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Transcript

Episode 19: The Craziest Business Story You'll Ever Hear, With Rich Cohen

Transcripts are created using a combination of speech recognition software and human transcribers and may contain errors. Please check the corresponding audio before quoting in print.

Paul Kix:
Hello, and welcome to another episode of Now That's A Great Story, the podcast that examines a single piece of work from the world's greatest writers as a way to help you do your own best work. I'm your host, Paul Kix.

Today, I'm joined by Rich Cohen, Contributing Editor at Vanity Fair and Rolling Stone, and author of numerous New York Time's best selling books, including Tough Jews, The Sun and The Moon and the Rolling Stones, and Sweet and Low, about the immigrant family behind the sugar packet, Sweet'N Low. His most recent book is The Last Pirate of New York, about Albert Hicks, the most notorious criminal of the New York Waterfront in the years before the Civil War. 

Today, we're going to discuss yet another of Rich's books, The Fish That Ate the Whale, which is just this bonkers story of an absolutely audacious entrepreneur named Sam Zemurray, a Jewish Immigrant that was known as Sam the Banana Man, and the story of how he came to run history's first real global conglomerate, United Fruit. I tell people that The Fish That Ate the Whale is my favorite business book all the time, and it's in large part because of one sequence of the book, which we'll discuss today. So, Rich, first and foremost, thank you for coming on the show. 


Rich Cohen:
Yeah, thanks for having me. 

Paul Kix:
All right, so you spell this out a like be in the book, but, what drew you to Sam the Banana Man?

Rich Cohen:
It's Sam the Banana Man is almost like every part of my life coming together, which is first of all, I'm from Chicago, I went to Tulane, and I took a class called Jewish American Novel where ... Huge influence on me because I read writers I never knew about really, like Saul Bellow who was from Chicago, and Phillip Roth, and but also before he taught us that class, he told us the story of Sam Zemurray, Sam the Banana Man, because he was really the benefactor of Tulane and he built Tulane early in the 20th century. Mostly funded it to fight diseases like Yellow Fever that was a problem in the countries where you grew bananas. 

And his house, he had this huge mansion on Saint Charles Avenue in New Orleans. He gave the house to Tulane when he died, and it's still this president of the school's house, and it functions there. And it was like stepping back into time to this life of this banana tycoon. And also, I felt like Sam Zemurray was very much in a way, like my own grandfather who wasn't quite as ruthless, quite as smart, quite as ambitious as Zemurray.

But my grandfather, you mentioned Sweet'N Low. He ran a diner in Brooklyn, and that led to his invention first of the sugar packet, then the soy sauce packet, then Sweet'N Low, and a bunch of other products like Sugar In The Raw. And I saw them both as a similar kind of guy, from a similar kind of generation that's gone, that started at the absolute bottom and ended up at the absolute top. 


Paul Kix:
Okay, so we're going to be discussing a chapter and a half of the book, that occurs about halfway through it. So, I'm wondering if you could just help the audience set up who Sam the Banana Man is at this point in time. So, he goes down to the Honduras in 1910, and can you give us a little bit of a background of who he is, where is he in this station in life, and what is he hoping to do when he goes down to Honduras?

Rich Cohen:
Well, his father ran a wheat farm in western Russia, and not a great place to be Jewish at that particular time. He had a lot of siblings. His father died and in a very classic immigrant thing, he was sent by himself with a distant relative to America to make enough money to send passage for everybody else to come across. He had a distant relative who ran a dry-goods store, which was what a lot of these guys did back then. A lot of the big department stores started as dry goods stores, some of these Jewish businessmen, Jewish peddlers, really. And he went to work there and it was in Selma, Alabama. And he, while there was no chance of him taking that over, he was a distant relative, but he had this job. 

And he happened to see his first banana, which kind of blew his mind. I always thought of the book as almost a love story between a man and a banana, in a way. And he, bananas then were incredibly rare, because you really couldn't ship them to the north until you had refrigerated ships and steamships, because they would rot before they could get to the markets in Boston and New York, pretty much. So, just to give an example, in 1776 or 1876, they were on display at the Centennial Celebration in Philadelphia, where they were shown as exotica and sold for 10 cents a slice, which is more expensive than caviar. 

So, he had this idea that he was going to be the guy to sell bananas in Selma, to be the first one to bring them to the market, and he knew where they came into America. They came into Mobile, Alabama. They came in from Jamaica and the West Indies, and he went down there and he watched all day as the big fruit company, which was then called Boston Fruit, unloaded their bananas on these ships. And he noticed that the bananas were separated into three piles, and there was a pile of very yellow bananas, a pile of green bananas, and at the end of the day, they took all these bananas away on different trains and there was still a pile left. And the pile left was the kind of banana that you would actually eat if you were going to eat a banana. They were ripe.

