by Rich Cohen
By 1897, Boston Fruit had $4 million in assets and was growing fast. Yet the company kept running into the same wall: supply could not keep up with demand. Sooner or later, prices would rise, destroying the business model that made the company successful. What’s more, all their bananas came from Jamaica, making Boston Fruit vulnerable. That’s why Preston was turned away by the banks: too much could go wrong. Though Preston and Baker were making big money—by 1899, Boston Fruit controlled 75 percent of the U.S. banana market—they were regarded as akin to mushroom harvesters, entirely dependent on the rain.
When the worst happened in 1899, the Year Without Bananas, Preston went back to the banks. Only this time, he went with a pitch: Some think the problem is we’ve grown too big, but the real problem is that we’re still too small. We must get bigger, much bigger. We must grow so many bananas in so many places that no single storm can ever put us in such dire straits again. In other words, United Fruit was born of disaster. As Bo Diddley might sing, it was the son of a lightning bolt, sired by a hurricane.
There were two ways for the company to grow: Preston could scout property, plant fields, and harvest bananas, or he could find someone who had done these things already.
* * *
By his fiftieth birthday, Minor Keith owned land in six republics on the isthmus, and the hundred-peso note of Costa Rica showed his face: small, dark, and filled with mischief. Fortune magazine described him as “an apple-headed little man with the eyes of a fanatic.” He had grown monstrously fat, a tiny, corpulent tycoon squeezed into expensive shoes. Brooklyn born, he traveled everywhere before making his way to Costa Rica in 1871, where his older brother Henry, because of family connections, had been hired to build a railroad across the isthmus. Henry, who knew little about trains, met Minor in Puntarenas on the Pacific. Spreading out a map, Henry traced a route that looked easy: fifty-four miles of flat ground and modest hills from Puntarenas to Puerto Limón. Wanting to see the terrain up close, they crossed the country by foot and mule—the brothers in Western gear, boots dragging on the ground. They climbed the Cordillera, the spine of mountains that runs the length of the isthmus. After three days, they reached San José, 3,500 feet above sea level. The country grew more rugged as they went. The valleys were choked with undergrowth. Most of the jungle was uninhabited, forsaken, diseased, the home of yellow fever and cholera. The Indians never lived there. They built their villages in the high country. The Spanish did the same. It was a factor in the success of the banana companies: the cheap prices paid for land by the gringos was considered a windfall by local owners, who believed the lowlands a dangerous waste with no value at all.
From the last hill, the Keith brothers could see Puerto Limón tucked into a cove on the Caribbean. They followed a path into town, then walked into the first tavern. When Minor told the bartender how they had come—across the Cordillera by mule—he bought them drinks. “There’s an old saying,” said the bartender. “A man who makes the trip to the Caribbean by land once is a hero, the man who does it twice is a fool.”
For now, let the Keiths be heroes—soon enough, they will be fools.
The first railroad tie was laid a few months later. In the public announcement, Henry Keith said the train would reach the Cordillera within a year. It’s not clear when he realized the work was going to be a lot harder than he’d imagined. A few days into the job is my guess. Laying track on the isthmus is a nightmare. There is no bedrock in the jungle. As soon as a section of rail had been laid, it began to shift. Now and then, after a big rain, an entire stretch would slide into a valley. Weeds wrapped around the ties, roots buckled the beds. The workers were tormented by heat and disease. More than three hundred died the first year; just four miles of track were completed.
Halfway through the second summer, Henry Keith was not feeling well. Feverish, hot to the touch. And his eyes—my God, his eyes! Yellow fever. Minor told his brother to go home to Brooklyn, recover, then return. But less than a month later, Henry was back in Puerto Limón. Soon after that, he was dead. Minor moved into his brother’s tent and carried on. He sent for his little brother Charlie, as he had been sent for. When that brother died, he sent for his youngest brother, John. When John died, he continued alone. This made him a hero in Costa Rica, a man whose commitment could not be questioned, who fed his own brothers to the jungle.
