Minister Morgan to the Secretary of State.

[Extract.]
No. 116.]

Sir: Referring to my No. 32, of April 10, in which I inform you that in accordance with instruction No. 7, of March 3 last, and in view of the fact that Mr. Fonts Sterling had succeeded Gen. Ruis Rivera as the head of the Cuban treasury department, I proposed to renew the representations previously made to that department regarding the desirability of admitting to the benefits of the treaty of reciprocity rice of foreign origin milled in the United States and exported to Cuba, I have the honor to acquaint you that after careful consideration the new secretary of the Cuban treasury maintains the same opinion on this subject as that which his predecessor held, and declines to admit the justice of our contention.

In a memorandum handed me on the 3d instant, Mr. Fonts Sterling states that the rice in question can not be considered a product of the industry of the United States, and in support of his views cites a decision of the court of administrative appeal, confirmed by one which the supreme court rendered on May 19, in a case concerning foreign-grown coffee imported into Cuba after having been roasted in the United States, brought by Galban & Co., of Matanzas, a Cuban firm, by which the provisions of treasury circular No. 325, of January 19, 1906, were sustained. In this circular the treasury department declares that it can not consider merchandise manufactured in the United States from raw material imported from abroad the product of American industry unless the same has undergone in the United States such a process as to transform it into an entirely different product, such, for instance, as wood made into furniture, or silk or wool manufactured into tissues, and that under no circumstances could the provisions of the reciprocity treaty be invoked when a product is subjected only to those operations which do not radically change its nature or the uses for which it is intended.

In view of this pronouncement, which is in accord not only with the results of correspondence, but of conversations, between the legation, the treasury and state department, and the President, it would appear that the Cuban Government at present is unwilling to admit American hulled rice of foreign origin to the advantages which the reciprocity treaty gives, and that this subject must be relegated for further consideration to the time when tariff concessions are mutually [Page 520]granted in connection with recasting the existing commercial treaty between Cuba and the Unted States. Although as yet comparatively little rice is raised on this island, there is a desire to encourage its production, and the belief exists that if foreign rice cleaned in America be granted preferential rates the protection now enjoyed by this infant industry will be minimized. * * *

I inclose in translation the memorandum of the secretary of the treasury referred to above, accompanied by a translation of circular No. 325, of January 19, 1906.

I have, etc.,

Edwin V. Morgan.

[Inclosure.—Translation.]

memorandum.

On February 14 last reply was officially made to the department of state and justice as to the extension of the benefits of the reciprocity treaty to rice of foreign origin milled in the United States and imported into this island, to the effect that, as sustained by that department, the said rice is not entitled to the treaty differential, inasmuch as it could not be considered a product of the soil or industry of the United States.

The reasons taken into account in not considering the rice in question a product of the industry of the United States are the same as those upon which circular No. 325, of January 19, 1905, is based; that is to say, that the grain in question has undergone no transformation such as to change its nature, but merely a manipulation that in no wise changes its essential condition nor the use for which intended.

The opinion has been confirmed by the court of administrative appeal of the Republic in hearing the appeal established by Messrs. Galban & Co. against the decision of this department in the case of coffee roasted in the United States and afterwards imported into Cuba, in which the court rendered its verdict on December 15, 1905.

The communication of February 14 above referred to, and which was transmitted to the State Department under No. 2319, has not yet been answered.