837.61351/4365

Mr. Earl B. Wilson of the Commodity Credit Corporation to the Chief of the Division of the American Republics (Bonsal)71

Dear Mr. Bonsal: Prior to the 1943 crop, the bulk of the Cuban sugar warehouse insurance was handled through the New York insurance brokerage firm of Johnson & Higgins. As you know, the 1943 insurance was placed by the Institute through Enrique Godoy in Havana.

Mr. Louis Tofte of the firm of Johnson & Higgins called on me yesterday and stated that the insurance companies, which are among the most responsible in the United States, that handled the insurance prior to 1943 are prepared to reduce their rates in an effort to recover the business. The companies that Mr. Godoy placed the insurance with were not sufficiently large to handle the coverage alone and it was necessary to have extensive reinsurance in order to afford the necessary protection. We hope that the 1944 insurance can be spread so that it will be placed with responsible companies with a very limited amount of reinsurance.

For that reason we are glad to hear that Mr. Tofte’s group is prepared to reenter the market. He stated that he is sure that the rate they will quote will be low enough to get the business but is afraid that other considerations will influence the decision of the Institute. He feels that if the Institute would agree to ask for sealed bids and open such bids in a manner that would insure the lowest bidder receiving the business, the situation would work out satisfactorily. If sealed bids are not required, he is of the opinion that whatever he quotes will be shopped around by competitors and the entire insurance picture will again become confused.

Commodity Credit Corporation is particularly anxious for a greater spreading of insurance because of the larger crop in 1944 and the greater amount of money involved in the advances to be made by Commodity to the producers. The suggestion of sealed bids appeals to us and we would appreciate anything Mr. Braden can do to further the program, providing it meets with his approval.

Mr. Tofte will be in Havana in the very near future and we are suggesting to him that he call upon Mr. Braden prior to discussing the insurance problem with any other parties in Havana.

Very truly yours,

Earl B. Wilson

Director, Sugar Division
  1. A copy of this letter was transmitted to the Ambassador in Cuba in Department’s Instruction No. 2410 of October 16 for his information and comment.