837.61351/4243
The Ambassador in Cuba ( Braden ) to the Secretary of State
[Received October 6.]
Sir: Referring to my despatch No. 4582 of September 24, 194313 and previous correspondence relative to Central Tinguaro, I have the honor to transmit the official text (Official Gazette No. XVIII of September 24, 1943) and an English translation of same, of the [Page 206] Decree which provides for the seizure of the mill and property by an interventor of the Cuban Government.14
The decree is an interesting document and in my opinion merits careful perusal, if for no further reason than that it may lead to difficult and perhaps unpleasant developments before the problem is finally settled. As already reported, the interventor (Sr. José Cala-vechia, an Italian-born Cuban engineer), has extremely wide powers which include the seizure of the property, the reconstruction of the mill and the operation of the enterprise for an indefinite period—all at the expense of the owner, the Cuban American Sugar Company. Moreover, the Company cannot regain possession without entering into commitments as to future operation considered satisfactory by the Cuban Government, and reimbursing the Government in full for all expenses incurred during the period of intervention.
The text of the decree, particularly its preamble, has obviously been drafted with an eye to the political situation. Citation is made to the Government’s wartime emergency powers as authorizing the Government’s step, but the various paragraphs are devoted primarily to the “social responsibility” of mill owners, the social functions performed by sugar mills, the rights of workers, the importance of Tinguaro to the economic life of its zone, et cetera, with no reference to the uneconomic operation of the mill (alleged by the Company—I am seeking specific figures), or the fact that since the Tinguaro cane could be ground by other mills in the vicinity the only workers who would really be affected if Tinguaro were abandoned would be the 368 mill employees and their families. While obviously it is desirable that steps be taken on behalf of these workers, it appears at least debatable whether the seizure of private American property in the circumstances set forth in the decree, represents a solution. Furthermore, the decree does not even approach the basic problem of the economy of the sugar industry of Cuba, or the future of that industry in terms of high costs resulting from artificial maintenance of marginal units.
All in all I can only consider the Government’s seizure of Tinguaro us an expedient adopted for primarily political purposes, and if it is resisted by the Company (as appears to be its intention) the prospects are that protracted difficulties may ensue. Finally I am concerned not only with respect to the sugar aspects of the problem but also on the effect of this move—especially should it prove “successful” from the point of view of the Cuban Government—on property rights in general in Cuba. It was for this reason that I drafted my note of September 23 to the Minister of State15 in such a way as to leave no doubt [Page 207] in the mind of the Cuban Government concerning the views of my Government relative to expropriation and compensation.
As intimated in previous despatches I do not consider that the blame for the present unfortunate situation can be placed exclusively at the door of the Cuban Government. As a result of my informal steps with the Prime Minister last winter, shortly following the fire, seizure by the Cuban Government at that time was avoided, and an opportunity was given to the Cuban American Sugar Company to come forward with counter proposals and suggestions and to make a genuine effort to meet the legitimate desire of the Cuban Government to solve the social-economic (and political) problem of the Municipality of Perico, of which Central Tinguaro is the principal source of income. Mr. Keiser, President of the Cuban American Sugar Company, agreed to pay the batey workers for the period of the zafra, which he did to the extent of over 40,000 pesos, but thereafter by his procrastination he unquestionably gave the Prime Minister grounds for irritation and for asserting “recalcitrance” on the part of the Company, notwithstanding numerous warnings which I gave Keiser, supplemented by repeated discussions of the case with Dr. Arturo Mañas, that unless Keiser bestirred himself the Prime Minister would lose patience. During my absence in Washington last June and July the matter was brought urgently to the attention of both Keiser and Mañas by Mr. Briggs, and very shortly after my return to Habana on July 23, I again urged Keiser to come to Habana, since it then appeared that unilateral action might be taken shortly after the then-scheduled opening of the Special Session of the Cuban Congress in the first week of August. It is true that Mafias has spent a large part of the past two months in Washington in connection with the Cuban Government sugar matters, but I do not regard his absence as any valid reason for the non-appearance of Keiser himself in Habana.
In short, I believe that the record indicates inescapably that Keiser has given grounds to the Cuban Government for alleging delay, resistance, et cetera, which contributed to provoking the seizure of the Tinguaro property.
Dr. Mañas “personal letter” to Dr. Zaydín16 (the text accompanied despatch No. 4582) in which he established as conditions prerequisite to reconstruction by the Company a permanent addition to Tinguaro quotas of 40,000 bags and a reduction of 50 per cent in railway freight charges, did nothing to advance the problem. With respect to the additional quota, Mañas is perfectly well aware that no such increase could be given one mill without igniting an explosion of protest from other hacendados, each of whom would probably argue with equally vehement eloquence that his proportional participation in future crops [Page 208] should similarly be raised. Mañas’ suggestion even involved the danger of encouraging the Cuban Government to reopen the whole question of quotas, as established seven years ago by Decree-Law No. 522, to the satisfaction of the industry as a whole. With regard to freight rates, Tinguaro may have a case for special consideration, but insofar as I am aware the Company has never, between January 23 last when the mill was damaged by fire, and September 24 when the decree was published, submitted any detailed figures or analysis in support of its contention.
I conclude therefore that whereas the unilateral action taken by the Cuban Government was no doubt ill-advised and probably uneconomic, as well as responsive principally to short-term political consideration, nevertheless the Company must bear a substantial share of the responsibility for its failure to take steps which in my judgment might well have avoided this seizure.
Now that the issue has been joined, it is difficult to foresee how either side can readily extricate itself. I believe that our Government should stand on the principles set forth in my note to the Minister of State of September 24 [23], at the same time exercising our continued informal good offices in an effort to work out some practical compromise solution.
A complicating factor is the pending charge of culpability in regard to the fire which the Cuban Government has brought against the local Manager, Mr. Harris, and certain Tinguaro personnel. I do not believe that Mr. Keiser has thus far viewed this case and the possibility of a verdict of guilty (with attendant highly unfavorable publicity) with sufficient seriousness.
Respectfully yours,