The Fish That Ate the Whale (7 page)

*   *   *

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 in 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, American 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.”

Zemurray lived near the docks. No one could tell me the exact address. Some building in the French Quarter, perhaps a wreck with cracks in the walls and a sloped ceiling, and the heat goes out and the fog comes in. When his business grew, he moved uptown, following the wealth of the city, which had been fleeing the French Quarter for decades. At twenty-nine, he was rich, a well-known figure in a steamy paradise, tall with deep black eyes and a hawkish profile. A devotee of fads, a nut about his weight, he experimented with diets, now swearing off meat, now swearing off everything but meat, now eating only bananas, now eating everything but bananas. He spent fifteen minutes after each meal standing on his head, which he read was good for digestion. His friends were associates, his mentors and enemies the same. He was a bachelor and alone but not lonely. He was on a mission, after all, in quest of the American dream, and was circumspect and deliberate as a result. He never sent letters or took notes, preferring to speak in person or by phone. He was described as shy, but I think his actions are more accurately characterized as careful—he did not want to leave a record or draw attention. His early life in Russia would have taught him that a Jew in the paper is a Jew in trouble.

The office of Hubbard-Zemurray—it was already being called Cuyamel Fruit—was at 21 Camp Street, in a neighborhood of fine houses, deeper than broad, three steps to the porch. Cuyamel was operating as an importer, not growing bananas, but buying them from Central American farmers. Zemurray's worries were about supply, setting a good price, working out deals with exporters. The firm was grossing several hundred thousand dollars a year, most of which went to pay farmers and sailors and local officials, who had to be bribed. When not traveling, he spent the entire day on the phone, shouting or being shouted at, then walked home. If he was in a bad mood, he might continue past his house. There were nights, before wife and children and the accompanying heartache and disaster of family, that he traversed the city from St. Peter Street to Audubon Park then out to the levee where the steamships threw sparks on the river. And the foghorn! And the trade wind! And the stink of the tide! If you looked into his eyes, you would see the machinery turning—that's what Frank Brogan told me. “It's just the sort of person he was,” explained Brogan, who worked for Zemurray in South America. “He was one of those guys, part of him is always figuring. You listen to a man like that. He knows something that can't be taught.”

It was not easy for Zemurray to find his place in the city, which was dominated by an ancient class-conscious, status-obsessed aristocracy. He had money, was smart and not terribly ugly, but everything else was against him. He was a foreigner—a
fucking
foreigner, as they said on the docks. A stranger, a flea, a Russian from the Pale. New Orleans was not a bad place to be from elsewhere. Jews had prospered in the city from its earliest days. It had been home to some of the big Hebrews of America: Judah Touro and Judah Benjamin, the secretary of state of the Confederacy, and Daniel Warburg, the first member of the banking family to settle in the United States. But Touro and Benjamin were Sephardic Jews (Warburg was German), a breed apart from the Eastern Europeans who arrived in the late nineteenth century. Erudite and refined, assimilated to the point of being unrecognizable, they formed a closed society that traced its roots in the city back a hundred years or more. These men were protective of their position, which, many feared, would be jeopardized by men like Zemurray. In this way, Sam was doubly rejected: turned away from the clubs of the German Jews just as decisively as he was turned away from the clubs of the Catholics and Protestants.