The Chargé in Cuba (Woodward) to the Secretary of State
[Received July 19.]
Sir: I have the honor to report that the contract for the purchase of Cuba’s 1946 and 1947 crop sugar, molasses and alcohol was signed at the Palace on the evening of July 16.55 One unsigned copy of the English text and one of the Spanish text of the contract are transmitted herewith for use of the Department.56 One original signed copy of the contract in English and one in Spanish are being transmitted to the Commodity Credit Corporation under separate despatch.[Page 800]
There is also transmitted herewith a copy of a note from the Embassy to the Foreign Office concerning Cuban domestic consumption sugar, exports of candy, continuation of Cuban sugar production control legislation, and United States allocations of food products. This note is based on Mr. Wilson’s letter of April 4 to the Cuban commission.
The contract was signed for Commodity Credit Corporation by Mr. Clinton P. Anderson, Secretary of Agriculture; and James A. Marshall, Director of the Sugar Branch. For the Cubans it was signed by Carlos Prio Socarrás, the Prime Minister; Dr. Oscar Seiglie, the President of the Cuban sugar mission; Tomás Puyans, President of the Institute; and Senator Jose M. Casanova, member of the Institute’s General Assembly.
Sugar, molasses and alcohol are all covered in one contract. It provides for purchase of all exportable surplus of sugar of the 1946 and 1947 crops, with the exception of 250,000 Spanish long tons for free export and 20,000 tons for UNRRA from the 1946 crop and 300,000 long tons from the 1947 crop. The price is 3.675 cents per pound of raw sugar, f.o.b. Cuban port, subject to escalator clauses, the principal one of which provides for a price increase if the Bureau of Labor Statistics cost of living or food price indices rise more than 2 percent above those for the last quarter of 1945.
The purchase includes a minimum of 115 million gallons of blackstrap molasses from the 1946 crop and a total of 165 million gallons from the 1947 crop at a price af 13.6 cents per gallon, f.o.b. Cuban port. A total of 40 million gallons of industrial alcohol is to be purchased under the two-year contract at a price of 65 cents per gallon.
This contract completes the negotiations that have been in process for more than a year and for the first time covers two crops in one contract. Conclusion of these negotiations should go a long way toward guaranteeing supplies of sugar to the United States and other claimants, particularly since a large crop is anticipated in 1947. The total value of three products covered by the contract for the two years represents an estimated 750 million dollars, and if the operation of the escalator clause results in appreciable price increases, it might approach a billion dollars. As a part of the negotiations, the United States Government has made certain specific commitments to provide minimum quantities of rice, wheat flour, lard and vegetable oils to Cuba.
- Copies of Cuban Government Decree No. 1615, July 16 (published in Official Gazette No. 164, July 17) were transmitted to the Department with despatch 1910, July 18, not printed.↩
- Not printed.↩
A copy of the Cuban Government’s reply (note no. 794 of July 22) to this note was transmitted to the Department with despatch 1956, July 29 (837.61351/7–2946). According to the despatch, the Cuban note followed closely the text of this note except in respect of the paragraph on sugar legislation where the Cuban Government’s reply, in translation, read as follows:
“Following the rule of not changing the sugar regulations with respect to the 1946 crop, especially as regards the distribution of quotas, my Government acted in anticipation of the sales agreement that was being planned regarding the 1946 crop by promulgating Decree no. 325 of February 15, 1946, in article 2 of which it is provided that the distribution of the 1946 crop shall be made in accordance with Decree-Law no. 522 of January 18, 1936, as it is in force under the terms of Law no. 20 of March 21, 1941, the Sugar Coordination Law and other legislation in effect. The regulations as regards the 1947 crop my Government hopes to be able to promulgate as soon as possible and in accordance with the same principles, should there be no provision of law that is in conflict therewith.”↩