837.5018/71
The Ambassador in Cuba (Braden) to the Secretary of State
[Received January 1, 1944.]
Sir: I have the honor to transmit to the Department a copy and translation of the reply of the Cuban Government39 to the price stabilization proposals regarding foodstuffs which were advanced by agencies of the United States Government. A copy of the Embassy’s note No. 1155 of October 25, 1943, transmitting such proposals to the Cuban Government was forwarded to the Department in Embassy despatch No. 5002 of November 3, 1943.40
The reply of the Cuban Government includes a memorandum from the Office for Regulation of Prices and Supply in which that organization describes various situations which prevent it from pledging not to increase during 1944 the ceiling prices for rice, wheat flour, beef, milk and charcoal. Assurances against such price increases were requested in the Embassy’s note in return for our assistance in supplying Cuba with rice, wheat flour and lard. The Minister of State now asks the opinion of the United States Government as to what measures are necessary for the proper adjustment of the price stabilization undertaking.
The arguments presented by the Office for Regulation of Prices and Supply may be summed up briefly as follows:
- 1.
- Rice. Cuban importers have been unable in recent months to purchase their usual types of United States rice with a high broken content, on. which Cuban ceiling prices are based. Instead, United States mills have been willing to sell only rice with a low broken content, whose cost makes impossible its purchase and sale under Cuban retail ceilings and thereby contributes toward general disregard of such ceilings. The ORPA believes that, unless the United States can undertake to supply Cuba with its usual types of rice with a high broken content, the ceiling prices in Cuba may have to be raised to cover the [Page 222] increased costs of the better quality rice. The Embassy’s opinion is that the analysis made by the ORPA is essentially correct with respect to the arguments set forth.
- 2.
- Wheat Flour. The price plan for wheat flour is stated to be the same as during 1943, yet the price for 1944 is based on New Orleans shipment instead of on Tampa, as last year. During 1943, most flour moved through ports other than Tampa, and as Tampa involves the highest freight cost, a considerable saving was made by Cuban buyers. The shift to New Orleans basis eliminates most possibilities for such savings during 1944. ORPA therefore contends that the basis should be shifted to Tampa in order to continue the prices as delivered to Cuban buyers at the same level as in 1943. The Embassy believes that ORPA is not illogical in this attitude, but on the other hand the United States neither in 1943 nor in 1944 assured Cuba anything beyond a maximum price c. i. f. Habana.
- 3.
- Beef and Milk. Cattlemen and dairymen of Cuba are applying great pressure to the ORPA for an increase in ceiling prices for meat and milk, threatening to stop deliveries and to curtail production if ORPA does not accede to their demands. ORPA so far has resisted such pressure but evidently does not feel sufficiently strong in its position to pledge to the United States that it will not capitulate.
- 4.
- Charcoal. Retail ceiling prices for charcoal have been ineffective during the past half year. Attempts by the ORPA to gain control by manipulation of producer prices and dealer margins have been unsuccessful. The ORPA realistically recognizes that it may be the best policy to increase the retail maximum in order to place the ceiling price somewhere in line with current selling prices, since enforcement of any lower price has proved impossible.
As the appropriate agencies of the United States Government apparently desired the blanket assurances of the Cuban Government against retail price increases, in return for the United States assistance with price stabilization for rice, wheat flour and lard, the Embassy desires to know whether or not the exceptions made above are acceptable to the United States agencies. It is the Embassy’s opinion that a reiteration of our request that there be no price increases might meet with the ultimate acquiescence of the Cuban Government. The result of this, however, would be in all likelihood a complete breakdown of ceiling price enforcement, so that the better policy might be agreement to controlled price increase when demonstrated to be clearly essential.
Respectfully yours,
Counselor of Embassy for Economic Affairs