The history of the banana republic began with the introduction of the banana fruit to the United States in 1870, by
Lorenzo Dow Baker, captain of the
schooner Telegraph, who bought bananas in
Jamaica and sold them in
Boston at a 1,000% profit. The banana proved popular with Americans, as a nutritious tropical fruit that was less expensive than locally grown fruit in the U.S., such as apples; in 1913, 25 cents () bought a dozen bananas, but only two apples. In 1873, to produce food for their railroad workers, American railroad tycoons
Henry Meiggs and his nephew,
Minor C. Keith, established
banana plantations along the railroads they built in
Costa Rica; recognising the profitability of exporting bananas, they began exporting the fruit to the
Southeastern United States. By the late 19th century, three American
multinational corporations (the UFC, the
Standard Fruit Company, and the
Cuyamel Fruit Company) dominated the cultivation, harvesting, and exportation of bananas, and controlled the road, rail, and port infrastructure of Honduras. In the northern coastal areas near the
Caribbean Sea, the Honduran government ceded to the banana companies of a laid railroad, despite there being neither passenger nor freight railroad service to
Tegucigalpa, the capital city. Among the Honduran people, the United Fruit Company was known as
El Pulpo ("The Octopus" in English), because its influence pervaded Honduran society, controlled their country's transport infrastructure, and manipulated Honduran national politics with anti-labour violence.
Honduras overthrew the civil government of Honduras to install a military government friendly to foreign businesses. In the early 20th century,
Moldovan-American businessman
Sam Zemurray (founder of the
Cuyamel Fruit Company) was instrumental in establishing the "banana republic" stereotype. He entered the banana-export business by buying overripe bananas from the
United Fruit Company to sell in New Orleans. In 1910, Zemurray bought in the Caribbean coast of Honduras for use by the Cuyamel Fruit Company. In 1911, Zemurray conspired with
Manuel Bonilla, an ex-president of Honduras (1904–1907), and American mercenary
Lee Christmas, to overthrow the civil government of Honduras and install a military government friendly to foreign businesses. The mercenary army of the Cuyamel Fruit Company, led by Christmas, effected a ''
coup d'état'' against President
Miguel R. Dávila (1907–1911) and installed Bonilla (1912–1913). The United States ignored the
deposition of the elected government of Honduras by a
private army, justified by the
U.S. State Department's misrepresenting Dávila as too politically liberal and a poor businessman whose management had indebted Honduras to
Great Britain. This was a geopolitically unacceptable circumstance in light of the
Monroe Doctrine. The ''coup d'état'' was a consequence of the Dávila government's having slighted the Cuyamel Fruit Company by colluding with the rival United Fruit Company to award them a monopoly contract for the Honduran banana in exchange for the UFC's brokering of U.S. government loans to Honduras. The political instability consequent to the ''coup d'état'' stalled the Honduran economy, and the unpayable
external debt (c. US$4 billion) of Honduras was excluded from access to international
investment capital. That financial deficit perpetuated Honduran economic stagnation and perpetuated the image of Honduras as a banana republic. The inherited foreign debt functionally undermined the Honduran government, which allowed foreign corporations to manage the country and become sole employers of the Honduran people. The American fruit companies controlled the economic infrastructure (road, rail, and port, telegraph and telephone) they had built in Honduras. The
U.S. dollar went on to become the legal-tender currency of Honduras; Christmas became commander of the
Honduran Army, and later was appointed
U.S. Consul to Honduras. 23 years later, after corporate interest among the American businessmen, Zemurray assumed control of the rival United Fruit Company in 1933. During the 1950s, the United Fruit Company sought to convince the governments of U.S. presidents
Harry S. Truman (1945–1953) and
Dwight D. Eisenhower (1953–1961) that the popular, elected government of President
Jacobo Árbenz of Guatemala was secretly pro-
Soviet for having expropriated unused "fruit company lands" to landless peasants. In the
Cold War (1945–1991) context of the proactive
anti-communist politics exemplified by U.S. senator
Joseph McCarthy in the years 1947–1957,
geo-political concerns about the security of the
Western Hemisphere facilitated Eisenhower's ordering and authorising Operation Success. The U.S.
Central Intelligence Agency deposed Árbenz' democratically elected government by means of a
coup d'état in 1954, and installed the pro-business government of Colonel
Carlos Castillo in its place. Castillo was
assassinated by a presidential guard three years later. A mixed history of elected presidents and
puppet-master military juntas were the governments of Guatemala in the course of the 36-year
Guatemalan Civil War (1960–1996). However, in 1986, at the 26-year mark, the Guatemalan people promulgated a new
political constitution, and elected
Vinicio Cerezo (1986–1991) president; then
Jorge Serrano Elías (1991–1993).
Ecuador In the early 20th century,
Ecuador was primarily a
cocoa exporting country; however, due to diseases and competition from other exporters, the country sought an alternative crop that could serve as a significant export. Ecuador became a major producer of bananas due to its
comparative advantage in fertile
lowlands, low labor costs, and skilled workers. Additionally, Ecuador has many environmental advantages, such as a lack of natural disasters and no excess humidity that may allow diseases to fester. The minimal disease prevalence has decreased
pesticide costs in Ecuador compared to other banana republic countries. The world's major importer of bananas is the
European Union. Ecuador produces its bananas during the European's highest demand season for bananas, which is December through May, further contributing to Ecuador's advantage in the banana market.
Ecuador is the world's largest exporter of bananas, representing over a third of international banana sales, and banana export revenues were a quarter of Ecuador's total value of merchandise exports. Ecuador is considered a banana republic country due to its dependence on the banana and
multinational corporations for the functionality of its economy. Still, it differs in a few characteristics of the typical banana republic country. Instead of the major banana corporations that contain large plantations throughout the country, such as
Dole,
Chiquita, or
Del Monte, Ecuador's banana production mainly comes from over five thousand small-holder farmers. == Banana market ==