837.61351/3–1745: Telegram

The Chargé in Cuba ( Muccio ) to the Secretary of State

185. The following comments are submitted in reply to the Department’s 161 of March 16, 11 a.m.

With industrial alcohol at 65 cents per gallon it is more profitable for sugar mills operating distilleries as adjuncts there to [,to] manufacture alcohol instead of sugar. It is assumed therefore that consideration has been given to the establishment of safeguards against [Page 928] the possible diversion by such mills of cane juice or even sugar to the production of alcohol.
When the amount of “free” and local consumption sugars has been definitely agreed upon it should be driven home to the Cubans that under no circumstance will these amounts be increased and that any exports of products containing sugar will have to be made against these quotas.
With regard to stevedore rates the Embassy feels it is entirely too late to avoid assuming the burden of the recent increase of port workers wages officially ordered by the Cuban Government in their decree No. 431 effective February 14. On the other hand, the United States Government which today pays approximately 90% of these charges should not be exposed to the possibility of having to assume the cost of further unilateral increases. At the same time, with the present delicate labor situation in Cuba it is altogether too dangerous for the United States Government to be placed in the position of being responsible in the eyes of labor for freezing wages paid to Cuban workers. Therefore there should be no notes exchanged prohibiting wage increases but it should be definitely stipulated in the contract or otherwise that any increases subsequent to Decree 431 will be for the sellers account.