Quotes from “Conquest of the Tropics” by Frederick Adams

This is a fascinating book published in 1914 that tells the story of the early years of the United Fruit Company and the import of bananas and other commodities from Central America to North America.

One of the key messages that I gleaned from this book was how this industry was perhaps the forerunner and an excellent example of fair trade organic food imported for the North American benefit.  In the early years of the 1900s, almost 50% of the money that a consumer paid for a banana went to the country where it was grown. We also have to recognize that in those early years, there was no access to the fertilizers and agricultural chemicals that there was a few years later. There are some key differences between the banana trade described in this book and the fair trade industry today:

1. The motive for the banana industry was to satisfy the desires of the North American people, the stated motives for fair trade are to benefit the person or organization that grows the food.
2. The banana industry was able to take advantage of cost effective management and transport of goods by owning ships and transportation systems; the development of “the machine”, whereas for the most part, fair trade relies on established transportation means for the transportation and handling of product.
3. The banana industry invested heavily in hospitals and other projects to improve the communities that they were working in, whereas there is less emphasis on community investment in the fair trade industry today.
4. Some of the leaders of the North American companies at that time involved in the banana industry were motivated out of a spirit of adventure, a continuation of the “frontier” mentality that dominated early North American culture.  This is both positive in that amazing things were accomplished, and negative in the attitude towards some of the local persons.

Another message was the story of the development of a publically traded company, where the stage was set for shareholders to be disconnected from the actual activities of the company, and who relied solely on the integrity of the leaders of the company in their quest to maximize shareholder profits.  One can see that it sets the stage for future exploitation of people and the environment. Only recently have we come up the concept of “ethical funds” to begin to connect ourselves with what our money is really being used for.

Banana Import Could be Perceived as Organic and Free Trade in the Early 1900s

“How does it happen that the home-grown apple is placed beyond the reach of the average consumer and that the foreign-grown banana has increased in quality and decreased in price? The banana is a perishable fruit. It must be marketed immediately on its importation, and the business is one which requires millions in investment and the risks incident to fleets sailing in waters menaced by hurricanes. It is a farce when apples grown within ten miles of St. Louis or New York sell by weight for ten times the price charged for bananas shipped from Costa Rica or Colombia, South America. p 339.

 Thus the banana bunch which was sold by the producer and importer for $1 reaches the consumer with not more than another dollar added to it for freight, delivery, and all of the charges imposed by middlemen. Does the American consumer obtain any native farm product at any such proportionate charge? Hardly!  According to one of the railroad authorities of the country the potatoes for which the farmers received $8,437,000 in 1910 were sold to consumers in New York City for more than $60,000,000. Onions, for which the farmers got $821,000, consumers paid $8,212,000. Consumers paid $9,125,000 for cabbages the farmers had sold for $1,825,000. p 346.

This means that when a housewife spends $1 for cabbage that only 20 cents of her money goes to the farmer who raised these cabbages, and that the remaining 80 cents has been absorbed by transportation charges, commissions, profits to various classes of middlemen, and to the retailer. This means that when the housewife spends $1 for potatoes that 14 cents of this represents the farmer’s share, and that 86 cents of her money is absorbed in the process of bringing them from the farm to her. In the case of onions the farmer gets almost exactly 10 cents out of every dollar expended by the consumer. p. 348.

But when this housewife spends $1 for bananas she can rest assured that about 50 cents of this goes to the producer and importer for honest value delivered, and that the remaining 50 cents stands for legitimate and indispensable services rendered by railroads, truckmen, and the retailer.” p. 348.

 The Banana Industry Was Part of the Development of “the Machine”

“The future historian will recognize the fact that the thirty years from 1870 to 1900 constitute a distinct and wonderful period worthy to be designated as “The Age of Invention.” p 14.

