337.61351/4513
Memorandum by the Chief of the Division of the American Republics (Bonsal) to the Assistant Secretary of State (Acheson)
Mr. Acheson: On December 20 in Washington representatives of the Cuban Government, sugar and alcohol industries, will renew discussions involving the possible purchase by this Government of blackstrap and invert molasses and industrial alcohol. Previous conversations were interrupted in late September, when the Cuban group indicated it was unable to accept Defense Supplies Corporation’s proposal on invert and backstrap molasses.
Blackstrap Molasses
Since September, War Production Board has become increasingly concerned at the sky-rocketing diversion into beverage alcohol of Caribbean molasses urgently needed in the United Nations alcohol program. With the enormous expansion in Cuban alcohol producing facilities it is likely that no Cuban blackstrap molasses will be available to the war program next year if the current negotiations are unsuccessful.
Invert Molasses
WPB’s present interest is to obtain as much invert molasses as it can in agreement with the food agencies of this Government and with the Cuban Government. The provisions of the 1944 Cuban Sugar Contract call for agreement between Commodity Credit Corporation and the Cuban Sugar Institute as to the total size of the Cuban crop and for agreement as to the amount of sugar to be released from the contract for the production of invert molasses.
Agencies of this Government have agreed on the equivalent of 800,000 short tons of sugar in invert, but the Cubans may not be willing to produce much more than 600,000 tons as invert. Agriculture has estimated the 1944 Cuban crop at 4,850,000 short tons to be distributed as follows:
| local consumption | 200,000 |
| sugar | 3,850,000 |
| invert | 800,000 |
Alcohol
This Government proposes to purchase Cuban specification industrial alcohol at a price related to blackstrap. While no official figures are available as to Cuba’s possible production, private sources estimate output of 190 proof alcohol as high as 80 to 90 million gallons annually. For alcohol not meeting specifications an adjusted price may be paid.
Beverage Import Control
In May this year the Embassy at Habana suggested the advisability of establishing control of alcohol imports under War Production Order M–63 in order to safeguard for Cuba its supply of cooking and motor vehicle fuel in the face of increasing beverage alcohol exports WPB did not consider itself involved at that time, since the tanker shortage made it impossible to move much molasses. Subsequently, shipping eased, and WPB finds its much needed raw material diverted into non-essential use. It has been unable to agree to definitive import control although it indicates that it would be willing to use such control as a last resort and if the negotiations are about to break down. The level at which imports would be fixed has not been decided.
The Department has maintained throughout the numerous discussions that we should inform the interested Governments including Cuba, Mexico and so on, in advance of the establishment of import control.
Numerous U. S. Agencies Involved
The variety of United States agencies interested in the matter has not made it easy to deal effectively with the Cubans. Commodity Credit Corporation, as purchaser of sugar; War Production Board, directing Foreign Economic Administration to procure certain quantities of molasses; and Defense Supplies Corporation as previous molasses purchaser, are all actively interested. It has been my feeling for some time that the purchase of molasses and sugar might very effectively be centered in one agency.
Mr. Crowley has decided that the American negotiating group will be headed by Mr. Sidney Scheuer, Director, Foreign Procurement and Development Branch, FEA.
In an effort to emphasize the importance of the molasses and alcohol programs, the Secretary discussed the matter with Dr. Concheso, Cuban Ambassador at Washington. The Secretary spoke of the tremendous diversion of an essential raw material into non-essential channels, stressing the need for both Governments to face firmly the efforts and pressure of the private, powerful alcohol interests.
[Page 184]I will be glad to discuss this matter further should you have any questions.