837.61351/4–546: Airgram
The Secretary of State to the Ambassador in Cuba (Norweb)
A–505. Quoted below is text of letter from Wilson to Seiglie presented at April 4 sugar meeting:37
“Discussions between representatives of the United States and Cuba for the purchase of the 1946 Cuban sugar crop began in Havana in [Page 780] June 1945.38 Since then numerous meetings have been held in Washington with the result that gradual progress has been made.
“During the past week the Cuban representatives have outlined to the United States representatives their ideas of what the final terms for a two-crop purchase, namely 1946 and 1947, should be.39 The United States group has given thorough consideration to these ideas and is now prepared to submit a proposal which comes very close to meeting the views of the Cuban Commission.
“This proposal is now submitted as the maximum that the United States can offer. If it is rejected by Cuba, we see no alternative except a one-crop purchase and sale, and the United States can only consider in this connection the purchase of sugar and blackstrap, and assistance in the procurement by Cuba of agreed-upon quantities of certain foodstuffs.
“Crop Purchase:
“The United States offers to purchase, with the escalator clauses previously agreed upon during the present negotiations, the 1946 and 1947 Cuban sugar crops at a price of 3.675 cents per pound, with the following exceptions as to quantity:
| 1946 crop— | 350,000 long tons for local consumption |
| 250,000 “ “ “ free export | |
| 20,000 “ “ “ UNRRA | |
| 1947 crop— | 350,000 “ “ “ local consumption |
| 300,000 “ “ “ free export |
“Candy:
“The United States will permit entry of candy in the calendar year 1946 up to but not exceeding the equivalent of 30,000 short tons, raw value, of sugar, and not in excess of 75,000,000 pounds of candy.
“In 1947, the United States will permit the entry of candy of up to, but not exceeding, the equivalent of 40,000 short tons, raw value, of sugar, and not in excess of 100,000,000 pounds of candy.
“An appropriate clause to implement the foregoing will be included in the sugar contract.
“Cuban Refined Sugar:
“If the 1946 Cuban sugar crop exceeds 4,750,000 short tons, raw value, the United States agrees to buy up to 125,000 short tons, raw value, of the excess in the form of refined sugar, provided the Cuban refiners will refine at a differential not exceeding that of the United States refiners. If the 1946 crop exceeds 4,750,000 short tons, raw value, by more than 125,000 short tons, raw value, any additional excess will be purchased in the form of raw sugar.
“If the 1947 Cuban crop exceeds 5,600,000 short tons, raw value, the United States will purchase, under similar terms, up to 125,000 short tons, raw value, in the form of refined sugar and will purchase any additional excess in the form of raw sugar.
[Page 781]“The amount for Cuban direct-consumption sugar to the United States will remain 375,000 short tons, raw value.
“Alcohol:
“The United States will purchase 10,000,000 gallons of alcohol for delivery during 1946 under terms similar to the 1945 contract, at 65 cents per gallon, and will purchase 20,000,000 gallons for delivery during 1947 at the same price and terms, and an additional amount of 10,000,000 gallons for delivery during the first three months of 1948. Our offer to purchase the above-mentioned quantities of alcohol is conditional upon guaranteed delivery by Cuba of the quantities of blackstrap indicated below.
“Blackstrap:
“The United States will purchase for delivery this year 1946-crop blackstrap at 13.6 cents per gallon provided Cuba guarantees the delivery of not less than 115,000,000 gallons. Also, the United States will purchase the 1947-crop blackstrap at the same price and terms, provided Cuba guarantees the delivery of not less than 165,000,000 gallons.
“Fertilizer:
“No quantity or type can be guaranteed by the United States but, with the great need for sugar in the world, Cuba can be assured of the best efforts of the United States Government to assist it in meeting its fertilizer requirements.
“Food Stabilization:
“All prices for commodities obtained in the United States will be at the prevailing price at time of procurement. On such foodstuffs as are allocated to Cuba from United States sources, the United States agrees to assist Cuba, if necessary, in the procurement of the allocated quantities.
Flour: The United States is prepared to guarantee Cuba 2,000,000 bags (200 pounds each) for the year 1946 and a similar amount for the year 1947. United States regulations have just been amended to enable millers to produce export flour of 72 percent extraction.
Rice: Cuba has received to February 28, 235,000,000 pounds of rice from the United States from the 1946 allocation period which began October 1, 1945, and runs to September 30, 1946. This includes a small amount of advanced licensing that was granted prior to October 1 against this year’s allocation. It is estimated that Cuba received about 25,000,000 pounds during March, which would leave approximately 40,000,000 pounds to be exported to Cuba from April 1 to September 30 from the United States to make a total of 300,000,000 pounds, which was the amount guaranteed under the 1945 sugar purchase agreement.
