Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

3. Letter From the Ambassador in Costa Rica (Woodward) to the Assistant Secretary of State for Inter-American Affairs (Holland)¹

San José, October 27, 1955.

Dear Henry: During the period that you have been Assistant Secretary, some extraordinary improvements have taken place in the relationships between the United Fruit Company and the Governments and workers of the countries in which the Company operates. In fact, I would say that there has been more improvement during this period than in any other period twice or three times as long. You know the great importance of this to United States relations as a whole in the banana-producing countries and in the rest of Latin America, but I believe that few people in the United States realize the extent to which the Company and its reputation is symbolic of the United States to thousands and thousands of people in Latin America. As a curious example of this, Monge² told Alex Cohen³ and me the other day that when ORIT was inclined to let up on its criticism of the Fruit Company, the ORIT affiliates in Uruguay and Chile accused ORIT of being too soft.

The reason I am writing to you is that it seems to me that such a good foundation has now been laid by the Company that, by the concerted exertion of the ingenuity that must be possessed by the splendid brains in the Company, the Company could at comparatively little additional expense gain Hemisphere-wide reputation for being “out in front” in constructive labor and public relations rather than always appearing to be fighting a “rear guard action” and getting a bad press in return for the really formidable concessions it has made. You may be able to encourage thinking in this vein in your conversations with Company officials. Certainly there is no effort that could contribute more to the reputation of the United States in Latin America, and particularly in the Caribbean area.

I have just returned from a visit to the Pacific banana zone with President Figueres and a couple dozen other people. The visit had for its ostensible purpose the showing of serious interest in the plight of the victims of the recent record floods. Actually the trip must have impressed everyone, as it did me, with the extent to which the Costa Ricans are fortunate to have a huge company absorb so much of the cost of damage from a natural disaster of this kind and keep all of the flood victims who are employees on the payroll. President Figueres, however, seemed primarily preoccupied with the prospective loss in tax revenues (possibly close to US $1 million) in the face of emergency public works expenses in other parts of the country, widespread crop damage that will increase Government expenses and decrease revenues, and the expected short coffee crop. Those on the tour therefore witnessed the remarkable spectacle of Figueres asserting to several large groups of workers that they have an important stake in the stability of the Company’s operations, because the Government is a “partner” of the Company to the extent of 30% of the profits, and because this tax yield is the source of eventual social and economic benefits to the workers (provided the Government can get around to distributing a significant amount of this yield in the banana zone!). Figueres asserted that, while the workers are “free agents,” he believed the workers should sign the collective agreement with the Company that has been offered to the workers in the Golfito Division (following the settlement on the Laurel farms), because this agreement will give the Government and the Company the stability they need to engage in improvements for the workers. (On October 27, the Company had obtained 6700 signatures barely exceeding the 6600 majority required to put the agreement into effect in the Golfito Division.) Figueres condemned the communist leaders and advocates of strikes as “anti-worker” and anti-Government because of their irresponsibility in bringing about losses, and he asserted that it is immoral to follow a communist labor leader unless one is prepared to accept a communist government and all the loss of liberty that would imply.

It is clear that Figueres has metamorphosed almost completely from a couple of years ago, in his attitude toward the Company. This has been due to a number of factors. One is the extraordinary ability and perspective of Walter Hamer, the Manager of the Compañía Bananera. (I believe, incidentally, that the Company would profit substantially from giving him increasingly greater authority. He combines in his thinking a more realistic and farsighted evaluation of all the factors in the Company’s production problems and more ability to get along with foreign officials than any other Fruit Company officer I have known.) Another factor has been the increasing ability and breadth of vision of the Fruit Company directors and officers in the United States; I only wish that they could take turns of several months apiece to live in the producing areas, steep themselves at first-hand in the problems, and put the full weight of their intellects to farsighted solutions. Still another factor that has helped much here was the pressure exerted by Bob Hill in 1954 for negotiation of the new contract and the ingenuity of Allan Stewart in suggesting the procedure. Moreover, during the past year, I think we have been able to accomplish something with persistent if inconspicuous conversation and nudging of a type to which Figueres seems much more susceptible than he does to obvious argument and emphasis. The visit that Vice President Nixon and you made here offered a very fine opportunity for some helpful statements by President Figueres which he cooperatively made, as you will recall. But perhaps the most important factor of all in changing the attitude of Figueres has been the increased tax returns (about 8% of total governmental revenues in 1954⁴) to which, it is apparent, he and the Government attribute a very great importance. Of course, one must bear constantly in mind that large concessions have been made by the Company and by the U.S. Treasury to the producing countries.

