269. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Ambassador in Cuba (Gardner)[1]

Washington, May 5, 1955.

DEAR ART: Your personal letter to me of April 29[2] indicates that the Cubans may be more optimistic than developments here would justify regarding the legislative situation on sugar.

Although we understand that Congressman Cooley[3] is in no hurry to hold hearings on sugar legislation and that he may actually be opposed to changing the Act before it runs its course, the President's advisers at the White House who are working on the problem have informed us that because of domestic political considerations they believe that something must be done this year to give domestic sugar producers some relief on the large stocks of sugar which they are carrying. We therefore regard ourselves as virtually under a White House directive to reach an agreement with the Department of Agriculture on sugar legislation to be submitted during the present session of Congress.

In a recent meeting which Mr. Waugh and I had with Mr. Hoover it was decided that the Department would not agree to legislation that would reduce Cuba's sales this year. Dr. Hauge at the White House shares this view. This would mean opposition to any law providing for sharing of increases in consumption by domestic producers until consumption reaches the level of 8.4 million tons. We also agreed that the possibility would be explored, on an urgent basis, of having domestic sugar declared surplus so that some 100,000 tons of our sugar might be used in foreign aid programs and thus afford immediate relief to our domestic sugar producers. This possibility is now being canvassed by the White House staff with the Department of Agriculture and the Foreign Operations Administration.

I am enclosing a copy of two tables that we have recently prepared in the Department and of a chart based on the tables which indicate the effect that various proposals for revision of the Act would have on‑Cuba's ability to supply sugar to this market.[4]

We now expect consumption in the United States this year not to exceed 8.4 million tons and it is possible that it may not exceed 8.5 million tons next year. At the 8.5 million ton level of consumption Cuba's quota, under the present Act, would be 2,956,000 tons. The tables and chart are based on the assumption that we would permit the Cuban quota to rise to this amount before the share of other foreign suppliers is increased. It is our belief, however, that foreign suppliers should be given a substantially increased participation in this market when consumption rises above the level of consumption which would give Cuba a quota of 2,956,000 tons. We believe that we cannot continue to give Cuba the same measure of preferential treatment that she has received in the past. We believe, in addition, that it is in our interest, and possibly in the long‑run interest of Cuba, that the base of our foreign supply of sugar should be broadened somewhat and less exclusive reliance placed upon Cuba as a foreign source of supply.

I wish very much that it were possible to permit the present Act to remain in effect until December 31, 1956. If it is to be changed, as I suspect it will, I believe that the best treatment we can expect for Cuba would be that which she would receive under the proposal which would provide that foreign and domestic producers would share 50‑50 in increases in consumption above the level of 8.4 million tons, that Cuba would receive 96 per cent of the foreign share until her quota reaches 2,956,000 tons and 60 per cent thereafter.

It is my understanding that the Government of the Philippines has recently requested that its quota also be increased, if the Act is revised at the present time. As you will note, the tables and chart make no provision for this, but the Department's decision with respect to the matter has not yet been made.

We have also not reached any final decision as to the relative treatment as between Cuba and other foreign countries. I am passing the foregoing on to you, however, as an indication of the direction in which our thoughts are moving. We will, of course, continue to keep you informed of developments.

With kind personal regards.

Sincerely yours,

Henry F. Holland[5]

[1] Source: Department of State, Central Files, 837.235/5‑555. Confidential.

[2] Not printed. (Ibid., Holland Files: Lot 57 D 295, Cuba)

[3] Harold D. Cooley (D.‑N.C.), chairman of the House Agriculture Committee.

[4] One of these tables is described in footnote 4, Document 265. The second table and the chart have not been found in Department of State files.

[5] Printed from a copy which bears this typed signature.