For the six months beginning October 1, 1945, the Combined Food Board approved allocations from foreign sources to Cuba of 40,000,000 pounds. The 1945 allocation from foreign sources was 75,000,000 pounds. Therefore, if this same total is used, the allocation from April 1 to September 30 from foreign areas would be 35,000,000 pounds.
It is recognized that the 75,000,000 pounds unused total remainder referred to in the two previous paragraphs will be insufficient [Page 782] to meet Cuba’s needs until October 1, 1946. Therefore, the United States is prepared to guarantee that Cuba will receive an allocation from United States sources of 40,000,000 pounds for the April 1–June 30, 1946, quarter, and 30,000,000 pounds for the July 1–September 30, 1946, quarter. The United States will endeavor to assure an equal monthly availability of this last-named quarterly amount. The United States will also support Cuba’s request to the Combined Food Board for allocations from areas other than the United States of 40,000,000 pounds for the April 1–June 30 quarter and 40,000,000 pounds in the July 1–September 30 quarter. This will give Cuba, if Cuba procures the amount allocated by the Combined Food Board, a total of 450,000,000 pounds of rice for this crop year.
From October 1, 1946, to September 30, 1947, the United States will support a request to the Combined Food Board by Cuba for 400,000,000 pounds of rice from United States sources and for not less than 50,000,000 pounds from other sources. If there is no Combined Food Board during this period, the United States will guarantee Cuba 400,000,000 pounds from United States sources. The United States will further assure Cuba that it will cooperate in an effort to enable Cuba to procure such amounts of rice as may be allocated to Cuba from other than United States sources.
Lard: Unfortunately, the lard situation, due to foreign relief programs and insufficient supplies, is so serious that the United States can only guarantee Cuba 60,000,000 pounds for the calendar year 1946. The United States will endeavor to assure this supply in approximately equal quarterly amounts. The United States is also prepared to guarantee Cuba this amount for 1947, but will meet with representatives of Cuba late in 1946 to discuss the prospects for 1947 and, if it is possible, will increase the amount for 1947.
Edible Oils: The United States will guarantee Cuba 10,000,000 pounds for the calendar year 1946 and it is contemplated this will be supplied by soybean oil. A like amount will be guaranteed as a minimum for 1947, but the situation will be reviewed at the end of 1946 as in the case of lard.
Tallow: This commodity is also seriously short and the United States can only guarantee such amounts as are allocated Cuba from United States by the Combined Food Board for the calendar years 1946 and 1947. At present this allocation is 13,664,000 pounds for 1946 from both United States and foreign sources. In case there is no Combined Food Board in 1947, the United States representatives will meet with representatives of Cuba and, in view of the situation then existing, will decide what can be provided Cuba during the year 1947.
Malt: This commodity is also in short supply and it will not be possible to guarantee Cuba more than 100,000 bushels for the current quarter and for each of the two-remaining quarters of 1946. The prospects for 1947 can be mutually reviewed late this year and attempts will be made to increase quarterly quantities for 1947.”
[At the May 24 meeting, a Cuban draft of article 4 of the proposed sugar contract (submitted in a memorandum of May 20 by Chairman Seiglie) was discussed; the Cuban proposal provided for sale of the 1946 and 1947 crops, with the 1946 crop to be priced at 3.675 cents and the price of the 1947 crop to be determined by mutual agreement at a later date; included in the proposal was a cancellation clause which Cuba could invoke if any legislation was passed in the United States which was considered detrimental to Cuban sugar. Mr. Wilson suggested that in view of the Cuban position he was inclined to favor a one crop contract, and, further, that the United States could not consider any contract containing a cancellation clause. He presented to the Cubans a counter draft of article 4, which, among other things, provided that the price of the 1947 crop would be governed by the escalator clause tied in with the cost of indices. Drs. Seiglie and Mañas after briefly glancing at this draft stated categorically that it would not be acceptable. (Summary record of fifth meeting, May 24, and memorandum of overseas telephone conversation, May 24, not printed; 837.61351/5–2446.)]
- Other meetings of the Cuban Sugar Commission with the United States Commission were held at Washington on March 26 and 28, April 1, and May 24, 1946.↩
- Issues still pending when negotiations were suspended in 1945 included (a) food stabilization program; (b) refined sugar quota; (c) molasses; (d) alcohol; and (e) sugar for local consumption and free export.↩
- Cuban tentative proposal set forth at second meeting, March 28, 1946, not printed.↩