Cuyamel Fruit Company

Cuyamel Fruit Company, formerly the Hubbard-Zemurray Steam Ship Company, was an American agricultural corporation operating in Honduras from 1911 until 1929, before being purchased by the United Fruit Company.[1] The company was founded in the 1890s by William Streich to export bananas and sugar from the northwestern Cortés region of Honduras to international markets. It was bought by Samuel Zemurray around 1905, who took the company name for his own operation.[2] Zemurray would later become the president of the United Fruit Company. Both Cuyamel and United Fruit are corporate ancestors of the modern-day firm Chiquita Brands International.

Early years

Cuyamel Fruit Company was founded in the 1890s by William Streich, a speculator who bought land near the Cuyamel River in Honduras. The company soon ran out of money and was purchased around 1905 by the Russian born Samuel Zemurray, who used it as part of the beginning of his growing banana trade operation.[2]

The Honduras "Banana Republic"

Regardless of this cooperation, it was the nature of the three companies' competition that led to political discord in Central American states in the early 20th century. Zemurray had played an active role in Honduran politics since he first arrived in the country. In 1910, the administration of President Miguel R. Dávila granted the Vaccaro Brothers' Company land for railroad construction and prohibited competitors from building a competing railroad within 20 kilometers of the Vaccaro line. Zemurray was no fan of the Dávila administration, having provided encouragement and financial aid in a failed 1908 coup attempt against Dávila.[6]

Dávila's concessions to Vaccaro pushed Zemurray over the edge. He found his opportunity in former President Manuel Bonilla. Zemurray supplied weapons and transportation for Bonilla to launch a coup against Dávila. President Dávila fled, and Bonilla once again assumed the presidency of the nation, owing in large part to the direct intervention of Zemurray. Shortly before Bonilla ascended to the presidency, Zemurray in 1911 transformed his company from Hubbard-Zemurray into Cuyamel Fruit Company. He acquired 5,000 acres of land for agriculture along the Cuyamel River in the northwestern extremity of Honduras, near the Guatemalan border. The firm took its new name either from this river or from the town of Cuyamel nearby. As a repayment for his support, Bonilla also granted Zemurray a concession to build a railroad between the town of Cuyamel, by the coast, and Veracruz, in the interior [6]. The company's main Honduras office was in the coastal city of Puerto Cortés.[7] The 1908 failed coup and the Bonilla coup would mark a tradition in Honduras and other Central American states of banana companies intervening in government affairs. This practice would last up until the 1970s. The most famous of these interventions is probably the CIA-backed Guatemalan Coup of 1954. However, unlike other countries surrounding it, Honduras was unable to urbanize or diversify its economy beyond the banana industry. The country became the paragon "banana republic" with an economy dominated by oligarchic banana plantations serving as a playground for foreign-owned companies.[8]

The uneasy peace and the 1920s

Historians classify the period between 1911 and 1920 as a time of "relative stability" for Cuyamel and Honduras.[9] There were no more coups in the country through the end of the decade, but Zemurray's Cuyamel Fruit was in fierce competition with Vaccaro and United. What's more, Cuyamel's development of a previously empty strip of land along the Guatemala-Honduras border almost led to an outbreak of war between the two states, but this was halted by United States mediation.[10] This incident of near-war strained relations between pro-Honduras Cuyamel and pro-Guatemala United, and this tension would not fully cool off until the two companies became one in 1929.[9] Despite its challenges, Cuyamel was able to expand into a near-sovereign entity. The American Embassy in Honduras went as far as saying, in 1916, that "the territory controlled by the Cuyamel Fruit Company is a state itself, within another state…it houses its employees, cultivates plantations, operates railroads, stations, steamship lines, potable water systems, power plants, commissaries, [and] clubs." By the 1920s, the land and the railroad grant that Zemurray started with in Honduras had helped him to emerge as even more of an industrial titan than he already was, and thanks to both a friendly relationship with the government of Honduras and strong sales, the company was able to expand its holdings. Records indicate that the company was incorporated in Delaware, but its board of directors met in New Orleans, Zemurray's adopted city. The firm organized operations under several subsidiaries. The Cuyamel subsidiary known as the "Cortés Company" was the firm's manager of Honduran operations. Other Central American subsidiaries under Cuyamel's control included the "Bluefields Company" in Nicaragua, the "Transport Company" to run the corporate freight rail and steam lines, and the "Sula Sugar Company" to manage the company's sugarcane interests.

Figures from 1924 peg the combined assets of these affiliates at $3.97 billion in modern inflation-adjusted figures.[11] The stock of Cuyamel fell by 20 points that same year.[12] In 1925, the firm issued $5 million in bonds backed by such prestigious firms as Lehman Brothers and Goldman Sachs to finance the company's purchase of land along the Ulúa River in western Honduras.[11] Sales data from 1927 shows that Cuyamel accounted for about 14% of the bananas imported and sold in the United States that year.[11]

former name	Hubbard-Zemurray Steam Ship Company
industry	Agriculture
fate	Purchased by United Fruit Company in 1929
founder	William Streich

Cuyamel Fruit Company

Early years

Growth in Honduras

Competition

The Honduras "Banana Republic"

The uneasy peace and the 1920s

Sale to United Fruit

Legacy

See also

References