The railroad made its first run on December 7, 1885. Fifteen years, at least four thousand dead. The conductor stopped short of the Devil’s Elbow, a precarious stretch in the mountains where the track crossed a rickety bridge. He was afraid it would collapse. Minor argued with the man, then grabbed an American flag and sat on the cow catcher. Looking ahead, he shouted, “Go!” The train reached Puntarenas at eleven p.m., where it was greeted by a huge crowd. Keith gave a short speech, his command of Spanish being barely serviceable: “Señores: suplico darme su perdón: yo no ser hablador; ser puramente trabajador.” Gentlemen, please pardon me; I no be speaker. I be purely worker.
In his spare time, Minor Keith roamed Central and South America, exploring its cities and towns. It was in this way that he saw his first bananas—a stem of fat fingers creaking in the warm wind. That was 1873, on the Caribbean coast of Colombia, where the Big Mike made its first appearance on the Spanish Main. Not long after, Keith heard that the Frank brothers of New York were planting bananas along the tracks of the Panama Railroad. And selling them in New York! He went to see Carl Frank, who explained the business. The early traders did not fear competition. It seemed there would never be enough bananas to meet the demand.
It was Carl Frank who sold Minor Keith the rhizomes he planted along the Costa Rican railroad. Keith thought bananas would serve as a cheap food for his own workers, but soon realized, as Frank had before him, that there was a tremendous market for bananas in the North. He formed the Tropical Trading and Transport Company to carry his fruit but sold most of his crop to other suppliers. Though he considered himself a railroad man—it was his dream to build a train from New York to Tierra del Fuego—his business was supported by bananas. He planted rhizomes across the region. By 1882, he was growing bananas in Colombia, Ecuador, Costa Rica, Nicaragua, Honduras, Guatemala, and Mexico. In 1883, he shipped 110,801 stems; in 1890, he shipped more than a million. In 1894, Keith signed a contract with Boston Fruit. He agreed to sell the company his entire banana harvest.
Despite this, Keith’s economic situation was perilously uncertain. It was the nature of train building: you lived at the whim of creditors. You might appear rich, but if a lender called in a loan, you were done. Keith owed millions of dollars to banks, money he borrowed to complete his railroad. In late 1898, one of these lenders, Hoadley and Company of New Orleans, went bankrupt. The creditors who took over gave Keith ninety days to repay $1.5 million.
Preston and Baker followed these developments. Keith was their biggest supplier. If he went under, so would they. Boston Fruit had money but needed bananas. Minor Keith had bananas but needed money. In March 1899, Minor Keith, forty-nine years old, boarded a ship for Boston.
* * *
The men met in the office of Boston Fruit. Everything was settled in less than an hour. There would be neither loan nor temporary arrangement. The men would merge companies instead—a permanent solution to perpetual problems: money for Keith, fruit for Preston and Baker. The new enterprise, called the United Fruit Company, was incorporated in New Jersey on March 30, 1899. Stock in United Fruit was then traded for stock in the existing concerns: 31,755 shares of United Fruit for all 5,000 shares of Boston Fruit; 39,964 shares of United Fruit for Minor Keith’s holdings. This left the company with $20 million in capital as well as 212,349 acres in the Dominican Republic, Cuba, Jamaica, Costa Rica, Honduras, and Colombia. Preston was the company’s first president and director, Keith its vice president.
United Fruit issued two hundred thousand shares of stock, which offered for $100 dollars apiece. Even after initial swaps and sales, the company still held 184,000 unsold shares. With this i
n hand, Preston put the second part of the plan into effect—a cunning way to bring order to a chaotic industry. He traveled from port to port, stopping in every city where bananas moved in numbers. He took aside dozens of importers and jobbers, giving each the same pitch: join us; get big; survive. In return for shares in their small companies, these men would receive United Fruit stock. (It was like selling talking parrots for a thousand dollars apiece and taking payment in thousand-dollar talking parrots, Lorenzo Baker explained later.) After the Year Without Bananas, most of the traders who survived were willing to swap independence for security. In its first six months, United Fruit merged with twenty-seven banana companies. It was like that movie The Blob—the beast absorbs everything into its own terrible body.