This Age of Invention came to a close, as a distinct era, in or about 1900. Since that time there have been no great inventions comparable with those announced to the world in the marvelous period of 1870-1900. The reason is plain. The Machine was perfected, or practically so…It was the Machine which precipitated a series of devastating industrial and financial panics, but the fault lay with the system, or, rather, the lack of an adequate system for handling and distributing the enormously increased products of the Machine… The Machine was the relentless incarnation of efficiency. It had no useless parts. It made no useless motions. It made no mistakes. The quantity and quality of its output was a known factor. It had been created to perform a mission. The outworn institution of petty, planless, and wasteful Competition stood in the way, and the Machine crushed in its massive cogs the type which prevailed prior to 1900. p 15.

The banana, as an article of import and consumption in the United States, is purely a product of what I designate as the Machine. p 16.

This reorganization of corporate industry was, whether its participants knew it or not, an evolutionary movement calculated to build for the Machine a foundation fitted to its stupendous energy and possible productivity.” p 17.

 The Banana Industry Was Built with a Spirit of Adventure

“Our school-books and our histories dwell with pride on the records of the pioneers who braved the wildernesses and paved the way of our empire from the Atlantic to the Pacific. Our national prosperity is founded largely on the achievements of those who risked their lives in the conquest of nature. p 11.

There was no native agriculture in the American tropics to “exploit,” and it may astound the reader to know that there never has been and that none exists today. These tropics are productive just about in proportion as American initiative, American capital, and American enterprise make them productive. p 37.

To-day these former wildernesses constitute one of the most productive agricultural sections of the globe. Today the ships from all the world enter the beautiful harbors of Central America and land their passengers in ports which are as sanitary as those of Massachusetts. To-day most republics in Central America are served with well-managed and modernly equipped railway lines. The day is near at hand when one will be able to travel by rail from New York or San Francisco to Panama City in safety and luxury. Who performed these miracles ? They were wrought by American citizens who had the imagination, the courage, and the ability to attack and conquer the countless dangers and problems of the tropical wildernesses, and who did this through the organization of enterprises which helped lay the foundations of the United Fruit Company. p 51-52

By the same token, the men who believed that it was possible to convert the miasmic swamps and jungles of Central America into vast plantations of nodding banana plants, and who had the courage and fortitude to act on that belief, need not fear that honest and intelligent men will fail to give them credit when the facts are known. It was not solely a desire for profits which  caused these men to combat the seen and invisible dangers of the tropical vastness. They did it in response to that instinctive spirit which ever has urged the American to face and conquer the frontier. p 54

Everywhere the observer sees the manifestations of a carefully designed machine calculated to yield the greatest possible result from a given application of endeavor. Here is an industrial army engaged in a constant battle with the forces of tropical nature. There is no telling when nature may strike an unexpected and dangerous blow. p 177

The United Fruit Company is more than a corporation. It is an institution, an American institution founded by certain of its citizens and conducted with a broadness of policy and an industrial statesmanship which lift it out of the class of mere money making and profit hunting corporations. It is doing for the American tropics and the American people what the Hudson Bay Company did for the British Empire in the frozen north of Canada. It has awakened the slumbering nations bordering on the Caribbean with the quickening tonic of Yankee enterprise. It has proved to the world that these tropics can be converted from a harassing liability into an asset of stupendous value, and it has solved for the world the problem of transforming deadly swamps and jungles to gardens on which can be raised the food products demanded to keep pace with the ever-increasing hunger of the city-housed multitudes.” p 357.

 The Prime Expected Result of that Adventure was Economic Gain

“Those who risk their lives and their fortunes in tropical investments have a right to expect that success will yield handsome returns. There is always the chance that weather disasters or political revolutions will blot the ordinary tropical enterprise out of existence. This fact is recognized and acted on by bankers and private money lenders. The banks of Cuba, Mexico, and of Central and South America demand from 10 to 20 per cent interest on high class tropical loans. The sugar planter, tobacco grower, small banana raiser, or other participant in tropical agriculture is satisfied to pay 12 per cent for money borrowed to conduct his operations. He has an expectation of making from 20 to as high as 100 per cent under favorable conditions, and money is not forthcoming when an enterprise cannot prove that it has a reasonable chance of realizing from 20 to 30 per cent net profit. p 101.

