263. Memorandum of a Conversation, Department of State, Washington, March 26, 1955[1]

SUBJECT

Sugar Legislation

PARTICIPANTS

Dr. Gabriel Hauge

Mr. McConnell, Agriculture

Mr. Holland, ARA

Mr. Waugh, E

Mr. Cale, AR

Mr. Callanan, IRD

Mr. Holland began the meeting by asking Dr. Hauge if he might outline his views on sugar legislation first, as Mr. Waugh had not been present the last time he had talked to Mr. McConnell and therefore he believed a statement of his views at this time would be as useful to Mr. Waugh as he hoped it would be to Dr. Hauge.

Mr. Holland proceeded to outline his views on sugar legislation in some detail. His remarks followed very closely the views expressed to Mr. McConnell on March 16 (see memorandum of conversation of that date)[2] and therefore will not be repeated here. Mr. Holland closed his remarks by saying that he considers the industry's proposal economically and morally indefensible. He did not believe that an uneconomic industry should be continuously extended. The industry had agreed to a "package" in 1951 and should be made to adhere to present legislation through 1956. To upset the present Act now would create insuperable problems for Cuba and jeopardize the Batista regime which was now on a constitutional basis. Mr. Holland said he realized sugar legislation had important domestic political considerations and recognized that they were going to collide with economic and moral considerations. He was willing to accept a compromise which would share increases in consumption over 8.5 million tons. He believed he could sell this to the Cubans. Agriculture however wanted 8.3. He was not authorized to go below 8.5, unless Agriculture was willing to come up to 8.4 and give this figure its strong support.

A general discussion of the domestic sugar industry followed, including the quota system, the tariff, benefit payments to growers, and collections of excise taxes. Dr. Hauge and Mr. McConnell agreed that this was an uneconomic field, but pointed out that sugar was not as bad as many other agricultural commodities.

Dr. Hauge said he was familiar with the President's views on sugar legislation. The President would be opposed to breaking any commitment to the Cubans or anyone else, and his instinct in this case was to let sugar legislation run unchanged through 1956. Dr. Hauge said that when things came to a showdown it would be necessary to marshall all the evidence for the President. He asked in just what form there was evidence of a commitment to the Cubans. Dr. Hauge was told that to the best of our knowledge there had not been an exchange of notes on this subject in 1951. Dr. Hauge asked if there was anything in writing which the Cubans could point to as indicating a commitment of this government. Dr. Hauge was told that there did not appear to be any written commitment that the Cubans could use as evidence. He was informed that the commitment was merely inherent in the situation in 1951. When the Puerto Rican quota was increased substantially the Cubans were told they would be given four years to recoup their loss. Dr. Hauge was assured that a search would be made of the record to establish whether or not there had been any written communications with the Cubans.

A lengthy discussion of statistics on consumption, distribution, and quotas followed. It was established that State would accept 8.4 if Agriculture would agree, but Mr. McConnell said he could not go above 8.3 at this time. Dr. Hauge suggested that Mr. McConnell talk to Secretary Benson and ascertain the maximum figure to which they felt they could go. He suggested that the meeting be resumed on Tuesday, March 29.[3] In closing Dr. Hauge emphasized a view that he had previously expressed several times. He said the fact that the President's instinct was against any change prior to 1957 should be given considerable weight in any compromise that was reached between State and Agriculture.

[1] Source: Department of State, Central Files, 811.235/3‑1655. Confidential. Drafted by Callanan.

[2] Supra.

[3] See infra.