Corporations: The Gringo Company

On paper there is no fruit so appealing to raise as the richest relative of the lily family, the banana. It grows so fast that it goes from bulb to cash crop in twelve months. It is the biggest moneymaker per acre of any crop grown anywhere, and is so popular that U.S. housewives buy more pounds of bananas each year than any other produce item. Yet under its golden peel there are a host of troubles, and in recent years United Fruit Co.—the world's largest banana grower and marketer—has had them all.

Until five years ago. with postwar banana sales rocketing. United Fruit was reaping profits by merely filling orders in the eleven American and European nations where it has sales offices. Then its plantations in Panama and Honduras were all but wiped out by a combination of wind, floods and the Panama disease, which by infecting the soil puts banana land out of cultivation almost indefinitely. Small Ecuadorian growers jumped in to capture 25% of the world banana market. Meantime, United Fruit's own share of the world market, which in 1948 stood at over 40% skidded to below 30%—though it managed to hang on to its 60% of U.S. banana sales.

This would still have been a profitable slice if United Fruit had not been saddled with costs that its competitors did not have to contend with. Since its founding in 1899. United Fruit had built a welfare system for its Latin American workers that included 188 schools and 16 hospitals, cost $4,000,000 a year to run. Unlike its latter-day competitors, who buy their bananas from independent producers. United Fruit also had vast fixed investments in banana lands, workers' housing and rail lines to haul the fruit. Between 1957 and 1960, as the company's sales dropped from $342 million to $304 million, these pressures shrank its per-share earnings from $3.59 to 25¢.

Reaching Out. As United Fruit's fortunes darkened, the company's directors, led by their newly elected chairman, Boston Investment Banker George Peabody Gardner Jr., 44, desperately reached outside the banana business to find a president who would remake the company. Their choice: Thomas Elbert Sunderland, 54, previously vice president and general counsel of Standard Oil of Indiana.

Sunderland found himself at the head of an empire which, besides banana lands in eight tropical American countries, included cattle ranches, thousands of acres in sugar cane, cacao and oil palm, 1,380 miles of railroads, 55 ships, a sugar refinery and a communications network (Tropical Radio Telegraph Co.). He also found himself saddled with a chaotic organization in which three men might be working on the same project without being aware of each other's existence. The company also suffered from memories of the freewheeling days when it was run by the late Sam ("The Banana Man") Zemurray and in the eyes of nationalistic Latin Americans was a symbol of everything they hated about "Yanqui imperialism."