Saturday, June 2, 2012

How the "lessons of the Banana Man" fail to include the most important lesson of all...

The Wall Street Journal has a laudatory story providing "five lessons to be learned from the Banana Man." Samuel Zemurray, the Banana Man, is the typical American success story. Born in 1877, Zemurray was a Russian immigrant who in the later years of the 19th century "recognized his opportunity" in a pile of freckled yellow fruit. Little more than 100 years ago, the banana was an exotic fruit, known by few, and Zemurray was instrumental in widening its appeal and reach to consumers.

To do so, Zemurray, in 1932, took over United Fruit, a huge multinational company that was struggling during the Great Depression. He turned the company around and "by the time he died in 1961, in the grandest house in New Orleans, he had been a hauler and a cowboy, a farmer, a trader, a political battler, a revolutionary, a philanthropist and a CEO."

What a life!

And here, from the WSJ, here are the top five lessons of the Banana Man - but as you read them, please note that they leave out the most important lesson of all:

"1. Go see for yourself. When Sam decided to become a banana grower, he moved to the jungle in Honduras. He planted stems, walked the fields and loaded banana boats. He believed that this was his great advantage over the executives of United Fruit, the market-leading behemoth that he battled for over a decade. U.F. was bigger, but it was run from an office in Boston. Sam was on the ground; he understood his workers, how they felt, what they feared and believed. Telling fruit honchos in Boston why he knew better, Sam would curse and say, "You're there, I'm here."

"2. Don't try to be smarter than the problem. In the late 1920s, United Fruit and Sam's company were trying to acquire the same piece of land, a fertile expanse that straddled the border of Honduras and Guatemala. But the land seemed to have two rightful owners, one in Honduras, the other in Guatemala. While U.F. hired lawyers and commissioned studies, trying to determine the legal property holder, Zemurray simply purchased the land twice, once from each owner. A simple problem deserves a simple solution.

"3. Don't trust the experts. In the 1930s, with United Fruit staggered by the Great Depression—its stock price fell from $100 a share to just over $10—the company's executives, in search of a game plan, consulted experts, solicited reports and interviewed economists. Zemurray wanted answers to the same questions—by then, he was the biggest holder of United Fruit stock—but he went instead to the New Orleans docks, where he buttonholed the sea captains and fruit jobbers who really understood the situation on the ground.

"He learned, for example, that banana-boat captains had been ordered to cross the Gulf of Mexico at half-speed, thus saving fuel. He also learned that, in the course of the extra days on the water, a large percentage of the cargo was going from yellow to ripe. One of Sam's first orders when he took over U.F. in 1932 was: Don't slow down; cut the number of crossings. Within six months of Sam's ascension, the stock had rallied and reached $50 a share.

"4. Money can be made again, but a lost reputation is gone forever. Early in his career, Sam joined in a partnership with United Fruit. The behemoth gave him money and helped to distribute his product; he gave the company the use of his ships. One year, when banana workers went on strike in Nicaragua and blockaded the country's rivers, U.F. broke the blockade with Zemurray's ships, his company logo painted in big letters on the side. It made his name hated in Nicaragua. It was one of the events that convinced Sam to dissolve his partnership with U.F., no matter how much he had come to depend on its deep pockets. A person who doesn't control his own name and image has nothing.
"5. When in doubt, do something! When Zemurray took over United Fruit in 1932, the company was a few months from collapse. The stock price was heading to zero, the best workers fleeing. As soon as he took control, he set off on a whirlwind tour, crisscrossing Central and South America, meeting workers in the field and asking for their ideas. The perception of activity, he explained, is just as important as the nature of that activity. The boys in the fields need to know that there is a person in charge. If they think you know what you're doing, they'll follow you anywhere."

It is indeed an interesting list of lessons to be learned by the Banana Man. But the list omits a critical piece of information - the role played by Zemurray's company in the 1954 coup that removed democracy - and Jacob Arbenz, a democratically elected leader - from Guatemala.

Here's some background from a 2008 NY Times book review of Peter Chapman's book, Bananas: How the United Fruit Company shaped the world:
"For much of the 20th century, the American banana company United Fruit dominated portions of almost a dozen countries in the Western Hemisphere. It was, Peter Chapman writes in “Bananas,” his breezy but insightful history of the company, 'more powerful than many nation states ... a law unto itself and accustomed to regarding the republics as its private fiefdom.' United Fruit essentially invented not only 'the concept and reality of the banana republic,' but also, as Chapman shows, the concept and reality of the modern banana. 'If it weren’t for United Fruit,' he observes, 'the banana would never have emerged from the dark, then arrived in such quantities as to bring prices that made it available to all.'"
In Guatemala, the company dominated government and the society. Again, from the NY Times book review:
 "When a left-wing democratic president named Jacobo Arbenz tried to roll back the company’s dominance in the 1950s (by, among other things, redistributing its fallow land), United Fruit executives saw it as an affront — and set out to help pressure the United States government to engineer a coup. Fortunately for them, virtually every major American official involved in the plotting had a family or business connection to the company itself. 
"A young Argentine traveler named Che Guevara happened to be in Guatemala when Arbenz was overthrown in 1954. After that, Che told his mother, 'I left the path of reason.' And so, too, did Latin America. That day marked a turning point, the end of a hopeful age of reform and the beginning of a bloody age of revolution and reaction. Over the next four decades, hundreds of thousands of people — 200,000 in Guatemala alone — were killed in guerrilla attacks, government crackdowns and civil wars across Latin America."
And so the key lesson from the Banana Man should also include this valuable nugget (learned well by some of America's banks): align your company with those in power, and persuade them that the health of your company is instrumental to the health of America.

And if the health of your company requires the CIA to remove a democratically elected leader from power, so be it.

Links to more info on this topic:

Kai Ryssdal interviews Peter Chapman in 2008 on NPR's Marketplace

Historycommons.org gives a timeline of events in Guatemala

PRwatch.org book review of The Father of Spin, which talks about the role Ed Bernays played in whipping up the passion needed for a mid-century Central American coup

Salon.com article on "America's original fast food" - the banana

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