Memorandum of Telephone Conversation, by the Chief of the Foods Section of the Division of International Resources (Mulliken)

I telephoned Mr. Marshall2 to ask whether my understanding that the Department of Agriculture was recommending an additional one-year extension of the Sugar Act of 19373 was correct. Mr. Marshall stated that his report on Senate 246, a bill recently introduced by Senator O’Mahoney to amend the Sugar Act of 1937 [and incidentally to improve the position of domestic beet growers]4 had not yet gone forward, but that he did expect to recommend a further extension for one year.

I pointed out that the 1947 Cuban Sugar Purchase Contract5 contains the folio wing provision6:

“In the event that the United States of America should enact legislation extending, modifying, or supplanting the Sugar Act of 1937, as amended, in a manner detrimental to the position of Cuba as a future supplier of sugar to the United States market, then and in that event all provisions of this Contract shall, at the option of the Institute, become null and void as to the portion of the products sold hereunder and undelivered at the time of such cancellation. For the purposes of this clause, a simple one-year extension of the Sugar Act of 1937, as amended, is determined not to be detrimental legislation.”

This contract was signed prior to the 1946 renewal of the Sugar Act, and it was clearly understood that the reference to a “one year renewal” [Page 605] applied to a renewal extending to December 31, 1947, and not beyond that date. Mr. Marshall acknowledged that that was the understanding, but stated that he intended to claim, in the Cubans’ own interest, that the phrasing of the Contract implies that any number of one-year extensions may be made without detriment to Cuba’s interest. It is his belief that this is not the time for a general revision of sugar quotas, since quotas will probably remain in suspense for several years anyway in view of the sugar shortage, and that the Cubans would gain nothing by campaigning for an increase in a suspended quota. He asked that State support Agriculture’s position that another one-year extension of the Sugar Act is not contrary to the terms of the Sugar Purchase Agreement.

I pointed out that this is the time, if ever, when Cuba could apply a little leverage in obtaining an increase in its quota by threatening to cut off our sugar supply. Mr. Marshall said that if Cuba actually took such a step its quota would probably be reduced to zero, that he was sure the Cubans were aware of that fact, and that he thought they would not run the risk of antagonizing the American public by any such action.

I called Mr. Marshall’s attention to the fact that the Secretary of State, in a recent confidential letter to Senator Vandenberg,7 a part of which had been released by the Senator, had listed legislation which the Department hopes to see enacted by this Congress and that point 17 on the list was “an increase in the Cuban sugar quota”. I said I thought this was probably a tactical error, since we are not actively sponsoring legislation, but merely suggesting, in our report on S. 246, that in any revision of quotas recognition be given to performance during a recent representative period. The inclusion of late years in the base period for sugar quotas would, of course, result in an increase in the Cuban quota. I said I would have preferred that the emphasis be laid on the more general problem of securing a “representative” base for import quotas rather than on the Cuban aspect of the question, but that since the statement had been made, and had received wide press notice, I thought the Department would not be prepared to reverse itself and state that all it really had in mind was a one-year renewal of the present act. I also expressed doubt that we would wish to support Agriculture’s interpretation of the contract, even if no statement regarding our intentions had appeared in the press, because of the unfortunate effect which such obvious distortion of the meaning of the contract might have upon our relations with Cuba. I agreed, however, to raise the question with the other interested divisions and inform Mr. Marshall promptly of the Department’s views.

  1. James H. Marshall, Director, Sugar Branch, Production and Marketing Administration, Department of Agriculture.
  2. For text, see Department of State, Treaties and Other International Acts Series (TIAS) No. 990, or 59 Stat. (pt. 2) 922.
  3. Brackets appear in the original.
  4. The 1946 and 1947 Cuban Sugar Crops Purchase and Sale Contract, July 16, 1946, not printed; for documentation on this subject, see Foreign Relations, 1946, vol. xi, pp. 799804.
  5. Part IV, article 8, of the Contract.
  6. Letter of February 5, 1947, not printed.