds Are 'Training Far More Than We Do,' Says Cleveland Professor, Back From Visit," "Soviet Restores Curb on Austria," "Eisenhower Calls Red Peril Global And Truly Serious" are a few titles of articles found in a single issue of the New York Times in 1954.

The leaders of the United Fruit Company went to a man called Edward Bernays, a master of public relations, and hired him to change the negative opinion that the United States was slowly forming toward the enormous United Fruit Company due to people like Huey Long. The main reason for Bernays' susess was that he was friends with, or had leverage over the owner of the New York Times, the publisher of Scripps-Howard newspapers, the editor of The New Leader, editors and reporters with the Christian Science Monitor and the San Francisco Chronicle, and he had a list of 25,000 men and women jounalists, editors, labor leaders, and industrialists with whom he could virtually shape the trend and attitudes of American opinion. Bernays promised to do his best and went to work. He brought the operation out in the open, describing the "remarkable" things that the United Fruit Company was doing in Latin America.

Once in the late 1940's while a serious labor dispute of wages and pay policy was going on, members of United Fruit began lobbying in Washington, and Congress denounced the laborers. From then on all the Fruit Company uprisings were dismissed as political disputes, the result of deliberate "Communist" ideas rather than genuine worker complaints.

The company gained the services of Senator Henry Cabot Lodge of Massachusetts whose father owned stock in the United Fruit Company. Lodge began denouncing the Labor Code of Guatemala for discriminating against United Fruit and causing the company economic breakdown through labor unrest. Bernays had a reporter come and interview a member of the Fruit Company to return with the one sided article for the New York Herald Tribune "Communism in the Caribbean." More and more articles of this natur followed, and soon there was no question in the minds of Americans that the United Fruit Company was an example persecuted American free enterprise, restricted by Communism in the Guatemalan government.

Bernay's work, however, meant almost nothing unless the United States would take note and act. Upon hiring a well-connected lawyer, Thomas G. Corcoran, the United Fruit Company had its fist connection with the Central Intelligence Agency. Corcoran, it turned out, was a good friend of Walter Bedell Smith, CIA director in the early 50's. Corcoran had served in a disguised CIA front, an airline enterprise called the Flying Tigers that operated in WWII. During these years Corcoran acted for the Fruit Company as a go between with the Agency. Corcoran also did his best to get the director of the State Department John Foster Dulles to do something to aid the United Fruit Company.

The CIA eventually found Colonel Albert Haney to run the Guatemalan operations and transferred him from his position in Korea. Haney began collecting exiles and looking for a suitable leader for an overthrow. His plan was to bribe Arbenz into resigning, and if that didn't work he had orders to execute a bloodless coup d'état. Haney decided to supplement this coup with psycological warfare on which he was an expert, with radio and leaflets and a force of 300 mercenaries to misguide the populace into believing there was a huge liberation force.

A budget of $20 million was allowed Haney and the operation grew to a tremendous scale. The whole point had become removal of the "Communist controlled" government, and the go ahead had been secretly given by Eisenhower himself. The Guatemalan government had said that, "Yes, there were some Communists with minor positions in politics, but they were much too few and weak to provide a threat." Arbenz said that the Communists had the perfect right to organize and exist under the democratic constitution even if he did not like them. Ambassador John Peurifoy (who could not speak Spanish and knew nothing about Guatemala before he arrived) once said if Arbenz "is not a Communist, he will certainly do until one comes along."

The CIA found a man perfect for the job, to lead the troops. His name was Castillo Armas and he was a small man, a former militay leader, with no strong views other than anti-Communism. He had not much intelligence for military operations, but he was not to plan too many of the attacks, he was only to take orders from his United States superiors.

The whole preparation finally reached its climax in June of 1954 when leaflets were dropped throughout the capital city of Guatemala, and raids made with American Planes flown by American pilots. A hidden radio station "The Liberator" gave notice of false troops marching on the capital, and United States planes dropped empty supply parachutes to no one. Arbenz resigned out of desparation, a victim of the psychological warfare, and a man named Colonel Carlos Enrique D'az popped up and took the presidency after the death of about a dozen of Arbenz's men.

The CIA weren't finished though, D'az was not the man for them, and they had him replaced after only a few days of power, Armas eventually ruling for a time.


Most of this History paper is actually directly from Steven Sclesinger's book: Bitter Fruit (New York, 1982). If you want to see what footnotes I claimed were mine, and not directly from Bitter Fruit: Footnotes. (What footnotes actually went with what appear to be lost through conversions from 1986 word processor format... I'm hoping this is actually the latest version of this paper. Similar bibliography: Bibliography.