[center][h2]The Republic of Guatemala and El Salvador[/h2]
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[b]History:[/b] Guatemala had long been little more than a puppet or resource for other nations to use as they saw fit. Following the Spanish conquest, the incorporation of Central America into the Mexican Empire, there was a brief recourse when the nations of Central America united as a single federation, only to collapse thereafter, and for Guatemala to fall into the sphere of the United States.

The US-based United Fruit Company (UFC) was one of many foreign companies that acquired large tracts of both state land and indigenous land. Manuel Estrada Cabrera, who was president of Guatemala from 1898 to 1920, permitted limited unionization in rural Guatemala, but also made further concessions to the UFC. In 1922, the Communist Party of Guatemala was created, and became a significant influence among urban laborers; however, it had little reach among the rural and Indian populations. In 1929, the Great Depression led to the collapse of the economy and a rise in unemployment, leading to unrest among workers and laborers. Fearing the possibility of a revolution, the landed elite lent their support to Jorge Ubico y Castañeda, who had built a reputation for ruthlessness and efficiency as a provincial governor. Ubico won the election that followed in 1931, in which he was the only candidate.

Ubico had made statements supporting the labor movement when campaigning for the presidency, but after his election his policy quickly became authoritarian. He abolished the system of debt peonage and replaced it with a vagrancy law, which required all men of working age who did not own land to perform a minimum of 100 days of hard labor. In addition, the state made use of unpaid Indian labor to work on public infrastructures like roads and railroads. Ubico also froze wages at very low levels and passed a law allowing land-owners complete immunity from prosecution for any action they took to defend their property, in practice legalizing murder. He greatly strengthened the police force, turning it into one of the most efficient and ruthless in Latin America. The police were given greater authority to shoot and imprison people suspected of breaking the labor laws. Ubico was highly contemptuous of the country's indigenous people, once stating that they resembled donkeys. The result of these laws was to create tremendous resentment against him among agricultural laborers.

[b]The October Revolution[/b]
As Ubico's policies lead to a downturn in the living conditions in Guatemala, widespread protests began against his government. Ubico responded by indefinitely suspending the constitution, and carrying out quick and brutal repression of any resistance to his rule. However, the protests had grown to the point where the government could not stamp them out, and rural areas also began organizing against the dictatorship. The government began using the police to intimidate the indigenous population to keep the junta in power through the forthcoming election. This resulted in growing support for an armed revolution among some sections of the populace. By now, the army was disillusioned with the junta, and progressives within it had begun to plot a coup. On 1 October 1944, Alejandro Cordova, the editor of El Imparcial, the main opposition newspaper, was assassinated. This led to the military coup plotters reaching out to the leaders of the protests, in an attempt to turn the coup into a popular uprising. On the 19th, Ubico announced elections, but the pro-democracy forces denounced them as a fraud, citing his attempts to rig them. That same day, a small group of army officers launched a coup, led by Francisco Javier Arana and Jacobo Árbenz Guzmán. They were joined the next day by other factions of the army and the civilian population. Initially, the battle went against the revolutionaries, but after an appeal for support their ranks were swelled by unionists and students, and they eventually subdued the police and army factions loyal to Ubico. On October 20, Ubico surrendered unconditionally and was sent into exile in the United States.

The military junta was replaced by another three-person junta consisting of Árbenz, Arana, and an upper-class youth named Jorge Toriello, who had played a significant role in the protests. The junta promised free and open elections to the presidency and the congress, as well as for a constituent assembly.

The subsequent elections took place in December 1944, and were broadly considered free and fair, although only literate men were given the vote. Unlike in similar historical situations, none of the junta members stood for election. The winner was one Juan José Arévalo Bermejo, the candidate of the Renovación Nacional, also known as the teachers' party. In an unexpected surge of support, his candidacy was endorsed by many of the leading organizations among the protesters, including the student federation. 

Arévalo took office on March 15, 1945, inheriting a country with numerous social and economic issues. Despite Ubico's policy of using unpaid labor to build public roads, internal transport was severely inadequate. 70% of the population was illiterate, and malnutrition and poor health were widespread. The wealthiest 2% of landowners owned nearly three quarters of agricultural land, and as a result less than 1% was cultivated. The indigenous peasants either had no land, or had far too little to sustain themselves. Three quarters of the labor force were in agriculture, and industry was essentially nonexistent.

Arévalo identified his ideology as "spiritual socialism". He held the belief that the only way to alleviate the backwardness of most Guatemalans was through a paternalistic government. He was strongly opposed to classical Marxism, and believed in a capitalist society that was regulated to ensure that its benefits went to the entire population. In searching for a basis to repair the broken society that Ubico had created, Arévalo looked north to the system of neighboring Mexico, which he quickly went about emulating, hoping to follow their path to economic growth. Arévalo's ideology was reflected in the new constitution that the Guatemalan assembly ratified soon after his inauguration, which was one of the most progressive in Latin America. It mandated suffrage for all but illiterate women, and provisions for a multiparty system. Communist parties were, however, forbidden. Arévalo worked hard to reorient Guatemala towards Mexico as its new most valuable partner in growth, establishing economic and political ties between the two nations. 

The Arévalo government also floated the idea of a Central American Federation, as being the only way that a democratic government could survive in the region. He approached several leaders of democratic Central American countries, but was rejected by all except Castañeda Castro, the president of El Salvador. The two leaders began talks to build a union and set up several commissions to look into the issue. In late 1945 they announced the formation of the union, which would go into effect the following year. 

