Sugar Legislation

PARTICIPANTS

Mr. Sherman Adams, Assistant to the President

Mr. Gabriel Hauge, Assistant to the President

Mr. Morse, Under Secretary of Agriculture

Mr. McConnell, Assistant Secretary of Agriculture

Mr. Myers, Director, Sugar Division, Agriculture

Mr. Waugh, E

Mr. Holland, ARA

Mr. Cale, AR

Mr. Callanan, IRD

Governor Adams opened the meeting by saying that he had discussed the sugar problem with Mr. Hauge and was familiar with it to some extent. He believed that the disagreement between State and Agriculture should be settled by the parties who knew the most about the subject matter. He knew that the President would prefer to have it that way. If however the problem had to be turned over to the White House he would, of course, see to it that a decision was taken.

Under Secretary Morse said that he had become fearful that the Administration was losing its leadership in the sugar problem. He understood that a number of bills had been introduced in the House today and that a bill would be introduced in the Senate tomorrow. There were so many States interested in growing sugar beets that he felt Agriculture could not take the responsibility for delaying an Administration position on sugar legislation any longer. A number of important Senators, such as Senator Ellender, were pressing the Department of Agriculture very hard on sugar legislation. The Administration was depending upon these same Senators for support of its farm program and flexible price supports. To date they had cooperated very well. The Administration's farm program might be wrecked if certain key Senators became irritated about the Administration's handling of sugar legislation. He therefore had felt that the White House should be advised of the disagreement between State and Agriculture.

Mr. Adams said he was aware of the possibility that there would be some vote swapping in connection with farm legislation, and this was of course always dangerous. He asked to what extent the adoption of Agriculture's position on sugar legislation would create chaos with our treaty obligations with Cuba. He added that the President did not like to welsh on an agreement whether it was an agreement he made or a previous administration had made. The President had a strong aversion against breaking faith with anyone and did not want to see an agreement which State had negotiated with the Cubans upset before its expiration. Mr. Adams asked what our posture would be before foreign countries if Congress forced us to break the terms of our treaty with Cuba. Mr. Morse said that it was a question of the Cubans not receiving their full expectations under present legislation, rather than any treaty commitment. He said the Cubans had called on him and indicated they relied heavily on present legislation running its course. At the conclusion of the present Act they wanted a long term agreement guaranteeing the amount of sugar they could export to the United States.

Mr. Holland commented along the lines indicated in previous memoranda of conversation on this subject. He pointed out that the Executive Branch had expected the legislation to run its full term and that the record of the hearings on the legislation in 1951 so indicated. He concluded by saying that he felt strongly that it was desirable to allow present legislation to run its full course, and that he did not believe the sugar interests could get a bill through Congress by themselves. He said their proposal was economically and morally bad, and that it was also bad from the standpoint of our foreign political relations. The industry proposal would be retroactive in its effect on Cuba and the Cubans would prefer to have the present law and take their chances in 1957.

Governor Adams asked whether or not it would be possible to convince the Cubans that it would be in their best interests to amend the Sugar Act now. He pointed out that they could be told their views had been carefully considered at high levels in the Government and that a decision had been made as to what appeared to be best for everyone over the long run. He was concerned over the fate of H.R. 1[2] in the Senate and did not like to see new difficulties created. Mr. Holland said he did not believe that full negotiations with the Cubans would mitigate the adverse political repercussions that were bound to follow if Cuba were injured by new sugar legislation. He would only be in a sound position if legislation were not retroactive in effect. If any legislation were effective prior to January 1, 1957 he believed it might be necessary for him to go down to Cuba to explain why the Administration had taken such a decision.

Dr. Hauge said he too was concerned about any retroactive legislation and believed we had to start measuring from the amount of sugar Cuba marketed in the United States last year. Mr. Holland disagreed and said the measuring should begin from 8.5 million tons which was the estimated consumption this year. A lengthy discussion followed of the statistics on consumption and distribution and Cuba's position in the market at various levels. Dr. Hauge said he was very much concerned about one aspect of this problem. The President had instructed Mr. Benson to get an Administration position on sugar legislation. He did not like it to appear Mr. Benson was incapable of developing an Administration position. A discussion followed of various leaks of information to the domestic sugar industry. It was pointed out that some persons in private industry knew what State and Agriculture's positions were and also knew in advance when meetings would be held on this subject. Governor Adams said that this present discussion was to be considered of a privileged character and that the President did not relish information on disagreements within the Executive Branch being leaked to outsiders.

Mr. Waugh commented that State and Agriculture had been bargaining in good faith on this problem for some time. It was an immensely complicated problem and took a lot of everyone's time. The industry was being somewhat unreasonable in their approach but we should remember that they had now been waiting for an answer from the Administration for quite a long time. Mr. Holland reiterated his previous remark that on economic grounds, moral grounds and foreign political grounds nothing should be done for the sugar industry this year. He said he was aware that domestic political considerations were the fourth element to be reckoned with and that there was frequently a conflict. If a decision were taken on the basis of domestic political considerations he merely wanted it to be abundantly clear that it was on that basis alone that a decision was taken. He added that in his opinion we would be buying peace with the sugar industry at much too high a price. Mr. Morse said he was wondering whether or not we should have an annual review of sugar legislation. He did not believe there was any long term commitment to Cuba and certainly believed if there was one we should be extremely careful never to get in this position again.

A discussion followed of the nature of our obligations to Cuba. A document bearing on this subject prepared by the State Department was circulated. Mr. Myers said that he had been the Administration's spokesman in 1951 and believed the record was clear that there had been a general expectation that the legislation would run its four year course but that there had not been any agreement with Cuba. He read several passages from his testimony including his assurance to Congressman Andersen[3] that there was "no understanding or agreement or commitments with Cuba or any other country".

Mr. Waugh attempted to get the meeting back to a discussion of the figures around which the disagreement between State and Agriculture centered. Reading from a table he pointed out just how much relief would be given the domestic industry this year and next year when consumption was shared over 8.3, 8.350 and 8.4 million tons.[4] There was, however, no resolution of the issue over which State and Agriculture were deadlocked.

Governor Adams in closing the meeting said that he assumed that when the Congressional committees asked us for our views on a bill we would then get an Administration position for presentation to the Congress. He said that he thought this should be to oppose the industry's bill and to state that if it were considered necessary by the Congress to alter the existing law the changes should not be more adverse to Cuba than the position agreed upon by the Administration.

[1] Source: Department of State, Central Files, 811.235/3‑3155. Confidential. Drafted by Callanan.

[2] Reference is to a bill to extend the authority of the President to enter into trade agreements enacted June 21, 1955, as P.L. 86. For text, see 69 Stat. 162.

[3] Herman C. Andersen (R.‑Minn.).

[4] In a March 31 memorandum for Waugh, Callanan noted that he and Myers had prepared statistics estimating how much relief domestic industry would be given under the various proposals and enclosed a table entitled, "Cuba's Position in the U.S. Market." He wrote in part:

"Although we have been discussing this problem in terms of tonnages, the question to be resolved is really whether anything should be done to give the domestic industry relief before the present Act expires on January 1, 1957.

"The industry wants 165,000 tons this year. Sharing increases over 8.3 would give them 50,000 tons this year. Sharing increases over 8.350 would give them 25,000 tons this year. Sharing over 8.4 would not afford any relief until 1956. Sharing over 8.5 would delay relief until 1957 or at best late 1956." (Department of State, Sugar Files: Lot 65 D 212, Revision of Sugar Act, 1955, Working Papers II)