Papers relating to the foreign relations of the United States, 1929, Volume II

611.3731/302

The Cuban Ambassador (Ferrara) to the Secretary of State

[Translation]

Washington, January 10, 1929.

Mr. Secretary: I have the honor to inform Your Excellency that my Government has carefully examined your note No. 611.3731/285 of June 13th, 1928,² as well as the documents of the United States Tariff Commission enclosed therewith.³ In reply thereto, I beg leave to state that the documents in question, coincide in part, with the points of view of my Government, and to a certain extent, do not. To make a thorough analysis of the statistics prepared by the United States Tariff Commission and of its conclusions stressing thereby the discrepancies, would not be conducive to the success of these negotiations, for in reality the differences that may be found are rather due to differing appreciation of the facts.

In synthesis, the different appreciation of the effects, whether beneficial or adverse of the Reciprocity Treaty of 1903,^3a is confined to the fact, that while the United States Tariff Commission believes that the increase in the exportations of sugar from Cuba to the United States is the essential point of the Commercial Treaty of 1903 entered into by the two countries, thereby resulting in great profits to Cuba, my Government is of the opinion that it is necessary to look into the prices attained by our main product (sugar) and particularly into the benefit of the 20% differential rate that, granted in the said Treaty to Cuba, has after 1911 favored, almost constantly, the American consumer, for the Cuban producer sold his sugar to the United States at the very same price that was disposed of to other countries which have not granted Cuba preferential treatment, and, which consequently do not receive for their exports correlative advantages. Nor does my Government believe that it could be considered as a justification of the Treaty the fact that Cuba had disposed of most of her sugar to the United States, for it is an undeniable fact that should there not have existed a Commercial Treaty with the United States and the subsequent differential customs duty, Cuba would have sold likewise all her sugars within or outside the American market and at the very same price which she obtained from the United States, because all the large exporting countries of this product, as Santo Domingo, Peru, Czechoslovakia, etc., have always been able to place the whole of their production at a price similar to Cuba’s. Java, save when she has of her own volition preferred to keep her sugars from one year to another, has also been able to dispose of her entire stock.

However, my Government does not wish to discuss the denouncing of the Treaty of 1903, nor its maintenance, for its only aspiration is to improve the commercial reciprocity relations between both countries, therefore, it analyzes the subject outside of the scope of the United States Tariff Commission.

In the report submitted together with Your Excellency’s note, mentioned hereinbefore, in Chapter First, reference is made to the political origins of the Reciprocity Treaty of 1903.^3b All that is contained therein is entirely exact. In fact, President Roosevelt, in his message to Congress on December 3rd, 1901,⁴ stated:

“We are bound by every consideration of honor and expediency to pass commercial measures in the interest of her (Cuba) material well being”.

And in another special message to Congress on November 10th, 1903,⁵ President Roosevelt added:

“We expect Cuba to treat us on an exceptional footing politically, and we should put her in the same exceptional position economically.”

Giving to the economic relations between the United States and Cuba the importance which it deserves, and seeing it in its true light, the then Secretary of War, Mr. Elihu Root, said:

“The same consideration[s] which led to the war with Spain, now requires [sic] that a commercial agreement be made under which Cuba can live. The condition of the sugar and tobacco industries in Cuba is already such that the earliest possible action by Congress upon the [this] subject is desirable.”

General Wood, Military Governor of Cuba at the time, asked that:

“Relief must be granted quickly or a condition will arise which will render the establishment and the maintenance of a stable Government highly improbable.”

These words are taken, as I mentioned before, from the report that Your Excellency forwarded to my Government.⁶

From a Cuban viewpoint, these antecedents could be added to others which would clearly indicate that the sources of the Treaty called Permanent⁷ and those of the Commercial Treaty, if they were not the same, at least, bear mutual relations.

Since December 5th, 1898, President McKinley established the commercial principles that should preside in the relations between the United States and Cuba:

“As soon as we are in possession of Cuba and have pacified the Island, it will be necessary to give aid and direction to its people to form a Government for themselves. This should be undertaken at the earliest moment, consistent with safety and assured success. It is important that our relations with these people shall be of the most friendly character and our commercial relations close and reciprocal.”⁸

Later, the same President of the United States set forth his ideas in his annual message (to Congress) of December 5th, 1899:⁹

“Whatever the outcome, we must see to it that free Cuba is a reality, not a name, a perfect entity, not a hasty experiment bearing within itself the elements of failure. Our mission, to accomplish which we took up the wager of battle is not to be fulfilled by turning adrift any loosely-framed commonwealth to face the vicissitudes which too often attend weaker States whose natural wealth and abundant resources are offset by the incongruities of their political organization and the recurring occasions for internal rivalries to sap their strength and dissipate their energies. The greatest blessing which can come to Cuba is the restoration of her agricultural and industrial prosperity, which will give employment to idle men and reestablish the pursuits of peace. This is her chief and immediate need.”

