Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

800.8836/1216

The Ambassador in Cuba (Braden) to the Secretary of State

No. 5653

Habana, January 11, 1944.
[Received January 14.]

Sir: Supplementing the Embassy’s air mail despatch No. 5420 of December 15, 1943 (file No. 815.6), transmitting a copy and translation of the Cuban Government’s note No. 3567 of December 2, 1943,⁵⁶ regarding the rights claimed by the several American-owned terminal companies under their respective concessions, I have the honor to enclose a copy and translation of the companies’ reply⁵⁷ to the arguments presented by the Cuban Government. This reply has been prepared jointly by the three leading American-owned terminal companies and is signed by their local managers and countersigned by their attorneys.⁵⁸

While the companies’ reply contains a few weak points, their arguments are, in the Embassy’s opinion, on the whole sufficiently sound successfully to refute the Cuban Government’s contention that their respective concessions had become impaired or even invalid. The reply points out that “these concessions are, in reality, administrative contracts of public law which, as such, cannot be the subject of modifications through the exercise of the sole volition of the Government that granted them”.

The Department will doubtless wish to study the terminal companies’ reply carefully in conjunction with the Cuban Government’s note No. 3567 of December 2, 1943, and in the event it agrees with the Embassy that the terminal companies’ concessions are still in full legal force, I hope that I may be instructed to present a strong protest to the Cuban Government in reply to its note No. 3567, and to demand that the rights of the terminal companies be upheld.

Prompt action along the lines suggested appears all the more desirable in view of the promulgation of Decree No. 2 of January 3, 1944, of which a copy and translation are enclosed.⁵⁷ Decree No. 2, in addition to providing for a 15 percent wage increase for all Habana port workers (except for handling sugar), prohibits the terminal companies from increasing their charges to local importers and exporters to offset this added expense. (Please see the Embassy’s strictly confidential telegram No. 18, January 8, 1944, 4 p.m.⁵⁷)

The terminal companies propose to protest against Decree No. 2 through the prescribed legal channels on the ground that it violates the terms of their concessions. They will demand the right to raise their rates sufficiently to offset the increase in wages. If their protest is accepted, it is their intention to make a corresponding increase in their charges to local importers and exporters after thirty days’ advance notice. Should their protest be denied, however, the companies intend to seek the help of the steamship lines, requesting them to increase freight charges on incoming vessels sufficiently to enable them to reimburse the companies for their additional out-of-pocket expenses.

While the second alternative mentioned above would, if practicable, afford the companies financial relief, it would, of course, in no way settle the fundamental issue involved, namely, whether the terminal companies have any concessionary rights or whether the Cuban Government, by such measures as Decree No. 2, may order increases in the companies’ expenditures while at the same time restricting their revenues.

The companies maintain, and I am inclined to agree, that these measures are of a confiscatory nature and they fear that unless a strong restraining influence can be placed on the Cuban Government, further measures of a like nature may be enacted, with the result that the companies may eventually lose their entire investments in these properties.

The Department, in view of the seriousness of the situation, may wish to bring it forcibly to the attention of the Cuban Ambassador in Washington, in addition to instructing me to present a strong protest to the Cuban Government here.

In view of the urgency of this matter, I would appreciate receiving a reply at the Department’s earliest convenience.

Respectfully yours,

Spruille Braden

56. Neither printed.
57. Not printed.
58. Havana Docks Corporation, United Fruit Company, and Compañia Terminal Cubana Americana. The managers and attorneys representing these companies were Antonio Rosado and Oscar Montero, respectively, for Havana Docks, Isidoro González and Jorge E. de Cubas for United Fruit, and C. H. C. Pearsall and Carlos Figueredo for Compañia Terminal.
57. Not printed.
57. Not printed.