New Great War Episode: Banana Wars - US Occupation in Central America for A Fruit Company

Posted by RTH Real Time History on

It’s June 1921, and Panamanian ambassador Narciso Garay has arrived in Washington. He is there to discuss the US response to his country’s recent war against Costa Rica – just one of the many US interventions in the Central American Banana Wars.

In the early 1920s, Central America was experiencing political instability which dated back to the 19th century. There had been several attempts to stabilize the volatile politics of the region by creating a Central American Federation, but these had failed. Border clashes, civil wars, and coups were common, especially among the smaller nations. These conflicts also took on an international dimension when US geopolitical and business interests got involved – and they often did.

In this episode we’ll take a look at a series of conflicts in Panama, Honduras, and Nicaragua which typify the so-called Banana Wars of Central America up to 1921, exactly 100 years ago.

Central America took on a new strategic importance in the late 19th century. One of the main reasons was the potential for a shipping canal that would link the Atlantic and the Pacific – not only for commerce, but also for warships. The US had shown some interest as early as the 1850s, but the French were the first to actual start building one in 1881. They began digging through the narrow Panama isthmus, which was under the control of Colombia at the time, but by 1888 the French company went bankrupt with the canal just 40% complete.

In 1903, the US struck a deal to buy the assets of the former French company for 40 million dollars. The Colombian government though, still needed to give its approval since it had conceded the right to dig to the French back in the 1880s. Colombia had just emerged from a bloody civil war and desperately needed money, so some politicians wanted to wait until the original concession ran out in 1904, which would leave Colombia with the French assets. US President Theodore Roosevelt was outraged, as he told his Secretary of State:

“I do not think the Bogotá lot of jack rabbits should be allowed permanently to bar one of the future highways of civilization.” (Gilderhus 28)

Luckily for Roosevelt, a solution was not long in coming. There were Panamanian separatists who wanted independence from Colombia, and they asked for US assistance. They received a cryptic response through an intermediary to the effect that US warships could be on the Atlantic coast in 36 hours, and on the Pacific in 48.

The Panamanian separatists took the hint and announced independence on November 3, 1903. The USS Nashville moved in to prevent Colombian retaliation, which resulted in a near bloodless revolution in Panama. Roosevelt and the Panamanian government then struck an agreement which gave the US a 16-kilometre-wide zone to build the canal with “all rights, power and authority… [as] if it were the sovereign of the territory”. In exchange, Panama became a US protectorate. One historian described the turn of events as follows:

“Panama became a rare recorded instance of a country that declared its independence and gave it up at the same time.” (Chapman 63)

By 1914, the Panama Canal was complete, and Roosevelt’s actions ushered in a new era of US involvement in Central America and the Caribbean. In time, the US adopted so-called “Dollar Diplomacy,” to influence the region by financial control. And in the early 1900s, big business meant bananas.

Bananas started out in the US as a novelty food, but by 1914 they were the second most popular fruit after apples. US companies imported up to 50 million bunches a year, which meant an increase in revenue from $250,000 in 1901, to $13 million in 1910. The fruit was especially popular amongst working class Americans, because it was cheap and could be easily brought toto dirty work sites in its protective peel. Banana excitement even spawned a hit song in 1923, called: “Yes, We Have No Bananas.”

It wasn’t long before companies got very interested in the banana business. In 1899, the Standard Steam Navigation Company and the Boston Fruit Company merged to create the United Fruit Company, which soon become a giant multinational.

United Fruit was known for its aggressive business tactics, which included undercutting rivals and buying up huge swathes of land in Central America. Eventually, the company owned over 3 million acres in Honduras, Costa Rica, Nicaragua, Guatemala, Panama, Colombia, Cuba, and Jamaica. Up to a third of this land was jungle, but owning it prevented rival companies from expanding.

On United Fruit’s plantations, company laws were gospel. It had its own security forces, and spy network, and troublesome workers were unwelcome – some were even lynched. To keep cash within the company, United Fruit paid its workers in vouchers that could only be used in company stores.

So, by the early 1900s, United Fruit was expanding so fast it became known as “The Octopus.” The company now wanted to get into the most lucrative banana producing country – Honduras. And if you wanted to do business in Honduras, you needed to do business with Sam ‘The Banana Man’ Zemurray.

