266. Memorandum of a Conversation, Washington, April 7, 19551

SUBJECT

  • Sugar legislation

PARTICIPANTS

  • Agriculture
  • Mr. Morse, Under-Secretary
  • Mr. McConnell, Assistant Secretary
  • State
  • Mr. Waugh—E
  • Mr. HollandARA
  • Mr. CaleAR
  • Mr. CallananIRD

Mr. Morse opened the conversation by saying that Agriculture felt another meeting was desirable on this subject in view of Governor Adams’ feeling that the problem should be resolved by those who were most familiar with it. Mr. Holland agreed that another meeting was in line with Governor Adams’ wishes. He added that he did not believe any limitation had been placed on the number of meetings we might have before the matter was referred back to the White House.

Mr. Holland asked the Agriculture representatives if they had seen the latest memorandum which the Cubans had left with Secretary Benson.2 Mr. Morse said that he had glanced at it. Mr. Holland said in view of this he would like to read certain sections of the memorandum which had made a great impression on him. He said up to this time the Cubans had wasted a lot of time making inconsequential arguments, and had for some reason waited until the last minute to provide material which merited very serious consideration. Mr. Holland proceeded to read several paragraphs from the Cuban memorandum. The Cubans pointed out that they had been forced to cut their crop progressively each year since 1952. The 2 million ton surplus from the 1952 crop had been financed by the Cubans themselves and scheduled for release to the United States market over a five-year period. In doing this the Cubans had, of course, relied very heavily on present sugar legislation running its course. If the Act were amended now to restrict their marketings in [Page 810]the United States, their marketing plan would be interrupted and they would be forced to add to their reserves whatever quantity they lost in the United States market in 1955 and 1956 by reason of a change in sugar legislation.

Mr. Holland remarked that he had just received a call from Havana from our Ambassador. He said the Ambassador felt that any change in present legislation before its expiry date would mean the fall of the present Cuban Government. Mr. Holland said he would not personally go that far, but had confidence in the Ambassador’s appraisal of the Cuban situation. Mr. Holland indicated he believed the best course to follow would be for the Administration to introduce a bill effective January 1, 1957. This would impress the Cubans and other friendly countries with the fact that the Administration had lived up to a commitment. The Administration then could proceed to trade back from that date in dealing with the domestic industry, but would have accomplished a great deal in maintaining our good relations with Cuba.

Mr. McConnell said he was informed that the domestic industry had sold their bill to many Senators on the grounds that it would not cut Cuba back from its present position. In response to a question from Mr. Waugh, Mr. Callanan pointed out that this contention of the industry would be true if one considered that 8.2 million tons represented all the market the Cubans anticipated this Calendar year. He went on to explain that the Secretary of Agriculture last December had estimated consumption in 1955 at 8.5 million tons. The Secretary then went on to say he was subtracting 300,000 tons from his estimate for price effect, and thus 8.2 million tons was the present level on which import quotas are based. All of this was public knowledge and the Cubans, of course, in planning their 1955 crop had based their estimate of their marketings in the United States in 1955 on the Secretary’s public figure of 8.5 million tons.

[Here follows discussion of the difference of opinion between officials in the Departments of State and Agriculture.]

  1. Source: Department of State, Central Files, 811.235/4–755. Confidential. Drafted by Callanan.
  2. This memorandum, entitled “Effects on Cuba of Certain Projected Amendments to the Sugar Act,” is attached to Holland’s April 9 letter to Hauge which is attached to the Memorandum of Understanding on Sugar Legislation, Document 272.