837.61351/7–1246
The Chargé in Cuba (Woodward) to the
Secretary of State
restricted
No. 1881
Habana, July 12, 1946.
[Received July
15.]
Sir: I have the honor to report that the
negotiations by Secretary Anderson51 for the purchase
of Cuba’s 1946 and 1947 crop sugar, molasses and alcohol have been
successfully concluded. Attached is a memorandum prepared by the
Agricultural Attaché concerning the progress of the negotiations. There
are also transmitted copies in English and Spanish of (a) an agreement signed on July 11 as a basis for the contract;
(b) the revised sugar price clause (Article
Four) of the contract; and (c) a press release
issued on the evening of July 11.52 Mr. Marshall,
Director of the Sugar Division, telephoned the text of the press release
to the Department of Agriculture on the afternoon of July 11 and
requested that a copy be transmitted immediately to the Department of
State.
Negotiations for the purchase of the 1946 crop have now been in progress
about 13 months. Before the arrival of Secretary Anderson, Ambassador
Belt reportedly had obtained assurances from President Grau that Cuba
would be ready to complete the sale of the 1946 crop. The limited number
of points of disagreement with respect to the 1947 crop, however, made
it highly desirable, the Embassy felt, to try to reach an agreement on
both crops at the same time.
Prior to the arrival of Secretary Anderson, there was considerable
opposition in Cuban sugar circles to completing a contract covering [Page 796] the 1947 crop. Resulting
publicity was generally adverse to the best relations between the two
countries. As an illustration, the leftist newspaper Hoy on July 5 carried a cartoon showing a large, fat man,
labeled “North American Imperialism” holding a small Cuban by the neck
and trying to force him to sign a paper labeled “Conditions for the
sugar crop sale” with the words “You take it or leave it”. In contrast,
there is now a general (although, of course, not universal) feeling of
relief and satisfaction not only in the sugar circles, but from the
public as well. Yesterday’s newspaper headline was “Cuba and the United
States Reach Complete Agreement on Sugar”. In this connection it is
pertinent that the vote of the General Assembly of Hacendados was 119 in favor of the 2–year contract and 7
against it.
Credit for the success of the negotiations is due primarily to Secretary
Anderson, whose tactful and frank presentations left an excellent and
friendly impression in Government and trade circles.
With the exception of Secretary Anderson’s personal calls on the
President on the evening of July 8 and the afternoon of July 11, the
Economic Counselor and the Agricultural Attaché were present during all
of the negotiations, and I attended the more important meetings.
The final drafts of the contract in English and Spanish are now being
reviewed by lawyers and it is anticipated that Secretary Anderson will
sign the contract in Habana on July 16.
Respectfully yours,
For the Chargé d’Affaires ad interim:
Paul G. Minneman
Agricultural
Attaché
[Enclosure]
Memorandum by the Agricultural Attaché (Minneman) Regarding Sugar
Negotiations in Habana
Secretary Anderson and James Marshall, accompanied by Ambassador
Belt, arrived in Habana on the evening of July 8. Ambassador Belt
took them the same evening to call on President Grau.
The next morning, July 9, negotiations began with a meeting in
President Grau’s office attended by the Cuban sugar mission (Dr.
Seiglie, Senator Casanova, Arturo Mafias, Santiesteban and Godoy),
the Prime Minister,53 Minister of State, Minister of Agriculture, Sr.
