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

No. 9558

Sir: With reference to the Department’s confidential instruction No. 5266, June 16, 1945, expressing concern with respect to the deterioration of Cuban price control, I have the honor to comment on further developments of interest in this connection.

The Embassy has discussed frequently with appropriate Cuban officials the non-enforcement in general of ceiling prices. The attitude of the Cubans is that the difficulties of general enforcement, especially at the retail level, are insuperable because of the existing food shortages, and that their efforts to assist consumers will produce more results if concentrated on the controlled distribution of a few essential commodities. It appears that our repeated comments concerning the desirability of effective general price control, through establishment of a strong and adequate Office of Price Regulation and Supply, have little influence in modifying this prevailing attitude. Emergency measures for distribution of key commodities appear to the Cubans not only as being more simple economically, but also as being more adaptable for purposes of political propaganda.

The emergency measures, for which the Government obviously merits some credit, have included so far the distribution in Habana of beef, soap, canned milk, and lard. Such distribution is made under police supervision at certain central points located mostly in the congested areas of the poorer classes. The Government assists by helping to obtain the supply of goods, and by providing police to prevent disorders and to enforce sale at ceiling prices. Such distribution covers only a few articles, and is available only to a minor portion of Cuba’s population, but it alleviates considerably the problems of supply and price for the particular population segments hurt most seriously by the rising cost of living.

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The Embassy considers these measures to be weak as a matter of policy in that the inflationary price problem is relieved only for a relatively small segment of the population, aside from the fact that [Page 937] considerable inconvenience is suffered by purchasers waiting in the lines at distribution points. Nevertheless, it has tended to abate the public clamor against food shortages and high prices, and the Government apparently has every intention of continuing these measures.

In general, the intent of the Government appears good, but its policy and organization definitely is inadequate for dealing with the existing situation. On the other hand, the problems of price control have been exceptionally difficult because of the hurricane last October, the subsequent drought, and the increasing world shortages of foodstuffs, explaining to some extent the failure of the Grau administration to act effectively in accordance with its good intentions.

Under such circumstances, it is unlikely that any change in policy will soon occur, but nevertheless the Embassy will submit a note to the Foreign Office again pointing out the Cuban Government’s failure effectively to enforce ceiling prices in accordance with the stabilization agreement, embodying the suggestions contained in the Department’s instruction under reference. Also, when mutual price stabilization undertakings again are discussed in forthcoming sugar negotiations, it may be advantageous for us at that time again to point out the lack of enforcement and to request from the Cuban Government a statement of its general price policy, in order that further confusion may not exist as to the scope and intent of Cuban undertakings in respect to enforcement of ceiling prices.

Respectfully yours,

For the Chargé d’Affaires ad interim:
Albert F. Nufer

Counselor of Embassy for Economic Affairs