Contextual Essay

On June 27, 1954, democratically elected president of Guatemala Jacobo Árbenz was overthrown by a U.S.-backed coup led by Carlos Castillo Armas. The result was a military dictatorship that would protect U.S. interests and help stop the threat of Soviet influence in Latin America, at the expense of the livelihoods of many Guatemalans. This story is often viewed and retold as a Cold War case study of the U.S.’s many attempts to contain communism. However, a more complete and nuanced version should consider the economic interests that the U.S. was acting to protect, rather than just matters of politics and national security. U.S. companies, particularly the United Fruit Company (UFCO), dominated Guatemalan economics and politics during much of the 20th century, and any threat to the autonomy of UFCO) would mean a threat to the business interests of the U.S., especially elite government officials. 

The U.S.’s motivations for conducting the 1954 coup (named Operation PBSuccess) were influenced heavily by UFCO, whose business was threatened by President Árbenz’s policies. Many, though not all, historians confirm this perspective of the event in their studies of documents like declassified government reports, propaganda campaigns by UFCO, and Guatemalan accounts. The documents included in this project will add to this existing work. By examining CIA memorandums, private communications, interviews, and speeches, UFCO’s role in motivating U.S. involvement in the 1954 coup becomes apparent.

Since 1944, Guatemala had been led by democratically elected, pro-labor, and pro-reform presidents. In 1952, Árbenz issued Decree 900, an agrarian reform law that aimed to redistribute unused land to landless peasants as part of his effort to “convert Guatemala from a backwater country with a predominantly feudal economy into a modern capitalist state.” ¹ As the largest employer and landowner in Guatemala, UFCO opposed this legislation. By the 1950s, UFCO had monopolized communication technologies, railways, and arable land in Guatemala. This extreme control created the “feudal economy” that Árbenz spoke of. However, they only used a fraction of the land they owned, which meant their land could be seized and reappropriated by the government under Decree 900. ² Land reform laws posed a major threat to not only their production, but also their ability to continue to control Guatemalan economics and politics. If Guatemala became a country with truly competitive capitalism, UFCO would no longer be able to monopolize all of these systems. 

The traditional story of the end of Árbenz’s presidency does not focus much on economic interests or on UFCO specifically. During the coup and in the years afterwards, there was little knowledge of the U.S.’s involvement. The day that Árbenz was overthrown, Secretary of State Dulles broadcast a speech on the radio, declaring the restoration of peace and freedom for Guatemalans, but made no mention that the U.S. helped to achieve this regime change. ³ By distributing news in this manner, government officials obscured the U.S.’s role in orchestrating, or even just supporting, the coup. In the 1970s and 80s, scholars began to better understand U.S. involvement and how much of an impact it made. ⁴ Still, the focus was mainly on Cold War politics and the containment of communism that characterized U.S. foreign policy at the time. ⁵ Though the fear of communism was an important motivation for the U.S. and should not be discounted, they were largely unfounded concerns. The economic threats to U.S. businesses, however, were much more real. 

As previously mentioned, Árbenz’s reformist legislation was not to create a communist state like that of the Soviet Union, but rather to end the feudal system that dominated Guatemalan agriculture, thanks in large part to UFCO. By empowering peasants and breaking monopolies, Árbenz hoped to transition Guatemala into a competitive capitalist system, much like the U.S.. Competing interpretations by historians tend to agree on the fact that there was no real Soviet threat in Guatemala. ⁶ Guatemalan communists did exist, but they had no success in attracting the interest of the Soviet Union. ⁷ Even an official CIA document from 1952 states that the legislation and ideas that Árbenz was encouraging “stem from the US New Deal rather than from Soviet Communism.” ⁸ The U.S. may have acted on a perceived a communist threat when in reality there was none, but this document calls into question whether that perception even existed. U.S. views may have changed by the time the U.S. government began PBSuccess, but focusing only on these political motivations ignores the role of economics, and particularly the UFCO in creating and carrying out the coup. 

The U.S. had a major interest in UFCO; it was a major company that provided lots of profits to its home country, the U.S.. During much of the 20th century, UFCO was one of the top fifty largest companies in the U.S.. ⁹ Even further, important government officials had close ties with UFCO. Secretary of State Dulles had been involved in the plans to expand UFCO to Guatemala, and his brother Allen Dulles served on the board of UFCO while simultaneously heading the CIA. ¹⁰ Senator Henry Cabot Lodge Jr., who also was a strong proponent of UFCO protection at the cost of a regime change, was a major stockholder of UFCO. ¹¹ These clear conflicts of interest made the UFCO in Guatemala more than just an issue of protecting a U.S. company. The personal wealth of powerful individuals was at stake, suggesting a clear motivation for intervening when UFCO’s power was threatened. 

Influential stakeholders were not the only people in support of a regime change. UFCO actively worked to push anticommunist propaganda that would turn the U.S. public against the democratically elected presidents. Led by public relations expert Edward Bernays, UFCO created a campaign meant to sway public opinion against Árbenz, and eventually to paint the rebels who overthrew him as freedom fighters. He set up false or heavily warped reports of communism in Guatemala to be reproduced in newspapers, magazines, and movie reels. ¹² In the years leading up to the coup, Bernays intensified his strategy with “fact-finding” trips to Guatemala meant to cherry pick evidence of communism to be disseminated to the press and the public. ¹³ These campaigns were very successful, and had the effect of gaining popular support among people who might otherwise not care much about the fate of UFCO. By combining the personal interests of the powerful with the support of the public, the U.S. was more free to carry out Operation PBSuccess. 

U.S. officials were wary of characterizing themselves as primarily interested in U.S. companies in Guatemala. Árbenz and his supporters generally perceived the U.S.’s interest as economic. A 1954 meeting between President Eisenhower and the Guatemalan Ambassador was largely an argument about whether or not U.S.-Guatemala relations were centered around the issue of communism or of UFCO. While Eisenhower claimed that his concerns were principally about Guatemala’s relationships with communists, the Ambassador accused him of only working to protect the interests of UFCO, which had a “stranglehold” on Guatemala. ¹⁴ Árbenz repeated this position in his resignation speech on June 27th. ¹⁵ Cognizant of this view held by many Guatemalans, members of the U.S. government specifically worked to understate that motivation for the sake of appearances. The U.S. Ambassador to Guatemala picked up on this perception, and in a telegram to the State Department, wrote, “I therefore suggest Department play down fruit company problem for present and concentrate on Commie issue.” ¹⁶ This demonstrates a deliberate choice to display a more political argument against Árbenz’s government and to hide the economic motives. 

Though the traditional story of the U.S.’s involvement in the 1954 Guatemalan coup often focuses on Cold War politics, a deeper study requires this evaluation of economic interests and UFCO’s role. An attempt to move from feudalism to capitalism may have been misconstrued as communism, but was also opposed for its threat to U.S. business. The conflicts of interest within the U.S. government are clear now, but were purposely obscured to prevent a compromising public image. By reading historiographic research and primary documents, especially those that were once kept secret, the public can have a better understanding of the event and of U.S.-Latin America relations more generally.