Banana republic | History and definition of the Banana republic

Minor C. Keith

Banana republic is a pejorative term that refers to a politically unstable country dependent upon limited primary productions (e.g. bananas), and ruled by a small, self-elected, wealthy, corrupt politico-economic plutocracy or oligarchy. The term banana republic originally denoted the fictional “Republic of Anchuria”, a “servile dictatorship” that abetted (or supported for kickbacks) the exploitation of large-scale plantation agriculture, especially banana cultivation. As a political science term banana republic is a descriptor first used by the American writer O. Henry in Cabbages and Kings (1904), a book of thematically related short stories derived from his 1896–97 residence in Honduras, where he was hiding from U.S. law for bank embezzlement.

A banana republic is a commercial enterprise for profit by collusion between the State and favoured monopolies, whereby the profits derived from private exploitation of public lands is private property, and the debts incurred are public responsibility. Such an imbalanced economy reduces the national currency to devalued paper-money, hence, the country is ineligible for international development credit and remains limited by the uneven economic development of town and country. Kleptocracy, government by thieves, features influential government employees exploiting their posts for personal gain (embezzlement, fraud, bribery, etc.), with the resultant deficit repaid by the native working people who “earn money”, rather than “make money”. Because of foreign (corporate) manipulation, the government is unaccountable to its nation, the country’s private sector–public sector corruption operates the banana republic, thus, the national legislature usually are for sale, and function mostly as ceremonial government.

The concept of the banana republic originated with the introduction of the banana fruit to Europe in 1870, by Captain Lorenzo D. Baker, of the ship The Telegraph, who initially bought bananas in Jamaica and sold them in Boston at a 1,000 percent profit. Yet, the banana business was incidentally established by the American railroad tycoon Henry Meigs and Minor C. Keith, his nephew, who, in 1873, started banana plantations, initially along the railroads, to feed the workers, and, upon grasping the potential profit of bananas sold in the U.S., also began exporting the fruit to the Southeastern United States. In the event, Keith founded the Tropical Trading and Transport Company, the future half of the corporate merger that established the United Fruit Company in 1899; and of which Minor C. Keith later became vice president.

The banana proved popular with Americans, because it was a tropical fruit cheaper than local U.S. fruits, such as the apple; in 1913 a dozen bananas sold for twenty-five cents, whilst the same money bought only two apples. The exporters profited from such low prices because the banana companies, via manipulation of the national land use laws, could cheaply buy large tracts of agricultural land for plantations in the Caribbean, Central American, and South American countries, whilst employing the native peoples as cheap manual labourers, having rendered them land-less. In 1899, the largest banana company, the United Fruit Company (Chiquita Brands International), resulted from a merger between Andrew Preston's Boston Fruit Company and Minor C. Keith's Tropical Trading and Transport Company; by the 1930s, its international politico-economic influence granted it control of 80–90 per cent of the U.S. banana trade. Moreover, in 1924, the Vaccaro Brothers established the Standard Fruit Company (Dole Food Company), to export Honduran bananas to New Orleans.

In Honduras, the United Fruit Company, the Standard Fruit Company, and Sam Zemurray's Cuyamel Fruit Company dominated the economy's key banana export sector, and the national infrastructure, such as the railroads and the ports. Moreover, the United Fruit Company's nickname was El Pulpo (The Octopus), because it freely interfered — sometimes violently — with Honduran national politics. In 1910, Zemurray hired mercenaries, led by “General” Lee Christmas, an American soldier of fortune from New Orleans, to effect a coup d’état in Honduras and install a government friendlier to the Cuyamel Fruit Company's business interests. In 1933, twenty-three years later, with a hostile takeover Sam Zemurray assumed control of the rival United Fruit Company.

In the 1950s, the United Fruit Company convinced the administrations of presidents Harry Truman (1945–53) and Dwight Eisenhower (1953–61) that the popular government of Colonel Jacobo Arbenz Guzmán in Guatemala was secretly pro-Soviet, for expropriating unused “fruit company lands” to land-less peasants. In the Cold War (1945–91) context of the pro-active anti-Communism of the McCarthy era of U.S. national politics, said geopolitical consideration facilitated President Eisenhower's ordering the CIA's Guatemalan coup d’état (1954) deposing the elected government of President–Colonel Jacobo Arbenz Guzmán, and installing the pro-business government of Colonel Carlos Castillo Armas. In the event, with the poem La United Fruit Co., Pablo Neruda denounced foreign banana companies' political dominance of Latin American countries.

Guatemala suffers the regional socio-economic legacy of the banana republic: inequitably distributed agricultural land and natural wealth, uneven economic development, and an economy dependent upon a few export crops, usually bananas, coffee, sugar cane. The inequitable land distribution is the principal cause of national poverty and the low quality of Guatemalan life, and the concomitant socio-political discontent and insurrection. Almost 90 per cent of the country's farms are too small to yield adequate subsistence harvests to the farmers, whilst two per cent of the country's farms occupy 65 per cent of the arable land, property of the local oligarchy.

Initially, short-story writer O. Henry’s coinage, “servile dictatorship”, bore a civil government face — a white-collar businessman president — yet when he proved an administrative incompetent, the military, usually the army, assumed government, and ruled as juntas (military government by committee) during the thirty-six-year Guatemalan Civil War (1960–96); nonetheless, in 1986, the Guatemalans promulgated a new political constitution, and elected Vinicio Cerezo (1986–91) president, then Jorge Serrano Elías (1991–93) five years later.

The long history of political discontent and insurrection in Honduras derives from commercial and political competition between banana exporters, e.g. the United Fruit Company and the Cuyamel Banana Company, for control of Honduran agricultural land and workers. In 1911 Sam Zemurray, owner of the Cuyamel Company hired mercenaries, led by “General” Lee Christmas, to effect a coup d’état to depose the liberal President Miguel R. Dávila (1907–11), with whom the United Fruit Company was colluding for a banana monopoly in exchange for brokering U.S. Government loans for Dávila's government; the Cuyamel Banana Company deposed President Dávila and installed President Gen. Manuel Bonilla (1912–13) in his stead. Contemporarily, internal political instability and a great foreign debt — more than $4 billion — have excluded Honduras from capital investment, thereby continuing its economic stagnation, and reinforcing its banana republic status.