837.61351/2458

The Ambassador in Cuba (Messersmith) to the Under Secretary of State (Welles)

Dear Sumner: The sugar financing bill passed the House day before yesterday with only one vote against it. I understand that this one adverse vote was cast by Carlos de la Cruz. You may recall the Senate passed the financing bill with not a single vote cast against it and with well over 40 Senators present at the time the vote was taken. The President has signed the bill.

There has been a long delay in this financing measure being approved by the Congress, but as I told you in my rather full letter of March 152 this delay in many respects has had its advantages, for it made possible the clearing up of many situations in the industry and the basis has been laid for more stable conditions in the sugar industry. As I pointed out in my letter of March 1 to you, longstanding difficulties between hacendados and colonos have been worked out on what seems to be a mutually satisfactory basis. The Institute has been reestablished for the period of the sugar arrangement, and the internal administration of the Institute is improved as a result of all [Page 236] these discussions and the financing law. Decree-Law 522 is renewed without any alteration which we consider substantial. When we realize how deep-seated and real were the difficulties between hacendados and colonos, what definite criticism there was of the Institute and opposition to the prolongation of its life, and how many interests were combined to prevent a prolongation of Decree-Law 522, this action of the Cuban Congress—especially the final vote on the financing bill—becomes all the more significant. …

Although the financing bill is of primary importance and vital in the maintenance of the economic, and therefore of the political, situation in Cuba, there are many other reasons why this financing arrangement is of importance and advantage to both Cuba and ourselves. Without this financing arrangement the Institute was dead, and the present equitable distribution of quotas would have been destroyed. Without the financing arrangement it would have been impossible to secure the renewal of 522, which, as you and I know, is essential to stable conditions in the sugar industry. If 522 had not been renewed there would have been an orgy of private interests, and Cuban and particularly American interests would have been affected. You and I realize that this discrimination against American sugar interests, which would have resulted from the failure to renew 522, would have been the invitation for and opened the way to discrimination against other American interests.

Growing out of the discussions which I have had with Batista, Cortina, Saladrigas, and others, over this sugar financing, there have come the most categoric declarations from them that under no circumstances must American interests be prejudiced or injured. I think there is more than words here, for I believe that the insistence which we showed with respect to 522 has had a salutary influence all around. You have performed a useful service in our relations with Cuba in general in maintaining the Department’s position so consistently that the renewal of 522 was of this primary importance.

I would like to think that we have passed another milestone on a road which we are endeavoring solidly to construct.

I should add that, although there has been this delay in the passage of the financing bill, it has not seriously affected either the economic situation or the industry, as there was the basic belief all the time that in some way or other the law would be voted in a satisfactory form. Although the grinding quota had been fixed at two million tons the mills were proceeding on the basis that the 400,000 provided by the bill were certain.

Now that this financing arrangement has been voted, and only the details need be worked out for the contract between the Bank and the Institute, Cortina is likely to go ahead more actively with the conversations [Page 237] on economic and financial cooperation. There has been no delay on my part, and I am awaiting the delivery by him of a memorandum which he informed me some weeks ago he was working on. My own preliminary impression is, without going into any detail at this time, that sufficient ground has really been cleared by the Cubans in meeting our conditions to enable us to go ahead. I am keeping in mind your strictly confidential letter to me of February 2755 in this connection.

As the Secretary was so much interested in this financing arrangement he may be able to find the time to read this letter.

With all good wishes,

Cordially and faithfully yours,

G. S. Messersmith
  1. Not found in Department files.
  2. Not printed.