So, he went to the Boston Fruit manager, and he said, "What's up with those bananas?" And the guy said, "They're ripe." And he said, "What's a ripe?" He said, "Well, the definition is, if it has one freckle or more, it's a ripe." And he goes, "What do you do with them?" He goes, "They're garbage, we throw them out. You can't get them to the market before they rot." So, what this guy did, this Russian immigrant, this very, I should say, this very big, tall, tough guy is he bought the ripe bananas that everyone else was throwing out, and he sold them right off the train. He got them on the train back to Selma, they started to rot, just like the guy said. 

So, he started to sell them off the side of the train to supermarket managers that came out to the train tracks. And he made a small profit, and he went back and did it again, and again, and again. And before he was 17 years old, he became a legend in the banana business, which was an importer business, as the crazy Russian immigrant who's made $100,000 selling what they consider rotten bananas. And as his business grew, he was ambitious and he wanted not just to sell ripe bananas, but he wanted to sell green bananas. My grandmother always said, "If you buy green bananas, you believe in the continued existence of life on earth." 

He wanted to sell green bananas, and ultimately that meant he'd have to grow them, and that meant he'd have to go down to places where bananas could be grown profitably. And that was the tropics. Couldn't even grow them in New Orleans. There wasn't a long enough season. He couldn't even grow them in Florida. He had to go to the tropics. He had to go to the regions around the equator, and he went down to Honduras because Honduras was sort of like the Wild West. It wasn't controlled. Guatemala, where Boston Fruit, which became United Fruit was set up, controlled Guatemala. There was no place for him to get into the market. But, Honduras was a sort of a crazy political country where governments were constantly rising and falling. It was called the Banana Frontier, and it had no extradition treaty to the United States so it was full of American criminals who were hiding out, guys looking to get rich. He borrowed a whole bunch of money and he went down there to see if he could buy his own banana ranch.


Paul Kix:
And when he goes down there, what Rich does he see beneath all those weeds in the delta, north of the Cuyamel River in Honduras?

Rich Cohen:
Well, it's incredibly rich banana lands, and if you know the history of Central America, the people that had been there traditionally, the Native Americans, I guess the Native Central Americans, the Mayans. They had always lived on the hillsides, on the mountaintops, and so had the Spanish. That's where they built their colonial towns because if you went into the jungle, you basically got Yellow Fever or Malaria and died. It was a sick, diseased country, but that was also the best country to grow bananas. There was a sweet spot, I think from 300' above sea level to 1,000' above sea level, which was all this very thick jungle, which was just considered wasteland. And he started buying up as much of that as he could, because he knew that would be the place where you'd grow the bananas.

Paul Kix:
It's a really rich soil, and it's also something ... You make this point, and I like this point. You said that it's because he had come from this wheat farm in Russia, that he knew the value of it. I guess my question is, why exactly did the locals not know how valuable this soil was?

Rich Cohen:
Well, because first of all it was dangerous to live there for the reasons that I said, and it was considered diseased country. It was like Florida swampland. Second of all, the market for bananas, which is really what you could grow there, and later on he expanded that a bit, was brand new. It was mostly like, I think the result was 90% of bananas were consumed within a half mile of where they grew was the statistic, something like that. What Zemurray did that was amazing later on in his life, was that he basically made bananas the most popular fruit in the United States. Which is amazing, considering not one of them was actually grown in the United States. 

Paul Kix:
Yeah.

Rich Cohen:
So, that's the whole story of his career. You put your finger on it. The idea that he came from this incredibly poverished country, it was very hard to grow things. I think it caused him to see the value in the banana in the first place. It caused him to recognize a really good product, and something valuable, and something else that everybody else literally considered trash. And the land was just like the fruit. The land was considered junk land. He saw the value in that, too. And that was his skill throughout his life. It was to spot hidden value, and like they say, one man's trash is another man's treasure, and that was really the case with Sam Zemurray. 

Paul Kix:
He went on a frenzy, and as you write, he completely overextended himself financially. He draws himself deep into debt from banks in New York and Boston, and then when banks in those cities refused him, other banks ... He went to any other bank he could find. And he's doing this because he thinks he can get these sweetheart deals from Honduran officials that'll mean he would avoid paying any sort of duty, any sort of tariff, any sort of tax. Why would he think that, and why would these officials engage in cutting him these sort of sweetheart deals?

Rich Cohen:
Well, that's the way the banana business works. And it was just part of the system, and that was part of the process of changing the model, changing the banana from this exotic piece of very rare, very expensive fruit, which it had been in 1876 to 50 years later, it was the cheapest fruit. And it became a high volume, very cheap business and that meant you had to be able to grow these bananas cheaply, ship them cheaply, and export them cheaply. 

And his main competitor was Boston Fruit, which had started as a very small shipping importing company in Boston, and then ultimately it started buying up all the other little banana companies that were all over the coast of the United States, and would form this huge conglomerate called United Fruit. And they were operating in Guatemala. They owned 80% of the private land in Guatemala at one point. And they had paid off all the officials, they owned the roads, and they were able to import and export as much as they wanted without paying any taxes, and that set the model for the business. 