This bonus meant far more than a mere money return. It meant the realization of years of hard work, relentless energy, courage, and fortitude. It meant that the banana industry had “arrived,” to quote a descriptive word. It was a token and a reward of the faith which had supported those who had struggled against the hardships and dangers of the tropics. It proved to the world that the industrial and commercial conquest of the American tropics was possible, and it should have proved to the United States that it was the bounden duty of its people, its press, and its government to encourage and foster the speedy development of the tropics. Not for the mere purpose of obtaining money rewards, but for the larger, broader, and statesmanlike object of obtaining from the tropics such of its other products as would add to the happiness and raise the standard of living of the people of the United States.” p 116.

 The Banana Industry at that Time Paid a Fair Wage to Workers

“The wages paid by the United Fruit Company and by other concerns engaged in productive enterprises in the tropics are practically as high as those commanded in the United States, which means that they are many times the rate ever before offered to labor in Central America. p 162.

If the Nobel Peace Prize could be awarded to a corporation, the United Fruit Company would have valid claims to recognition. It has done more to pave the way for peace and prosperity in Central America and in the Caribbean countries than all of the statesmanship and oratory which have vainly been directed to the same purpose. p 166.

The wages paid by the company average more than double that paid by the coffee planters of the highlands, and the drainage of the swamps and the rigid enforcement of scientific sanitary measures has rendered this section as safe and healthful as any part of the republic. Most of the manual labor on a banana plantation is what may be termed “piece work,” the laborer contracting to perform certain duties on a certain tract of land. He may, for instance, contract to keep clear of weeds and dead fronds or leaves five or ten acres of bananas, or he may contract to cut and deliver to the railroad platforms the bananas grown in a similar tract. As a rule the workman on a banana plantation selects his own time for the performance of the duties he assumes. Little or no work is done in the heat of the day… Under this system a worker can set his own pace and earn as much as he cares to attempt, but none is assigned to work who cannot perform a reasonable minimum, the pay for which exceeds a dollar a day. There are skilled and sturdy negroes who have no difficulty in making two and three times this amount, and the task is far less arduous than that done by the average white laborer in the United States. Their rent is nominal, and every occupant of a house or cabin has, rent-free, a garden patch on which he can raise at all times of the year the vegetables which respond to almost no attention. You may search the world over and not find a more happy and contented class than those who work in the banana plantations.  p 174.

It is to be doubted if anybody of colored men anywhere in the world receive as high pay, enjoy as much comfort, freedom, and happiness as the 60,000 or more Jamaican negroes who make possible the giant activities of the United Fruit Company and competitors….That corporation has many thousands of acres of banana plantations along the lowlands of the Motagua River and extending to the Caribbean Sea. It pays its laborers a dollar a day, eleven times as much as the laws of Guatemala say shall constitute a day’s wage. One can readily imagine what a boon this is to poor Indians who have formerly been paid only nine cents. Yet the United Fruit Company voluntarily pays this wage, and is able to give work to every Guatemalan Indian who applies for a job. p 202.

There is every likelihood that the payment of good wages, coupled with sanitary surroundings and civilizing influences, will breed in Guatemala and in all of Central America strong, self-reliant, and progressive races of people, and with these traits will come that sense of responsibility and real patriotism which ever serves as the foundation for orderly government and national advancement. p 203.

the United Fruit Company has loaned tens of millions of dollars to those who otherwise would not have been able to use their lands for banana cultivation. These loans have ranged from a few hundred dollars to loans of hundreds of thousands of dollars. Such loans have been made to residents of Guatemala, Costa Rica, Panama, Colombia, Jamaica, and have also been made to citizens of the United States, of Germany, Spain, and other countries… It has encouraged native landowners to undertake the cultivation of bananas on as large a scale as their circumstances would permit. It has offered to lend, and has actually lent, millions of dollars to such native landowners. This money was not advanced by the United Fruit Company at 12, 20 or 25 per cent interest, which rates are eagerly paid by borrowers with good security in most parts of these sections, but at low and reasonable rates of interest.  p 239.

Under this broad and liberal plan the United Fruit Company had deservedly won the loyalty and cooperation of thousands of planters who have shared in the prosperity which always accrues when men of energy deal fairly one with the other.” p 240.

