837.51/2411
The Secretary of State to
the Ambassador in Cuba (Wright), Temporarily in
Washington
No. 1028
Washington, July 19,
1939.
Sir: You are instructed to proceed at once to
Habana and seek an audience with the Secretary of State, and present to
him the attached note.
You will indicate to the Cuban Government that this Government considers
as prerequisite to any resumption of converations leading to increased
economic cooperation between the two countries the settlement of the
admitted claims of Warren Brothers and Company and Purdy and Henderson
Company, and of the so-called Morris claim.21
The Government of the United States considers, further, that the
circumstances surrounding the discussions of November 1938, at which
time this Government expressed its willingness to enter upon a program
of economic cooperation with Cuba, have been materially altered by the
credit moratorium situation and the recent enactment of monetary
legislation22
referred to in the attached note. This Government believes that the
enactment of a satisfactory measure to liquidate the Cuban credit
moratorium and the amendment of the recently enacted monetary law to
eliminate certain undesirable features and ambiguities are essential to
the reestablishment of normal commercial and financial relations between
the two countries, and it is prepared, at the request of the Cuban
Government, to furnish competent technical experts to advise the
appropriate authorities of the Cuban Government in the determination of
the provisions of such legislation.
In view of the close relationship of the fiscal situation to an economic
atmosphere in Cuba favorable to the carrying out of a program of
economic cooperation, the Government of the United States considers that
the enactment of suitable tax legislation embodying the recommendations
of the Magill report, which was prepared at the request and expense of
the Cuban Government, would be most helpful.
You will further indicate that this Government is prepared, if the Cuban
Government takes action settling the claims of Warren Brothers and
Company and Purdy and Henderson Company, and the so-called Morris claim,
and disposing satisfactorily of the credit
[Page 531]
moratorium and monetary legislation matters
referred to above, to extend immediately to the Cuban Government the
benefits of a broad program of economic cooperation including:
- 1.
- The speedy conclusion of a supplementary trade agreement on
mutually advantageous terms, and the simultaneous signature of a
Treaty of Establishment and Navigation;23
- 2.
- The immediate consideration by the Government of the United
States of the extension of financial assistance for the carrying
out of a reasonable program of public works in Cuba;
- 3.
- Assistance by experts of the United States Department of
Agriculture in developing and diversifying agricultural
production;
- 4.
- Technical aid by the United States Treasury, if requested, in
putting into effect the recommendations of the Magill report;
and
- 5.
- The active cooperation of experts of this Government in
studying methods of improving the existing monetary, banking and
exchange systems of Cuba.
Very truly yours,
For the Secretary of State:
Sumner Welles
[Enclosure]
The American Ambassador (Wright) to the Cuban Secretary of State (Angel Campa)24
Excellency: As Your Excellency is aware,
my Government is sincerely desirous of maintaining with Your
Excellency’s Government relations of the closest and most cordial
cooperation. The friendship between the Cuban and American people
has endured unbroken over the many years that have elapsed since our
two countries fought side by side in the war that culminated in the
emergence of an independent Cuba. The intimate relations between our
two countries were further strengthened by the conclusion in the
year 1934 of the treaty25 which
provided for the abrogation of the Piatt Amendment.26 In
the same year, the economic relations of our two countries were
rendered more mutually beneficial through the negotiation of a
reciprocal trade agreement which has been of self-evident advantage
to each of the signatories.
To mention but one of the topics of mutual interest in connection
with which the warm and cordial relations existing between the two
Governments have proved of the utmost value, I refer to the
International
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Sugar
Agreement which was signed at London in May of 193727 and
which is recognized to have introduced a much needed element of
stability into the so-called world sugar market. As lately as last
month, the delegations of our two Governments to the International
Sugar Council,28 working together, were
able to bring about certain developments that greatly improve the
likelihood of an adequate and reasonable price for world sugars.
In November 1938 discussion was inaugurated of a program of economic
cooperation of the type which has subsequently been considered and
thereupon rendered effective as between the United States and other
American Republics. At the same time my Government indicated its
interest in supplementing the existing Cuban-American trade
agreement on mutually advantageous terms, as well as in taking other
steps demonstrative of the importance which it attaches to close and
harmonious relations with Your Excellency’s Government.