So, he needed all this money, Zemurray, for a few reasons. Like you mentioned, is one, he needed to buy the land. He needed to buy the tools he needed to clear the land, and he needed money to pay off all the government officials so he didn't have to pay taxes on things coming in and coming out of the country. And without that, he couldn't have competed. His bananas would have been too expensive and they would have gone unsold. So, that was just part of doing that business, and that's what he spent a lot of his time doing down in Honduras, which was basically bribing people. 


Paul Kix:
Yeah. You say that if he had settled in Chicago, it would have been beef that he would have been selling. If he had grown up in Pittsburgh, it would have been steel. If he had grown up in LA, it would have been movies. And I want to just quote briefly from the book. "In the end, it does not matter what you're stocking. Selling is the thing. Who knows where such ambition came from? Maybe it was the pent-up energy of dozens of thwarted Jewish generations, confined to the ghettos of Europe. Maybe it was the result of some forgotten childhood trauma. Maybe it was evidence of a defect, or a lack, a missing thing that Sam found in competition."

What I find kind of fascinating about not only this book, but a lot of your other books, Rich, in book after book, Tough Jews, The Avengers. Your most recent book, The Last Pirates ... The Last Pirate of New York, excuse me. You're drawn to these hardened men. These men who kind of paint their portraits on that gray easel of life, right? And I'm wondering why is that?


Rich Cohen:
I don't know. Honestly, I've been spending a lot of my time trying to figure that out, and I always think I figure out some initiating caus>e that got me interested in this kind of character. Why I'm just drawn to these people. I mean, in real life and in writing life. In real life, meaning like people I meet. When I was a kid, I was always drawn to the kid, he was a little unusual, a little outside, and a little bit scary. And I honestly, I'd probably have to go to some kind of Jung-y and psyche analysis to figure it out. I don't know the reason. And I just go, it's like if you're in a room and you see a bunch of people and there's one person, you just want to hear what that person has to say for whatever reason, you go to that person. And it's been like that with me in choosing subjects to write about. 

Just like I went through the different reasons, what drove Zemurray, I've gone through different reasons trying to figure out what drives me to these certain subjects. Some of it is, it's kind of all similar to my own father in some way, I mean, but I don't even know if or it's maybe just because they're great stories. Or, maybe because these are the kinds of people that encapsulate larger stories, that tell about that whole generation, which now I feel very certain is gone and will be missed, which is the guys who were flawed, these people who were flawed but who built these incredible institutions and had these huge ambitions. So, I don't know if that answers your question, but I guess my answer is, I'm searching for the answer myself.


Paul Kix:
Well, it's such a fascinating search, because there are a few moments in the book where you step outside of the narrative itself, and you give these little glimpses into your own life. I mean, you mentioned your father just a minute ago. There's a couple passages in the book that concern your grandfather as well, and just his sense of, these are men who had to ... and it is largely men, I think it's fair to say as well, right? 

Rich Cohen:
Yeah. 

Paul Kix:
This is your fascination, and there's something about them that is not only entrepreneurial, but is like they will do what it takes to succeed. And do you find yourself, is that how you've lived your own writing life? You've been really successful in your career, just from that intro alone. Is this been your driving passion as well? Whatever it takes, I'm going to do it?

Rich Cohen:
I mean, I think I'm completely different nature than these people, which is probably why I get along with them, and why I'm drawn to them, which is basically a cerebral ... although I do things, but I'm a writer. So, and the big thing that has made me productive as a writer I think, is just continuing on, no matter what happens, or if you're successful, or if you fail, or what people say about you. Just continuing on, like in the nature of a road trip. And I do think that probably as far as writing a bunch of things, that I've probably been lucky, I mean, it doesn't feel like luck, but in that I haven't been hugely unsuccessful, but I haven't been hugely successful either.

So, it's almost like the carrot is still just on the stick, just in front of me. I'm still chasing around the track. If I got the carrot, I'd probably would just be sitting around in a giant house somewhere, and if I felt there was no chance I can get the carrot, I probably would have quit. But it's somewhere like right in that middle zone of just to keep you working, and working, and working, and working, and working so that's sort of what I think. So, as far as it's interesting. It's like people could, especially with my first book Tough Jews, people were like, "Why did this guy write this book about these people?" I mean, I do think that there's a degree to which, as a kid in school, and in Hebrew school, you heard so much about Second World War, and the victim-ology. And I just rejected, I just didn't want any part of that. 

And my father was part of that, too. He was like, "You can do what you want, basically, and you don't have to take crap from anybody and don't listen to them." That was just the big thing. Don't listen to them. That's my whole ... My father's whole thing, I was talking about this history with somebody. It was sort of like just saying, "Any kind of received wisdom is sort of like bullshit." And I just looked for probably ... just rhyme with characters or people that seemed like the same. Zemurray, I think, deep down was the same kind of guy, because to be Jewish in a place where you're told that Jews are basically scum, and if you're not a religious person, like he wasn't, it takes a strength of character. 