The former Secretary Root said more than that; we take the liberty of transcribing the whole paragraph:¹⁰

“Cuba has acquiesced in our right to say that she shall not put herself in the hands of any other power, whatever her necessity, and in our right to insist upon the maintenance of free and orderly government throughout her limits, however impoverished and desperate may be her people. Correlative to these rights is a duty of the highest obligation to treat her not as an enemy, not at arm’s length as an aggressive commercial rival, but with a generosity which toward her will be but justice; to shape our laws so that they shall contribute to her welfare as well as our own. Aside from the moral obligations to which we committed ourselves when we drove Spain out of Cuba, and aside from the ordinary consideration of commercial advantages involved in a reciprocity treaty, there are, the weightiest reasons of American public policy pointing in the same direction; for the peace of Cuba is necessary to the peace of the United States; the health of Cuba is necessary to the health of the United States; the independence of Cuba is necessary to the safety of the United States. The same considerations which led to the war with Spain now require that a commercial arrangement be made under which Cuba can live, etc.”

We are referring to these antecedents, inspired in the Report of the Tariff Commission of the United States, that, with a high spirit of impartiality has recalled them. Cuba, on her part, has always been inspired by the principles that presided her first moments of independence.

Politically, she has given proofs of an ever increased friendship toward the United States; commercially, she has opened widely her doors to investments of money to the United States; to her banks, to her insurance companies, to her merchant marine, to her railroad enterprises as well as to her merchants, to her business men, to her manufacturers, and to her products.

She has never committed any act or action which might lessen, limit or alter the effects of the political treaty or commercial agreement. All the various elements of the economic activities from the United States have found laws which favor and authorities which protect them.

The products of the soil and industry of the United States receive in Cuba a preferential treatment that amounts up to 40% on the general tariff, which treatment is not nominal but real, for it may be considered that in all, in spite of attaining an average during these past years of $170,000,000, they do not pay import duties in excess of $24,000,000, which is about 16% of the total value.

As a consequence of this attitude there is invested in Cuba at the present time, nearly 1,500 million dollars of American capital; the banks of your nation control the monetary market; American ships enter and leave Cuban ports paying less port duties than the ships of other nations by special provisions of the law and 76.1% in the year 1919, and 62.1% in 1927, of the Cuban imports were products of the soil and industry of the United States.

It is indispensable to determine clearly this state of things of the Cuban economic structure affirming, that as a consequence of the Commercial Reciprocity Treaty of 1903 between the United States and Cuba, the economic relations of both countries have reached such a degree of thorough understanding that it is very difficult to determine whose is the benefit and whose the harm, whether the interests of the United States or those of Cuba, when the changes in the customs tariff or the fluctuations of the price of sugar lower or favor the wealth of the Republic of Cuba. Statistics clearly verify these affirmations. In 1920, the year of prosperity, Cuba imported from the United States $404,386,000; on the other hand, during the crisis of 1927, these imports dropped to $155,383,000 and the outlook for 1928 is still worse, as it is presumed that it will not exceed $125,000,000. If to this be added the difference had in the dividends of the sugar, tobacco, telephone, railroad, manufacturing, shipping, banking, and insurance companies, etc., domiciled in the United States which do business in Cuba, in the years above mentioned, it will be seen that the losses entailed by Cuba or the benefits obtained, are reflected to a certain extent, not unworthy of consideration, on the economic structure of the United States.

The essential point of the report of the Tariff Commission of the United States is that the increased Cuban production is the cause of the present crisis. The causes of the increased production in sugar are several, and if there is any fault in these, it is not certainly Cuba’s. The natural development of Cuba has been one of the chief causes, up to 1911; a privileged and fertile country which can advantageously produce sugar, should, in an industrial era, such as ours, and with a stable government, develop the production and the manufacture of her main product.

It should not be cause for surprise that near to the United States, the largest consumer of sugar, there should develop, increasing its production, the country which possesses more natural conditions favorable for that production.

But the most important factor in the increased production was the European war. Cuba responded to the insistent indications of her allies who asked her to produce as much as possible to cover the deficit brought about by destruction of sugar-beet fields and of European sugar factories. Cuba did not want to remain deaf to the vehement suggestions of the United States; and she did not do it with lucrative purposes, as might be surmised, because she accepted fixed prices for her sugars for several years, very much lower than those she could have secured in an open market, and sometimes below cost of production, owing to the subsequent and sudden high cost of the raw materials indispensable to the sugar industry. Lastly, another cause of the increased production was the commercial upheaval of the year 1921, which placed in the hands of bankers and of important companies of the United States many sugar mills owned by small Cuban proprietors, the new owners of which improved their machinery and their fields, obtaining thus a larger production.

