It redistributed unused land greater than 90 hectares (224 acres) in area to local peasants, compensating landowners with government bonds.
In addition to raising agricultural output by increasing the cultivation of land, the reform is credited with helping many Guatemalans find dignity and autonomy.
[7] Indigenous people had been treated as subordinate for hundreds of years, and had become increasingly impoverished and dependent on wages from plantation work.
Indigenous people were also required to serve as migrant laborers through legal coercion, as Guatemala's coffee industry expanded rapidly from the 1870s through the 1930s.
This constitution explicitly stated that the government should protect communal land and create policies that would lead to equitable distribution of wealth.
[8] Article 88 of the 1945 Guatemalan Constitution, which served as the legal basis for Decree 900, stipulates: "It is a primary function of the State to develop agricultural activities and industry in general, toward the end that the fruits of labor shall preferentially benefit those who produce them and that the wealth shall reach the greatest number of inhabitants of the Republic.
[11][12] This constitution marked the beginning of the Ten Years of Spring, also known as the Guatemalan Revolution: a period of democratization and liberal reforms.
Árbenz sought to transform Guatemala from a feudalist to a capitalist economy by distributing capital and creating infrastructure to increase production.
Árbenz accepted help from the PGT and its leaders were among his personal friends; however, he rejected some of their proposals, including a mandate for the organization of producer cooperatives.
[18] The proposed law gained widespread support among peoples' organizations and in the national press, but was opposed by the Asociación General de Agricultores (AGA), which represented the existing landowners.
[21] Congress introduced some changes to Árbenz's version, most notably restoring the idea of cooperatives (although not to the degree proposed by the PGT).
[24] Decree 900 specifically abolished slavery, unpaid labor, work as payment of rent, and relocation of indigenous workers.
[31] By 1954, 570,000 ha (1,400,000 acres) had been reappropriated and 100,000 families (about 500,000 people, one sixth of the population) had received land as well as bank credit and technical aid.
[9] The CNCG peasant league, founded in 1950 by activists and members of the teachers' union, grew rapidly during this time and by 1945 was the largest peoples' organization in the country.
These included the provision of incentives for peasants to join the army, as well as attempts to foster ties between the armed forces and the DAN.
[54] In 1953 Árbenz announced that under the Agrarian Reform Law—specifically, because of an order made by the DAN—Guatemala was expropriating approximately[55] 94,700 ha (234,000 acres) of uncultivated land from the United Fruit Company.
[57] The company was compensated with $627,572 in bonds for the expropriation of their holdings, the amount United Fruit had claimed the land was worth for tax purposes.
[58] A report written by the U.S. State Department's Office of Intelligence Research suggested that the reform itself would only affect 1,710 landowners, but expressed fear that the law would strengthen the position of communists in Guatemala.
[59] U.S. opposition to the Árbenz government certainly resulted from his reformist policies, but historians differ on the relative importance of expropriating United Fruit versus the apparent communist threat implied by land reform.
Wrigley Jr. Company had been the sole buyer of the product, the Árbenz government suddenly had to provide a massive aid program for chicle harvesters.
[62] The CIA also intensified propaganda campaigns to isolate Guatemala among Central American nations,[63] and to convince the Guatemalan people that the Árbenz regime was on the brink of collapse.
[64] In June 1954, Árbenz Guzmán was overthrown by a multi-faceted coup operation involving a small army led by Carlos Castillo Armas, scattered right-wing violence in the countryside, a U.S. Navy blockade (called Operation Hardrock Baker), bombardment by CIA planes, and a sophisticated CIA strategy of psychological warfare intended to demoralize Árbenz and provoke military defections.
[67] Armas created a new Agrarian Commission and passed two new laws, which restored control over land policy to government officials.