Paul Kix:
Yeah. 

Rich Cohen:
And so, that's what I'm interested, like strength of character and people who basically try to do what they say they're going to do. And I just remember once, somebody that I really like did something really bad to me. I won't say who it is. And I was complaining to my father about it, and he said, "That's terrible." And I said, "Yeah, but the guy's got kids, and everybody says you can't take a chance to, Bob always got kids." And I just remember my father said, "If having kids means violating everything you supposedly stand for, maybe that's God's way of saying he doesn't want you to have kids. Maybe that's God's way of saying, he doesn't want your line continued." Something about that always stuck with me, and I think I've just found characters I felt like I understood and we're interesting, and it's probably some echo of the philosophy I grew up with around the house. 

Paul Kix:
I want to go back to Zemurray, and there is this great passage of writing where you step outside the narrative to describe what clearing Honduras of the jungle is like. And first, let me say that just these passages of you talking about how the jungle is cleared, "To expose its black soil to the ambition of American Capitalism." It is beautiful, almost hypnotic writing. And then, you step outside it. And if I could, I'd just like to read a paragraph. 

"This is easy for me to write, of course, sitting at my desk, looking at the winter landscape out my window, repairing to the kitchen now and then for a cup of coffee. But it was the hardest work in the world. If this was the kind of book I want it to be, it will leave you with a sense of the fields, the heat and fear, the snakes and the brush that have to be killed with a single blow, the sting of the poison that makes you want to lie down, just for a minute in the shade of the Ceiba tree. The scorpions that drop into your shirt in search of exposed skin. The mosquito swarms that portend Yellow Fever, the Malarial dreams. The swampland, and broken tools, and arsenic tree, the way your health is destroyed, your hands blistered, your back ruined. The way the world appears when you have forgotten to drink enough water. A tiny image, seen through the wrong end of a telescope." 

I read that, Rich, and I was just like, "Wow, that is amazing." Why exactly was it that you chose at that point to, instead of just stay in the narrative, to step outside it so the reader could feel it and smell it? Was that a conscious choice or it was just sort of a rift? Do you happen to recall what you were thinking when you were trying to put that passage together and why you did it?


Rich Cohen:
Well, I can't remember exactly, but I know basically what I was thinking, which is, it was a conscious choice and it's sort of like you're trying to, you have this incredibly wild landscape with this guy who's from a different place altogether. He's a double foreigner in a way. He's Russian to Alabama and then he's Alabama to Honduras. And you're trying to express in writing in all the usual ways, how hard this work was. Because I'm writing a book and I'm just, it's I'm translating the real world into language, and it's a translation, it's not the real world. 

So, you're trying to express how hard this writing is, and you feel like you're doing ... this work is, doing it again, and again. You feel like you're circling it, and circling it, and circling it, and not getting it. And so you just want to sort of step out and break through the screen and say, "I'm just going to tell you how fricking hard this was." Go straight at the reader and just try to say, in case I'm not getting it, in case I'm not explaining it, this is how hard it is, this is how dangerous it is, and this is how you don't just go in there and spend time and come out. You're basically paying for his experience in building that company with your health and with your life, and that's the way things are built. And so it's almost like I see it, like circling, circling, and then just saying, "The hell with it, I'm just going to say it."

Paul Kix:
You know what else I really like about all this? I want to keep this moving, because Sam did so much when he was down in Honduras. But, the fact, there's something else I think is sort of revealing here. The fact that Sam the Banana Man, right, who by this point is probably worth millions, right? 

Rich Cohen:
Mm-hmm (affirmative). 

Paul Kix:
He's working alongside the employees as they're clearing the jungle. Why did he feel that, that was important?

Rich Cohen:
Well, he had a philosophy, and basically he was battling with this company, United Fruit, which had been something ... His company was called Cuyamel after a river in Honduras, and his, United Fruit had been something like Zemurray's company in its first generation. But by the time he was competing with them, the second generation had come along, which were basically managers who stayed in Boston and gave orders. And his great advantage was, unlike them, though he was smaller, he was on the ground. He knew what the actual situation was. He knew what the rainfall was every single day. He knew what was going on with the people in the villages. He was there. And that was always his thing, which was that his great advantage was information, and being able to understand the business from A to Z, as he said. And so, it was important for him to actually experience every part of the business and to know what was going on, and to be in Honduras and live in Honduras. 

Paul Kix:
So, he gets these fields set up, and bananas don't have seasons, they just grow, right? So and Sam wants to buy more land, because he's starting to make money, only now no bank will lend to him. So he has to get the money from gangsters, with interest rates at 50%. And then the Honduran government gets in trouble with its own debt. It owed millions of dollars to bankers in London, and this would ultimately threaten to bring down Sam's empire. Could you explain what was going on there with the Honduran government and the British banks, because this ends up being kind of important to what we're going to discuss.

