Trouble in Green Gold

The bold adventurers who ranged through Central America toppling governments and creating the sprawling United Fruit Co. banana empire are long gone. There was Lorenzo Dow Baker, the founder, a Massachusetts schooner captain who got into bananas back in 1870 when he found that the fruit he skeptically picked up for 25-c- a bunch in Jamaica fetched $2.50 a bunch or more in New York. There was Minor C. Keith, who hacked through Central American jungles a railroad line that, according to legend, cost a human life for every tie in the first 25 miles. And then there was Russian-born Sam Zemurray, who in 1910 sent a yacht with two U.S. soldier of fortune and a case of rifles to depose the President of Honduras. "I feel guilty about some of the things we did," Zemurray admitted later.

Better behaved now, United Fruit pays hefty taxes into tropical treasuries, concedes fringe benefits, goes in for such good-will undertakings as operating a free school in Honduras, where men from all over tropical America study scientific agriculture. But last week a new policy dramatically measured the change in United Fruit. President Thomas E. Sunderland proposed to turn over United Fruit banana lands to Latin American growers.

"Times are changing in Latin America," he said, "and we must change with the times." Henceforth, United Fruit will be "firmly committed to the policy of selling, leasing or contracting to nationals as much of our banana-producing land as can be reasonably accomplished."

The new policy is partly designed to appease what President Sunderland called the "understandable desire" of Latin Americans "to own their own land and grow their own crops for sale in the international markets." But it has another, even more compelling purpose: to raise United Fruit's profits.

Upset Cart. In the days of Baker and Keith and Zemurray, the banana trade was deliciously profitable, and many a Boston fortune was founded upon "green gold" (from the greenness of bananas , when shipped). But during the past decade United Fruit has slipped badly. Net earnings per share plummeted from $7.49 in 1950 to $2.60 in 1958 and a dismal $1.39 last year. Labor costs rose steeply during the 1950s. The company has been faced with "unprecedented, abnormal" bad weather and persistent plant diseases.

Above all other difficulties, competition from Ecuador has upset United Fruit's banana cart. Ecuador's banana exports have increased 1,000% since the late 1940s, giving it 20% of the world banana trade and making it the world's No. 1 producer. Only one-fifth of Ecuador's bananas are shipped by United Fruit.

Skipped Dividend. As a result of these trials, United Fruit last summer skipped its quarterly dividend for the first time in the 20th century. The appalled board of directors called in Outsider Sunderland, vice president and general counsel of Standard Oil Co. (Indiana), to be top banana.

Sunderland took over some massive headaches apart from sinking profits. Among them: Fidel Castro's confiscation of 272,472 acres of United Fruit sugar and cattle lands in Cuba; a 1958 anti-trust consent decree requiring United Fruit, by 1970, to divest itself of roughly one-third of its banana import business.

But President Sunderland, 53, is brimful of plans for restoring United Fruit's oldtime profits. Above all, Sunderland wants to make the company less dependent on bananas. It might diversify by raising more cattle, producing more palm oil, manufacturing soap and other palm-oil products. Most important, perhaps, United Fruit last year acquired a 123,000-acre oil concession in Colombia, and Oilman Sunderland is keenly interested in exploring for oil elsewhere in tropical America, hoping that black gold will pay when green gold does not.

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