The Secretary of State to the Chargé in Great Britain (Atherton)

No. 260

Sir: With reference to the Department’s telegram of February 21, 1934,15 informing you that the President has approved your designation as the Chairman of the American Delegation to the preliminary and exploratory conference on sugar to convene at London, March 5, next, there is attached hereto a “Memorandum of Basic Instructions”, with VIII annexes, by which the Delegation will be guided at this conference.

You are requested to keep the Department informed by telegram of all important developments at the conference, and to refer to it for further instructions any matters not covered in the attached Memorandum, with annexes, or by subsequent telegraphic instruction.

Very truly yours,

Cordell Hull

Memorandum of Basic Instructions

According to the letter of invitation dated February 6, 1934, received from the Secretary General of the Monetary and Economic Conference

“The object of the meeting is to resume the examination of the sugar question on the lines on which it was begun at the London Conference by the subcommittee for the coordination of production and marketing and to ascertain whether the convening of a subsequent meeting of a wider scope, to which the principal importing and exporting countries concerned would be invited, might facilitate the conclusion of a general agreement for insuring a better organization of the production and marketing of sugar.”

[Page 671]

The following countries have been invited to take part: Germany, Belgium, Great Britain, Cuba, United States of America, Hungary, Netherlands, Peru, Poland, Dominican Republic, Czechoslovakia, Yugoslavia. In addition the honorary president and the President of the International Sugar Council have been requested to attend in an advisory capacity.

This Government has agreed to participate in this Conference on the understanding that it cannot take any position with respect to an international agreement until its policy, embracing the areas supplying the American domestic market, has been developed. By this is meant in particular action by Congress on certain proposals supported by the President, which it now has before it. (Copy attached to Annex 1.) The attached Annex No. 1 with regard to the sugar situation as it affects the areas supplying the American domestic market, sets forth the reasons for, and the nature of the bill16 now before Congress regarding sugar. This bill, if enacted into law, will provide a method whereby this Government may take steps tending to control the production of sugar in the various areas under its jurisdiction. According to the President’s message to Congress,17 a copy of which is attached to Annex No. 1, this legislation will facilitate steps by which the marketing of sugar produced in these areas will be very materially reduced. This program will have the “three-fold object of keeping down the price of sugar to consumers, of providing for the retention of beet and cane farming within our continental limits, and also to provide against further expansion of this necessarily expensive industry”. In addition, it should contribute to the economic rehabilitation of Cuba, by allocating to Cuban sugar a quota in the American market considerably in excess of marketing during the last two calendar years. The tariff on Cuban sugar will be reduced substantially, and in order that the Cuban sugar industry may derive a greater benefit from the sales of its sugar in the American market the President indicated in his message to Congress that he is prepared to give “favorable consideration” to a proposal to increase the existing preferential on Cuban sugars, “to an extent compatible with the interests of the two countries”.

As has already been stated, however, the President’s plan has not yet received the approval of Congress, and until this is forthcoming, the American Government is unable to enter into any international commitments.

You should confine yourself, therefore, to following closely the proceedings at the Conference in order that you may report fully to this Government. If called upon by the Conference for indications [Page 672] as to the preliminary and tentative ideas of the American Government, you may base your remarks upon the following observations, but the Conference should clearly understand that these are subject to change, since they are entirely dependent upon the outcome of the plan now before Congress.

I. Provided the legislation before mentioned is enacted into law, it will permit this Government to pursue the following policies.

(a) Continental United States. In this area this Government will be able to pledge that once the plan becomes fully operative production will not exceed the amount required for consumption as determined by the Secretary of Agriculture, taking into account supplies from other areas producing for the American market.

(b) Insular areas (exclusive of the Philippines). This Government believes that the administration of its sugar plan will operate so as to bring into equilibrium production and marketings in the United States of sugars produced in Hawaii, Puerto Rico and the Virgin Islands, taking into account supplies from other areas producing for the United States market. As a first step in this direction, this Government is willing to undertake that production in Hawaii and Puerto Rico be limited to the 1933–34 crop level.

In the event that the preliminary conference canvasses the possibility of a tentative agreement for the disposal of surplus crops (by which is meant the difference between the quotas set for the abovementioned areas and the amounts produced), and desires to learn the views of this Government, you are requested to refer the matter to the Department for instructions.

