Lesson 20

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Question SA-9. Here is the text reference (p. 197/5):

To break the hold of United Fruit Company and other foreign investors, the Arévalo government set in motion a land reform program which would nationalize unused land and turn it over to landless groups at the bottom of the socioeconomic pyramid; the owners of the land would be compensated by the government based on the value they had placed on the land for tax purposes. United Fruit had considerable unused land which they argued was needed as a reserve for future expansion and also in case their banana trees came down with disease and had to be replaced. As was typical in such cases, United Fruit had undervalued their land for tax purposes, and stood to take a significant loss if the land reform program went through. The Arévalo regime also proposed social and labor legislation which would have increased taxation and labor costs to large landowners.