Summing up the gains to date, in simplest terms, the direct operations of the Company in operating banana plantations in Costa Rica have at long last become evaluated by the Costa Rican Government for near their true importance to the Costa Rican economy, both as a method of cushioning the economic shock of natural disasters (which can be expected with altogether too great frequency) and as insuring the Government a handsome tax revenue which it would never be able to collect from individual domestic growers who might produce the same bananas with Company technical advice, spraying, irrigation, etc. (in fact, these individual domestic growers would be mostly in lower tax rate brackets anyhow).

(You may recall the paper on the subject of a tax study that I sent you months ago.⁵ In the light of the great importance the Costa Rican Government is attributing to the present tax revenues, if they should ever get any higher proportion of the taxes one can conjure up a very curious imaginative picture of the way the Costa Ricans might in the future struggle to keep the Company in direct plantation operations even though the Company might wish to transfer many of the present risks to domestic growers under cooperative schemes of the kind it now uses in part! For this reason, I would think that it would be of value to the Company to get the Government even more deeply involved in the “partnership” in this way, and I am somewhat baffled by the Company’s lack of interest in this idea.)

However, to get back to the main point of this letter, the foundation is now sufficiently soundly established, so I believe the Company can with relatively little expense (1) get its relationship with labor on a more secure and sound basis in Costa Rica and (2) begin to win the reputation of being “out in front” in constructive labor and international relations (a) by a few relatively simple and superficial human-interest frills for the workers that may have a large psychological effect and (b) by frankly taking advantage of some of the Figueres’ pet ideas on this subject in order to bring him to the point where he will become a Hemisphere-wide public relations agent for the Company.

With respect to labor relations, only a few weeks ago we were deeply concerned about the possibility of an impasse in the labor negotiations at Laurel which might have resulted in the abandonment by the Chiriqui Land Company of those eleven farms and, worse, might have resulted in the extension of the strike to the operations of the Compañía Bananera divisions. Fortunately, a settlement was reached, with a substantial number of small concessions made to the 1600 workers. We thought that the communist leadership would loudly take credit for the concessions obtained; instead, they loudly advertised the settlement as a defeat, and the communist party removed the communist labor leader, Marchena,⁶ from leadership of the FOBA labor confederation in the banana zone for an indefinite period.

Even assuming that the removal of Marchena from the leadership of the FOBA federation may be only temporary, this constitutes a very unexpected opportunity for the Company, the Costa Rican Government, and the non-communist labor organization to try to wean away Marchena’s followers. We have discussed with all of the interested parties, at various times, possible methods of taking advantage of this opportunity. The Company—at least, its officials in Costa Rica both in the producing zone and in San José—now appears definitely desirous of having a responsible non-communist labor organization with which it can deal in the future. We have been urging Monge, the Costa Rican who seems to be taking the most active detailed interest in the problem, to find some really competent leadership that can compete with the FOBA leadership. Although the man that Monge and the Rerum Novarum organization⁷ now have in mind does not appear to be conspicuously able, he might be able to make some progress if he receives some subtle help from the Company. He is a Señor Alvaro Rojas Rojas, who is a former employee of the Compañía Bananera (and not remembered as a particularly outstanding one) and who is now in charge of the Materials and Supply Department of the Pacific Railway and a member of the Rerum Novarum union of Public Works employees. Alex Cohen and I think that the Rerum Novarum organization should be able to find a more competent leader or leaders among the workers in the Golfito Division, and I heard and saw a couple of workers who made speeches during the rallies, in the course of the recent visit of President Figueres to the banana zone, who I believe might be better candidates than Rojas. This is a matter on which I would assume the Company would wish to apply itself urgently and seriously with Monge and Rerum Novarum if they really wish to take advantage of the present unique opportunity.

