Chiquita
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Posted by Jim Down in Journal section |
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Everyone knows Chiquita for our delicious fresh bananas. But Chiquita is a leading international marketer and distributor of many other fresh and processed food products such as melons, grapes, citrus, peaches, pears, plums, peppers, tomatoes and cucumbers. Chiquita is truly a global company and its headquarters are located in Cincinnati, Ohio whereas the banana fields are primarily in Panama, Costa Rica, Colombia, Guatemala and Honduras and secondary on the Ivory Coast, the Philippines and Australia.
In 1871, U.S. railroad entrepreneur Henry Meiggs signed a contract with the government of Costa Rica to build a railroad connecting the capital city of San José to the port of Limón in the Caribbean. Meiggs was assisted in the project by his young nephew Minor C. Keith, who took over Meigg’s business concerns in Costa Rica after Meiggs’ death in 1877. As an experiment, Keith had begun planting bananas along the train route in 1873.
When the Costa Rican government defaulted on its payments in 1882, Keith had to borrow £1.2 million from London banks and from private investors in order to continue the difficult engineering project. In 1884, the government of President Próspero Fernández Oreamuno agreed to give Keith 800,000 acres (3,200 km²) of tax-free land along the railroad, plus a 99-year lease on the operation of the train route. The railroad was completed in 1890, but the flow of passengers proved insufficient to finance Keith’s debt. On the other hand, the sale of bananas grown in his lands and transported first by train to Limón and then by ship to the United States, proved very lucrative. Keith soon came to dominate the banana trade in Central America and in the Caribbean coast of Colombia.
In 1899, Keith lost $1.5 million when the New York City broker Hoadley and Co. went bankrupt. He then travelled to Boston, Massachusetts, where he arranged the merger of his banana trading concerns with the rival Boston Fruit Company. Boston Fruit had been established by Lorenzo Dow Baker, a sailor who, in 1870, had bought his first bananas in Jamaica, and by Andrew W. Preston. The result of the merger was the United Fruit Company, based in Boston, with Preston as president and Keith as vice-president. Preston brought to the partnership his plantations in the West Indies, a fleet of steamships (the “Great White Fleet"), and his market in the U.S. North-East. Keith brought his plantations and railroads in Central America and his market in the U.S. South and South-East. At its founding, United Fruit was capitalized at $11,230,000.
In 1901, the government of Guatemala hired the United Fruit Co. to manage the country’s postal service. By 1930, the Company had absorbed more than 20 rival firms, acquiring a capital of $215,000,000 and becoming the largest employer in Central America. In 1930, Sam Zemurray (nicknamed “Sam the Banana Man") sold his Cuyamel Fruit Co. to United Fruit and retired from the fruit business. In 1933, concerned that the company was mismanaged and that its market value had plunged, he staged a hostile takeover. Zemurray moved the company’s headquarters to New Orleans, Louisiana, where he was based. United Fruit went on to prosper under Zemurray’s management, who resigned as president of the company in 1951.
Corporate raider Eli M. Black bought 733,000 shares of United Fruit in 1968, becoming the company’s largest shareholder. In 1969 Zapata Corporation, a company in which George H. W. Bush held significant interest, acquired a controlling interest in United Fruit. Robert’s father, Ralph Gow, was on United Fruit’s board of directors.
In June 1970, Black merged United Fruit with his own public company, AMK (owner of meatpacker John Morrel), to create the United Brands Company. United Fruit had far less cash than Black had counted on and Black’s mismanagement led to United Brands becoming crippled with debt. The company’s losses were exacerbated by Hurricane Fifi in 1974, which destroyed many banana plantations in Honduras. On February 3, 1975, Black committed suicide by jumping out of his office on the 44th floor of the Pan Am Building in New York City. Later that year, the U.S. Securities and Exchange Commission exposed a scheme by United Brands to bribe Honduran President Oswaldo López Arellano with $1.25 million, and the promise of another $1.25 million upon the reduction of certain export taxes. Trading in United Brands stock was halted and Lopez was ousted in a military coup.
After Black’s suicide, Cincinnati-based American Financial, one of millionaire Carl H. Lindner, Jr.’s companies, bought into United Brands. In August 1984, Lindner took control of the company and renamed it Chiquita Brands International. The headquarters was moved to Cincinnati in 1985.
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