Zemurray was a banana entrepreneur who was especially known for risky ventures in Honduras. United Fruit bought 60% of his company, but was then forced to sell it back to him to comply with new anti-trust laws. Zemurray though was unable to afford his shares, and so remained secretly in debt to United Fruit.

In 1907 political events put United Fruit’s lucrative operations in Honduras at risk. General Manuel Bonilla – dictator and friend of United Fruit - was overthrown by both the Honduran and Nicaraguan armies. In 1910, United Fruit offered to build railways in Honduras in exchange for land and concessions, but the new president Miguel R. Dávila refused.

The exiled Bonilla and Sam Zemurray had other ideas. They hired a group of American mercenaries, including Lee Christmas and his partner Guy ‘Machine-gun’ Molony, and bought an old US navy vessel, the Hornet. The conspirators landed at Trujillo, joined with local supporters and fighters from Guatemala who were most likely hired by United Fruit. The coup was a success and Bonilla was quickly reinstated despite US attempts at mediation.

The US had done little to stop the coup, and American warships had watched as Bonilla arrived. Privately, President William Howard Taft was irritated, since the US was attempting to bring Honduras under its economic control through Dollar Diplomacy. But he didn’t want to get into a fight with United Fruit either.

The company denied all involvement but did benefit greatly from Zemurray’s coup. Zemurray received land and tax-breaks from Bonilla, which he then passed on to United Fruit to cover his debt. Free of the Octopus, Zemurray would eventually become their biggest rival before eventually taking over as president of United Fruit himself.

According to journalist Peter Chapman, the Honduran episode would mark a turning point for United Fruit:

“The events of 1911 in Honduras brought to an end what might be termed the United Fruit Company’s ‘nice guy’ period. There would be little more of that. United Fruit had established its power and was of every mind to wield it.” (Chapman 74)

So United Fruit had established itself as a power in Central America, but it wasn’t the only one – the US government also didn’t hesitate to get involved.

Nicaragua was one of the countries of interest to the US, since for some time it was considered a potential location for a transoceanic canal. American business interests, however, also loomed large, especially around the coastal town of Bluefields.

In 1909, conservative rebels, including many Americans, overthrew President José Santos Zelaya. Zelaya had been accused of hostility towards US business interests, and he was forced to resign when US marines landed to protect American citizens. He was replaced by Juan José Estrada, who in turn was replaced by Adolfo Diaz in 1911.

Diaz was a big supporter of the US and had business interests in Bluefields. But the closer he got to the US, the more enemies he made in Nicaragua. Minister of War General Luis Mena - with the support of the army - soon called for Diaz’ resignation. The US intervened diplomatically to protect Diaz, so Mena cut off electricity in the capital, and his troops bombarded the city for four hours.

Now that violence had broken out in Nicaragua, the US once again sent in the marines under Major Smedley Butler, whose troops arrived in August 1912. Butlers orders were not to go after the rebels, but to secure the main railway line and keep any fighting away from it.

In September, Butler commandeered a train and headed down the line towards Granada. The rebels had sabotaged the lines with liquid from milkweed, which caused the train’s wheels to slip so much the marines had to get out and push. Once the Americans finally arrived at Masaya, a rebel force of 150 horsemen then ambushed them. Butler ordered the train to drive straight through the attack:

“It was a gorgeous spectacle. A sheet of fire was spitting into the darkness on both sides of the road. Four hundred Marine rifles were popping with tongues of flame, the sixteen machine guns were rattling out a staccato beat, the engines were screaming and puffing - all in one little narrow street.” (Langley, p. 68)

Mena said the attack was a mistake, but politically, the damage had been done. Butler ordered Mena to resign, which he did – though some of his commanders decided to hold out. General Benjamin Zeledón, whose troops had originally attacked Butler, moved his 800 men into defensive positions on two fortified hills overlooking Masaya and dug in.

On October 4, around 1,000 marines and sailors and 4,000 Diaz supporters surrounded the hills. During the night, marines crept up to the first hill and stormed it. Then they turned the captured artillery against the second hill. Within half an hour the battle was over, with around 30 rebels and 4 marines killed.

