In 1952, Guatemalan President Jacobo Arbenz Guzman initiated Decree 900, an unprecedented land reform program that gave the government of Guatemala the power to expropriate parcels of uncultivated land on any farms that exceeded 223 acres. The program also left any large plantations that were at least two-thirds cultivated untouched, and farms that were fully cultivated could not be touched.

The goal of the program was to reduce the amount of unused land in Guatemala and provide that land to landless peasants in portions up to 42.5 acres. Landowners where the land was expropriated would receive 25 year government bonds with a 3% interest rate.

Peasants that benefited from the program were not allowed to resell the land for profit. In return for the land, the new land owners would need to pay the Guatemalan government 5% of the value of food produced on the land.

The reform succeeded in redistributing unused land totaling 1.5 million acres to about 100,000 peasant families around the country. Even Arbenz himself gave up some of his own land to the program. It was one of the most significant national efforts to redistribute wealth, the likes of which have never been seen, nor would ever be contemplated in a country like the United States. Yet, the actions by one of America’s neighbors affected an American company – the United Fruit Company – and by most accounts is what sparked a covert U.S. government effort to paint Arbenz as a Communist and to orchestrate his demise. (1)











United Fruit and the CIA

United Fruit Company was a major player in Guatemala at the time of Decree 900. They company had purchased plenty of land thanks to government concessions, and actively developed the countryside by building railways. The company therefore controlled a significant portion of the country’s banana exports – one of Guatemala’s main exports. United Fruit Company owned a lot of land in Guatemala.

Decree 900 was almost a direct attack against the power of United Fruit, because out of the 550,000 acres that the company owned, 85% of that land was uncultivated. (1)

Guatamala expropriated hundreds of thousands of acres from the company, and compensated the company at a rate of $2.99 per acre. When the company – and the U.S. government – complained about the valuation, the Guatemalan government pointed out that the valuation was performed “using the information provided by the tax forms filled by United Fruit itself and, according to this information, this was the actual value of the land.”

Outsmarted and outwitted – the company encouraged and endorsed any efforts by the U.S. government to “take down” Arbenz. Company shareholder Samuel Zemurray pushed an anti-Arbenz media campaign in the U.S. and to Congress, touting the idea that the land-grab by Arbenz revealed that the leader was a Communist threat – calling it the “Communist infiltration in the Americas”. (1)

Finally, U.S. Secretary of State, John Foster Dulles and CIA Director Allen Dulles, brothers, both heavily promoted the idea to Congress and at the CIA that the Communist Party in Guatemala had clearly taken a foothold, and that Arbenz and his land reform program presented a clear and present threat to national security at the height of the McCarthyist cold war hysteria.

The Dulles brothers and others successfully forced the initiation of a black operation to produce “evidence” that the Guatemalan government had been compromised by Communists, and to ultimately take Arbenz out of power.

Both John Foster Dulles and Allen Dulles owned stock in the United Fruit Company.