837.61351/3669
The Ambassador in Cuba ( Braden ) to the Secretary of State
[Received February 24.]
Sir: I have the honor to refer to my despatch no. 2242 of February 18, 1943, and enclosure no. 288 thereto reporting the contemplated action of the Prime Minister89 to issue a decree whereby the Cuban Government would take over the Tinguaro property and reconstruct the mill thereon. It will be recalled that this mill belongs to the Cuban-American Sugar Mills Company and was approximately 50% destroyed by fire several weeks ago.
Mr. Kaiser,90 President of the company, arrived in Habana about the middle of January and had a meeting with the Prime Minister on February 5. At this gathering, which was also attended by the company’s attorney, Dr. Arturo Mañas, the Prime Minister strongly urged that the company reconstruct the mill in order to give employment to the workers therein. Mr. Kaiser stated his belief that his directors would be unwilling to do this unless they were assured by the Cuban Government that this property, which he claims has been unprofitable, could be placed on a basis where it could operate without loss, and to this end he demanded as a [Page 199] quid pro quo for his company’s carrying out its reconstruction that the government assign an additional quota to the property and obtain a reduction in railroad freight rates for it. The Minister replied that he would favorably consider such action once the mill had been reconstructed by the company, but that unless this work were commenced forthwith the government would be compelled to intervene, take over the property, operate it for a period and reconstruct the mill itself for the company’s account.
On February 12 the Prime Minister advised me that the President91 had ordered him to intervene in the mill immediately, and to this end a decree was being drafted. The Prime Minister also expressed great annoyance because despite Mr. Kaiser’s promise to consult with his Board of Directors in New York, a week had passed and Mr. Kaiser had not even left Habana.
The following day Mr. Kaiser called on me, and I expressed my regret that he had not done so before since probably my good offices might have been more effective if I had been consulted before matters had reached such an impasse with the Prime Minister. However I was able to induce the Prime Minister to defer any action until a more thorough discussion had been had.
Accordingly on February 15 I attended a meeting at the Prime Minister’s office at which in addition to Dr. Zaydín and myself there were present Minister of the Presidency Lόpez Castro, Mr. Kaiser and Dr. Mañas.92 The Prime Minister still demanded that the company agree forthwith to reconstruct the mill and said that otherwise the decree which he held in his hand would be issued immediately giving effect to the government’s intervention. Mr. Kaiser refused to commit himself but indicated that his directors would consider it a better course for the company to collect approximately $400,000 of insurance covering the loss by the fire, to have its cane ground in other mills in the vicinity and not reconstruct a plant which had been a losing venture for fifteen to twenty years with the sole exception of 1942.
I pointed out to Mr. Kaiser that the government was faced with a difficult social and political problem, that neither the State Department nor this Embassy could do more than exercise good offices unless it should be established at some time that there had been a denial of justice93 and that this might be difficult to do since the Cuban Constitution provides that inherent in property rights are social obligations. I also pointed out that intervention in this property might have repercussions on his company’s four other centrals94 and on American investments in the sugar industry in general. I said that to avoid all of the [Page 200] disagreeableness, including the possible criminal suits alleging arson in the case of the fire, that I felt the company should be willing to make some effort to ease the Prime Minister’s problem and that this, I thought, might be done if the company would agree, pending its reaching a decision with respect to reconstruction, to pay normal wages to its employees who had been deprived of work by the fire.
On the other hand I explained to the Minister that in view of our stringent laws I felt Mr. Kaiser was entirely accurate in his allegation that he could not take any action without the prior approval of his Board, I explained Mr. Kaiser’s delays as misunderstandings. I expressed the hope that the Minister’s problem from the social and political aspects might be temporarily assuaged through the payment of wages I had suggested to Mr. Kaiser.
It required several hours to accommodate the differing viewpoints of the Prime Minister and Mr. Kaiser, but I am now glad to enclose copy of Acta dated February 1695 from which it will be noted that the intervention in the mill has been deferred and that Mr. Kaiser has through February 23 in which to advise whether or not the company will pay its mill workers the normal wages they might have expected this season. In any event these wages will be paid through February 23, and the company will have until March 9 to determine whether it will or will not reconstruct. If it should decide not to reconstruct then the government may intervene, but will not take over company revenues unless the company is relinquished from the obligation to pay wages.
That even this temporary solution has eased the situation is indicated by the following telegram which has just been received:
“Concentraciόn trabajadores y pueblo felicita su actuaciόn en el grave problema central Tinguaro.
“Sindicato Central Tinguaro”.96
I sincerely hope that the company Board of Directors will decide to reconstruct the mill, particularly as the Prime Minister has promised Mr. Kaiser in Dr. Mañas’ and my presence that the government will do its utmost to improve his corporation’s earnings. While there is no question that there are too many sugar mills operating on this island, it is also true that through the years communities have been built up around the centrals so that their sudden cessation, as in the present instance, would entail severe hardship on the workers, and undoubtedly a social obligation does devolve on these sugar companies.
[Page 201]In my opinion this Tinguaro affair has vividly brought to the fore the necessity which exists for sometime effecting a complete reorganization of the sugar industry in Cuba.
Respectfully yours,
- Neither printed.↩
- Ramόn Zaydín.↩
- David Keiser.↩
- Fulgencio Batista y Zaldívar.↩
- Arturo M. Mañas, consulting lawyer.↩
- For explanation of this term, see footnote 49, p. 124.↩
- Sugar mills.↩
- Not printed; it was a formal memorandum of a conversation that took place on February 16 between Zaydín, Lόpez Castro, Keiser, and Mañas in which the Cubans presented a 9–point statement of their idea of the Company’s obligations to its workers and in which Keiser explained that company action must await decisions of the Board of Directors in New York.↩
- “The mass of workers and people praise your action in the serious Tinguaro Mill situation. Tinguaro Mill Syndicate.”↩