Historical Perspectives
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Congressional Briefing on the 50th Anniversary of the U.S. Intervention in Guatemalar
Presentation by Panelist Alfonso Bauer Paiz June 24, 2004

Guatemala and the Overthrow of President
Arbenz Fifty Years Ago

I am grateful to the esteemed Congress of the United States of America for the honor of being received here in these halls.

During the last century, the people of Guatemala suffered under the arbitrary and despotic rule of two dictatorships, one of President and lawyer Manuel Estrada Cabrera and the other of General Jorge Ubico. The first dictatorship lasted 22 years, the second, fourteen.

Freedom of expression did not exist during those years, nor was there freedom to organize political parties outside that of the dictator or—in the Ubico period—the political parties of Guatemala’s European residents. (These were the Nazi, Fascist, and Francoist Phalange parties of the Germans, Italians, and Spaniards.)

It was dangerous to oppose the dictatorships. Those who tried to form political opposition groups were jailed, exiled, or simply murdered with impunity. Workers were without rights and were exploited mercilessly. The laws and regulations of the time allowed forced labor, and obligated indigenous peasants (more than two-thirds of the population) to work building highways and other infrastructure projects. As peons on coffee and sugar plantations, they were poorly paid. Illiteracy was at extreme levels.

These regimes also took national property (such as the railroads, the country’s main port, and vast extensions of land) and turned it over to foreign interests from Germany and the United States. The United Fruit Company (UFCO) in particular, became a political power capable of choosing or removing political leaders.

Influenced by many democratic countries’ struggle against fascism, students, teachers, intellectuals, professionals, and workers began a series of civic actions that culminated finally in the resignation of the Dictator Ubico. Later, young officers of the Guatemalan Army joined forces with civil society groups who were struggling for political and social change. On October 20, 1944 an historical feat was accomplished and the de facto President, General Federico Ponce Vaides, was forced out of power. Finally the Ubico regime had been rooted out. A Revolutionary Junta, made up of two military officers and one civilian, took charge of the government and set the country on a path to free elections in which the people could choose their own representatives for a Constituent Assembly and a Legislative Assembly. The first body issued a new Constitution that went into effect in 1945. When presidential elections were held, Juan José Arévalo, a Doctor of Pedagogy, was elected with over 70% of the votes from a field of several candidates. Never again have elections produced such a large majority in favor of a presidential candidate in Guatemala. Historically speaking, both governments [of the revolutionary period] have been those which have had the most support of the people.

The Legislative, Executive, and Judicial branches—the three powers of the State—were independent of each other and coordinated their activities to fulfill many of the citizens’ greatest desires. They established a democratic, representative, and participatory State that guaranteed public freedoms and acted to eradicate corrupt dictatorial practices and promote policies for socio-economic and cultural change. They eliminated forced labor, fought racial discrimination and the abysmal inequalities of the times, created the institutional structures necessary to provide the population with education, healthcare, jobs, and social welfare, safety nets, and public security, all within the framework of democracy. It was a welfare state along the lines of Keynesian models and Franklin Delano Roosevelt’s New Deal. It was a State that stood alongside Costa Rica as one of the two democracies in Central America at the time.

The United Fruit Company was used to receiving a very preferential kind of treatment from the tyrants they had helped to impose, and it opposed the governments of both Arévalo and Arbenz. Though Guatemala’ s new Labor Code had received high praise from the International Labor Organization (ILO), the UFCO refused to comply with its provisions, claiming that its contracts with the government of Guatemala allowed it to administer its own activities and relations with its workers. I was the Labor Minister at the time and was witness to the fact that it was very difficult to get them to accept and apply the guidelines of the Labor Code in 1948. From then on, the relationship between the UFCO and the Guatemalan government became very tense and difficult, so much so that the UFCO began to use its great political and economic power to launch an intense and campaign of lies and defamation against the Guatemalan government. Taking advantage of the circumstances of the “cold war,” it accused the government of being “communist” and of being a satellite of Stalinism. This was false. The truth is that, because there was now freedom of association in the country, some citizens formed a Guatemalan Workers’ Party in 1949. The party had a Marxist ideology and some of its members were able, in free elections, to be elected as congressmen. But no communist ever occupied important positions in the executive or judicial branches.