Rich Cohen:
Well, basically Honduras had tried to build the national railroad. And to this day, Tegucigalpa is the only capitol without a railroad. And it hired a guy from America to do it, and he swindled them. He swindled them by they agreed to pay per mile laid, and so he just had his railroad go basically in zig zags to nowhere. Still there, you can still see it, because the really hard stuff was crossing through the mountains and he never went up to the mountains. So, eventually they fired him, and they had this huge debt. They borrowed money from banks in Britain to build the railroad, and the debt had interest on it, and it was increasing and increasing, and there was a history of Britain going into countries with warships to collect their debt. 

And the Monroe Doctrine existed in the United States, and there was fear in the United States that Britain would come in and occupy Tegucigalpa, or occupy the port cities of Honduras and make them pay, and that was against our national interest, and against our national policy. So, the Secretary of State who was a guy named Philander Knox, he convinced J.P. Morgan who was the biggest banker in America, and the actual guy himself, J.P. Morgan, to come in and basically take over the debt. To pay back the British, to make them whole. Then to refinance it, and then to give Honduras money to run itself, and Morgan didn't really want to do this. 

But, he was sort of forced into it, I feel like, by the Secretary of State. And his condition was, that he wanted to take officers from his bank and sit them at all the border control areas and port cities in Honduras, and collect tax on everything coming in, and collect tax on everything going out. Take his cut to the bank, and give the balance to the country to run itself. And of course, Zemurray had paid that he wouldn't pay any tax, and then suddenly there was now tax to pay on every piece of equipment coming in and every banana going out. His bananas would be too expensive and he would be beaten by United Fruit. And he was, like you said, hugely overextended himself, because he recognized that this land was very, very cheap, and this was the moment to buy it. So, he bought as much of it as he could, going to the mob in New Orleans to get extra money to buy more. 


Paul Kix:
What does this do to his psyche? What does this do to his company?

Rich Cohen:
Well, his company is still basically run by him and a few relatives, so it's not a public company. And what's amazing is, he'd already built a fortune kind of, he already was successful. He'd already brought all his relatives over. he had all this money, he was living in New Orleans. But, he basically bet everything on this happening with this land and growing his own bananas. And to me, it's almost like a guy in the casino who just keeps taking his chips and pushing them all out at the center of the table. And at that point, he has a decision to make. 

He basically, the way he's going to fight against J.P. Morgan is he basically hires lobbyists to argue against this deal set up by Philander Knox, because he's basically saying the United States is getting involved in foreign countries and it's their sovereignty and your money, and all this stuff. And he's becoming fairly successful in Congress about lobbying congressmen to oppose this deal. And Philander Knox gets very upset and he demands to know who's doing this, and he finds out that who's paying for the lobbyists. It's this guy, Sam the Banana Man, who's a Russian immigrant, basically. He's been in the United States at this point for about 20 years, I guess. 

And he summons him to Washington and he sits him down, and he basically reads him the riot act. And he says, "Stay out of Honduras." And Zemurray explains the situation and the guy says, "I don't care about your situation." And he says, "Well, what am I going to do? I owe all this money," and he says, "I don't care what you do. If you have a problem, go speak to Mr. Morgan about it." And he says, he has a great line. This is an actual quote, he says, "Mr. Morgan, he's no favorite uncle of mine. He doesn't know me, he doesn't care about me." Now, you got to remember in business, this is the United States in the late 19th century, people are incredibly condescending to him because he's a Russian, he's a Jew, and he speaks with a very thick accent. The thing they always said about him is that he could swear in five different languages. 

But, people respect him, too, because he's kind of this very big guy, imposing guy. So, there's amount of respect he gets just out of how he is, presence is physically. But he still is what he is, which is basically a Russian dirt farmer who's uneducated, who's now supposed to go ask for a favor to J.P. Morgan, who's now, J.P. Morgan's an old man. So, that's not going to work, so he goes back to New Orleans and goes with plan B.


Paul Kix:
This is amazing to me. So, he's got the US, he's got ... Knox was what, the Secretary of State?

Rich Cohen:
Yeah, Secretary of State. 

Paul Kix:
So, he's the Secretary of State. Basically, he's the Secretary of State. Basically the richest man in America is also against him, and Sam the Banana Man is faced with the choice, and this is where the story just goes crazy for me. Because, I'm like, "There is no way. I don't think I could ever do this." But, what exactly does he do?

Rich Cohen:
Well, whatever he said to Philander Knox in the old executive office building where they met, which we just know the gist of it. He unsettled Philander Knox and Philander Knox was worried about him. And he basically called the Treasury Department which controlled the Secret Service, and he said, "I want you to have someone in New Orleans keep an eye on this guy." He lived in New Orleans, "And make sure he does not leave New Orleans until this deal is done. Okay? I don't want him going to Honduras. I want him in the country." 