The names of these firms read like names on the sides of sunken clipper ships:
Colombian Land Co.
Snyder Banana Co.
J. D. Hart Co.
J. M. Ceballos & Co.
Orr & Laubenheimer Co.
Camors, McConnell & Co.
New Orleans–Belize Royal Mail & Central American Steamship Co.
W. W. & C. R. Noyes
John E. Kerr & Co.
J. H. Seward Importing & Steamship Co.
Aspinwall Fruit Co.
West Indian Fruit Co.
Monumental Trading Co.
West India Trading Co.
Henry Bayer & Son
Camors-Weinberger Banana Company
J. B. Cefalu & Brother
S. Oteri
Bluefields Steamship Co.
W. L. Rathbun & Company
One of United Fruit’s acquisitions stood out: the Vaccaro Brothers Company, a banana export business run by three Sicilians from New Orleans. Later called Standard Fruit, the concern, which eventually regained its independence, would become part of Dole, now one of the most powerful companies in the fruit business. For years, the banana trade was defined by these three names: United, Cuyamel, Standard.
This was the age of trusts, when steel and oil concerns combined to monopolize their industries. It was also the age of trustbusters, when the government went after any would-be Rockefeller who tried to get a stranglehold on a trade. (The Sherman Anti-Trust Act passed in 1890.) With this in mind, Preston was careful to control no more than 49 percent of the business in any market. He wanted to get big enough to dominate but stay small enough to avoid prosecution. The independents who survived this wave—a tidal wave that remade everything that came before—were allowed to survive by United Fruit. They were left to stand as proof of healthy competition. In other words, even its rivals existed so U.F. could prosper.
* * *
The company solidified its control by amassing the Great White Fleet, the ships that ruled the Caribbean. Within a decade, the fleet—each vessel painted white to reflect the tropical sun—was carrying not just bananas but also the mail and cargo of Central America. In the case of a strike or disagreement, the company could simply shut down the commerce of the region.
U.F. was in possession of just four ships at the time of incorporation, sailboats with auxiliary steam called fruiters. Preston replaced these tubs with a fleet of powerhouses: the Farragut, the Dewey, the Schley, the Sampson, “twin-screw 280-footers” with engines that drove a furious pace—Honduras to Boston in fourteen days; Honduras to New Orleans in five. What began as a summer business for Captain Baker became a twelve-month operation, with banana plants bearing every week of the year. The company introduced its first refrigerated vessel in 1903, a river freighter named Venus that had been refitted by a Canadian scientist with a primitive contraption of ice blocks, animal hair, air ducts, and fans. Told of this, Lee Christmas, drinking in the French Quarter, slammed his fist on the bar and said, “Ain’t it just like them gah-damned Yankees to commence by refrigeratin’ Venus? So they take the Venus and pad her stern with cow hairs, and put fans and ice bins in her belly! That’s Boston, brother! That’s Boston!”
By 1910, United Fruit owned one of the largest private navies in the world: 115 ships that sailed under a flag designed by Preston’s daughter Bessie—a white diamond bounded by blue and red triangles: the isthmus, the sun, the encroaching seas. The pride the company took in its fleet was captured in an old company mural: a native weighed down by a bushel of bananas, pushing aside a palm frond to reveal a ship at anchor in the bay, aglow with the light of civilization.
United Fruit bought vast tracts of jungle in these years, which were cleared and filled with buildings, turned into settlements of clapboard and steel. “It’s in Guatemala that one begins properly to appreciate the great civilizing influence of the United Fruit Company,” National Geographic reported in 1903.
