German coffee, predatory states, and selective property rights enforcement in 20th-century Guatemala

Abstract How do political leaders in states with limited institutional constraints enforce property rights? In 20th-century Guatemala, German coffee producers benefited from the country’s export-led growth policies—trade agreements, land grants, and infrastructure concessions that allowed them to become the primary producers of the country’s coffee. The security of their property rights depended on their contributions to government revenue through the production of coffee and customs duties. When contributions declined during both world wars, so did security of ownership, leading to two bouts of large-scale expropriation—during the dictatorships of Manuel Estrada (1898–1920) and Jorge Ubico (1931–44). Through a comparative analysis of the two regimes that draws from original qualitative and quantitative evidence, this article argues that political leaders limit expropriation to encourage production and maximize government revenue. However, when revenue falls below the expected gains from expropriation, the likelihood of state appropriation of property rights—whether through asset seizure or regulatory restrictions—increases.