Created: 2/11/1954

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kOUTING and recor&^smeett"'


1TK Division








Subject: Tho Coffee Problem as lt Affects

l ,

recent sharp rise ln the price of coffee in thahaa oaueed agitation ln tha praaa and Congreee forto lowar tha price. Inveetlgatlon by aaoaalttaeunder wa/. High United 8tataa Oorernaent offlalalaa boycott of eoffeaabinet amber. theof Agrlaulture (by promoting the Idea lt would be betterallk). Linked with the boycott proposal Id tba publicthe Ouateaalan laaue. alnceohell and otheraa boycott of Ouateaalan coffeeeana ofln that country. (Senator Smith of Mainereeolutlon ln the Senate on February. to inwestigatemovement ln Ouataaala and lta effect on the pricecoffee.) Idoycott of Ouateaalan ooffee hae

wbataoerer to do with the boycott of all ooffeeeana

ofriceut lt la one of the principal polnta of oonfuslon whereby Guatemala la brought Into the picture.

Coffee la one of the noat eaaentlal producta to many latin Aaarlcan natlone, being grown principally for export and aa such the larceet eourca of their dollar Income. In Oentral America, all oountrlea Including Ouateaala are dependent od coffee aalea to varying degreea; three of then, XI SalTador, Nicaragua, and Coeta Rloa. hare alnoat "coffee econoales." Panama la enjoying Increasing ooflet output. The three Caribbean natlone (Cubs, Haiti, and tha Dominican Republic) derlre eubetantlal Income froa coffee: and Mexico larower. In South America. Coloabla and braill lire off coffeend Venezuelaarge coffee locoae (lt paid off tbe foreign debt before oil vaa discoveredeara ago) of extreme Importance to the Andean region of the country wnence com the Teassuelan ruling military class.

Two-thirds of Latin American coffee production ls Bold ln the United States market, afforte to reatrlct thla narket are extreaely reaestod by all the producer nations, not only as directly affecting their Intersate but aa baaed on falsehood and slander -that the rise In ooffee prices le due to manipulation on their part.

,as oof fee is grown on small farms by nattvea, not foreign oompanlea, lt la undoubtedly tha one enterprise which touches most deeply tha baeic economy of thirteen producing countries, and ltolitical issue on vhlch all partlaa ln thaaa oountrlee suet etand absolutely united. Threats by United States Government officials are already bains widely exploited by tha Oommunleto ln Latin America as proof of tba Imperialist determination to keep the Latin producers of raw materials in econoaic bondage.

On tha ere of the Oaracaa conference, the Communiat-influenced Government of Guatemala is thus aerred the moat perfeotly tailor-made loaua lt could aaelc la order to dierupt tha conference and repel any efforta by tha Hemisphere to take action against Communism. Linking threats of boycott of Guatemalan coffee with threata to boycott all ooffee, the Guatemalan delegation has an Issue on whloh all Latin producing nations Mill respond as on*. It le economic aggression ln lta widest and most dangerous form, aa lt affeota more oountrlee than could any other and more people In each oountry.

Cm countries affected are precisely the oountrlee on whose cooperation and firmness we must depend for auoceoa on tho Oooaunlat issue at Caracas. The Central American countries must themeelvee stand up to the threat of Guatemalan aggroesion represented by Comouniet Infiltration ln Guatemala; the active support of the three South American leaders agalnet Communism, Colombia, Venezuela, and Brazil, is vital to the United States poaition on the danger ofpenetration in the Hemisphere; and the votee of the three Caribbean nations hold the balance in any close debatewo-thirds majority la required. All of thie support will be weakened and confused if Guatemala is able to pin the charge of economic aggression on the United Statea.

Appropriate action at this time, taror-aaaKa" in advance of the conference, should be taken to remove the Issue from the minds of Latin American nations. This action should be along the lines that tba Unitedwhile concerned at Increased coffee pricesurden on American consumers,determined to obtain the full faote by careful and impartial Investigation; that information to date does not support any bsllef that the producing natione have ln any way whateocver caused the rise in coffee prices; that all of these nations haveplendid example of inter-Aaerican friendship by their offera of cooperation in the lnveetlga-tton and in plana to coahat further price rises; and that the United States understands and appreciates the econooio problems that oonfront then and the need for all to cooperate in solving<-


lhg Secretary, General rloon Affalfa, fonld be oarried ln ^he press tlVeness, lt should beweekly press conference. Is very ouch Interested ln and backs up fully/the state-

A statementthis effMt oould vail be made by the

Department ol* State, through either the Smith, or tae ABslotant /Secretary for Mr.f done /on Februaryt of Thin, for maximum e* lowed by An lnquirr to tha President at which'tine he might respond that the proxies, has /ollowed lt Closely,


nent of tbe Department of State. This would be carried in the press of Zaun America' on the eleventh and twelfth, and between bothmade abundantly clear that the United States Govern-eieat/ia not syntactic to ani boycott.



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