Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

837.61351/10–3044

Memorandum of Conversation, by the Assistant Chief of the Division of Caribbean and Central American Affairs (Scherer)⁴⁵

[Washington,] October 30, 1944.

Sugar negotiations were resumed on October 30. United States Commission⁴⁶ asked whether August 2 Resolution of Hacendados Association (authorizing acceptance of 3.25 cents price or higher) is still binding. Cuban commissioners⁴⁷ stated that Commission has full powers to negotiate although agreement will require clearance by Cuban Government which consults Hacendados and Colonos. In any case when Commission agrees definitively to a proposal here it will have authority to accept and it will be binding. Dr. Mañas stated that it may be desirable to have the Hacendados Resolution amended during course of negotiations.

1. Length of Purchase

In reply to an inquiry whether Cuba would be interested in the sale of the 1945 crop alone, in view of recent developments indicating a more favorable supply picture in Western Europe and perhaps in the Philippine Islands the Cuban Commission stated its entire position would have to be revised and a “substantially higher” price than 3.30 cents obtained if the 1945 crop only were sold.

The Cuban Commission seeks stability for the sugar industry and would prefer a two or three year contract, the former being entirely acceptable.

2. Escalator Clause

Mr. Wilson pointed out that it does not seem consistent to have included in the contract both an escalator clause based on a United States price index and also a price stabilization program by which this Government would be obligated to maintain landed prices in Cuba on certain exports.

Mr. Wilson explained that both appeared to cover somewhat the same ground in that Cuba would receive through an increased sugar price the benefit of an increase in index in this country and at the same time this Government would be obligated to fixed prices on certain exports to Cuba.

Dr. Mañas said that the Cuban Commission considers the United States position valid, and he suggested that the same type of relief be provided that was included last year in the contract. If Cuba benefited by an increase in the sugar price last year, the United States Government was also entitled to proportionate relief in prices on wheat flour, hog lard and rice. Dr. Mañas indicated that Cuba hopes to receive the benefit of an increase in price if any of the following three have an increase:

1. United States ceiling price,

2. General price index (nature to be decided later),

3. Puerto Rican subsidy.

Mr. Wilson stated that he wished to make known to the Cubans that this Government plans to increase somewhat the present Puerto Rican and Hawaiian subsidies although the amount is not yet known. Dr. Mañas stated that the Cubans feel they should receive the same return as Puerto Rico, but Mr. Wilson indicated that the Puerto Rican position will not be included in an escalator clause.

3. “Free Sugar”

Mr. Wilson reviewed his previous considerations in connection with the need for omitting free sugar from the present contract, emphasizing that the nations which are receiving Cuban sugar are under heavy ration control and that American Republics requesting sugar are enjoying war prosperity.

In presenting the Cuban position Dr. Mañas indicated that the Cuban Commission “must insist” on a certain amount of free sugar. In addition to the previous points brought out by the Cuban Delegation, new consideration was added, namely, that Cuba wishes to provide the American areas with sugar in order to keep the Governments of these countries from encouraging sugar expansion. This is a real possibility, according to the Cuban Commission. For instance, Mexico was ready to import from Fulton of St. Louis an entire sugar producing plant but delayed the purchase pending the outcome of the Mexican Government’s offer for 100,000 tons of Cuban sugar.

The Cuban Commission indicated that it wants to receive 175,000 tons which it will sell at reasonable prices and which the Institute is ready to guarantee will not get into speculators’ hands. Sales of this sugar will be made on an entirely government to government basis.

45. Copy transmitted to Habana in Department’s instruction 4614, November 1, 1944, not printed.
46. The Commission was composed, at this meeting, of the same delegates present at the meeting of September 5 (memorandum of September 6, p. 942) except for the substitution of A. A. Greenwood of the War Food Administration for Alan Brannan, the addition of Carl Gibboney and Oregon Helfrich as representatives of the Foreign Economic Administration, the addition of Francis A. Linville of the Department of State, and the absence of Nelson Norregaard of the Commodity Credit Corporation.
47. The Cuban Commission at this meeting was composed of the same delegates that attended the meeting of September 5 except for the absence of Teodoro Santiesteban.