By 1905, the banana trade was United Fruit. The company owned the most ships, planted the most fields, had the most money, and controlled both supply and demand: supply by planting more or less rhizomes, demand by increasing the market. Beginning around this time, U.F. stationed an agent at South Ferry terminal in New York, where the Ellis Island Ferry landed. Handing a banana to each immigrant who came off the boats, the agent said, “Welcome to America!” This was to associate the banana with the nation, a delicacy of the New World, though none of the bananas were grown in the United States, were in fact as foreign as the men and women coming off the boats. At the same time, U.F. began selling baby food made from bananas, which would hook customers when they were tiny. In 1920, the company introduced a hot banana drink meant to take the place of coffee—it failed. There was banana flour and banana bread. In 1924, U.F. published a book of recipes meant to jack up sales, for example:
CORN FLAKES WITH BANANAS
Fill a cereal bowl half full of corn flakes, and cut one half of a ripe banana on top of this, and serve with heavy cream, and sugar if desired (though it will be found that for the average taste the banana supplies the necessary sugar element in a natural form).
Each of these efforts associated the banana with the beginning—of your life, of your day, of your career as an American. In this way, the banana, which had been exotic, was turned into a staple, the most familiar, necessary, obvious thing in the world. In this way, business boomed. By 1908, United Fruit was shipping thirty-six million stems a year—60 percent of all bananas consumed in the United States. By then, the company had become a dominant player in Central America.
* * *
United Fruit dealt with its competition in one of two ways: absorb or crush. Even in the United States, where the dominance of the company was not fully understood—you really had to go down there and see for yourself—people began to ask, Should any company be this powerful? Questions persisted. Finally, a decade after the behemoth incorporated, Andrew Preston’s fears were realized.
A lawsuit brought by the American Banana Company of Mobile was joined by the Justice Department. It charged United Fruit with violating the Sherman Anti-Trust Act, which was meant to break up “combinations” of companies that banded together to corner a market. It’s difficult to imagine a company in more clear violation. Between 1899 and 1905, United Fruit had acquired dozens of independent concerns, rolling them into a monolith that dominated trade. Gone were the mom and pop haggling on the docks; gone were the pushcart operators setting their own prices.
According to the Justice Department, the formation of United Fruit, this Ottoman Empire of a trust, robbed consumers of a crucial benefit of competitive trade: a better product at a lower price. The U.F. lawyers argued that the size of the company had done just the opposite, resulting in a dependable supply of cheap bananas. In fact, said the lawyers, there were still not enough to satisfy demand, meaning there was plenty of room for any independent trader who wanted to get into the business.
In 1909, the case reached the Supreme Court. It’s interesting to consider what might have happened if the Justice Department had won its case against United Fruit as it won its case against Standard Oil two years later. If U.F. had been broken up, if the monster had been divided into a half dozen little monsters, A
merican history in Latin America might have been very different. An isthmus without El Pulpo is an isthmus in which the United States is not demonized in the same way. But the Justice Department did not win. Nor did it lose—not on the merits. (There is no way to look at U.F. in those years and see anything but a monopoly.) The Supreme Court instead decided—it was a huge decision, rife with unintended consequences—that it did not have the authority to judge, as most of the actions under review had occurred overseas. According to Oliver Wendell Holmes Jr., who wrote the majority opinion, “A conspiracy in this country to do acts in another jurisdiction does not draw to itself those acts and make them unlawful, if they are permitted by the local law.”
By growing its product there and selling it here, U.F. had stumbled on the greatest tax-saving, law-avoiding scheme of all time. With this decision, Justice Holmes cleared the way for that crucial player of the modern age: the global corporation that exists both inside and outside American law, that is everywhere and nowhere, and never dies.
7
New Orleans
When Sam Zemurray moved to New Orleans circa 1905, it was for the same reason the striver always moves to the big town: for the action.
The city was at its maximum glory. The people-jammed streets were covered in the smog of industry, the Mississippi crowded with freighters and side-wheel steamers. The wharves were divided into sections: those dedicated to grain and cotton, the outgoing harvest of the plantations; those dedicated to bananas, the incoming harvest of the tropics. As the WPA New Orleans City Guide (1938) described it, “All day long the groaning conveyors lift bunches of bananas from the hold of the ship, and all day long men continue to move in a line carrying them. Darkness falls and the lights flash on; there are long swaying shadows, and the fruit is doubly green in the artificial light.”