In 1950, elections would be held, this time between two of the former Triumvirate Leaders, Jacobo Árbenz and Francisco Arana. Arana was largely supported by the wealthy, landed elite, while Árbenz was favored by leftist movements. Fearing loss, and a potential coup should the more radical Árbenz come into power, In July of 1949, Arana delivered an ultimatum to Arévalo, demanding the expulsion of all of Árbenz's supporters from the cabinet and the military; he threatened a coup if his demands were not met. Arévalo informed Árbenz and other progressive leaders of the ultimatum, who all agreed that Arana should be exiled. Two days later, Arévalo and Arana had another meeting; on the way back, Arana's convoy was intercepted by a small force led by Árbenz. A shootout ensued, killing three men, including Arana. Arana's supporters in the military rose up in revolt, but they were leaderless, and by the next day the rebels asked for negotiations. Following this, Arana's supporters were exiled. In a speech on July 21, Arévalo made a speech describing Arana's death. He suggested that Arana had flirted with conspiring against the president with people hostile to Arévalo, but had eventually refused to overthrow the government, and been assassinated for his refusal. He did not name the assassins but suggested that they were members of the conservative opposition.

The following year, Jacobo Árbenz won the election by a massive landslide victory, and continued the land reforms of his precessor, the biggest component of Árbenz's project of modernization was his land reform bill. Árbenz drafted the bill himself with the help of advisers that included some leaders of the communist party as well as non-communist economists. He also sought advice from numerous economists from across Latin America. The bill was passed by the National Assembly on 17 June 1952, and the program went into effect immediately. The focus of the program was on transferring uncultivated land from large landowners to their poverty-stricken laborers, who would then be able to begin a viable use of the land of their own. Árbenz was also motivated to pass the bill because he needed to generate capital for his public infrastructure projects within the country. By June 1954, 1.4 million acres of land had been expropriated and distributed. Approximately 500,000 individuals, or one-sixth of the population, had received land by this point. The decree also included the provision of financial credit to the people who received the land. The National Guatemalan Bank (Banco Nacional Guatemalteco, or BNG) was created on 7 July 1953, and by June 1954 it had disbursed more than $9 million in small loans. 53,829 applicants received an average of 225 US dollars, which was twice as much as the Guatemalan per capita income. The BNG developed a reputation for being a highly efficient government bureaucracy.

[b]The United Fruit Company[/b]
he United Fruit Company had been formed in 1899 by the merger of two large American corporations. The new company had major holdings of land and railroads across Central America, which it used to support its business of exporting bananas. In 1900 it was already the world's largest exporter of bananas. By 1930 it had an operating capital of US$215 million and had been the largest landowner and employer in Guatemala for several years. Under Manuel Estrada Cabrera and other Guatemalan presidents, the company obtained a series of concessions in the country that allowed it to massively expand its business. These concessions frequently came at the cost of tax revenue for the Guatemalan government. The company supported Jorge Ubico in the leadership struggle that occurred from 1930 to 1932, and upon assuming power, Ubico expressed willingness to create a new contract with it. This new contract was immensely favorable to the company. It included a 99-year lease to massive tracts of land, exemptions from virtually all taxes, and a guarantee that no other company would receive any competing contract. Under Ubico, the company paid virtually no taxes, which hurt the Guatemalan government's ability to deal with the effects of the Great Depression. Ubico asked the company to pay its workers only 50 cents a day, to prevent other workers from demanding higher wages. The company also virtually owned Puerto Barrios, Guatemala's only port to the Atlantic Ocean, allowing the company to make profits from the flow of goods through the port. By 1950, the company's annual profits were US$65 million, twice the revenue of the Guatemalan government.

In 1952 when Jacobo Árbenz passed Decree 900, the agrarian reform law, the uncultivated land held by the company, of the 550,000 acres (220,000 ha) that the company owned, 15% were being cultivated; the rest of the land, which was idle, came under the scope of the agrarian reform law. The United Fruit Company responded with intensive lobbying of members of the United States government, which lead to the planning of a coup to be executed in 1954 in response to the presence of Communists in the Guatemalan government under the Árbenz, using one of Francisco Arana's long time supporters who was sent into exile, Carlos Castillo Armas. By luck, however, Árbenz had managed to discover the plot of Armas' coup, and action was taken against him, wherein upon his arrival, he and his supporters were ambushed, and captured. Armas was put on a public trail, where he was convicted of treason under collusion with the United States government, and executed, while public and government opinion of the United Fruit Company's presence in Guatemala has only worsened, with Árbenz now up for reelection in 1955, and public opinion gradually turning more and more radical, as reforms increase the economic growth of this once feudal Central American nation, now aware of its position on a larger scale. 

[b]Information:[/b]

[i]Guatemala City:[/i] The Capital of Guatemala
[i]Revolutionary Action Party:[/i] The Ruling Party of Guatemala, lead by President Jacobo Árbenz
[i]Communist Party of Guatemala:[/i] A radical left-wing pary, only recently legalized by the Árbenz regime, but popular among the urban working class. While technically an opposition party, it has strong ties to the current regime, as per the friendship of it's leader, José Manuel Fortuny, with the current president Jacobo Árbenz.
[i]Popular Liberation Front:[/i] A center-right party, the major opposition party, and slightly conservative force. Its candidate, Víctor Manuel Giordani, is the main opposition to Árbenz in the upcoming 1955 election.

[i]El Salvador:[/i] Instead of a federation of two Central American peopls, as many Salvadorians had imagined, the RGS turned into a state completely dominated by Guatemalans. Salvadorian political life was also diminished, as Arévalo demanded all political parties in El Salvador to be dismantled and absorbed into Guatemalan parties. The economically weaker El Salvador has been since dominated by Guatemala, which saw significant economic growth following the Mexican inspired reforms of the Arévalo government.