The American Banana Farmer That Funded A Honduran Revolution
Imagine an immigrant, with no power or money, working his way up and eventually funding an entire revolution in Central America
In the late 1800s and early 1900s, bananas were a newfound luxury in the United States. Coming primarily from Central America, they arrived in ships and were found in large American ports such as New Orleans and Boston. As this delicious new delicacy was discovered by more people across the country, it became highly desired, and the demand for bananas exploded exponentially. This caused entrepreneurs such as Minor C. Keith, founder of United Fruit, to capitalize on the newfound desire for bananas and go on to create one of the largest fruit companies in history.
The competition was fierce, however, with countless other banana farmers taking up residence in various Central American countries to try and secure a small percentage of the market share dominated by United Fruit. Most of them would end up being acquired by United, creating one of the largest monopolies in early America at the time. However, one, in particular, would prevail and would go on to be the catalyst behind a massive revolution in Honduras.
Sam Zemurray
Commonly known as “Sam the Banana Man”, Zemurray was a 33-year-old Russian immigrant with a strong footing in the banana business. He started out as a fruit peddler, taking the ripe bananas thrown out by large fruit companies such as United Fruit, and selling them to people for a fraction of the cost. These slightly ripe bananas were looked at as trash by large companies and Sam was the master at taking advantage of opportunities. So, he saved up some money and started buying them in bulk, directly from the ships, and selling them across the country out of a rented train car.
He made quite a bit of money throughout the process and would go on to become fairly successful. But, this wasn’t enough for Sam and he knew that the real money came from being directly involved in the banana trade, not as a peddler, but as a grower and importer. Thus, he took all of his earnings at the time, along with any other capital that he could acquire, and purchased Thatcher Brother’s Steamship Company.
These dilapidated ships would be used alongside the newly acquired Cuyamel Fruit Company to import bananas directly from Central American farmers and into the hands of the American public. This was a step in the right direction for Zumurray, but it was not his end goal. In order to secure the best possible margins, he needed to do everything in-house. He needed to get bigger and become a banana farmer.
Vertical Integration
In order to grow bananas in-house and vertically integrate, Sam needed to be able to purchase land to make farms, build railroads, and set up distribution centers. So, he took out as many loans as he could so that he could have the funds necessary to buy land. After securing the capital, he decided on Honduras. Honduras was a perfect region for growing bananas and it was the original location of the Cuyamel Fruit Company that he had recently purchased.
With money in hand, he decided to purchase 5,000 acres along the Cuyamel River and create a massive banana plantation. Hiring countless locals, he developed all of the infrastructure needed to export bananas to the United States. He built railroads, towns, warehouses, and countless other necessities in a trade as complicated as banana farming. On top of this, he paid the locals considerably more money than most other American corporations that were infiltrating Central America and even went on to work alongside his workers in the jungle. This gave Cuyamel and Zemurray a legendary reputation in the region and it would go on to build the foundation for an entire civil uprising within the country.
Massive Debts
The banana trade is a very low-margin business. Incurring a cost of one extra cent per bunch of bananas is enough to send a company the size of Cuyamel into a downward spiral resulting in its demise. Thus, it is important that costs are as low as possible.
Because of this, Zemurray would spend a lot of time negotiating with and bribing officials of the Honduran government. Importing the equipment that was necessary to develop his plantations was extremely expensive and he would put a few extra dollars in the pockets of officials in order to keep those costs down. The government would honor these concessions, making Zemurray happy, and providing the Houndran economy with the stimulation needed to help it grow.
However, the Honduran economy was already in rough waters. They were in over $100 million of debt to Great Britain and were tasked with repaying large sums of money that they couldn’t afford. This debt would become increasingly problematic over time and would peak right as Zemurray was expanding his banana empire.
In 1909, an agreement was made between Honduras and the American government in order to handle the ever-present issue of the pressing debt. American bank, J.P. Morgan, would take on the 100-million dollars of debt for the country. In exchange, they would take over control and ownership of the Houndran railroad system and collect taxes on all imports coming into the country via these railroads.
While this situation worked well for Honduras, Great Britain, and the United States, it hurt companies like Zemurray’s. If J.P. Morgan began controlling imports into the country, they would no longer be able to honor his concessions and his business would go under because of the low margins.
Something had to be done.
The Revolution
Zemurray started by talking to officials in the United States. Bringing up the discussion of concessions, he asked if J.P. Morgan would honor previously established terms. Unfortunately, however, the officials wouldn’t give Zemurray the time of day and consistently told him to “leave it alone” and to “not get involved”.
After working as an immigrant and building his business from the ground up, Zemurray was not going to accept these terms. He was not going to let a large American corporation or the Honduran government drive his business into the ground. Luckily for him, he had a plan.
While being trailed by United States officials, Zemurray took matters into his own hands. He recruited a team of established mercenaries, led by a man known as Lee Christmas. He secretly purchased an ex-navy warship and enough weapons and explosives to take over an entire country. And he did so, all without being detected by the government.
His plan was simple. First, he would rile up the Honduran people, showing them that an American company was taking control of a large portion of their country and claiming ownership of a railroad that they should not own. Then, he would show how incompetent the current Honduran leadership was, allowing such a thing to happen. Finally, once the time was right, he would use his group of insurgents, along with any other revolutionists he could find, to overthrow the current leader of Honduras and replace him with someone else.
That, someone, was Manuel Bonilla. Bonilla had a major fall from grace a few years earlier and had been living in New Orleans, withering away with very little money or power. He was the perfect target and Zemurray knew that he would honor the concessions that were previously given to the Cuyamel Fruit Company.
And ultimately, his plan worked. After taking over various cities with his group of mercenaries and forcing the Honduran president at the time to surrender in a fortified city, he won. Zemurray single-handedly funded and led an entire revolution in Honduras in order to reduce the cost of goods of his banana business. Bonilla was sworn in as president and the concessions were honored. For a while at least….
Conclusion
It’s crazy to think that an immigrant, with little to no money or power, can end up becoming strong enough to take over an entire country. This story amazed me, which is why I decided to share it.
I read about this in “The Fish That Are the Whale”, a book talking about Zemurray’s life and how he went on a journey to start revolutions and ultimately change the history of Central America in order to overtake United Fruit in the banana trade. It is a fascinating book, and I would definitely recommend giving it a read. If you use this link, some of the profits go towards supporting local bookstores, which have been struggling due to COVID-19 and companies like Amazon.
