File No. 837.61351/130a
The Secretary of State to the Secretary of the Treasury ( McAdoo )
Sir: I have the honor to inform you that according to reports received by the Department from American officials in Cuba there exists a situation in connection with the financing of the sugar crop, which may result in serious economic as well as political difficulties for both the United States and the Republic of Cuba.
The Department understands that the International Sugar Commission has entered into a contract with the Cuban Government and with the representatives of the Cuban sugar producers, which provides for a certain price to be placed on sugar produced in Cuba and also comprises arrangements for the transportation of this sugar to the United States.
It now appears that on account of the lack of tonnage existing at this moment, due to conditions brought about by the war, that the sugar can not be moved with that rapidity which is essential for the satisfactory financial operations customary in these transactions. It is therefore necessary that credit be extended to the sugar producers based on the sale of the sugar in order that they may continue to pay the wages of their employees and to meet their other expenses.
The Department understands that the various banking institutions of Cuba are unable, on account of limited resources, to finance [Page 355] the present undertaking and very many of the mills can not pay for their cane and discharge their own expenses during the harvest season under present conditions; nevertheless the cane must be paid for. In the past neither the laborers nor the colonos have ever waited for their money, and as they know that the world needs sugar, the cane must be paid for or it will not be harvested.
Without taking into consideration the serious difficulty which would undoubtedly be occasioned in this country, as well as in the countries of the Entente Allies, should sugar production come to an end in Cuba, it is necessary to give careful thought to the fact that if the great quantities of laborers, who have come to Cuba from different countries only on account of the harvesting of sugar crop, are not paid, riots will undoubtedly take place together with the burning of cane and of sugar mills. Such a situation would most certainly bring in its train political unrest which would in all probability be fostered by enemy agents who are only too desirous of seizing such an opportunity to embarrass Cuba, the United States, and the Entente powers.
The Department in bringing these facts to your attention trusts that you may be in a position to take whatever steps may be necessary to aid in arranging for the necessary credits.
I have [etc.]