President Arbenz’s program for government was based on the principal of free competition, the principal that many in the circles of U.S. government and business proclaimed then and still proclaim today. President Arbenz proposed, for example, a) to build a highway to the Atlantic to break the monopoly of the International Railways of Central America (IRCA), a subsidiary of UFCO; b) to build an electric company to compete with the Electric Bond and Share; c) to carry out an agrarian reform; and d) to found a national bank for foreign trade. The latter was the only point on his program that he did not carry out.

Naturally, the UFCO was not pleased with points (a) and (c) because they weakened its monopoly, so the company fought back with all its power. Paradoxically, they had more success in Guatemala than in the United States. IRCA shareholders sued the company over the fact that they were not receiving any dividends since IRCA was charging UFCO less for freight than what it actually cost to transport their bananas. The business was only kept alive by the fact that Guatemalans were having to pay very high freight charges. I found out about this when I was the inspector for IRCA in 1953. The Guatemalan government was planning to join the shareholders suit as a co-plaintiff. This did not end up happening because of the overthrow of President Arbenz. But in 1963 a United States Court of Justice applied the Sherman Act against monopolies to the UFCO, forcing it to dismantle its business in Guatemala, just as if it was located within the territory of the United States of America.

There was nothing communist about Arbenz’s agrarian reform, established by Decree 900. More radical agrarian reforms were put into place in the Asian countries that the United States Army occupied after World War II, countries that are now industrialized, thanks to the positive effects of those agrarian reforms.

This is exactly the kind of thing that the Arbenz government was proposing—to do away with the semi-feudal relations of production in the countryside substituting them with capitalist relations and to correct the inequity in land ownership. At that time small farmers who owned less than 3.5 hectares of land were 76.2% of all land owners, but they only had 9% of land. Those with more than 45 hectares (2.2% of all landowners) had 72.2% of the total land. But the greatest concentration of land was in the hands of the plantation owners who had more than 9,025 hectares apiece. There were only 22 of them; the UFCO was one. Together they owned 498,949 hectares, or 13.4% of total lands.

Decree 900 treated the UFCO the same way as it did Guatemalan landowners; only its idle lands were to be expropriated and under the same conditions.

Because important government officials in Washington DC—senators, congressmen, and some military officers—were shareholders, the UFCO was able to get President Eisenhower to authorize Operation Guatemala and to charge the CIA with intervening to overthrow President Arbenz, counting on the assistance of other Central American and Caribbean countries, and ending in this way the democratic-revolutionary process in Guatemala. The Operation attained its objectives on June 27, 1954 a half a century ago.

In a separate attached list, I have included the names of the high officials, senators, and others who participated in this action over which John Foster Dulles, then Secretary of State, presided.

During the last century, the people of Guatemala suffered under the arbitrary and despotic rule of two dictatorships, one of President and lawyer Manuel Estrada Cabrera and the other of General Jorge Ubico. The first dictatorship lasted 22 years, the second, fourteen.

Freedom of expression did not exist during those years, nor was there freedom to organize political parties outside that of the dictator or—in the Ubico period—the political parties of Guatemala’s European residents. (These were the Nazi, Fascist, and Francoist Phalange parties of the Germans, Italians, and Spaniards.)

It was dangerous to oppose the dictatorships. Those who tried to form political opposition groups were jailed, exiled, or simply murdered with impunity. Workers were without rights and were exploited mercilessly. The laws and regulations of the time allowed forced labor, and obligated indigenous peasants (more than two-thirds of the population) to work building highways and other infrastructure projects. As peons on coffee and sugar plantations, they were poorly paid. Illiteracy was at extreme levels.

These regimes also took national property (such as the railroads, the country’s main port, and vast extensions of land) and turned it over to foreign interests from Germany and the United States. The United Fruit Company (UFCO) in particular, became a political power capable of choosing or removing political leaders.

Influenced by many democratic countries’ struggle against fascism, students, teachers, intellectuals, professionals, and workers began a series of civic actions that culminated finally in the resignation of the Dictator Ubico. Later, young officers of the Guatemalan Army joined forces with civil society groups who were struggling for political and social change. On October 20, 1944 an historical feat was accomplished and the de facto President, General Federico Ponce Vaides, was forced out of power. Finally the Ubico regime had been rooted out. A Revolutionary Junta, made up of two military officers and one civilian, took charge of the government and set the country on a path to free elections in which the people could choose their own representatives for a Constituent Assembly and a Legislative Assembly. The first body issued a new Constitution that went into effect in 1945. When presidential elections were held, Juan José Arévalo, a Doctor of Pedagogy, was elected with over 70% of the votes from a field of several candidates. Never again have elections produced such a large majority in favor of a presidential candidate in Guatemala. Historically speaking, both governments [of the revolutionary period] have been those which have had the most support of the people.

