In 1870, a merchant captain by the name of Lorenzo Dow Baker imported bananas from the Orinoco, which he then sold on the docks of Philadelphia. He undercut the local apple harvest by 80% and made more than a 1,000% return on his investment.
A few years later in 1876 at the world's fair, a banana tree was displayed down the hall from Alexander Graham Bell's telephone exhibit. It was the first time most people in North America had ever seen a banana, and they loved them. Bananas rapidly gained popularity and sales grew.
After several more profitable trips to the Caribbean and back, Baker and eight other investors formed the Boston Fruit Company, which went on to become the United Fruit Company, now Chiquita. Baker retired a very rich man.
Upon seeing the profits, more fruit companies formed. These established themselves as vertical integration companies, meaning they owned the plantations, the transportation in the form of railroads, trucks, and ships, and the brokers who bought and sold the fruit, as well as the people who worked the trees and the politicians who ran the countries.
The phrase “banana republic” was termed by author O. Henry in a short story in 1904. It is now a popular part of the lexicon. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
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The term banana republic describes a struggling country whose economy depends on exporting natural resources — particularly agriculture, hence the banana — to larger, wealthier nations. These countries are politically unstable, making them susceptible to worker exploitation, government corruption, and foreign control. While banana republic used to be a commonplace term in political science, it’s considered derogatory today.
Characteristics of a banana republic are: widespread government corruption, tyranny, instability, civil unrest, coup attempts, economic dependency on exporting a limited natural resource, infrastructure owned by out-of-country interests, overall economic dependency on foreign investment or business entities, widespread poverty, and a large gap between the ruling and working classes.
The parallels to the modern United States are obvious. Granted, the country isn’t dependent on a single natural resource, nor is its infrastructure owned primarily by out-of-country interests, but one could argue that it is economically dependent on a small circle of business entities, and we’ve been lurching toward tyranny, destruction of the middle class, and all the rest.
I’m not the first person to have this idea.
Al Jazeera put out the headline "The United States Is a Banana Republic."
The Atlantic asks, "Is the U.S. on the Verge of Becoming a Banana Republic?"
A Washington Times headline reads, "Welcome to the Banana Republic of America."
I don’t think we're there quite yet, but we're getting closer every year. The secret police have their own agenda. The taxman is used for political purposes. Voters are ignored. Insiders are corrupt. Laws are applied haphazardly, if at all, with little sense of justice. Spending and debt go up while services go down. All the while, the political process gives us the same old choices most people don't want.
It's no wonder that approval ratings for all forms of government are at abysmal levels. Even the armed forces, which had previously been held in high esteem, can’t even meet their recruitment targets despite paying large bonuses and letting in out-of-shape, low-level criminals. All the while, the mainstream media tell you things have never been better.
The question you must ask is at what point in the cycle does it turn around… or does it turn around at all? When will we wake up? What is rock bottom for a country anyway? I mean, sure, Japan and Germany turned it around, but that’s not a round trip anyone wants to take.
Tomorrow we will search for historical examples of civilizations and economies bouncing back… and we wonder if it could happen here.
All the best,