United States, United Fruit Company, Banana Republic discussed on Freakonomics Radio
The world's largest banana companies his title at Chiquita was CEO of bananas, pineapples seriously. That's the title as for the bananas in the world. It's the fourth most important crop of two rice, wheat and corn. The economic value generated by the banana some fifty two billion. There are some four hundred million people that rely on bananas for a staple food staple source of income, there are many countries, they did not have bananas. They would go showed a food the Kevin dish banana accounts for just under fifty percent of global banana production but again, almost one hundred percent of exported bananas and Ecuador alone accounts for more than a quarter of all, Kevin dish exports. If you produce something, and very, very large numbers than you bring down the per unit or average cost for the early American banana companies the transition from luxury fruit to mass import was a strategic move. I think the key to the strategy our understanding the strategy was to realize that they made more money from having a smaller margin on a much larger volume than they would have had continuing to treat bananas, a luxury item and how did they accomplish this? Consider the history of Chiquita. Data started way back in the eighteen hundreds and was a company that I went public believe it or not in nineteen ninety three back, then it was known as the United fruit company and United free happen to have the largest fleet of ships in the western hemisphere only the US navy had a larger fleet of ships. In fact, the navy would requisition some United ships during World War Two, but in peacetime. Well, they use those fleets to move bananas to the United States, very, very efficiently. And as always the case, practically always the case, the major beneficiaries of this officiency were in fact, consumers prices were slashed and within a few years bananas, were no longer a luxury item. They were instead of fruit of, of poor people, the first food that a lot of poor babies aid after weaning where mashed bananas today's. Before canned baby food, it would be hard to overstate here the role of the United fruit company. What we have here is a company that she created of an auto industry. It was called the octopus because it had a near monopoly on production. United fruit definitely had its tentacles wrapped around this industry. Most of United's bananas were grown in the Spanish speaking, countries to our south Costa Rica, Honduras, and other Central American nations happen to be an ideal setting for raising bananas for the US market ideal because of the climate. Yes, but also because land and labour were both very, very cheap. So American consumers were winning United fruit was really winning. And what about those Central American countries keep in mind, they were largely undeveloped at the time. Foreign companies led by United fruit were willing to make the investment. Clear, put an infrastructure and so forth to start producing bananas on a massive scale for the US market. But only if they were awarded vast tracts of land and largely exempted from taxation so that gave them the dominant position. That's what led to banana republics. Yes before it was a clothing store, banana Republic meant something, very different. Essentially a fragile country, whose economy and often political leadership were propped up by an export crop. And when a banana Republic acted against the interests of their banana, overlords, things could get ugly. Consider the case of Guatemala in the early nineteen fifties president Cobo Arbams, former army Colonel was pursuing a land reform program that would have reclaimed property from the banana companies and this anger. United fruit United fruit, definitely wanted to see our Vince go United fruit lobbied. The US congress to act against Guatemala, and Arbenz was ultimately ousted in a coup, led by the CIA drying, simple line of causation. United fruit US government, overthrow of Guatemala doesn't capture all of what was going on? The US government had other reasons why it was alarmed at some of what our Vince was doing apart from the land reform. Specifically the American government was worried that Guatemala was sliding toward communism and Allianz with the Soviet Union. This was a common theme of the Cold War era. We're not talking only Guatemala here in any case..