Image: A mural in Guatemala City commemorating President Jacobo Arbenz and Decree 900. (source)
In 1952, democratically elected Guatemalan President Jacobo Arbenz signed into law Decree 900, passed by the democratically elected Guatemalan Congress. Decree 900 bought 1.5 million acres of land from private owners and distributed it to 500,000 Guatemalan families, or about one sixth of the population of Guatemala. The purchase of these 1.5 million acres of land was not voluntary, yet it was fair to landowners. Similar to the principle of eminent domain in the United States, the Guatemalan government paid the owners 100% of the value of the land that they themselves had indicated on their tax returns. And, the Guatemalan government only forced the sale of land that was not being used by its owners. Legally, any land that was actually being used by its owners could not be taken.
The logic of Decree 900 was very straightforward:
- Those who do not have ownership of their own capital (in this case, land to cultivate) can be exploited.
- Those who own large amounts of capital tend to manipulate the political and economic system for their own benefit.
This assessment was very accurate in Guatemala.
First, wages for rural Guatemalans were extremely low, at or below sustenance level. Because poor, rural Guatemalans did not own land, they had to work for wages for people who did. Given the choice between working for wages and starvation, this lack of ownership opened poor Guatemalans to terrible exploitation.
Furthermore, just 2% of the population owned 70% of the land of Guatemala. The American company United Fruit alone owned a staggering 42% of the total landmass of Guatemala, including some of the most productive farmland in the entire world on Guatemala's west coast. Obviously, the ownership of so much of Guatemala's productive capacity by so few concentrated a great deal of power in very few hands.
These wealthy, powerful landowners had used their power to manipulate Guatemala in order to further increase their profits. Most obviously, they carved out special rules for themselves. United Fruit, for example, had been able to secure exemptions for its massive profits from nearly all taxes. Despite owning nearly one half of the landmass of Guatemala, they paid nearly nothing to support the country.
