Memorandum by the Chief of the Division of the American Republics (Bonsal)64

Ambassador Braden telephoned at 12:40 today with regard to the sugar proposal embodied in our airgram of yesterday.65 He stated that he was very much depressed at the terms of our latest proposal. In particular, he felt that the price of $2.55 proposed by us would be most adversely received by the Cubans—both the Government and the industry.

The Ambassador stated that he questioned the wisdom of presenting this proposal to the Cubans at all. He said that it would undermine President Batista and that the Prime Minister would undoubtedly have to resign. The Ambassador proposed two alternatives:

Our current proposal with a $2.65 price. He said he believed he could put this across and get the President’s support.
A proposal based upon the Ambassador’s suggestions of the past few weeks, i.e., 2,700,000 at $2.65 with 300,000 tons of free sugar subject to a stock pile contribution in the event of an inter-American agreement on the subject.

I explained to the Ambassador the difficulties of our situation here in relation to the other agencies. I stated that I would submit his suggestions to you.

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(Personally, I have, as you know, questioned the desirability of the $2.55 price contained in the latest BEW–CCC66 proposal. I believe that we should attempt, on purely political grounds to secure the consent of these agencies to the $2.65 price. The Ambassador stressed that “the situation is very bad”.)

The Ambassador also mentioned two minor points:

(1) He said that he had understood from our 50 of January 967 that we would consent to assume storage and insurance charges after June 30, 1944, whereas our current proposal gives December 31, 1944 as the date when we take over these expenses.

(b) [(2)] In referring to our ceiling price proposal or escalator clause, the Ambassador indicated the desirability of assurances on our part that we would not give away the sugar which we are buying. I suppose that what he has in mind is that we will sell it through normal channels and not use it for relief purposes, the result of which might be to eliminate the possibility of any profit which would later be handed over to the Cuban Government and people. I made it very clear that there was no thought of turning over any profit directly to the sugar industry—I believe he is in full agreement on this point.

Philip W. Bonsal
  1. Addressed to the Under Secretary of State (Welles) and to the Adviser on Political Relations (Duggan).
  2. Airgram No. A–713, January 25, not printed; in this airgram the Department summarized for the Ambassador a modification of its December 17 proposal, and indicated its readiness to accept from the Cuban Government a “firm counterproposal” embodying the several alterations itemized therein (837.61351/3626a).
  3. Board of Economic Warfare and Commodity Credit Corporation; the latter was a corporate agency of the United States Government, authorized to purchase the Cuban sugar crop.
  4. Foreign Relations, 1942, vol. vi, p. 342.