837.61351/7–1844
The Ambassador in Cuba (Braden) to the Secretary of State
[Received July 22.]
Sir: Supplementing the Embassy’s secret air mail despatch No. 7024 of May 27, 1944 (File No. 861.35),30 and previous correspondence in the matter, I have the honor to submit herewith a more detailed summary of the several points which I feel should, if possible, be covered in the forthcoming sugar crop sale negotiations and included in the resulting sales-purchase contract.
- 1.
- It is of the utmost importance, in order to avoid the difficulties which we encountered last year and early this year, that the purchase of sugar, blackstrap molasses, invert molasses and industrial alcohol be undertaken as a single negotiation, together with the establishment of whatever quota for beverage alcohol it may be decided to give Cuba for 1945.
- 2.
- If possible, the negotiations and the contract should cover the 1945 and 1946 Cuban sugar crops in order to afford greater stability to the Cuban sugar industry and to enable colonos to increase their cane plantings for 1946.
- 3.
- It is highly desirable that our purchase of the 1945, and possibly 1946, crop be on a real f.o.b. (free on board) basis and not, as at present, on what is actually an f.a.s. (free alongside ship) basis. This is especially important in view of the increasing tendency on the part of the Cuban Government indiscriminately to increase wages for all kinds of work without regard to the inflationary effects of these wage increases. Should, contrary to the very strong recommendation of this Embassy—supported by the representatives here of the War Shipping Administration, the Defense Supplies Corporation and the Commodity Credit Corporation—the interested agencies of our Government decide that they cannot insist on a delivered-on-board basis, [Page 940] then instead of an exchange of notes similar to that entered into with regard to the 1944 crop (which might appear to involve our Government in the fixing of wages in Cuba) some clause should be inserted in the contract to the effect that the price or prices agreed upon are based on wage rates, handling charges, et cetera, in effect on, for instance, January 1, 1944, and that any increase in these wages, charges, et cetera, whether the result of official or private action, will be for the expense of the seller. This latter clause should, the Embassy feels, be inserted in the contract in any event.
- 4.
- In view of the breakdown of Cuba’s price control measures and the probable denouncement by our Government of the Price Stabilization Agreement as a result of the recent Cuban bread price increase, the adoption of a new Stabilization Agreement might be considered provided the Cuban Government can successfully demonstrate its willingness and ability to hold the line on prices and to reverse the inflationary spiral. (See Embassy’s despatch No. 7406 of July 13, 1944.32 A new Stabilization Agreement would constitute an additional bargaining point for our negotiators and should prove helpful in enabling them to induce the Cubans to accept the present sugar price. To avoid the misunderstandings which developed during each of the past two years with respect to the Price Stabilization commitments, however, it is recommended that any commitments this year be undertaken only after consultation with the Embassy regarding their practicability.
- 5.
- The 1944 molasses contract does not permit the DSC or WSA to stipulate the ports at which the invert molasses is to be loaded. While the submarine menace has, of course, lessened, the possibility of a return of submarines will not be entirely removed until Germany is defeated, so that some clause should be inserted in the next contract permitting one of the two agencies mentioned to designate molasses delivery ports. In addition, provision should be made for a 30-day advance delivery notice to DSC to enable WSA to make arrangements for tanker schedules to avoid ditching, which under the present contract is for DSC’s account. A clause requiring periodic notice of molasses available to DSC should also be included.
- 6.
- Adequate assurances should be obtained from the Cuban Government that no change will be made in the sugar legislation of Cuba for the 1945 and possibly 1946 crops and that the distribution of production will be based on the existing system of quota allocations.
As mentioned in the Department’s memorandum of May 12, 1944, a copy of which was attached to the Department’s secret air mail despatch No. 3229 of May 22, 1944,33 all contemplated notes bearing on the sugar negotiations should be signed, sealed and exchanged before the agreement can be considered concluded and the contract signed so as to avoid a repetition of the delays and difficulties experienced last year.
Respectfully yours,