The Legislative, Executive, and Judicial branches—the three powers of the State—were independent of each other and coordinated their activities to fulfill many of the citizens’ greatest desires. They established a democratic, representative, and participatory State that guaranteed public freedoms and acted to eradicate corrupt dictatorial practices and promote policies for socio-economic and cultural change. They eliminated forced labor, fought racial discrimination and the abysmal inequalities of the times, created the institutional structures necessary to provide the population with education, healthcare, jobs, and social welfare, safety nets, and public security, all within the framework of democracy. It was a welfare state along the lines of Keynesian models and Franklin Delano Roosevelt’s New Deal. It was a State that stood alongside Costa Rica as one of the two democracies in Central America at the time.

The United Fruit Company was used to receiving a very preferential kind of treatment from the tyrants they had helped to impose, and it opposed the governments of both Arévalo and Arbenz. Though Guatemala’ s new Labor Code had received high praise from the International Labor Organization (ILO), the UFCO refused to comply with its provisions, claiming that its contracts with the government of Guatemala allowed it to administer its own activities and relations with its workers. I was the Labor Minister at the time and was witness to the fact that it was very difficult to get them to accept and apply the guidelines of the Labor Code in 1948. From then on, the relationship between the UFCO and the Guatemalan government became very tense and difficult, so much so that the UFCO began to use its great political and economic power to launch an intense and campaign of lies and defamation against the Guatemalan government. Taking advantage of the circumstances of the “cold war,” it accused the government of being “communist” and of being a satellite of Stalinism. This was false. The truth is that, because there was now freedom of association in the country, some citizens formed a Guatemalan Workers’ Party in 1949. The party had a Marxist ideology and some of its members were able, in free elections, to be elected as congressmen. But no communist ever occupied important positions in the executive or judicial branches.

President Arbenz’s program for government was based on the principal of free competition, the principal that many in the circles of U.S. government and business proclaimed then and still proclaim today. President Arbenz proposed, for example, a) to build a highway to the Atlantic to break the monopoly of the International Railways of Central America (IRCA), a subsidiary of UFCO; b) to build an electric company to compete with the Electric Bond and Share; c) to carry out an agrarian reform; and d) to found a national bank for foreign trade. The latter was the only point on his program that he did not carry out.

Naturally, the UFCO was not pleased with points (a) and (c) because they weakened its monopoly, so the company fought back with all its power. Paradoxically, they had more success in Guatemala than in the United States. IRCA shareholders sued the company over the fact that they were not receiving any dividends since IRCA was charging UFCO less for freight than what it actually cost to transport their bananas. The business was only kept alive by the fact that Guatemalans were having to pay very high freight charges. I found out about this when I was the inspector for IRCA in 1953. The Guatemalan government was planning to join the shareholders suit as a co-plaintiff. This did not end up happening because of the overthrow of President Arbenz. But in 1963 a United States Court of Justice applied the Sherman Act against monopolies to the UFCO, forcing it to dismantle its business in Guatemala, just as if it was located within the territory of the United States of America.

There was nothing communist about Arbenz’s agrarian reform, established by Decree 900. More radical agrarian reforms were put into place in the Asian countries that the United States Army occupied after World War II, countries that are now industrialized, thanks to the positive effects of those agrarian reforms.

This is exactly the kind of thing that the Arbenz government was proposing—to do away with the semi-feudal relations of production in the countryside substituting them with capitalist relations and to correct the inequity in land ownership. At that time small farmers who owned less than 3.5 hectares of land were 76.2% of all land owners, but they only had 9% of land. Those with more than 45 hectares (2.2% of all landowners) had 72.2% of the total land. But the greatest concentration of land was in the hands of the plantation owners who had more than 9,025 hectares apiece. There were only 22 of them; the UFCO was one. Together they owned 498,949 hectares, or 13.4% of total lands.

Decree 900 treated the UFCO the same way as it did Guatemalan landowners; only its idle lands were to be expropriated and under the same conditions.

