Memorandum of Conversation, by the Acting Deputy Director of the Office of International Materials Policy (Linville)[1]

OFFICIAL USE ONLY [WASHINGTON,] June 29, 1954.

Subject: Discussion Regarding Revision of the Sugar Act.

Participants: Dr. Hauge, White House

Mr. L. Myers, Sugar Branch, Dept. Of Agriculture

E‑Mr. Waugh

APS‑Mr. Linville

MID‑Mr. Wellman

Dr. Hauge described the meeting[2] which the President had with Mr. Kemp,[3] representing the sugar industry, Senator Ferguson[4] (Michigan) and Senator Barrett[5] (Wyoming). Mr. Kemp said that the sugar industry had wished to get the Sugar Act revised during the current session of Congress. It had found some opposition in the Administration and had decided not to try to get Congressional action until next year. The industry wishes to carry on conversations with representatives of the Administration a little later in the year in an effort to reach an agreement on a bill to be placed before the next Congress. He feared that the Department of State would be unwilling to participate in such discussions, however, since it took the position that the present four‑year act should not be altered during its term. He hoped, however, that this would not be the position.

The President inquired as to whether there was a four‑year "contract". Mr. Kemp said that there was not. The President asked Dr. Hauge to inquire regarding this issue.

The representatives of the Department of State and Agriculture told Dr. Hauge that there is no "contract" which would keep the legislation from being altered. The present Act, however, was worked out with the thought that its provisions would be in effect for four years. Mr. Linville said that one important reason why the State Department had been willing to go along with enactment of the present legislation was that, though the Act increased the quotas of some domestic areas, it would bring benefits to foreign suppliers as production expanded in the United States over a four‑year period. He read from testimony given by Mr. Myers before the House Agriculture Committee when the present act was under consideration. Mr. Myers had said that the Committee would "find that the domestic areas all accept the proposed quotas for the period of the duration of this. proposed extension" (1953‑56). Mr. Myers gave a general confirmation of the importance which had been attached to the term of the legislation. Mr. Wellman observed that there had been a clear understanding in 1951 3n which Cuba relied that the quotas would not be changed during the extension period.

Mr. Hauge indicated he would inform the President there is no Legally binding agreement not to amend the Sugar Act for the four year period of its extension.

Mr. Waugh reviewed the conversations which he and Mr. Holland and other officials had had with representatives of the sugar industry .)n June 12,6 and with Mr. Kemp and Mr. Shields' some days later." He said that he and Mr. Holland had expressed objection to revision of :he Sugar Act, which would seriously harm our relations with Cuba. He referred to the discussions regarding an exchange of letters between the Department of State and the sugar industry, and explained :hat the Department had been unwilling to make the commitment requested by the industry to consider proposals for new sugar legislation to be effective in 1955. He said that the Department would be prepared, however, to discuss the subject further with the sugar industry at any time.

Mr. Myers said that it should be recognized that there will be new legislation next year whether the Administration likes it or not. The only question is what kind of legislation will we have and can the Administration exercise a moderating influence on it. He said that we should face the facts and not get unnecessary blame for resisting the inevitable. He said he thought it would be possible to prevent any cutback in import quotas if we should agree that 50% of the expansion in United States consumption over 8.2 million tons should go to the domestic industry. He indicated Cuba could be prevailed upon to accept such a division.

Dr. Hauge said the main question at the moment seemed to be that of soothing the feelings of representatives of the sugar industry. He said the President had inquired as to whether it would be feasible to inform the industry that the Administration would make no statements prior to later discussions with the industry regarding its position as to modification of the existing Act. He asked if the domestic industry might be told the Government has determined neither that it is desirable nor that it is undesirable to amend the Sugar Act next year.

There was discussion of the possibility that the United States Government might be asked to make some future commitment with respect to sugar legislation. The proposed inter‑American economic conference to be held at Rio de Janeiro in November' was mentioned in this connection. Mr. Waugh expressed the opinion that Department officers should guard against making any such commitments. Mr. Wellman expressed the opinion that such commitments as existed arise from the facts surrounding the amendment of the Sugar Act in 1951, and that it was more likely that assurances would be requested within the general context of the stability of United States foreign economic policy than with specific reference to United States sugar quotas.

It was agreed that Mr. Waugh would telephone Mr. Kemp, who is an old friend of his, and tell him that the Administration does not intend to make any public statement prior to discussions with the industry later in the year as to its position on revision of the Sugar Act next year. Mr. Waugh would also indicate the willingness of the Administration to discuss this problem with the industry later in the year in light of the conditions prevailing at that time. Mr. Waugh would ask Mr. Kemp whether he would like to have any further discussion at this time. Dr. Hauge would be willing to have a meeting with Mr. Kemp and representatives of interested Departments if Mr. Kemp thought this would be helpful. It was also suggested by Mr. Myers that relations with the industry could be improved at the meetings scheduled in Denver in July between industry and Department of Agriculture officials.

[1] Mr. Linville was also Chief of the Agricultural Products Staff.

[2] The referenced meeting took place at the White House on June 28.

[3] Frank A. Kemp, President and General Manager, The Great Western Sugar Company, Denver, Colorado.

[4] Homer Ferguson.

[5] Frank A. Barrett.

[6] A memorandum of the referenced conversation, by Mr. Wellman, dated June 12, 1954, is contained in MID files, lot 56 D 569, "Sugar Act."

[7] Robert H. Shields president and general counsel, United States Beet Sugar Association, Washington, D.C.

[8] A memorandum of Mr. Holland's conversation with Messrs. Shields and Kemp, by Mr. Cale, dated June 22, 1954, is in file 811 .235/6‑1654.

[9] Reference is to the Meeting of Ministers of Finance or Economy of the American

Republics as the Fourth Extraordinary Meeting of the Inter‑American Economic and Social Council (commonly referred to as the Rio Economic Conference), held at Quitandinha, Brazil, Nov. 22‑Dec. 2, 1954; for documentation on the meeting, see pp. 313 ff.