So, Zemurray then meanwhile, so this is the point where you would sell everything you have, pay off who you can, and start building again and start over. He has this idea that he's going to do something different, which is, "The government of Honduras isn't helping me. I'll get a new government of Honduras." So, this is a-


Paul Kix:
I read that and I was like, "The brass balls it takes to say, I'm just going to stage a coup."
 

Rich Cohen:
Right. And at this point in time, it was a wild period of time where there were all these soldiers of fortune. This was like the time of Poncho Villa and there were all these little wars being fought all over Central America. And there were these professional soldiers who would go fight. Hire out their services. If they were on the losing side, they would have to flee the country. If they were on the winning side, they would get rich. I'm talking about countries in Central America mostly. And a bunch of these guys, when they were in-between jobs, they called them outs, because they were on the outside of whatever government it was. 

They would go hang out at a bar in New Orleans which is still there, called the Carousel Bar. It turns slowly like a carousel, and it's in the Hotel Monteleone on Royal Street. And they would just hang out there, looking to get hired. And one of these guys was the most famous mercenary soldier in the world at the time, a guy named Lee Christmas, who'd been a railroad engineer for the Illinois Central, involved in the biggest crash in the history of the Illinois Central at that time. And had gone originally down to Honduras because, the United States as part of a result of that crash, the Illinois Central instituted a system of red lights and green lights, to tell guys to stop before coming into the station. And Lee Christmas was color blind, and he failed that test, which, ultimately led to him being a soldier of fortune. 

So, Zemurray went to the Carousel Bar. He hired him. He hired another famous soldier of fortune named Machine Gun Maloney, who later became the chief of police in New Orleans, which gives you a sense about New Orleans. And there was a guy who had been President of Honduras names Manuel Bonilla, who had been deposed in an earlier coup. He was living in the French Quarter. They went and they hired him. And then Zemurray bought them an old warship, that was sort of a US warship that had been decommissioned. He bought them that, and they set up this plan to attack, and invade, and overthrow the government of Honduras. 

Rich Cohen:
Meanwhile, they're being followed everywhere around by these Secret Service agents, so what they would do is every night, these guys would go to this famous bordello. Storyville still existed in the red light district of New Orleans. And when they went into the bordello, the Secret Service guys would just stand outside, waiting to see if they left. And after five straight days of this, as soon as they went to the bordello, the Secret Service guys would take off, leave, go home, go to sleep. And so that's what they were waiting for. As soon as that happened, they took off. They went out through the bayou, they got on this ship. They went down to one of the little islands off of Honduras, where they met a bunch of other soldiers they'd hired, or people that were against the government. 

And they attacked Honduras and in a two week war, in which they used many of the same psychological methods that would later be used by the CIA, overthrew the government of Honduras, removed the President at that time and replaced him with Manuel Bonilla, whose first act as President was to say, "For the next 25 years, Sam Zemurray pays no taxes on anything coming in and out of Honduras." And they also gave him a lot of that, more of that jungle right along the border with Guatemala, and they also reimbursed him for the cost of the ship, the cost of the guns, and the cost of the uniforms. And set up his business for the next 50 years. 


Paul Kix:
Just help me understand something here. What? Because when I read this, this was just crazy to me. Does Sam feel guilt about, "I'm going to hire these soldiers of fortune. I'm going to stage this coup. I'm going to win here." There's sort of, there's so many questions I want to ask, but maybe the first one is, does he feel guilty about doing any of this?

Rich Cohen:
At the end of his life, okay, he expressed some remorse for the many things that he had done, that we would look at as bad, okay? But, at the time, he was like a guy playing a game and these were the rules of the game. And he didn't question them, he just played the game. And also, it wasn't like he was taking, overthrowing a good government fairly in place with a corrupt government, corruptly in place. There had been a series of coups, and he just came in the middle of this completely messed up history. 

Now, you can go all the way back, and look at the colonial history of Honduras and why it was the way that it was, but he wasn't doing that. And so, at the time, he was completely engaged in the struggle and in the game, and playing by the rules of that game, which was a dirty game and those rules included hiring mercenary soldiers, which the other companies did. Fielding private armies, and paying bribes, and owning politicians. And there was a lot of laws later passed because of this. And he did a lot of very good things in Honduras and Central America, too, but this was a period early in his career where he was overextended and he was just playing the game as rough as anybody out there. 


Paul Kix:
And do you think that he does this because he's overextended, or is there some other facet of his ambition that leads him to take these extreme measures?

Rich Cohen:
No, it's the facet of his ambition which is, he wanted to win on the biggest stages. He wanted to build this massive company, and this is what he had to do. And he looked at people. When he looked at a guy like J.P. Morgan, it wasn't like he saw the legitimate good guy. He saw the same bullshit as the same guys that at Boston Fruit. It was, everybody was playing their own game in their own corrupt way, and he was closed out of it. He was getting hosed basically. He was getting hosed by these guys. They didn't care about him. He was a player in Honduras. He owned all this land. They'd set up a deal where they were including everybody, including putting bank officers at the ports of Honduras. By the way, this is one of the reasons why he was able to overthrow the government, which is the people in Honduras were pissed off about it. They felt like their sovereignty was being given to the United States, and not just to the United States, but to a United States banker. A bank. 

