Banana enclaves in Honduras, Guatemala, and Costa Rica were developed by North American companies at the beginning of the twentieth century (Galeano 2004:141, 144). In the 1870s, a company owned by a US citizen was granted land in Costa Rica. The company, which later became the United Fruit Company, was granted the land as payment for the construction of a railroad. The company used the land to cultivate bananas for export to markets in the United States. The labor utilized was low-wage labor of African descent imported from the English-speaking Caribbean (Booth and Walker 1993).
In 1899, the United Fruit Company began to operate plantations in the Caribbean coast in Guatemala. Three decades later, it established banana plantations on the Pacific coast. The plantations utilized labor primarily from the Caribbean and from El Salvador (Booth and Walker 1993).
In Honduras, banana production grew rapidly in the 1890s, and by the 1920s Honduras had become the world's leading exporter of bananas. Prior to 1899, there were more than 100 small-scale enterprises, owned by Hondurans, which sold bananas to North American merchants, who in turn sold them in North American markets. In 1899, two North American banana-producing enterprises were formed, and a third was founded in 1905. As the demand for bananas in the world market rapidly expanded, an increasing amount of capital became necessary in order to clear the tropical forest, develop a transportation system, modernize the productive process and develop a system of refrigeration for maritime transport. The North American producers, with greater access to the necessary credit and capital, were able to become more competitive than the Honduran producers. By 1911 the three North American producers had displaced the Honduran producers and completely dominated the market (Booth and Walker 1993; Murga 1978:58).
The North American banana companies were aided by concessions from the Honduran government in their rapid domination of Honduran banana production and in their rapid expansion after 1911. These concessions included free grants of the richest land, permission to construct railroads and to control the administration of the railroads, and exemptions from taxes and tariffs on imported equipment and construction materials and on exports. The government permitted the North American companies to have complete control of the entire system of transportation and commerce on the north coast, the region of the banana production. These concessions to the banana companies were the culmination of the liberal reform program of the late nineteenth century (Murga 1978:63-66; Molina 1976).
The liberal reform program in Honduras depended on the development of foreign capital, due to the limited amount of capital in Honduras. As the government pursued a policy of attracting foreign investment in raw-materials export production, foreign capital became the most important economic and political force in the country. The banana companies came to own not only banana enterprises, but also related industries, including transportation, communication, energy, food, and retail outlets. This dominance by foreign economic interests inhibited the development of a national bourgeoisie able to formulate and defend national interests. Local elites became employees or consultants of foreign companies, serving as intermediaries between them and the government, defending their interests and seeking new concessions. In this role, local elites were not in a position to accumulate capital. Given the limited potential for local accumulation of capital, and given the low-wage labor in raw materials export production, the country would not be able to develop the capital or the home market necessary for industrial development (Murga 1978:26, 68, 74-85, 97-98; Meza 1982).
The strategy of the government of Honduras in the development of the banana export industry illustrates a dependent capitalist model of economic development. It takes as given that the nation ought to assume the peripheral role in the world-economy. It provides free and open access of foreign companies to the natural resources and labor of the country. It does not seek to defend the interests of emerging national producers. This strategy precludes the possibility for the autonomous economic and cultural development of the nation. It retards the development of a national bourgeoisie. It condemns the nation to underdevelopment, and it ensures the continued impoverishment of the people. It was developed in the service of particular interests.
During the course of the twentieth century, popular movements in Latin America and the Caribbean would emerge that would reject the dependent capitalist model of development. The popular movements have experienced renewal since 1995, creating a new political reality in the region, a phenomenon that we will discuss in future posts.
Booth, John A. and Thomas W. Walker. 1993. Understanding Central America, Second Edition. Boulder: Westview Press.
Meza, Victor. 1982. Honduras: La Evolución de la Crisis. Tegucigalpa: Editorial Universitaria, Universidad Nacional Autónoma de Honduras.
Molina Chocano, Guillermo. 1976. Estado Liberal y Desarrollo Capitalista en Honduras. Tegucigalpa: Banco Central de Honduras.
Murga Frassinetti, Antonio. 1978. Enclave y Sociedad en Honduras. Tegucigalpa: Editorial Universitaria, Universidad Nacional Autónoma de Honduras.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, world-system, world-economy, development, underdevelopment, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, banana, Honduras, Central America