837.61351/9–1344

Memorandum of Conversation, by the Assistant Chief of the Division of Caribbean and Central American Affairs (Scherer)

At the meeting of September 1340 Mr. Wilson presented £ Memorandum of the same date41 offering to purchase the 1945 Cuban crop at 2.75 cents per pound or the 1945 and 1946 crops at 2.65 cents. In addition, local consumption was to be raised to 250,000 short tons per year and 25,000 short tons to be released by Commodity for 1944 Cuban local consumption. Blackstrap molasses was to be sold at the same price as in 1944.

Dr. Seiglie expressed disappointment at the proposal, indicating that a 2.75 cent price is tantamount to 2.65. He regretted that Cuba could not accept the new proposal and hoped that the two Governments can get together in the future. Mr. Wilson replied to the effect that an additional income of from $8,000,000 to $10,000,000, which a 10-point increase would mean, could hardly be considered as equal to the former return. He spoke of the inflationary pressure in Cuba that would be caused by a higher price and also stated that supply prospects for additional sugar in the future are favorable.

Dr. Seiglie reviewed the position of sugar in Cuban economic history, pointing out that 10 lean years of losses and a few years of profits did not signify that Cuba has had an easy time. Costs have risen and it would actually be impossible to produce the 1945 crop at a profit with the price at 2.75 cents. Indeed, Dr. Seiglie intimated that Dr. Grau’s Government,42 which he represents in the negotiations, must give an increase in wages to meet higher costs of living, even though the Batista Government had already boosted salaries.

Mr. Godoy also pointed out that the price of 2.75 would not permit the Colonos to operate at a profit.

An attempt was made by Mr. Wilson to divert the discussions into consideration of price stabilization assistance by the United States Government which would help Cuba maintain a competitive position in the post-war sugar market. Dr. Mañas stated the Cuban Delegation would be ready to discuss price stabilization only with the understanding that a higher price would be in line.

The Cuban position on price is elastic but it would include a satisfactory safety clause, price stabilization, and other features. When asked how low Cuba would be willing to go in price, Dr. Mañas replied [Page 945] the Delegation would consider an offer of 3.30 cents for two crops. Dr. Seiglie said he would present a memorandum tomorrow. Mr. Wilson mentioned the United States Delegation would be glad to review it. Another suggestion for a joint press release was deferred for later discussion.

It was evident, in part, that the Cuban Delegation was disposed to delay its return to Cuba, although there is as yet no common meeting ground for price.

  1. The list of participants in this meeting differs from that of the September 5 conversation (memorandum of September 6, supra) by the substitution of Oscar Albertini for José Casanova, and the addition of E. M. Shulman of the War Food Administration and Carl Gibboney of the Foreign Economic Administration.
  2. Not printed.
  3. Ramón Grau San Martín was elected President of Cuba on June 2, 1944, and took office October 10, 1944.