As a stop-gap arrangement, pending the possible eventual development of an acceptable non-communist labor organization in the banana zone that can really compete with FOBA and eventually put it out of the running, the Government is sending additional labor inspectors into the area. The purpose is to try to make certain that the workers who do not follow the communist leadership of FOBA will receive at least as much attention to their complaints and grievances as the FOBA workers do. To make this arrangement more effective—if this is to be a relatively permanent procedure rather than to try seriously and energetically to develop a strong non-communist union—I have suggested to President Figueres, the Labor Minister, Monge, Walter Hamer, and Mr. Bump, in various conversations, that any labor leader who is not a worker be required to bring any grievance or complaint to the labor inspectors rather than directly to the Company. (The communist labor leaders are not workers.) The Company naturally wishes to preserve the practice of encouraging workers to bring complaints directly to their supervisors so that grievances can be settled by the simplest possible procedure. No change in this practice would need to be made under a strict rule that labor leaders who are not workers must present their grievances to the labor inspectors, and this procedure would enable the labor inspectors to make certain that the communist leaders do not get preferential attention to their complaints by virtue of more efficient and persuasive presentation. Conversely, the labor inspectors could actually assist the less competent non-communist complainants.

Even if a strict rule of this kind were not to be applied by the Government and the Company, I would think that the same fundamental idea could be put into practice—probably even more effectively—by the Company itself, if it decided unqualifiedly to do so. Heretofore, there has been a natural tendency on the part of the Company officials to give more attention to complaints presented by labor leaders who make efficient and systematic presentations and in a manner which creates a minimum of friction. Marchena has been very skillful in making his presentations in this way, and the only non-communist leader of any consequence in the banana zone, Juan Rafael Solis B., leader of the “independent” Fetraba union (who was receiving Costa Rican Government support up until July), happens to be an inefficient and unreliable person with an irritating personality. Fortunately, Solis is also being relieved of his position of leadership. Even though his substitute, or the leader of some new labor organization that may be started by Rerum Novarum in the banana zone, may not turn out to be an outstanding leader, it seems to me that the Company would find it advantageous to do everything possible to help this new leadership become an outstanding success in competition with the FOBA leadership. Even if the Company had to employ some additional personnel to exert special zeal in attending to the complaints and grievances which may be presented from now on through any non-communist labor organization in the banana zone, I would think that the Company would find it advantageous to go this extent to set up effective competition to FOBA.

In fact, going even further, I believe that it might be a very good idea for the Company actually to work out carefully coordinated arrangements with the new non-communist labor leadership by which these leaders could gather support rapidly through being able to show concrete improvements they have been able to gain from the Company from time to time. The officers of the Company frequently, of course, have ideas of their own concerning new improvements and these improvements are often put into effect on the Company’s initiative. Even at the cost of some loss of direct credit to the Company for taking such initiative, any new improvements could be carried out ostensibly as concessions to the non-communist labor leaders in order to make their leadership more attractive to the workers. For example, during the recent visit of President Figueres to the banana zone, he personally observed some seriously over-crowded conditions of a kind that the Company will undoubtedly plan to correct in the near future. The construction of additional quarters at certain farms, which may be necessary anyhow, could be carried out as a concession to the non-communist labor leadership. If additional quarters are constructed at certain other farms, it would be possible to give further credit to these non-communist leaders, and, at the same time, to make a great hit with President Figueres, if some single-family houses were built of a kind that Walter Hamer says are now being built in Guatemala. President Figueres happens to be very much taken with this idea. Of course, Figueres also likes to have the Government get credit for persuading the Company to make improvements, but he would, I believe, be willing to cooperate in using the “credit” for improvements for the purpose of building up the non-communist labor organization.

