271. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Administrative Assistant to the President (Hauge)1

Dear Dr. Hauge: As you may know, the Department of State representatives pointed out at the meeting yesterday in the Department of Agriculture that the sugar industry’s bill would give to domestic producers the right to supply more than two-thirds of estimated increases in consumption between 1955 and 1962.2 As Mr. Shields was not prepared to accept this statement, I am taking the liberty of giving you the reason for it. This is easier to understand, if the effects of the proposed bill are tabulated on a year-by-year basis. We have developed four tables3 to show the effect of the proposed bill on the domestic quotas, assuming annual increases in consumption of alternatively 100,000 tons and 135,000 tons, the latter being in our view a rather optimistic estimate. One set of tables shows increases each year; the other shows cumulative increases. The tables demonstrate that on the assumption of a 100,000 ton annual increase in consumption the domestic share would be at least 70 percent of the total increase in consumption between 1954 and 1962; on the 135,000 basis, it would be at least 67.7 percent.

This result is brought about, in part, by the fact that the bill takes a consumption level of 8,200,000 tons as the basis from which to measure increases in consumption, rather than the figure [Page 816]8,350,000 tons, which is the consumption level which the Department of Agriculture estimates was actually reached last year. The fact that domestic producers would be given 100 percent of the first 188,000 tons above the 8,200,000 ton level is, of course, also a very large factor.

If present unofficial estimates by Department of Agriculture officials that consumption this year will be about 8,400,000 tons should prove correct, the estimate of 8,350,000 tons for last year is probably too high and should perhaps be reduced to around 8,300,000 tons. This would increase the estimated increase in consumption this year by about 50,000 tons and make the domestic share a somewhat smaller part of the total increase. On the other hand, if the level of consumption estimated this year is taken as the point from which increases in consumption should be measured, as I believe it should be in order for the bill not to have a retroactive effect, the share going to domestic producers would be an even larger part of the total increase. Their share would, of course, be still larger if increases in consumption were measured from the 8.5 million ton level which it will undoubtedly reach before the present Act expires.

Sincerely yours,

Henry F. Holland4
  1. Source: Department of State, Central Files, 811.235/5–1355. Drafted by Cale.
  2. Reference is to H.R. 5406, a bill introduced by Hale Boggs (D.–La.) in the House of Representatives on March 31, which represented the sugar industry’s consensus. An identical Senate bill, S. 1635, was introduced on April 1 by Senator Ellender and 48 cosponsors. The text of H.R. 5406 is in U.S. Congress, House Committee on Agriculture, “Amendments to Sugar Act of 1948,” Hearings on H.R. 5406, June 22, 23, 24, 25, 27, 28, 29, July 6, 7, 14, and 15, 1955, 84th Cong., 1st Sess. (Washington, 1955), pp. 1–2 (hereafter cited as Hearings—1955).
  3. These tables have not been found in Department of State files. Copies of them can be found as enclosures to the signed original of this letter; see footnote 4 below.
  4. Printed from a copy which bears this typed signature. The signed original is in Eisenhower Library, White House Central Files, attached to the Memorandum of Understanding on Sugar Legislation, infra.