837.61315/305
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received November 15.]
Dear Mr. Secretary: By your telegram No. 153 of September 17, 1921, I was advised that certain banking interests were pressing the Department to secure a public statement by the President of Cuba that the Sugar Finance Commission, established by Decree No. 155, February 11, 1921, would be continued with jurisdiction over the present crop until the last pound of it was sold.
In my Urgent 115, September 18, 1921,98 I advised the Department that the President had no thought of disbanding the Sugar Finance Commission and was contemplating a public statement to that effect. In my Urgent 116, of September 17 [19], 1921, I cabled President Zayas’ statement in full. At the time the statement was given out, Mr. Roger Farnham of the National City Bank was in Havana and explained to me that the Banks were acting in pursuance of a plan agreed upon between them, Sugar Refiners, and the New York members of the Sugar Finance Commission, the more essential terms of wilich were to refine the raw sugar in bond, and to transfer the refined sugar to warehouses in close proximity to possible markets; the bankers to furnish the money to move the raw sugar to the refineries [Page 805] and the refined sugar to possible markets, and also to pay a proper toll to the refiners for their work.
On the 9th instant, Mr. Farnham explained to me that this plan had the concurrence of Secretary Mellon, but had failed because of the attitude of certain banking interests which declined to carry out the agreement, and because of the attitude of the Sugar Finance Commission as expressed by Mr. Hawley that all the present crop must be included in the agreement or the Sales Commission would refuse to deliver any raw sugar.
Mr. Farnham now states that the National City Bank is of the opinion that the Sugar Finance Commission should be discontinued, and I have a similar message from the Royal Bank of Canada. What the effect of discontinuance of said Commission will have upon the market price of sugar, it is not easy to determine. Most persons with whom I have talked consider that the immediate effect would be a marked lowering of price, but that within thirty days the market would begin to adjust itself to normal. Mr. Farnham has admitted to me that the attitude of the creditor banks in such a situation would probably be to advise sugar producers whose warehouse certificates are pledged to them, to hold on for the period of thirty days or more for an adjustment of the market price, and leave the competitive selling which would probably take place with a resulting crash in the market, to owners of sugar who can not get such support from the banks.
I am to have a conference with the President on this subject at an early date when I hope to start a movement which will elicit the opinion as to continuance or discontinuance of the Commission of the actual owners of the present unsold crop. This ought not to occupy a great deal of time. I think it would be unsafe to follow the opinion alone of the creditor banks whose clients are mainly the owners of the contract exempt sugar, all of which except about 40,000 tons have been sold.
I hope to transmit definite recommendations within a few days.
Very respectfully,
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