Another pet idea of President Figueres from which the Company could get a substantial amount of good-will very economically, is the simple idea of encouraging the workers to install flower pots around their somewhat barren-appearing dwellings. Incidentally, the President mentioned this so many times in the course of his tour through the banana zone that the Company could probably get a very disproportionate amount of good-will by even consulting him personally concerning various styles and methods of encouraging individual initiative in “flower-potting”. The Fruit Company might be inclined to do this on a modern, streamlined basis but they could no doubt win more good will by consulting Figueres and using the styles associated with Figueres’ own small-town memories.

Anyone who is aware of the great expense to the United Fruit Company from a natural disaster such as the recent floods in the banana zone would be very hesitant to urge the Company to engage in any large new expenditures at this time to improve the living standards of the employees. Moreover, anyone who has traveled about the banana zone cannot help but be impressed with the fact that the Company’s workers undoubtedly live in circumstances that are a substantial improvement over the living conditions they would otherwise have. (President Figueres, in fact, pointed this out to the largest meeting of workers he addressed on his recent visit to the banana zone in the Coto Section of the Golfito Division. He pointed out that virtually no one was living in the Pacific banana zone 20 years ago, and he posed the rhetorical question: Why did these people leave their former homes in Guanacaste, Nicaragua, Panama, and the Meseta Central? He then answered the question by saying that they had left their former homes because conditions were worse in the places from which they came! Moreover, wages are so comparatively high in the banana zone that, for the first time, the Company has a surplus of candidates for employment.) In these circumstances it would now be logical to suggest additional expenditures for the improvement of living conditions of the workers only in modest amount (a) which could reasonably be expected to forestall future Company losses through work stoppages or slow-downs, (b) which might be worthwhile, conversely, as probably stimulants to greater productivity, (c) which could be carefully calculated to be worth the additional expenditure for purposes of improving even further the relationship between the Company and the Government, and (d) which, in the particular instance of the Costa Rican Government, would take advantage of the present very important trend of President Figueres to become the best advertising agency that the United Fruit Company could find in Latin America. These gains, if they can be attained economically, should be worth quite a lot to the Company and to the United States as a whole.

Specifically, I believe that the Company would be taking advantage of an extraordinarily valuable opportunity if Walter Hamer were to be authorized to go over the plans of new houses with President Figueres, deliberately planning to adopt a few of President Figueres’ suggestions concerning small changes in design, as well as discussing with President Figueres such ideas as some system by which the occupants of Company houses can have some voice in the selection of a variety of attractive new colors of paint for the houses they occupy, the styles of flower pots, as mentioned in a preceding paragraph, and such other matters as the selection of some new varieties of wood-stoves (an item purchased individually by workers) and devices for piping the smoke out of kitchens, etc. The Company might even be able to devise some workable ideas for “employee participation” in the beautification and improvement of their houses—even to the point of substantial savings in labor costs for such functions as painting, etc.

Please excuse the length of this letter but I hope you will find it useful.

With best wishes,

Sincerely,

Bob

1. Source: Department of State, Holland Files: Lot 57 D 295, Costa Rica. Official–Informal. A cover letter of the same date from Woodward to Holland is not printed. In that letter the Ambassador wrote he understood Holland was contemplating showing a Woodward letter of October 6 to officials of the United Fruit Company. Woodward suggested substituting the October 27 letter because it reflected later developments in Costa Rica. (Ibid.) On November 10, Holland forwarded Woodward’s October 27 letter to Kenneth H. Redmond, President of the United Fruit Company. (Ibid., Nicaragua–Costa Rica Desk Files: Lot 57 D 15, Costa Rica, 1955—United Fruit Company)
2. Luis Alberto Monge Alvarez, Secretary-General of Government in Figueres’ administration from July 1955 to May 1956. During this period he was on leave from his position as Secretary-General of the Inter-American Regional Organization of Workers (ORIT).
3. Alex A. Cohen, consul and attaché in the Embassy in Costa Rica.
4. This is about 50% of all income taxes received by the Costa Rican Government. [Footnote in the source text.]
5. Not found in Department of State files.
6. Isaias Marchena Moraga, Secretary-General of the Costa Rican Banana Workers’ Federation (FOBA).
7. The Rerum Novarum was a confederation of Costa Rican labor unions.