And so when these guys came in and tried to overthrow the government, there was a lot of popular support for it, because they thought this horrible thing had happened, which is the President of the country, to pay off the debt which the government completely got on its own for stupid reasons, was selling his country to J.P. Morgan. And so, Zemurray actually to them, would have appeared as almost like a Robin Hood, you know? Fighting this corrupt thing. And I think Zemurray to some extent saw it that way, too. It wasn't like he was the evil outsider. He was the guy who was coming into the country that he'd spent a lot of time in, and getting rid of a corrupt deal.

 
Paul Kix:
During the coup itself, is Zemurray in Honduras? Is he in New Orleans? Where is he? Is he Napoleon, leading the charges in? What's he doing? 

Rich Cohen:
He's in New Orleans, because he was being followed. So what he did was, when those guys got out of the bordello, they went down the back way out of New Orleans, which is they went across to Lake Pontchartrain, they got on a little ship which, owned by Zemurray. Set up there, they brought that ship out to kind of a yacht where Zemurray was waiting. And that was Zemurray's boat, and he explained the whole thing, what they would do. And he brought them out, beyond, into the Gulf on his boat where they then got in this warship that he had purchased and headed to Honduras, which I think was three or four days. 

And so, and then he stayed in New Orleans until after the revolution, where our government ... Once the new government was in place and the country was firmly in control, and it seemed like there was going to be no more threat from the British and they took over the paying of that debt, Philander Knox didn't really seem to ... he gave it up. He didn't care. He lost, and the main thing that he was worried about was having the British come into Honduras, and that now didn't seem like it was going to happen. So, he dropped the whole thing. So, it kind of worked out okay with the government. It could have been very bad for Zemurray but it wasn't, and then he wound up being a very powerful player in Democratic administrations later on. 


Paul Kix:
When this coup is over, there is this passage of power. This is what I just, it's the kicker to the whole story. He wins so completely. He not only gets the government in place that's favorable to them, but he basically defeats the US government and J.P. Morgan. This Russian immigrant defeats two of the most powerful forces in the world at that time. And just if we can, a couple questions. Number one, can you dwell in particular on what exactly, how exactly, what exactly those terms were? How exactly he won, and then I have a follow up question.

Rich Cohen:
Well, the sense I always had, from my memory here is, J.P. Morgan didn't really want to do it anyway. I mean, Philander Knox-

Paul Kix:
Didn't want to do what? I want to make sure we're clear.

Rich Cohen:
He didn't want to refinance Honduras' gigantic debt to Britain. And it was the very end of his life, and he just, it was a giant thing to do. And he didn't, but he felt like the government kind of went to him in the form of Knox, and said, "We need you to do this for the country. Otherwise, the British are going to come in the Western Hemisphere." And he did it kind of reluctantly, but he did it and as his terms, he would take over some sovereignty from Honduras. So, that was the seed in the apple, right there. And Philander Knox didn't want the debt to become a problem that would bring the British in. 

So, Zemurray was a smart guy, and he knew everybody had their needs. And he knew if their needs were met, they might not like how it happened, but they weren't going to make a big thing about it. So, when the government of Honduras was established with Zemurray kind of behind the scenes, one of the things they did was they made the government solid, and they continued to pay off the debt. And dealt someway with the bankers in Britain so there was no more need for the United States to come in and refinance the debt. And J.P. Morgan was basically off the hook. He didn't want to do it anyway. So, it kind of worked out that everybody, I hate to just use the term like win-win-win, but everybody was basically okay with the situation. Because everybody kind of got a part of what they wanted. 


Paul Kix:
To what extent is Sam aware of this? To what extent is he playing three dimensional chess, and knowing if he just does this absolutely bonkers thing, everybody might win? Do you have a sense for whether he had the foresight for that?

Rich Cohen:
He absolutely was aware of it. He was very incredibly smart and savvy. He was actually a great chess player. And you can read letters written by people like Franklin Roosevelt writing about him. About how smart he was and what he did in his spare time, and so he clearly had this, he was a long-term thinker. And he saw five or six moves ahead. It's the whole story of his business, and how his business worked. And why he was able to do what he did, because he had a plan, basically. And he knew that was a tough move. He was in an impossible move. Probably the kind of move he wouldn't have normally taken, except he was in such an extreme situation, it was like the odds of this happening were better than what was going to happen if he did nothing. Because doing nothing was doing something. 

So, doing nothing was defaulting on his own debts, and getting in trouble with the mafia. So, he needed a bunch of things to go right, which is he needed the coup to work. He needed the government, the people to not oppose him but to support it. He needed the government to be established in such a way that it would placate the Secretary of State and J.P. Morgan, and he needed the President whom he had helped put in power to go ahead and do what he said he would do. And all those things happened, and that's why that is the key chapter of the book which you focused on, and that is why it's both a complete expression of him and his character, and also sets up the entire rest of his career, which is the history of United Fruit. Which, if you want to look at it deeply, you could say sort of explains a lot of what America was up to in the 20th century. 


