637.0023/11a

The Secretary of State to the Ambassador in Cuba ( Crowder )

No. 92

Sir: The Department has today been handed by Mr. Cummings of the firm of Sullivan and Cromwell of New York, attorneys for the Cuba Cane and Manatí Sugar Companies, a copy of a bill modifying Article 15 of the ports law of Cuba, which he states he understands was drawn up by Colonel Tarafa and which, it is reported, will be introduced secretly into the Cuban Congress on the last day of its session (July 31st) and rushed through.

According to the proposed law, a copy of which is enclosed herewith,22 the Cuban ports are to be classified as ports of general interest of the first and second class and ports of local (provincial and municipal) interest. A list of some twenty-five ports is given at which importation and exportation shall be authorized and no authority shall be given hereafter for the opening of any port for foreign commerce except in the cases and under the conditions established by the law. The law further provides that commerce may be authorized at sub-ports or wharves that are not connected with lines of the consolidated railroads, but in such cases sugar mills which enjoy the privilege of private ports shall pay for that privilege fifteen cents on each one hundred pounds of sugar exported.

With regard to the mention of the “consolidated railroads” above, Mr. Cummings handed the Department a copy of another bill for the [Page 855] consolidation of the Cuban railways, a copy of which is enclosed herewith.23

Mr. Cummings asserts that the first bill, if passed, will raise the basic production cost of sugar in Cuba some forty-nine cents a bag, and he considers it a scheme … to increase the basic price of production of the cheaper producing mills on the coast in order that the interior mills working under higher production cost will be able to pay a higher tariff rate on the railroad. He states that it will not be economically possible for the railroads to extend their systems to the small sub-ports, served by only one sugar mill at each, and that therefore the effect of the law would be to impose a tax of fifteen cents per one hundred pounds on the sugar produced at those mills—amounting, he estimates, in the case of the Manatí Company, to some two hundred and fifty thousand dollars a year—thus augmenting the basic production price of sugar and increasing the cost thereof to the consumer.

Mr. Cummings stated that the Cuba Railroad is in sympathy with the project, although not actively supporting it, but that he was informed yesterday by the Chairman of the Board of Directors of the United Railways of Havana that that Company has nothing whatsoever to do with the scheme and is opposed to it, as it is opposed also to the bill providing for the consolidation of the Cuban railways.

The Department desires that you should make a complete investigation regarding this matter and report to the Department, by cablegram if necessary to prevent any action prejudicial to American interests.

I am [etc.]

For the Secretary of State:
Leland Harrison
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