561.333D3/3–1946: Circular telegram

The Secretary of State to Diplomatic Representatives in Certain American Republics 3

restricted
u.s. urgent

Continuation of coffee subsidy of 3 cents a pound will be announced by Bowles evening March 19. New subsidy, effective immediately, will be paid by RFC to importers on maximum of 7,500,000 bags of green coffee to be entered through customs into continental US by June 30, 1946. This is in addition to 6,000,000 bags of subsidy announced November 17, 1945. This means that buying price ceilings on green coffee in foreign countries by American importers will be continued at 3 cents a pound above the levels set by OPA in December 1941. No increase will take place in either green or roasted coffee ceilings in this country. New program based on continued necessity for holding food prices in line and need to break paralyzation of coffee market.

Continuation of subsidy will allow those delayed for one reason or another from fully participating in first subsidy to benefit, since Directive 87 is amended to increase quantity from 6,000,000 to 13,500,000 bags to be imported by June 30.

Half million bags of new quantity will be set aside as reserve to be used to take care of hardship cases among roasters some of whom complain of inability to import or otherwise purchase green coffee during first subsidy period.

To ensure equitable domestic distribution, Agriculture will issue inventory control order immediately.

Inter-American Coffee Board did not regard subsidy plan (Depcirtel March 114) as satisfactory solution and producing countries reaffirmed their point of view to OPA on March 15 that elimination of all restrictions is only solution. However, under present unusual circumstances they recognized that US may be unable immediately to meet desires of producing countries.

The Coffee Board wishes to begin negotiations with US Govt, in effort to find long-term solution to coffee problem which may take effect after June 30. Such negotiations will be started immediately but it is hoped that they will not result in withholding by producing countries on chance of getting higher prices after June 30. Such negotiations would be most difficult if they were conducted under adverse supply conditions in this country.

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The facts in the above paragraph should be used discreetly by Embassy but it is believed do provide an answer to charge that this Govt, is thinking only of its own interests in deciding upon a continued subsidy costing it $30,000,000.

Airgram follows with complete text subsidy press release.5

Byrnes
  1. Not sent to Argentina, Bolivia, Chile, Panama, Paraguay, and Uruguay.
  2. Supra.
  3. The text of the statement on the coffee subsidy released on March 19 by the Office of Economic Stabilization was transmitted in an airgram of March 21 to the diplomatic representatives addressed in this circular telegram of March 19.