Links Joined

When Mexican revolutionists, pursued, scamper across Mexico's northern border they land in Texas. But southbound fugitives emerge in Guatemala, which has a small outlet on the Atlantic, a large coastal line on the Pacific, and a stretch of mountainous country in between. South of Guatemala lies Salvador, which is a comparatively narrow strip of country along the Pacific, big Honduras shutting it off on the Caribbean side. In eastern Guatemala the principal product is bananas. In western Guatemala and throughout Salvador the principal product is coffee. A large percentage of the population of both Guatemala and Salvador is Indian or half-breed and, though Guatemala City has been called the Paris of America, neither country can well escape being classed among backward nations.

Soon, however, there will occur an industrial event which should add to Guatemalan and Salvadorean prosperity. This event will be the completion and opening early next month of an 80-mile stretch of railroad which will link the coast-to-coast Guatemalan railroad with the coast-to-the-interior Salvador railroad. With the completion of this connecting link, the coffee planters of San Salvador will be given a direct rail line to the Atlantic. Instead of shipping coffee to the Pacific, then down to the Panama Canal, then through the canal to the Atlantic, coffee men can ship entirely by rail, can save from seven to 15 days in transportation to U. S. and European markets.

Completion of the link between the Guatemala and the Salvador railway will bring to a successful conclusion 25 years of effort by Minor Cooper Keith, organizer of potent United Fruit Co. In 1904 (five years after the formation of United Fruit) Mr. Keith acquired from the Guatemalan government a 130-mile railroad which ran from Puerto Barrios (Guatemalan Atlantic port) inland. It was a very unprofitable road, since its other extremity was but Guatemala City, its only logical western terminus. But Mr. Keith pointed out to United Fruit that it could well and profitably grow bananas in eastern Guatemala, thus providing the railroad with freight. Then the road was pushed on to Guatemala City. In 1912 the railroad company changed its name from Guatemala Railway Co. to its present title of International Railways of Central America, acquired a road running from Guatemala City to the Pacific, thus gave Guatemala, a coast-to-coast railway.

International Railways of Central America is not a United Fruit subsidiary. It was originally financed from London as, in 1904, U. S. capital did not venture much beyond U. S. borders. Gradual transition from British to U. S. ownership was completed in 1927 when J. Henry Schroder Banking Corp. of Manhattan became financial sponsor. The directorate is now exclusively Manhattan. Though independent, I. R. C. A. nevertheless maintains close relations with United Fruit. Minor Keith is its board chairman. And the two companies have a 33 1/3% discount agreement by which United Fruit passengers and freight travel on the I. R. C. A. at two-thirds the ordinary cost and I. R. C. A. passengers and freight use United Fruit ships on the same basis.