837.61351/4–945
The Ambassador in Cuba (Braden) to the Secretary of State
[Received April 13.]
Sir: I have the honor to refer to the Department’s telegram no. 154 of March 14, 4 p.m., regarding the negotiations for the sale of the 1945 Cuban sugar crop and specifically to the first sentence of the second paragraph thereof in which it was stated that “the failure of the 3–cent gentlemen’s agreement of last October to effect a prompt settlement” was especially disturbing to the WFA.74 As this statement indicates that the impression may exist in Washington that President Grau failed to live up to his commitment to me in the premises, I feel that the following comments are in order so that the Department may be fully informed in the evemt this question should be raised at some future date by any of the other interested agencies of our Government:
[Page 929]Grau’s commitment of last October was that we would get Cuba’s 1945 crop sugar. While he stated that 3 cents was acceptable to him, he did not at any time indicate that he would not prefer a higher price, and it will be recalled that he subsequently requested my assistance in obtaining at least 3.05 cents and that this request was transmitted to Washington (please see my telegram no. 1097 of December 30, 1944, 7 p.m.75).
When the 1945 crop began, the President did fulfill his promise that we would get the sugar and the sugar started flowing to the United States at once on a provisional 3-cent basis. Had we been adamant in refusing to consider any price higher than 3 cents, I feel confident that we would have eventually reached an agreement at that figure and that, if necessary, the President himself would have instructed the Cuban negotiators to accept the 3-cent price. It was, perhaps, too much to expect that he would force the issue so long as there was any possibility of obtaining a higher price and, as a matter of fact, it would have been imprudent for him to do so in view of the political inexpediency of such a move. The sale of the sugar crop has been a red hot political question each year since 1942, and for Grau to have forced the sale at 3 cents would have greatly weakened his political position in an already difficult general situation.
It was the decision of our commission in Washington (a decision which had my full and unqualified approval) that the Puerto Rican strike had forced our hand and that a prompt agreement with Cuba was therefore essential. The result was their offer of 3.05 for 1945 and 3.10 for two years and even though the members of the Cuban mission had not been quite so avaricious, it was perhaps only natural for them to counter with an offer of 3.10 for one year.
It should be observed, however, that up to the afternoon of March 12, when the decision to increase our price because of the Puerto Rican situation was telephoned to me, the 3 cent price had been accepted—grudgingly, but accepted—by the industry in Cuba as final and our ethical and highly proper procedure in voluntarily raising the price was regarded as manna from heaven.
In short, President Grau throughout the entire negotiations lived up to the spirit of the gentlemen’s agreement of last October and if at any time it had come to a showdown he would have seen to it that we got the crop at 3 cents. Moreover, this was clearly evidenced by his instructions early in January to arrange for the free flow of sugars to the United States despite the fact that the negotiations for the sale of the crop had not been concluded.
Respectfully yours,
[Contracts for the purchase of sugar, blackstrap molasses, and ethyl alcohol from the 1945 Cuban sugar crop were signed in Habana on April 26, 1945 (none printed), by Ambassador Spruille Braden, representing the Commodity Credit Corporation, and by Prime Minister of Government Felix Lancis, President of the Cuban Sugar Mission Oscar Seiglie, President of the Sugar Stabilization Institute José Manuel Casanova, and Member of the General Board of the Institute Teodoro Santiesteban, all representing the Cuban Sugar Stabilization Institute.
The sugar contract provided for the sale to the Commodity Credit Corporation of the entire 1945 Cuban sugar crop in the form of raw sugar, less 250,000 long tons for Cuban consumption and 150,000 (or less) long tons which Cuba might sell to countries other than the United States. The basic minimum price was set at 3.10 cents, United States currency, per pound.
The blackstrap molasses contract provided for the sale to the Defense Supplies Corporation of at least 70,000,000 gallons of blackstrap molasses at a basic minimum price of 2.50 cents, United States currency, per English pound of total sugars content, the equivalent of 13.6 cents per gallon.
The ethyl alcohol contract provided for the sale to the Defense Supplies Corporation of a minimum of 20,500,000 wine gallons of 190 percent proof, or equivalent, industrial alcohol produced from molasses not sold under the above-mentioned blackstrap molasses contract, plus an additional quantity dependent upon various factors itemized in the contract, at a price of 65 cents, United States currency, per gallon of 190 percent proof alcohol or higher, and lower prices for alcohol of poorer quality.
Three notes on matters related to the above contracts, and their replies, were exchanged during the ceremony in which the contracts were signed (none printed).
Embassy note No. 294 and Cuban Foreign Office note No. 731 formalized an agreement on price stabilization in Cuba.
Embassy note No. 295 and Foreign Office note No. 732 concerned 1) the application of existing sugar legislation in Cuba to the 1945 crop, 2) the continuance of past procedures of handling and loading sugar on vessels in Cuban ports, and 3) the continued application of reduced freight rates covering the shipment of sugar to other than normal Cuban ports.
Embassy note No. 296 and Foreign Office note No. 733 provided for the distribution, for the benefit of Cuba, of any net profit that might result from the United States purchase of the 1943, 1944, and 1945 Cuban sugar crops.]