(c) Philippines. Instructions will be forwarded by telegram.18

II. This Government believes that the plight that exists in the sugar industry today arises in large part from the governmental stimulants to production. The protective and preferential duties, subsidies, bounties, rebates, et cetera, under which seven-eighths of the world sugar supply is produced or marketed, have stimulated local uneconomic production, have diverted and twisted the channels of international trade in sugar from their normal course, have brought about differentials in local prices above world prices, but collectively have depressed the world price so that the effect has been to lower returns to the industry generally.

It cannot be expected that national action can solve a problem essentially international in character. For this reason the American Government strongly urges that steps to curtail the use of these devices be agreed upon and put into effect as rapidly as possible. So important is this to the American Government that it is prepared to proceed immediately and unilaterally, after receiving the approval of Congress of the sugar plan now before it, to lower its sugar tariff in order to permit a neighboring country to sell a substantially greater [Page 673] amount of sugar within its confines than during recent years and insure increased marketings from that country by quota provision. At the same time, it will make certain payments to sugar beet and cane sugar farmers in return for the agreement by them to limit production.

Moreover, this Government believes that at least a partial solution of the present difficulty lies in a further and more rapid increase in consumption. In this connection the matter of excise duties on sugar is important, for even though import duties be lowered, high excise duties may prevent an increase in consumption. It is pointed out lowered excise taxes may stimulate sugar consumption, thereby augmenting and not diminishing revenues derived from these taxes. It is suggested that the governments concerned may desire to give careful study to this matter.

III. The American reply to the invitation to participate in the preliminary conference states in part:

“It is noted that in case it is decided to convene a meeting of wider scope, the principal importing as well as exporting nations will be invited.”19

The American Government considers it highly desirable that to international conferences designed to elaborate plans to control production to the end that prices may be raised or prevented from falling, there be invited the principal nations, which would bear the brunt of such relative or absolute price increases.

In this connection there may be cited the action of the Monetary and Economic Conference in London last summer in establishing the principles to which all agreements concerning the coordination of production and marketing should conform. Particularly under 3 (d) of Section II of the Report of the Economic Commission, as adopted by the Conference, the following principle was laid down regarding such agreement:

“(d) It should be fair to all parties, both producers and consumers, it should be designed to secure and maintain a fair and remunerative price level, it should not aim at discriminating against a particular country, and it should as far as possible be worked with the willing co-operation of consuming interests in importing countries who are equally concerned with producers in the maintenance of regular supplies at fair and stable prices.”20

There are attached hereto eight annexes, providing factual and statistical data, and interpretative analysis with regard to both the world situation and that of the areas supplying the American domestic [Page 674] market. Should any particular problem arise not covered by these annexes or for which additional data is necessary, the Department will endeavor, upon your request, to secure the desired information.


Memorandum with regard to the sugar situation as it affects the areas supplying the American domestic market, dated February 21, 1934, prepared by the Department of Agriculture.
Memorandum on sugar prepared for the Economic Committee of the League of Nations by Dr. Prinson Geerligs, Mr. F. O. Licht and Dr. Gustav Mikusch, dated, April 15, 1929—Geneva. (Official No. C. 148.M.57)
The World Sugar Situation, a report by the Economic Committee of the League of Nations, July 4, 1929, Geneva. (Official No. C.303.M.104)
Memorandum on the Aims and Provisions of the International Sugar Agreement of May 9, 1931, prepared by the International Sugar Council. (Document C. D. 242)
Documents Relating to Sugar of the International Monetary and Economic Conference—London, 1933.
Report of Secretary of Agriculture on World Trade Barriers in relation to American Agriculture; June 7, 1933, pages 266288; (Senate Document No. 70; 73d Congress, 1st Sess.)
United States Tariff Commission Statistics on Sugar—August 1933.
United States Department of Agriculture Tabulations showing the world production of sugar and international trade of all important sugar exporting and importing countries, 1928 to 1933 inclusive, and average for years 1921 to 1925. Compiled February 14, 1934.
  1. Not printed.
  2. H. R. 8861, Congressional Record, vol. 78, pt. 5, p. 5691.
  3. Department of State, Press Releases, February 10, 1934, p. 77.
  4. See infra.
  5. See telegram No. 14, p. 669.
  6. League of Nations, Monetary and Economic Conference, Reports Approved by the Conference on July 27th, 1933, p. 19.