Castro returned to Cuba having said to a Social Democrat friend that he was not a Communist because Communism was the dictatorship of a single class and meant hatred and class struggle. On television he told the Cuban people that extremists had no place in the Cuban revolution. By now, however, Cuba's Communist Party had joined the Castro's revolution – not unlike the Bolsheviks in early 1917 who had joined the revolution that overthrew Tsar Nicholas of Russia. And the Communist Party complained that Castro was endangering Cuba's revolution.
Castro instituted agrarian reform. Estates larger than 1,000 acres were subject to expropriation, with compensation paid to the owners in 20-year bonds at 4.5 percent annual interest – higher interest than MacArthur's land reform in Japan, and repayment faster than the land reform in Taiwan. In the future, land could be bought only by Cubans, and after the harvest of 1960 sugar plantations would have to be owned by Cubans. Sugar company stocks fell on the New York Stock Exchange. US executives protested to the US government. More talk erupted in the US about Communism in Cuba, and the Eisenhower administration argued with Cuban officials about their agrarian reform.
Meanwhile, anti-Communist members of Castro's revolution (the 26 of July Movement) were showing hostility to the movement's communist members. The anti-Communists were calling the communists melons – green on the outside, as in green fatigues, and red on the inside. The Communists denounced the red-baiting and spoke of the need for unity. Bombs exploded in Havana, believed to be the work of counter-revolutionaries, and Castro veered to the side of those supporting unity.
In increasing numbers anti-Communists began abandoning Castro. President Urrutia objected to the heightened radicalization of Castro's movement and resigned. So too did his prime minister, José Cardona. Osvaldo Dorticós was now Cuba's new president and Castro was the prime minister. One of Castro's old anti-Communist compañeros, Hubert Matos, was soon to be arrested for treason and for having disrupted agrarian reform. He was to be tried and sentenced to 20 years in prison.