837.61351/3626f: Telegram
The Secretary of State to the Ambassador in Cuba ( Braden )
132. From Duggan. Your 60, January 27, 9 p.m.76 If the Cubans should reach the conclusions you describe with respect to our proposal in telegram 127 of January 28, 9 p.m., it would reveal a fundamental misunderstanding of the premises on which this proposition was based (and for that matter, although this is academic, that in airgram 713 of January 2573). Although it would be fruitless to enter discussions with the Cubans of the relative merits of earlier proposals, it seems advisable to emphasize the following important factors underlying our January 28, in as much as the type of calculations you fear the Cubans may [Page 159] make can have a bearing on your presentation and the Cubans’ understanding of this final proposition.
Our calculation is based on the following premises:
- 1.
- Given a constant wage rate, the mill cost of producing 3,225,000 tons of sugar is a constant, regardless of what detailed arrangement is entered into with the United States.
- 2.
- Variable costs to the producers are those connected with internal transportation,-warehousing, et cetera.
- 3.
- Therefore, the only figures that can properly be discussed are the total dollars to be paid to the producers by the United States and any variable costs mentioned in point 2.
Important variable costs which have been modified favorably to Cuba in both our airgram no. 713 and telegram no. 127 include:
- 1.
- The elimination of the $5,000,000 liability for abnormal inland transportation. If this were to be compared with December 17, the improvement is even greater, as there was no limit in the December 17 proposal to Cuba’s liability. It will be recalled that the producers calculated this cost at 23 points.
- 2.
- The termination date of responsibility for warehousing and insurance carried by the Cuban producers. Formerly there was no termination of this liability. A–713 set the termination date as December 31, 1944. Our no. 127, January 28, set it at June 30, 1944.
- 3.
- The Cubans always preferred crop financing which would have given them the opportunity to speculate on the entire crop. All our previous proposals have been designed to prevent speculation and stabilize price. We now concede the Cubans an opportunity to speculate with a portion of the crop.
- 4.
- These calculations also ignore the possible return to the Cuban Government and people in the event that any net profit is made by the Commodity Credit Corporation.
- 5.
- It is also to be pointed out that on January 2 this Government increased its offer for molasses over that made on December 17. Our present proposal maintains the January 2 offer as optional if the Cuban producers wish to accept it.
In sum, we have precisely defined the variables and have transferred the burden to ourselves of the major portion of these; so that there can be absolutely no justification of the calculations and conclusions that you say may suggest themselves to the Cubans. [Duggan.]