In 1871, U.S. railroad entrepreneur Henry Meiggs signed a contract with the government of Costa Rica to build a railroad connecting the capital city of San José to the port of Limón in the Caribbean. Meiggs was assisted in the project by his young nephew Minor C. Keith, who took over Meiggs's business concerns in Costa Rica after his death in 1877. Keith began experimenting with the planting of bananas as a cheap source of food for his workers.
When the Costa Rican government defaulted on its payments in 1882, Keith had to borrow £1.2 million from London banks and from private investors to continue the difficult engineering project. In exchange for this and for renegotiating Costa Rica's own debt, in 1884, the administration of President Próspero Fernández Oreamuno agreed to give Keith 800,000 acres (3,200 km2) of tax-free land along the railroad, plus a 99-year lease on the operation of the train route. The railroad was completed in 1890, but the flow of passengers proved insufficient to finance Keith's debt. On the other hand, the sale of bananas grown in his lands and transported first by train to Limón, then by ship to the United States, proved very lucrative. Keith eventually came to dominate the banana trade in Central America and along the Caribbean coast of Colombia.
United Fruit (1899–1970)
In 1899, Keith lost $1.5 million when Hoadley and Co., a New York City broker, went bankrupt. He then traveled to Boston, Massachusetts, to participate in the merger of his banana trading company, Tropical Trading and Transport Company, with the rival Boston Fruit Company. Boston Fruit had been established by Lorenzo Dow Baker, a sailor who, in 1870, had bought his first bananas in Jamaica, and by Andrew W. Preston. Preston's lawyer, Bradley Palmer, had devised a scheme for the solution of the participants' cash flow problems and was in the process of implementing it. The merger formed the United Fruit Company, based in Boston, with Preston as president and Keith as vice-president. Palmer became a permanent member of the executive committee and for long periods of time the director. From a business point of view, Bradley Palmer was United Fruit. Preston brought to the partnership his plantations in the West Indies, a fleet of steamships, and his market in the U.S. Northeast. Keith brought his plantations and railroads in Central America and his market in the U.S. South and Southeast. At its founding, United Fruit was capitalized at $11,230,000. The company at Palmer's direction proceeded to buy, or buy a share in, 14 competitors, assuring them of 80% of the banana import business in the United States, then their main source of income. The company catapulted into financial success. Bradley Palmer overnight became a much-sought-after expert in business law, as well as a wealthy man. He later became a consultant to presidents and an adviser to Congress.
An illustration from The Golden Caribbean
In 1900, the United Fruit Company produced The Golden Caribbean: A Winter Visit to the Republics of Colombia, Costa Rica, Spanish Honduras, Belize and the Spanish Main - via Boston and New Orleans written and illustrated by Henry R. Blaney. The travel book featured landscapes and portraits of the inhabitants pertaining to the regions where the United Fruit Company possessed land. It also described the voyage of the United Fruit Company's steamer, and Blaney's descriptions and encounters of his travels.
In 1901, the government of Guatemala hired the United Fruit Company to manage the country's postal service and in 1913 the United Fruit Company created the
Tropical Radio and Telegraph Company. By 1930 it had absorbed more than 20 rival firms, acquiring a capital of $215,000,000 and becoming the largest employer in Central America. In 1930, Sam Zemurray (nicknamed "Sam the Banana Man") sold his Cuyamel Fruit Company to United Fruit and retired from the fruit business. By then, the company held a major role in the national economy and eventually became a symbol of the exploitative export economy. This led to serious labor disputes by the Costa Rican peasants, involving more than 30 separate unions and 100,000 workers, in The Great Banana Strike of 1934, one of the most significant actions of the era by trade unions in Costa Rica.
By the 1930s the company owned 3.5 million acres of land in Central America and the Caribbean and was the single largest land owner in Guatemala. Such holdings gave it great power over the governments of small countries. That was one of the factors that led to the coining of the phrase "banana republic".
In 1933, concerned that the company was mismanaged and that its market value had plunged, Zemurray staged a hostile takeover. Zemurray moved the company's headquarters to New Orleans, Louisiana, where he was based. United Fruit went on to prosper under Zemurray's management; Zemurray resigned as president of the company in 1951.
In addition to many other labor actions, the company faced two major strikes of workers in Central America, in Colombia in 1928 and the Great Banana Strike of 1934 in Costa Rica. The latter was an important step that would eventually lead to the formation of effective Trade unions in Costa Rica since the company was required to sign a collective agreement with its workers in 1938. Labor laws in most banana production countries began to be tightened in the 1930s. In 1954, the company experienced a major strike in the Honduras.
United Brands (1970–1984)
Corporate raider Eli M. Black bought 733,000 shares of United Fruit in 1968, becoming the company's largest shareholder. In June 1970, Black merged United Fruit with his own public company, AMK (owner of meat packer John Morrell), to create the United Brands Company. United Fruit had far less cash than Black had counted on and Black's mismanagement led to United Brands becoming crippled with debt. The company's losses were exacerbated by Hurricane Fifi in 1974, which destroyed many banana plantations in Honduras. On February 3, 1975, Black committed suicide by jumping out of his office on the 44th floor of the Pan Am Building in New York City. Later that year, the U.S. Securities and Exchange Commission exposed a scheme by United Brands (dubbed Bananagate) to bribe Honduran President Oswaldo López Arellano with $1.25 million, plus the promise of another $1.25 million upon the reduction of certain export taxes. Trading in United Brands stock was halted and López was ousted in a military coup.
Chiquita Brands International
After Black's suicide, Cincinnati-based American Financial Group, one of billionaire Carl Lindner, Jr.'s companies, bought into United Brands. In August 1984, Lindner took control of the company and renamed it Chiquita Brands International. The headquarters was moved to Cincinnati in 1985.
Throughout most of its history, United Fruit's main competitor was the Standard Fruit Company, now the Dole Food Company.