 The Banana Industry Invested in Hospitals and in Other Community Services

“The company has $240,166 invested in hospitals. Each employee pays a small sum per month for medical service, but this is not sufficient to meet the expenses and there is always a considerable annual loss which the company is glad to meet. It is to be doubted if any private enterprise in the world has originated or maintains any service approaching that under the direction of the United Fruit Company… The sanitary work and discoveries of the United Fruit Company constitute a notable contribution to medical science. At a sacrifice of money and of human lives the means have been found to safeguard the health and lives of those who care to go to the American tropics to participate in the development of its hardly touched resources, or to assist in building up new and important markets for the products of their own country.” p. 296

The North American People Were Disconnected From Their Money That They Invested

“The United Fruit Company was formed in the year when the American public was possessed of a mania for risking its money in new and vast undertakings. Any plan of reorganization or consolidation of industry which could be so presented as to offer a reasonable chance of success had its securities snapped up by thousands of investors who besieged the offices of the underwriters and deluged them with letters containing remittances. It was a period when billions of dollars were turned into the coffers of the “New Industry.” p. 87

The blunt truth of the matter is that the United Fruit Company was forced into its present leadership in the banana industry because of the ignorance and indifference of the investing public of the United States concerning the tropics at their southern gates. p 89.

A corporation has the double duty of conserving the interests of its stockholders and of rendering a service to the public which has authorized its corporate existence. These duties do not conflict. The stockholders are entitled to fair profits on their stock investments, and the public is entitled to the benefits of prices and services based on just dividend rates. The aim of the United Fruit Company is to continue its work of linking the United States commercially and industrially with the American tropics, and to share in the rewards of the mutually enhanced prosperity of both sections. We are proud of what we have already accomplished. We are jealous of a prestige earnestly fought for, and we shall do our best to preserve and increase it.” p 361.

 North American Investors Were Not Interested in the Welfare of Their Neighbours

“We are so sure that the United States is the greatest country in the world that we are inclined at times to act as if it were the only country in the world. Some of us are so narrow that we find it impossible to understand why a citizen of the United States cares to live or dares to invest a dollar outside of the confines of his native country. The broad spirit of initiative and enterprise recognizes no national lines. p 4.

There is one dominant reason why the American tropics have not participated in the stupendous progress of all other tropical sections, and that reason is this: Instability of their governmental conditions has estopped the capital and the enterprise of the world from undertaking the development of their wonderful tropical resources. For this state of affairs the United States is largely to blame. Our national sins are not those of commission, but of omission. We have paid no attention to the welfare of our tropical neighbors for the purely selfish and ignorant reason that we did not consider the matter worth our while…It has not yet dawned on our political leaders that our tropics are a great but unused asset. We are so accustomed to the careless or wilful destruction of forests and other of our own natural resources that it is a matter of slight interest to us whether our tropical neighbors make a specialty of anarchy or of productive peace. We will one day learn, as financiers already have learned at their bitter cost, that each civilized nation shares in the prosperity or distress of all other nations. p 10.

Successive administrations have treated the questions arising from our relations with our tropical neighbors in a manner calculated to convince them that we took slight interest either in their welfare or in that of the Americans who had cast their lot with them. No official in recent years has greatly distinguished himself in tropical affairs, and we are in sad need of men who will take sufficient interest in these questions to qualify as experts.” p 13.

Summary

We know about what happens in subsequent years with the banana industry and other “investments” in the tropics. There are few key trends hinted at in this book that set the stage for the future:

1. The tropics exist for the benefit of North Americans.
2. North American investors are disconnected from where and how their money is used.
3. The goal of financial investment is to maximize profit.

One can argue that the disconnect between investment and where and how their money is used is simply an extension of the dominant religion in North America at that time that seemed to forget the second of the two greatest commandments clearly summarized by Jesus himself: Love God, and love your neighbour. As Jesus then said to the rich man who clearly knew these two commands – then go and do likewise, so I too am challenged to move from talking about loving our neighbour to actually doing it. This is one significant factor in the resurgence of “fair trade”.