By October 6, the Nicaraguan rebels had been defeated. Diaz’ presidency was secure, and his government erected a memorial to the US forces:

“[We] desire that our elder sister, the great Republic of the United States, so wise, so powerful, will bring to us permanently the benefits which all her sons enjoy throughout all her vast and peaceful domain.” (Langley, 69)

The opposition Nicaraguan press was less enthusiastic and attacked Butler and his home state personally. They described the US intervention as “...the blond pigs of Pennsylvania advancing on our garden of beauty.” (Langley 69)

The US would remain in Nicaragua until 1933 and was often accused of rigging the elections, a claim even Butler did not dispute.

The Nicaraguan occupation of 1912 marked a turning point, since it was the first time US forces had actively gone into battle to suppress a revolution. US interventions after Nicaragua were concentrated in the Caribbean, but in 1921 conflict and American troops once again returned to Central America.

One of the reasons for the numerous conflicts between Central American states was border disputes. Many ran through poorly mapped jungle, which was a problem when even small pieces of land were hugely important to the small states. A prime example of this kind of conflict was the Coto War between Costa Rica and Panama in 1921.

At the center of the conflict was the tiny, disputed village of Coto, which was home to 27 families. In 1914, the US confirmed a prior judgement which awarded the village to Costa Rica, and ordered the Panamanians to withdraw – even though Panama was a US protectorate. This was politically impossible for Panamanian President Belisario Porras, who was under pressure not to give away any land.

In December 1919, Costa Rican President Julio Acosta Garcia called on Panama to finally accept the decision. Although Costa Rica was militarily stronger than Panama, Porras delayed withdrawing in the hopes that the US would, well, protect its protectorate. The Costa Ricans then announced their intention to the US to occupy Coto to the US, but the Americans did not respond.

Acosta assumed the US was not interested, and sent 28 soldiers to Coto, who quickly overpowered the single police officer. There was an explosion of nationalist sentiment in Panama, which put Porras under even more pressure. Since Panama had no army, volunteers tried to create one but there weren’t enough weapons. Instead, the 1000 men of the police force were converted into a makeshift Panamanian army.
Porras tried to avoid a conflict, and publicly said that “war between Panama and Costa Rica over valueless land was an absurdity.” In response, an angry mob stormed the senate and Porras was saved by US forces.

So a tiny village, had brought Panama and Costa Rica to the brink of war. Neither president truly wanted it, but domestic political pressure by nationalists demanded action, and so, in February 1921, the Coto War began.

The war started well for Panama despite its military weakness. President Porras heard that the Costa Ricans were going to reinforce their troops in Coto, so he sent General Manuel Quintero with a scratch force of policemen-turned-soldiers. When they arrived, the Costa Rican garrison withdrew without a fight.

Quintero now laid plans to ambush any boats coming across the border by river. On February 27, his forces ambushed a Costa Rican boat and captured a machine gun, which they used to capture another boat carrying 100 Costa Rican troops. But these were minor victories, and the Panamians were still desperately short of weapons and ammunition.

The next clashes occurred along the Atlantic coast. On March 4, the Costa Ricans commandeered a United Fruit train and crossed the border on the Sixuola River. The Panamanians did not dare to blow up the bridge, as it was also owned by United Fruit, and so they simply retreated.

President Acosta now ordered an advance deeper into Panama. Privately, he actually wanted to provoke US intervention to end a war he didn’t want. 1200 Costa Ricans armed with 17 machine guns and three cannons now prepared to land on the island of Bocas del Toro.

The US promptly sent warships to the area and forced a stop to the fighting on March 5. Costa Rica had won the military conflict, but both sides actually benefitted from the war politically. Porras made a show of wanting to continue the fight to satisfy the Panamanian nationalists, knowing full well the US would not allow it. The presence of US forces also gave Acosta a convenient excuse to withdrew his army from Panama.

