Decree 900 (Spanish: Decreto 900), also known as the Agrarian Reform Law, was a Guatemalan land-reform law passed on June 17, 1952, during the Guatemalan Revolution. The law was introduced by President Jacobo Árbenz Guzmán and passed by the Guatemalan Congress. It redistributed unused land greater than 90 hectares (224 acres) in area to local peasants, compensating landowners with government bonds. Land from at most 1,700 estates was redistributed to about 500,000 individuals—one-sixth of the country's population. The goal of the legislation was to move Guatemala's economy from pseudo-feudalism into capitalism. Although in force for only eighteen months, the law had a major effect on the Guatemalan land-reform movement.
Indigenous groups, deprived of land since the Spanish conquest, were major beneficiaries of the decree. In addition to raising agricultural output by increasing the cultivation of land, the reform is credited with helping many Guatemalans find dignity and autonomy. The expropriation of land led major landowners–including the United Fruit Company–to lobby the United States government to intervene by construing the Guatemalan government as communist. Decree 900 was thus a direct impetus for the 1954 coup d'état, which deposed Árbenz and instigated decades of civil war.
When Árbenz was elected in 1951, Guatemala had a high GDP but extremely unequal distribution of land: 2% of the population controlled 72% of the arable land. Only 12% of this land was under cultivation. Much of the population without land was poor, and had associated health problems. 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.
After Juan Jose Arévalo won the 1944 election, Guatemala created a reformist constitution in 1945. This constitution explicitly stated that the government should protect communal land and create policies that would lead to equitable distribution of wealth. 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." Article 90 recognizes the existence of private property, but suggests that rights to property could be waived in the social interest. 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. The wish to transform Guatemala into a competitive capitalist nation led Árbenz to push for the construction of a national highway, a new port, a hydroelectric power plant—and for increased cultivation of unused lands.
Árbenz began promoting agrarian reform soon after becoming president. He was aided politically by a renewed Communist Party of Guatemala (PGT), which believed that some amount of capitalist development necessarily preceded a communist revolution. 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.
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.
Presented with a draft by the President, the Guatemalan Congress met on Saturdays and Sundays for five weeks. Congress introduced some changes to Árbenz's version, most notably restoring the idea of cooperatives (although not to the degree proposed by the PGT). Decree 900—Ley de Reforma Agraria—was passed on 17 June 1952 at 1:45 AM and signed into law by Árbenz on the same day. It called for 603,704 ha (1,491,790 acres) of farmland to be redistributed to 100,000 families. Specifically, it authorized the redistribution of all uncultivated land on estates larger than 272 ha (672 acres), and of land on estates sized from 91–272 ha (224–672 acres), on which less than two-thirds of the land was cultivated. It also specified total redistribution of the government owned fincas nacionales, which contributed a quarter of the nation's coffee production.
The Agrarian Reform of the October Revolution intends to eliminate the feudal property structure in the countryside and develop relations of production that originate to develop the land to the form of operational and capitalist methods of production in agriculture and to prepare the way for the industrialization of Guatemala.
Proponents of the law stated that it was intended to “eliminate all feudal type property...especially work-servitude and the remnant of slavery”. Decree 900 specifically abolished slavery, unpaid labor, work as payment of rent, and relocation of indigenous workers.
The law did not redistribute land automatically. It created a National Agrarian Department (DAN), and required people without land to file requests with Local Agrarian Committees (CALs). CALs would then make decisions about how to reappropriate the land of major owners. Landowners could dispute these decisions, with an appeals process going all the way up to the President. The committees were formed from local groups, and intended to foster the spirit of community control and local political power. As suggested by the PGT, the law also gave new landowners the option of choosing lifetime tenure instead of private ownership, with the goal of preventing large landowners from simply buying back the land. The Fincas Nationales were available only through the lifetime tenure option. According to José Manuel Fortuny, a PGT leader who helped draft the legislation:
We [the PGT] proposed the creation of peasant committees [CALs] in order to lay the groundwork for the eventual radicalization of the peasantry. We talked to Arbenz about this, and he agreed with us. What we wanted was to foster the control of the reform from below. This would give the peasants a strong sense of their common needs. And if, from the system of lifetime tenure, cooperatives developed, the seeds of a more collective society would have been sown.
Finally, the law established a system for using bonds to compensate people who lost acres to peasants. The property owners were paid in bonds which matured in 25 years; value of the land was based on claims made on the previous year's tax returns.
Credit for those receiving land was mandated by additional legislation in 1953, which also established a National Agrarian Bank (BNA). The government dispensed $3,371,185 in loans during 1953; $3,049,092 (around 90%) had been paid back by July 1954—a historically unusual success in lending.
Beginning in 1954, land and credit were supplemented by literacy programs—the third major plank of the reform program.
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. The law affected about 1,700 estates of the country's richest and most conservative people and groups
Production of corn, coffee, and bananas increased while the law was in effect in 1953 and 1954. High coffee prices bolstered the national economy and offset the flight of foreign capital. According to a report by the U.S. Embassy in 1954, "A preliminary analysis of the President's report left little doubt, as long as coffee prices are at their present high level, that the Guatemalan economy was basically prosperous."