[Page 797] Torro (Juan de Peso)
representing the Sugar Labor Federation, and, of course,
representatives of the Embassy. Secretary Anderson stated that he
was anxious to close the negotiations which had already continued
more than a year, and was prepared to see that Cuba received fair
treatment. He pointed out that the delay in the negotiations was
being used by certain interests in the United States as an argument
for increasing our domestic sugar production. He indicated that he
was prepared to discuss the 1946 crop involving sugar only, but that
since Cuba and the United States appeared to be so nearly in
agreement with respect to the 1947 crop, it would obviously be
highly desirable to cover both at the same time if that were
possible. Dr. Seiglie, for the Cubans, reviewed the principal points
of difference and asked the opinion of the Hacendados as to including the 1947 crop. The reaction to
this was generally negative and skeptical. Mafias stated that the
Hacendados, Colonos and aborers felt that
the situation had changed considerably since our former offer, and
it would be necessary to take any 2-year offer up again with the
General Assemblies of the respective Associations, and implied that
it would be a difficult struggle to obtain agreement. It was stated
that the Hacendados did not want to specify
any price for 1947 because they feared (a)
increased wages and other costs in Cuba, (b)
increased prices in the United States resulting from OPA suspension, and (c) possible unfavorable United States sugar legislation
(other than one year’s extension of the 1937 Sugar Act). Mañas also
stated that he did not know whether the Hacendados would be willing to sign a contract for 1947
without prior agreement with labor concerning wages. The Colonos added that laborers were now asking
for 25 to 30 percent increase in dead season wages and that the
costs (contract labor) for one cultivation of cane had already
increased from $80 or $90 per caballería (33.16 acres) in 1945 to
$250 in 1946. The meeting at the Palace adjourned.
That afternoon the meeting was resumed at the Ministry of
Agriculture; President Grau, the Prime Minister and the Minister of
State were absent. At this meeting detailed provisions of the price
clause were considered and afterwards the United States
representatives drafted changes in this clause and submitted it to
the Cubans that night.
The evening meeting was at the Palace with President Grau and other
Cabinet Ministers attending. After hasty examination of the modified
price proposal, the Cubans stated that they were in general
agreement, although minor points still should be ironed out. They
[Page 798] added that it would be
necessary to submit the new proposal to the General Assemblies of
the Associations, but that this could probably be done promptly.
Mañas requested a new proviso in the preamble of the contract to the
effect that the Cubans were entering into the contract with the
understanding that in future legislation they would receive an
increased share of the United States market. Secretary Anderson
pointed out that such a proviso would be impossible and would
certainly have an adverse effect upon the United States Congress.
The Cubans saw the point and agreed to drop this request. The Cubans
also requested that a cancellation clause be inserted to the effect
that Cuba reserved the right to cancel the contract in the event of
United States sugar legislation detrimental to Cuba (other than a
one-year extension of the Sugar Act). It was also suggested that
this might be done through an exchange of notes. This matter was not
raised subsequently by the Cubans and therefore has been
dropped.54 The meeting adjourned with
the understanding that the Cubans were to discuss the details with
the Board of Directors of their respective Associations and would
redraft the payment clause.
At a meeting on the afternoon of July 10, Seiglie reported that the
Board of Directors of Hacendados. Colonos and
laborers had agreed to the 2–year proposal and the Hacendados General Assembly was called for the morning of
July 11. (Jesus Menéndez, Secretary-General of the Federation of
Sugar Workers, in addition to Torro, attended the meeting.) The
Cuban price draft was examined in detail and certain changes were
agreed to, including removal of the Cuban suggestion that one of the
factors for determining the 1947 price should be the cost of
production. Reference to cost of production, however, remains as one
of the grounds upon which the Cubans may request reexamination. The
Cubans insisted that several other statements [Page 799] that appeared to us as being
undesirable in the Cuban draft were merely platitudes intended for
moral support to sell the contract to the Cuban industry and
laborers.
The Cubans also asked that they have the right to sell an additional
7.5 million gallons of industrial alcohol to the United States if
this quantity could not be sold as beverage alcohol. To this
Secretary Anderson replied that he could not possibly increase the
purchase of industrial alcohol, and hoped that the Cubans would make
this available as additional blackstrap molasses to the United
States in 1946 when it was urgently needed for feed. The Secretary
expressed the hope that 50 million gallons of additional blackstrap
molasses would be made available for 1946, but Mañas replied that
part of the molasses already supplied was being used for distilling
in the the United States and Europe and that it was Cuba’s declared
policy that raw materials should be processed in Cuba. After
consultation among themselves, however, the Cubans stated that they
would ship to us any remaining quantity of blackstrap molasses
(above that needed for the 7.5 million gallons of beverage alcohol)
and estimated that some 15 to 20 million gallons might be available,
in addition to the 115 for 1946 specified in the contract.
The labor delegates inquired particularly as to whether the food
allocation commitments would stand as stated in Mr. Wilson’s letter
of April 4, and were informed that this was the case.