These facts surely well known to the technical experts of the various departments of the Government of the United States, exclude the sole essential deduction made in their statistics by the Tariff Commission of the United States.

The problem, in my Government’s judgment, must not be analyzed as to the quantity of the production or the quantity of the importations into the United States of Cuban sugars, but only with regard to the treatment that these imports receive. Cuba, which according to the opinions of President McKinley, of President Roosevelt, and of Secretary Root, which we have reproduced hereinbefore, given, almost, in the form of an offer, must economically be bound to the United States more intimately than to any other nation, receives a customs treatment, by virtue of which her products pay both alone and jointly more than any other of the countries doing business with the United States.

Of the approximate six hundred million dollars customs duties collected annually, the products of Cuba pay to the American treasury about $150,000,000. Canada which exported to this country in 1927 $475,028,148 paid around $26,000,000. France which exported to the United States $167,799,661 paid more or less $50,000,000 and the same happened with regard to Germany whose exportations amounted to $200,554,291. The United Kingdom which shipped $357,930,937 paid less than $70,000,000. The products of the soil and industry of Cuba pay almost as much as the products of England, France and Germany together, which are the three foremost nations exporting to this country.

Taking the total of the Cuban exportations to the United States, including in this total the raw materials which are not subject to duty, the customs tariff levy an average duty on our products of 55% in 1927; while it levies 18% to England; 31% to France; 25% to Germany; 6% to Canada and 4% to Japan. Should the grand total of the importations of the United States which amounted to $4,184,742,416 in the same year, be compared with the grand total of the customs duties collected, which amounted to approximately $600,000,000, it may be easily appreciated the treatment accorded to our country.

These are the figures, which grosso modo have been compiled by our statisticians, and which might be subject to a slight change if thoroughly studied with more accurate details, but this change would not alter the deductions reached. If they be placed in relation with the phrases pronounced at the beginning of Cuban independence, when the bases were put forth for a political treatment called the Permanent Treaty, which at the same time was originated by the Unilateral Act called the Platt Amendment,^10a it will be seen that the purpose of the high contracting parties has not animated the subsequent acts.

However, my Government does not aspire to anything else but to find a solution for the future, that will be of common interest. My Government wishes to save from a possible ruin the Cuban wealth, which is in part, wealth pertaining to American interests, and to favor further, in just reciprocity the exportations of the United States to Cuba.

To this effect, on December 15th, 1927, I sent a note to Tour Excellency¹¹ outlining ideas for a new commercial agreement. I proposed in this note that a part of Cuban sugar should receive a preferential treatment, while another part would be subject to the present tariff. Now, taking into consideration the report of the Tariff Commission which Your Excellency sent me, I am able to state that my Government would be willing to enter into an understanding on the basis of a reciprocal interest, whereby Cuba be granted the free entry of her sugar for a limited quantity. An arrangement could be reached easily as to the quantity and also with respect to benefiting some other articles. The customs revenues of the United States, and perhaps those of Cuba, would be the only ones to be subject to the consequences of an arrangement of this nature, but all concerned from both countries would greatly profit by it, without detriment to domestic producers of the United States, and without increase, of the cost of the articles to the consumers. The solution would be of mutual advantage and would tend to consolidate the economic unity that in fact exists today, although endangered by customs measures.

My Government considers that this is the right moment for reaching an agreement, not only in its own interest, owing to the serious crisis which its principal product has been going through for the last three years, but also in behalf of the American exporters. They are seeing their volume of business with Cuba decreasing more and more every day, which market might be largely lost by them in a short time.

Accept [etc.]

Orestes Ferrara

2. ibid., 1928, vol. ii, p. 640.
3. Report of the U. S. Tariff Commission, The Effects of the Cuban Reciprocity Treaty of 1902 (Washington, Government Printing Office, 1929).
4. This treaty, signed in 1902, became effective in 1903, and is often referred to as of that date.
5. The origins of the commercial treaty with Cuba are set forth in chapter ii of the report of the U. S. Tariff Commission.
4. Foreign Relations, 1901, p. xxxii.
5. Reference apparently erroneous; the sentence here quoted appears in the message of June 13, 1902; see A Compilation of the Messages and Papers of the Presidents Prepared … Pursuant to an Act of the Fifty-Second Congress of the United States, vol. xv, p. 6681.
6. Report of the U. S. Tariff Commission, pp. 387, 398.
7. Signed May 22, 1903; Foreign Relations, 1904, p. 243.
8. ibid., 1898, p. lxvi.
9. Ibid., 1899, p. xxix.
10. The quoted passages from the annual report of the Secretary of War, 1901, were reprinted in the report of the U. S. Tariff Commission, p. 387.
11. See the President’s message to Congress, March 27, 1902, Foreign Relations, 1902, p. 320; also the treaty between the United States and Cuba, May 22, 1903, ibid., 1904, p. 243.
11. ibid., 1927, vol. ii, p. 508.