Foreign Relations of the United States Diplomatic Papers, 1936, The American Republics, Volume V

611.236 Sugar/11

The Chargé in Peru ( Dreyfus ) to the Secretary of State

No. 4726

Lima , September 16, 1936.
[Received September 22.]

Sir: Referring to the Embassy’s despatch No. 4720⁵ of September 14, 1936, particularly its penultimate paragraph concerning the local sugar crisis and Peru’s efforts to assure a quota for her sugar exports, I have the honor to enclose a copy of the text of the memorandum which Dr. Alberto Ulloa, Minister for Foreign Affairs, handed to me this morning.⁶ Since the Foreign Minister advised me that a copy of this communication had been sent to the Peruvian Ambassador at Washington in the preceding airmail for delivery to the Department, a translation has not been prepared.

The memorandum is practically a reflection of the series of articles which have appeared in the Lima press during the last few weeks. It is considered an indication that now the Government of Peru has placed itself squarely behind the sugar growers in their demand for a 200,000 ton sugar quota in the United States market, with a virtual threat that if this request is not given favorable consideration, the Government of Peru will be constrained to retaliate against the United States by placing restrictions on the latter’s exports to Peru: the Government evidently has in mind Chile’s recent action⁷ along these lines. Other countries would then have the opportunity to supply the products which will no longer be permitted to come from the United States. This is the impression which is gained from the first paragraph of the Foreign Minister’s memorandum and also from the language in the eighth paragraph which states that failure to assure the sugar quota which Peru requests would result in Peru’s “immediate adoption of a policy of action which would bring about at the same time a more balanced trade (between the two countries), by means of a change in the present method of imports from the United States, since public opinion requires such action”.

The Government of Peru is firmly convinced that the United States is responsible indirectly for the loss of Peruvian sugar markets abroad, as a result of the preferential treatment accorded by the United States to Cuban sugar. In this connection, the special attention of the Department is directed to the following statements contained in the memorandum:

“…if the Government of the United States wishes to aid the Government of Peru, it can secure from the Government of Cuba the cession or transfer in favor of Peruvian sugar of 200,000 tons, which is only a small proportion of the enormous quota of 1,700,000 tons accorded to Cuba”.

also

“…the Government of Peru is convinced that the Government of the United States could advise Cuba (to suppress its dumping of sugar on the world markets) and that this advice would be followed by the Government of Cuba”.

A further important point in the memorandum is the proposal that, provided the 200,000 ton quota is granted,—

“it would permit the Government of Peru to secure from the sugar growers an equitable tax which could be utilized for service on the external debt”.

This proposal has been made repeatedly to the Ambassador by the President and the Minister for Foreign Affairs during the exploratory conversations concerning the possibilities of negotiating a commercial agreement between Peru and the United States.

The decision of the Government as contained in the memorandum was reached after due investigation of the economic, political and social problems involved in the local sugar industry, and due consideration was given to the petitions of the National Agrarian Society. For background purposes, it may be recalled that members of this Society have been sufficiently influential to jam through the recent Commercial Agreement with Chile; to overthrow the Leguia regime through their support of Sanchez Cerro;⁸ and to bring to a successful conclusion the new Commercial Agreement with Great Britain,¹⁰ which is ready for signature.

Respectfully yours,

Louis G. Dreyfus, Jr.

5. Not printed.
6. The same memorandum was presented to the Secretary of State by the Peruvian Ambassador on October 6; for text, see infra.
7. See section entitled “Efforts of the Department of State to Secure Equitable Treatment for American Interests With Respect to Chilean Exchange Restrictions,” pp. 324 ff.
8. See Foreign Relations, 1930, vol. iii, pp. 720 ff.
10. See pp. 908 ff.