Foreign Relations of the United States Diplomatic Papers, 1941, The American Republics, Volume VII

837.51 Cooperation Program/123a

The Secretary of State to the Secretary of Commerce ( Jones )

Washington , April 28, 1941.

My Dear Mr. Secretary: Reference is made to your letter of December 2, 1940⁶⁵ and numerous conversations between officers of the Department and of the Federal Loan Agency with respect to the requests of the Government of Cuba for the financial cooperation of the Export-Import Bank in carrying out a program of agricultural development and diversification and of useful and necessary public works in Cuba.

The whole subject of economic cooperation between the United States and Cuba has been the subject of extended discussions between the United States Ambassador and the Government of Cuba, and officers of the Federal Loan Agency have been kept posted as to the progress of such discussions. The Government of Cuba has now submitted memoranda requesting credits for the financing of agricultural and public works projects and indicating its interest in the establishment of a central bank and other appropriate banking facilities. There are enclosed copies of despatches of April 20, 1941 from the Ambassador at Habana⁶⁶ transmitting these memoranda.⁶⁷

You will note that the Government of Cuba requests the opening of credits in the amount of $30,000,000, $10,000,000 for agricultural diversification, and $20,000,000 for essential public works not including the Habana Waterworks which, in view of the special autonomy of the Municipality of Habana, are not directly within the scope of the activities of the national government. These credits would, of course, be utilized only after specific examination and approval of individual projects, and would be expended in accordance with arrangements agreed upon by the Government of Cuba and the Export-Import Bank.

The Department has given the most thoughtful attention to the requests of the Government of Cuba and to all phases of the Cuban situation and especially its relation to the United States. It believes that the following points are significant:

1. Cuba is a very important market for United States goods and supplier of essential imports. In 1940 Cuba was the eleventh best customer of the United States, importing from us $79,600,000 of goods out of total Cuban imports of $103,900,000. In the same year Cuba was the sixth most important supplier of our own imports, exporting to the United States $104,900,000 out of total Cuban exports of $127,300,000. All of this trade is carried on freely; there is no restriction of exchange transfers, or delay in payment.

2. Cuba is the most important field for United States investment in the other American Republics. The Commerce Department has estimated United States investments in Cuba at $733,000,000, or 19% of total investments in Latin America. These investments are not subject to any unusual forms of control by the Government of Cuba, and remittance of interest dividends, and other services is entirely free.

3. The public debt record of Cuba is good. A large portion of the dollar obligations of the national government have been regularly serviced throughout the last twelve years, while all of the rest have been settled by agreements with the bondholders which are currently being kept scrupulously.

4. Other claims of American citizens are being handled in a satisfactory manner. The Cuban Government last fall settled the so-called gold obligations held by Warren Brothers and other public works contractors. It has given orders that a settlement be reached with the claimants in regard to the so-called Morris Claim. It has indicated a willingness to receive and discuss any other claims of Americans which may be brought forward.

5. The Government of Cuba has in a number of other respects recently given indication of its friendly and cooperative feeling towards the United States and United States citizens and enterprises. Among these may be mentioned:

a. The renewal of Decree Law No. 522 regarding the distribution of sugar production quotas to the various mills in Cuba.

b. The derogation of three decrees with respect to quotas for refined sugar which have been considered prejudicial to American mills.

c. The entirely satisfactory solution of the controversy regarding the Havana Electric Company.

6. The Government of Cuba has demonstrated a firm determination to reorganize and reform the administrative machinery. It is returning to the civil authorities the powers exercised by the military following the Revolution of 1933; it is emphasizing full democratic processes of law; and it has ousted the unsatisfactory superior officers of the Army and Navy replacing them with competent respected individuals.

7. The Government of Cuba is attacking the fiscal problem, studying methods to improve tax collections and accounting, and has introduced in the Congress a bill calling for new taxes which would raise, it is estimated, over $7,000,000 in additional revenues.

8. The Government of Cuba is in all ways cooperating fully with the United States in matters of the military defense of the hemisphere.

In view of all of these and other considerations, and after careful study of the Cuban requests and the individual projects of development and diversification which have been proposed, the Department believes that the time is now opportune for a broad program of economic cooperation with Cuba, and recommends that the Export-Import Bank immediately open a line of credit to the Government of Cuba totaling $30,000,000. Feeling strongly that this Government should do everything in its power to assist in the long range development of the economic resources of Cuba, it suggests that up to $15,000,000 of this amount be allocated to projects of agricultural development and diversification including irrigation works and agricultural roads. In this connection, attention is called to the recently completed study and detailed recommendations regarding Cuban agriculture made by a survey party of the Department of Agriculture. Copies of this report have been made available to the Export-Import Bank and Mr. W. L. Clayton, Deputy Federal Loan Administrator.

The Department further suggests that up to $10,000,000 be allocated to other types of public works—water supply systems, sanitation projects, highways, et cetera—to be carried out by the national government. All of these would, of course, be subject to the specific examination and approval of the Export-Import Bank.

Finally, the Department agrees with the Government of Cuba that the amplification of agricultural credit facilities is of the greatest importance in a program of agricultural development and diversification. The report of the Department of Agriculture survey party mentioned above devotes a full section to this subject. The Department does not wish to put forward at this time a specific plan for agricultural credit, but suggests that the remaining $5,000,000 be set aside for this purpose, to be utilized only with the full approval of the Export-Import Bank for a system for agricultural credit established by the Government of Cuba with the advice and assistance of technical experts of this Government.

The Department believes that it is most desirable that public announcement of cooperative arrangements between the United States and Cuba be made at the earliest possible date, and hopes that the Export-Import Bank will give prompt consideration to the economic program suggested above.

Sincerely yours,

For the Secretary of State:

Sumner Welles

Under Secretary

65. Not printed; pertinent paragraphs are included in the memorandum from the Under Secretary of State to the Cuban Ambassador, December 4, 1940, Foreign Relations, 1940, vol. v, p. 784, and instruction No. 421, January 11, 1941, to the Ambassador in Cuba, ante, p. 133.
66. Despatch No. 1910, not printed; and despatch No. 1914, ante, p. 147.
67. Memoranda of April 15, pp. 146 and 148.