My Government stated that as a prerequisite to the favorable
consideration by the Export-Import Bank of the extension of credits
for any construction of public works in Cuba, there must necessarily
be involved the equitable adjustment of the obligations recognized
by the Cuban Government as legitimately due to certain nationals of
the United States: first, the final liquidation of the claims of
Messrs. Warren Brothers and Company and Purdy and Henderson Company,
which comprise the balance of the so-called Public Works Debt; and,
second, the payment of the so-called Morris claim which is based
upon a judgment in favor of the claimants rendered in 1929 and
upheld by the Supreme Court of Cuba in 1931.
With regard to the supplementary trade agreement, negotiation of
which has been pending since November 30, 1938, Your Excellency has
indicated that Your Government now desires to discuss a certain item
not included in the original announcement by my Government of its
intention to negotiate. You will recall that a full explanation of
the procedure which my Government observes in such negotiations was
made to appropriate officials of Your Excellency’s Government at the
time of that announcement, it having then been made clear that it
would not be possible for my Government to give consideration to a
concession on an item of the United States Tariff, unless that item
was included in the original announcement. The inclusion of any
additional item at the present time would therefore require a
special announcement followed by public hearings, which my
Government does not consider now practicable. It may be observed
that my Government has as yet received no reply to the specific
proposals which were handed to the Cuban Ambassador in Washington on
May 24.29
[Page 533]
In further pursuance of its desire to improve the relations between
Cuba and the United States, my Government has proposed for the
consideration of the Cuban Government a draft treaty of
Establishment and Navigation designed to solve some of the mutually
vexatious questions which arise from time to time regarding the
residence of nationals of one country in the territory of the other
as well as those relating to shipping and navigation. No specific
reply of an official nature has been received from Your Excellency’s
Government in regard to this matter but Your Excellency has
indicated informally that it might be held in abeyance pending the
meeting of the Constituent Assembly.
This Government has viewed with the greatest sympathy the desire of
the Cuban Government to enact legislation which will, in a manner
fair both to creditor and to debtor, lessen the burden of the
excessive and unduly onerous exactions which a certain category of
debtors in practice cannot meet. My Government, however, has on
frequent occasions called to the attention of the Cuban Government
the fact that very considerable investments of American capital have
been made in Cuba, and its hope that in justice to the American
investors the credit moratorium situation in Cuba will be solved
upon a basis, which while responsive to the just needs of the
debtors, would nevertheless provide an orderly procedure for
adequate and equitable repayment to the creditors. While my
Government understands that a full hearing was recently granted to
interested parties before the legislative commission appointed to
consider this matter, nevertheless the bill passed last week by the
Cuban Senate would not appear to have accomplished this objective,
nor to have contributed to the creation of that feeling of economic
and financial confidence in Cuba which could be regarded as
conducive to the carrying out of those measures of cooperation which
my Government has expressed its willingness to undertake.
The situation has further been aggravated by monetary legislation
recently enacted, the terms of which have given rise to highly
undesirable ambiguities of interpretation and resultant dislocation
of commerce between the United States and Cuba. Your Excellency will
recall in this regard that the bearing of this legislation on the
trade agreement between our two countries was the subject of
repeated representations and inquiries by me on July 6, 7, and 8
and, furthermore, that I had the honor to make similar inquiries of
the President of the Republic on the eighth instant. At that time I
was assured by the President, as well as by Your Excellency, that no
violation of the existing trade agreement between Cuba and the
United States was intended and, further, that the regulations to be
prepared for the enforcement of this measure would carry ample
assurances in that regard. These regulations, however, have not as
yet appeared, and
[Page 534]
while my
Government is confident that they will embody the aforesaid
assurances, it is the belief of my Government that the necessary
clarification might advantageously be incorporated in the law itself
in order that any difficulties of interpretation may subsequently be
avoided.
In view of all these circumstances, my Government regretfully finds
itself obliged to inform Your Excellency that all studies with
respect to the aforesaid program of economic cooperation and looking
toward the improvement of commercial relations between the two
countries have been suspended on the part of the United States,
pending a clarification of the situation and of the specific matters
which are alluded to in this note. Furthermore, it is the intention
of my Government, because of the highly undesirable state of
uncertainty among those engaged in trade between Cuba and the United
States as a result of the facts set forth above, to make public
announcement on August 1, 1939 to the effect that the negotiations
looking toward a supplementary trade agreement with Cuba have been
indefinitely suspended.
I avail myself [etc.]
[File copy not signed]