In June, Panama sent diplomat Narciso Garay to Washington to plead their case. They were disappointed by the lack of support from their protector and asked for the Coto decision of 1914 to be reconsidered in their favour. The US refused, so Garay wrote a lengthy letter of protest:

“The acts carried out by the Government of Costa Rica under the protection of the United States will be impotent to kill or weaken Panama's right to continue to occupy Panamanian territory… [The Coto judgement] only proves that in the present state of the world, force still governs relations between the two countries and that the rights of the people are only valid in direct proportion to the rifles, machine-guns and cannon they have to back them up.” (Controversia De Limites, 479)

Costa Rica finally occupied Coto peacefully, in September 1921.

The Coto War and the other conflicts in the Banana Wars period had a major impact on the states and people of Central America. US interventions would cause long-lasting political, economic, and social issues. But were the Banana Wars really about bananas?

Well, the answer is a bit complicated. United Fruit and other companies certainly played a role, and contemporaries often assumed they had a hand in US interventions. One observer wrote of the Coto War:

“...the United States intervened: whether in compliance with her protective treaty obligations towards Panama, or to protect the United Fruit Company's extensive plantations near Bocas, it is not possible to say.” (Colby 373)

In fact, the US government and United Fruit were often at odds in Central America. US Senators from both parties tried to introduce taxes and antitrust laws to limit United Fruit’s growth, while the company’s deals with local governments interfered with Washington’s Dollar Diplomacy.

Some historians have argued that US financial domination Central America was not just about money, but about keeping other powers out of the region in accordance with the Monroe Doctrine. According to this argument, many Central American states owed money to European powers, who might intervene in case of political instability or collapse. US hegemony could therefore be preserved via economic control.

But for two-time Medal of Honor recipient and Banana Wars veteran Smedley Butler, the wars were about money. Butler became disillusioned with the US role in the region, and went on a speaking tour. Butler later summed up his feelings:

“I spent 33 years… being a high-class muscle man for Big Business, for Wall Street and the bankers. In short. I was a racketeer for capitalism… I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I helped make Mexico and especially Tampico safe for American oil interests in 1916. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Haiti and Cuba a decent place for the National City [Bank] boys to collect revenue in. I helped in the rape of half a dozen Central American republics for the benefit of Wall Street.” (Langley, 213)

In 1921 though, these debates were a long way off for Butler, and for the people of Central America. Butler and the Marines would return to Nicaragua in 1929 to put down another revolution, and US interventions in the region continued for years to come. And for the United Fruit company, business was still booming.


  • Butler, Smedley, War is a Racket: The Antiwar Classic by America's Most Decorated Soldier, (Los Angeles, CA : Feral House, 2003)
  • Chapman, Peter, Bananas: How the United Fruit Company Shaped the World, (Edinburgh : Canongate, 2007)
  • Colby, Elbridge, “The United States and the Coto Dispute between Panama and Costa Rica”, The Journal of International Relations, Vol. 12, No. 3 (Jan., 1922)
  • De La Pedraja Tomán, René, Wars of Latin America, 1899-1941, (Jefferson, N.C. : McFarland & Co., 2006)
  • Gilderhus, Mark T, The Second Century: U.S.- Latin American Relations Since 1889, (Wilmington, Delaware : Scholarly Resources Inc, 2000)
  • Harrison, Benjamin, “The United States and the 1909 Nicaragua Revolution”, Caribbean Quarterly, Vol. 41, No. 3/4 (September-December 1995)
  • Langley, Lester D, The Banana Wars: United States Intervention in the Caribbean, 1898-1934, (Wilmington, Delaware : Scholarly Resources Inc, 2002)
  • Leonard, Thomas M. “Search for Security: The United States and Central America in the Twentieth Century”, The Americas, Vol. 47, No. 4 (Apr., 1991)
  • Moberg, Mark & Striffler, Steve (eds.), Banana Wars: Power, Production and History in the Americas, (Durham, NC : Duke University Press, 2003)
  • Mobley, Scott, ““By the Force of Our Arms” William D. Leahy and the U.S. Intervention in Nicaragua, 1912”, Federal History, (2019)
  • Panama Secretary of Foreign Affairs, Controversia de Limites Entre Panama y Costa Rica, Tomo II, (Panama : Imprenta Nacional, 1921)
  • Schoultz, Lars, Beneath the United States: A History of U.S. Policy toward Latin America, (Cambridge, MA : Harvard University, 2003)

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