320. Telegram From the Embassy in Cuba to the Department of State 1

1555. I saw Castro for an hour and a quarter this afternoon. He was relaxed and friendly and showed no signs of being upset at our note.2 We had a discussion ranging over effects of Agrarian Reform Law on American interests and on the role of private enterprise, especially American enterprise, in new Cuba.

On Agrarian Reform I mentioned that our two sources of concern were (1) possible decline in sugar production affecting supplies to American market and (2) compensation for expropriated properties.

Castro gave strong assurances Cuba would not fail to meet US sugar quota but admitted a slight drop in production possible. I expressed appreciation for assurances but suggested best course here was perhaps to await developments to which he agreed. He said distribution of land into very small parcels would be ruinous to production and government aimed rather at establishment of cooperatives of reasonable economic size. Re his message to Secretary Benson, Castro regretted going out of channels but said he had to reassure public in Cuba and in US on this important matter. I gave him background on reasons for lifting restrictions on cane plantings in US, at which he expressed surprise, having previously understood this action a result of Agrarian Reform Law. I expressed view that private conversations between us might have developed some better way of conveying to US Government this confidence in adequate sugar supplies than through 8 million ton offer to Secretary Benson. He agreed.

Castro found our concern over compensation provisions natural but stressed point that revolutionary government was honest and would fulfill promises to pay. He said difficulty was that government lacked resources to pay promptly in cash unless it could reach some financial arrangement with US. Land reform could not wait, he said, until government able to pay in cash; it had to be undertaken everywhere once it was started. This a matter of life or death, Castro stated. Expropriations would begin next year. Government not disposed to quibble over 20, 30 or 40 million pesos in total amount and he confident difficulties could be negotiated out as they arose. In reply to my doubts concerning adequacy of registered value of lands, he said registered value of American companies relatively high. I stated that American [Page 530] companies already seriously damaged by Agrarian Reform Law in decline of stock values and cited reduction of one company’s stock quotation from 37 to 21. Castro confident values would rise again.

I outlined American belief in private enterprise as basis for economic development and asked what Cuban attitude was toward foreign private investment in Cuba. Castro stated revolutionary government wanted private enterprise; preferred national to foreign where possible, but where impossible was glad to get foreign. Reason for preference: National investment was all in the family, created no internal problems. He said it especially desirable that basic industries like fertilizer be national and that public utilities were also a special case. For this reason government preferred foreign credits to foreign investment but would pass such credits along to national private enterprise. Government favored state industry only where private enterprise would not come in [and?] fill an essential need. I stressed constructive role of American companies in Cuban economy and questioned Castro on his hostility to “intereses creados”. He laughed and said he used this term to apply where interests had been acquired illegally or with special privileges but not to mean legitimate business concerns even though large. He readily recognized that American firms had played constructive role, met taxes and provided good wages and working conditions for industrial workers but said conditions of field workers pitiful. He also asked why American administration cane growers in Cuba had been unable to obtain high yield of planters in US. [sic]

I urged on Castro the importance of my maintaining close relations with him because of geographical proximity of countries and interlocking economies. He was entirely agreeable to this suggestion but suggested that on economic matters it usually more satisfactory for me to see Economic Minister Boti in whom he had great confidence. He apologized repeatedly for delays in seeing me.

In my opinion this meeting was useful and generally satisfactory. Castro recognizes our concern over aspects of Agrarian Reform mentioned. Groundwork has been laid by our note and by this talk for further discussions if and when our legitimate interests begin to be really hurt.

Bonsal
  1. Source: Department of State, Central Files, 837.16/6–1259. Confidential; Priority.
  2. See Document 318.