Banana Republic refers to a politically unstable nation economically dependent on the exportation of a limited resource product (bananas, for example). In 1901, the American author O. Henry coined the term to describe Honduras and neighboring countries under economic exploitation by U.S. corporations, such as the United Fruit Company (today known as Chiquita Brands International). Typically, a banana republic has a society of stratified social classes. This usually consists of a large and poor working class and a ruling-class plutocracy, composed of the business, political and military elites of that society.
History tells us that it was the American corporate machine that led to the coining of the phrase. In the late 19th century American companies began buying up large tracts of agricultural land in tropical Central and South America. They would then hire indigenous people to work those lands for extremely low wages and sell their product in the U.S. at a 1000% markup. The inequity of the land distribution created mass poverty among locals and created a minuscule ruling class attached to a military arm. These companies would then hire mercenaries to go in, overthrow these governments, and create a climate conducive to their continued profit.
In November of 2013, The Economist author T.W. (byline incomplete) speaks directly to this:
“In 1954, America’s Central Intelligence Agency (CIA) backed a coup against the government of Guatemala, which had threatened the interests of United. (Historians still debate whether the CIA’s motive was to protect United or, as many now believe, to nip Communism in the bud.) Hence the real meaning of a “banana republic”: a country in which foreign enterprises push the government around. In Honduras, that remains the case—but the product in question is no longer fruit. Bananas remain an important part of the economy, and workers still have complaints about their foreign employers.”
Interestingly enough, the coup which overthrew Guatemala’s democratically elected president, Jacobo Arbenz, also brought about the rise of Che Guevara. Che Guevara was a young backpacker traveling through Guatemala when Arbenz, who had championed safe working conditions, paid time off, insurance and other worker’s rights, was removed from office by the U.S backed coup. This event is largely seen as Guevara’s turning point. Also, the resulting conflict between the Left and the new U.S backed government lasted until 1996 and saw the deaths of nearly 200,000 civilians and a scorched-earth campaign against the Mayan indigenous populations. All for bananas and money, of course.
These American fruit companies are the ancestors of companies we know and purchase from today. As ugly as their history is, we have seen them become the corporate template for financial success. Sadly, as a result of their success, as you travel more, you often can see modern companies copying some of these same strategies.
Ironically for the Zeiglers, after Gap Inc. purchased Banana Republic in 1983, they instituted a coup of their own, completely changing the product line and giving it a more upscale and preppy product look. The Zeiglers have since been quoted as being displeased with the direction of the company they founded, with Mel Zeigler even saying, “he wishes they’d changed the name completely when they bought the company.”
So that’s Banana Republic…just some food for thought the next time you’re in need of dress pants, a blazer or a banana.