Because important government officials in Washington DC—senators, congressmen, and some military officers—were shareholders, the UFCO was able to get President Eisenhower to authorize Operation Guatemala and to charge the CIA with intervening to overthrow President Arbenz, counting on the assistance of other Central American and Caribbean countries, and ending in this way the democratic-revolutionary process in Guatemala. The Operation attained its objectives on June 27, 1954 a half a century ago.

In a separate attached list, I have included the names of the high officials, senators, and others who participated in this action over which John Foster Dulles, then Secretary of State, presided.

CONSEQUENCES OF THE OVERTHROW OF THE CONSTITUTIONAL PRESIDENT OF GUATEMALA
JACOBO ARBENZ GUZMAN, IN 1954

1. Guatemalan government’s welfare state ends and is replaced by a government at the service of oligarchic minorities.
   
2. The militarization of the country turns the Army into a parallel power that has exercised complete control over elected governments, even when the presidents have been civilians.
   
3. Public services such as security, social security, health, and education are denaturalized and weakened.
   
4. A Central Bank system at the service of the State and the essential needs of the population is replaced with a system dominated by the private bank, operating excessively for profits and unwilling to give credit for productive activities of agriculture, ranching, forestry, and industry. The private bank limits itself to speculative but profitable financial operations.
   
5. Domestic and foreign debt of the State and municipalities grows to a point not seen in the country between the 1930s and 1954. This is aggravated by the fact that the resources obtained have not been invested for the capitalization of the economy or for the development of the nation but rather for bureaucratic operational expenses.
   
6. National sovereignty is lost and the country is subjugated to the designs of foreign interests.
   
7. Policies that protected the country’s productive sectors were abandoned, and instead preferential treatment is given to foreign business owners, as is the case in the mining of metals and in oil concessions.
   
8. No attention is paid to the care of the environment or fighting pollution. There is indifference towards the continuing deforestation of the mountains and the lack of preservation of our natural renewal and non-renewal resources.
   
9. Corruption becomes generalized in institutions and organizations of the State and municipalities, and also in private enterprise.
   
10. There is excessive enrichment of a small number of already wealthy people of the traditional oligarchy and of another emerging minority linked to organized crime, contraband, and drug trafficking. Meanwhile, the majority of the population, already poor or extremely poor, sinks to even lower levels.
    
11. Violence increases at alarming rates (lynching, kidnapping, assassination, rape, break-ins to private homes, daily assaults on public buses in and outside of the city, massacres of entire families).

I remember the mythological Greek fable, Pandora’s Box, where Epimetheus opens the box and unleashes all sorts of evils that spread quickly throughout the world. This is like what has happened in Guatemala after 1954. Fortunately, however, Hope still exists in Guatemala, and Guatemalans trust that our future generations of indigenous, ladino, and mestizo youth will build a new Guatemala, that will be free, democratic, and just, and with a bright horizon.

LIST OF HIGH OFFICIALS OF THE EISENHOWER ADMINISTRATION (SENATORS, CONGRESSMEN, AND MILITARY OFFICERS) WHO WERE SHAREHOLDERS IN THE UNITED FRUIT COMPANY OR CLOSELY CONNECTED TO THE COMPANY IN OTHER WAYS IN 1954

Officials of the Executive Branch
• John Foster Dulles, Secretary of State
• Allen Foster Dulles, Director of the Central Intelligence Agency
• John Moers Cabot, Assistant Secretary for Inter-American Affairs
• Lincoln White, Official Spokesperson for the Department of State

Diplomats
• Richard Patterson, Ambassador to Guatemala during the Arévalo government.
• John Peurifoy, U.S. Ambassador during the government of President Arbenz.
• W.A. Williams, Ambassador to Honduras.

Senators
• Lyndon B. Johnson, Democratic Majority Leader in the Senate
• Henry Cabot Lodge, Senator from Massachusetts
• John McCormack, Senator from Massachusetts
• Joseph McCarthy, Senator from Wisconsin
• Alexander Wiley, Republican from Wisconsin
• George Smathers, Democrat from Florida

Congressmen
• Robert Sikes, Democrat from Florida

Public Relations for United Fruit Company
• Spruille Braden, Chief of Public Relations of the UFCO and influential politician and high level public official.

Military Officers
• General Richard P. Ovenshine
• Lieutenant Colonel Walter R. Mullane
• Colonel M.C. Shattuck, Chief of U.S. Military Mission in Honduras.

(All of these participated actively in Operation Guatemala in 1954)