Paul Kix:
Yeah, it's an amazing book, and I actually want to try to compel the listeners of this podcast to go and buy it. Because, while I think this is ... you're right, Rich. While I think this is sort of of the err story of Sam's life, it's by no means the only one, and the stuff that he does after this episode are sort of just as amazing. And there's this, I don't even want to ruin it, but I laughed out loud when he was in that boardroom. 

And you don't often get a chance to say this about a whole lot of business books, which tend to be sort of dry, but this is not one of them. And that's why I said at the beginning of this podcast, anytime I run into anybody who's entrepreneurial in any way, I'm like, "Oh, have you heard of Sam Zemurray?" And a lot of times, they're like, "Who?" And then I'm like, "United Fruit?" And still it's like, "What?" And I's like, "Just read, The Fish That Ate The Whale. You're going to love it."


Rich Cohen:
Thank you for that. 

Paul Kix:
What do you think, just sort of as a closing thought here. We're talking about this, and it's this great story, it's this really fun story. At the same time, to stage a coup means that people died, right? This is a war. It's a small war, but it's a war all the same. I'm wondering, the extent to which Sam wrestled with his legacy around this chapter of his life, and I'm wondering the extent to which you wrestled with it, and if you reached a verdict? So, if you could take both of those in turn, I'd appreciate it.

Rich Cohen:
Well, I think he did wrestle with it, and it just wasn't that one incident. There were other incidents. There were actual ... Guatemala and Honduras later on in the book, almost came to war. They mobilized their armies because of a fight between these two companies. And I would say, Huey Long only ever made one speech about foreign policy on the floor of the Senate, when he was a Senator, and that was to denounce Sam Zemurray. So, I think what Sam Zemurray did was, like I said before, I think that he very much felt like it was a war that he was in, and it was a rough place called the Banana Frontier. It's where the term Banana Republic comes from. And it was full of very rough characters, and that was just the terms of engagement.

I think as he got older and his own son was killed in the Second World War, and he looked at things differently, he tried to make amends in his way. He set up this school, which is still one of the best schools in Central America, to study agriculture, that's the tuition's free. He set up basically state run healthcare in Honduras, he set up through United Fruit. He gave tremendous amounts of money away in that country, and is still kind of revered as a philanthropist in mostly in Honduras, although later he became responsible for what was going on in Guatemala because of United Fruit. But, that happened later in his life and it wasn't a thing he was involved in as a younger guy. 

And so yes, I think the answer is yes. And he lived into the mid-70s, early 70s, and he was kind of a haunted guy at the end because of everything that had happened. And a lot of that did, I think have to do with the death of his son, and a lot of other things. 


So, and then as far as me, yeah. I mean, the whole time I'm writing this book, I'm trying to figure out what this story means. And is he good or is he bad? And can you be a force for both, and this is like one of these rare projects I got involved in where, you feel there is a ... Whatever you think of Sam Zemurray, he had tremendous depth, and he was struggling himself. And he had this talent, but he was struggling with his relations with the world and his relations with other people. And you even see it in photograph with him. And because of that, he has this kind of arc to him. And he was young, when he was young and struggling, he's young and struggling. And when he's old, and he could recollect, and history changed on him. All the qualities that had been seen as positive qualities were now in his later life, seen as negative qualities. I said, he's like the guy who played cards, and suddenly the value of the cards all changed in the middle of the game. 

So, when he came, there was this idea, still this kind of idea of manifest destiny still around in America, and he was learning it second hand. And the idea was that they were going to these kind of jungle lands, clearing the jungle and building something. And by the end of his life, that was seen as kind of a kind of colonialism. And it really caused him to really search. But if you talk to, if you read the letters and the writings of people like Justice Frankfurter or like I said, franklin Roosevelt, or a lot of the people who were involved in the CIA later, who he worked with in his business, they speak of him as a person with incredible depth and sensitivity so, and that's what I came to see. 

So, no matter what you think of the value of his life, I mean, he wasn't a frivolous person, and he wasn't doing the things he did without thought, and he wasn't a person who didn't care about being good or bad or doing good or bad. He wanted to do good. Now, you could say on balance, maybe it was more bad than good, but that's a decision for history to make. The last couple days, I've been reading this book about the making of a neutron bomb, which is super interesting, the Richard Rhodes book. And all the guys that are involved in that, everyone of them you're reading about, worked at some point for Zemurray. So, that's something else that he did. He was an incredible talent scout. 


Paul Kix:
Wow. Wow. Well, Rich, I want to thank you for coming on the show. The music for, Now That's A Great Story comes from Jeff Willet. A little bit of production help comes from him as well. If you like this podcast, please don't forget to rate and review it, wherever it is that you listen to podcasts. I hope you have a good one. Bye.

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