837.61351/7–346

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

confidential
No. 1842

Sir: Supplementing the Embassy’s telegram no. 491 of July 2, 1946, 11 a.m.,46 and previous correspondence regarding the decision of the Cuban Sugar Institute to suspend shipments of 1946 crop sugar to the United States pending the conclusion of negotiations for a satisfactory modus vivendi or definite sugar contract, I have the honor to report the following subsequent developments:

On the morning of July 2 I called on the Minister of State;47 accompanied by the Economic Counselor, and informed him of the action taken pursuant to President Grau’s request that our Government take such steps as might be possible to prevent a three-year extension of the 1937 Sugar Act (see my telegram no. 469 of June 21, 7 p.m.46). I told the Minister that both Undersecretary Acheson and Assistant Secretary Braden had given this matter their attention and that it [Page 793] now appeared probable that any extension of the Sugar Act would not be for more than one year.48 The Minister expressed his appreciation of the efforts that were being made on Cuba’s behalf and I took the opportunity of pointing out that under the circumstances it seemed especially unfortunate that the Sugar Institute, because of the seeming impasse that had been reached in arriving at an agreement with regard to the modus vivendi, should have decided to suspend sugar shipments to the United States. I expressed the opinion that no useful purpose would be served by the adoption of so drastic a measure, which could not but cause unfavorable comment both here and in the United States, and that, on the contrary, there was every reason to expect that the Institute’s action, if persisted in, would obstruct rather than facilitate the final outcome of the sugar negotiations. The Minister appeared to be wholly in agreement with these views and said that he had had no previous knowledge of the action taken by the Institute, which he said was so important that he would bring it at once to President Graivs attention.

This morning Dr. Seiglie telephoned to say that the Minister of State had discussed the matter with the President and that Dr. Grau had also received a communication from Ambassador Belt expressing his grave concern over the turn of events. As a result, Dr. Seiglie said, the President yesterday evening summoned him to the Palace, together with Dr. Mafias and Senator Casanova, and that it had been decided at that meeting to resume sugar shipments forthwith, without prejudice to Cuba’s position. Although Dr. Sieglie did not so state, it seems highly probable that President Grau was responsible for this decision and that the President was impressed by the arguments of the Minister of State and (probably to an even greater extent) by the communication which he received from Ambassador Belt which the Ambassador presumably sent him following his conversation with the Secretary of Agriculture summarized in the Department’s telegram no. 470 of July 2, 8 p.m.49 In any event, it is assumed that the problem [Page 794] has been solved, at least for the time being, and that there will therefore be no letup in shipments, as the vessels now loading or assigned to Cuba will presumably be able to keep sufficient sugar moving until additional vessels can be assigned here.

The meeting of the Executive Committee of the Hacendados’ Association to discuss this matter, announced in the Embassy’s telegram no. 491, was held yesterday. In accordance with press reports, confirmed by Dr. Seiglie, the Committee resolved to maintain the basic price for 1946 crop sugar of 3.675 cents per pound f.o.b. in the hope that an early agreement with the Commodity Credit Corporation can be reached and provided prices of raw materials, foodstuffs and other basic commodities which Cuba imports from the United States are not substantially increased and that actual conditions in the United States sugar market are not changed by the action taken by any other sugar supply areas. In adopting this resolution, however, the Committee went on record to the effect that Cuba should receive adequate protection against the dangers of inflation in the United States and that the degree of protection which the Committee sought would not be afforded by the establishment of a ceiling price for Cuban sugar equal to the price paid our possessions in the Caribbean area should prices of products which Cuba imports from the United States increase substantially. The Committee agreed to support the Sugar Institute in requesting the Commodity Credit Corporation not to assign any more vessels to Cuba until a definite agreement had been reached in respect of the sale of the 1946 Cuban sugar crop. Pending a mutually satisfactory solution of this problem, the Committee resolved to study the possibility of continuing to supply the United States with sugar on a provisional basis and for that purpose agreed to convene a general assembly of the members of the Hacendados’ Association to adopt whatever resolutions might be deemed pertinent with respect to the modus vivendi suggested by the Commodity Credit Corporation.

While the Hacendados’ decision to support the Sugar Institute in its refusal to accept the assignment of any more vessels to load 1946 crop sugar is presumably now only of academic interest, in view of President Grau’s decision in favor of the immediate resumption of sugar shipments, their resolution to maintain the 3.675 cent per pound basic price, provided prices of the basic commodities Cuba imports from the United States can be maintained at present levels, is doubtless encouraging. Significant is their statement that parity with our Caribbean possessions would in itself not afford Cuba adequate guarantee against possible inflation in the United States. Dr. Seiglie explained to the Embassy this morning that it was generally [Page 795] agreed at yesterday’s meeting that the clause in the Commodity Credit Corporation’s suggested modus vivendi, limiting the price to be paid Cuba for its 1946 crop to the Puerto Rican price regardless of the extent of any increase in the cost of living index prepared by the Bureau of Labor, was entirely unacceptable.

There is enclosed a clipping50 from today’s issue of El Mundo which contains a detailed description of what transpired at the meeting under reference.

Respectfully yours,

For the Chargé d’Affaires, a.i.:
Albert F. Nufer

Counselor of Embassy for Economic Affairs
  1. Not printed.
  2. Alberto Inocente Alvarez.
  3. Not printed.
  4. Protocol to prolong the sugar agreement of May 6, 1937, for one year after August 31, 1946, was signed at London August 30, 1946, effective September 1, 1946. For text, see Department of State, Treaties and Other International Acts Series No. 1614, or 61 Stat. (pt. 2) 1236.
  5. Not printed; in this telegram Acting Secretary Acheson reported that Secretary Anderson in conversation with Ambassador Belt on that date had expressed disappointment and concern over the recent decision of the Sugar Institute to withhold shipments of sugar to the United States and stated that if the decision were not rescinded, he would have no alternative but to suspend food shipments to Cuba; further, he pointed out that Cuba would have little chance to sell her sugar to other countries, inasmuch as the United States was able to exercise influence over those countries because of our supplies of wheat and other vital foodstuffs.

    Ambassador Belt suggested that if Secretary Anderson and President Grau could get together they could probably settle without too much difficulty all of the existing issues and arrive at some satisfactory agreement. Secretary Anderson accepted his invitation to hold such a meeting. (837.61351/7–246)

  6. Not printed.