740.0011 European War 1939/10175: Telegram

The Secretary of State to the Ambassador in Spain (Weddell)

214. Reference Department’s no. 208, April 26, 8 p.m. You are authorized to inform General Franco orally and in person that you now have authority from your Government to initiate discussions with the competent Ministers of the Spanish Government with a view to broadening and liberalizing the basis of mutual trade between Spain and the United States. You may state that your Government is prepared to give immediate and careful consideration to the means whereby it may be possible for the Government of Spain to obtain surplus commodities in the United States of which it is in need, such as wheat, corn and cotton.

In first examination of the situation as a whole we have come to the conclusion that it may be possible to take some immediate, effective steps toward the mutual development of trade between Spain and the United States, and at the same time to assist in a large measure to meet the immediate foodstuffs requirements of Spain, through an exchange of commodities without resort to credit transactions. In this connection we have in mind the possibility of an arrangement whereby a substantial quantity, say 25,000 tons, of Spanish olive oil would be exchanged for an equal quantity of peanut oil from the United States, plus the large quantity of wheat representing the difference in the market price of olive and peanut oils. We believe [Page 894] that it would be possible in a transaction of this kind to make available to Spain a very substantial quantity of wheat, perhaps amounting to over 200,000 tons.

As you are aware, the Olive Oil Association of America, Incorporated, and individual American importers of olive oil, have been endeavoring for some months to obtain fulfillment of existing contracts for shipment of large amounts of olive oil from Spain; the Spanish Government has stated that it would only permit the exportation of olive oil to the United States in return for an equal amount of substitute oils; and it has not been possible to obtain the olive oil on this basis because of the refusal of the British Government to permit the importation of substitute oils into Spain so long as the Spanish Government continues to export olive oil to Germany and Italy. We are now informed that the British Government may be prepared to lift its restrictions on importation of substitute oils into Spain to permit the realization of this proposed exchange of commodities since it would have the effect of making available from the United States a substantial quantity of urgently needed foodstuffs to Spain.

It is believed that if the suggestion outlined meets with the approval of the Spanish Government, and if definite assurances are received from the British Government that the contemplated exchange of commodities will not be interfered with, it may be possible through the cooperation of the American Olive Oil Association to put this proposal into effect within a short time. We have in mind also that it may be possible to expand this proposed transaction to include other commodities in which the Spanish Government is interested and in which there exist available surpluses in the United States, in view of previous indications from the Spanish authorities that upward of 50,000 tons of olive oil might be made available for exportation to the United States. Similar transactions might subsequently prove feasible with respect to other commodities of mutual interest to Spain and the United States.

With respect to the articles and materials subject to export control mentioned in your no. 340, April 20, 2 p.m., it may be observed that in view of the fundamental and necessary policy set forth in our no. 103, March 3, 2 p.m., it may not be possible to make available any substantial quantities at this time. With respect to scrap iron, in which it appears that the Spanish Government is particularly interested, it may be observed that our policy is based upon the President’s statement of September 26, 194017 in which he said that the exportation of scrap iron from the United States would hereafter be limited to the amounts required by Great Britain and the other countries of this hemisphere. With respect to the other principal items under [Page 895] export control in which the Spanish Government is interested, it may be observed that we have now approved the issuance of licenses for the exportation of approximately 7,000 tons of Sulphate of Ammonia since January 1, and may be able to authorize some additional quantities despite the fact that the total exportable quantity available has become increasingly restricted. The situation with respect to machine tools remains as stated in our no. 103 of March 3, 2 p.m. We may, however, find it possible to issue licenses for the exportation of some machinery. It may also be possible to approve exportation of a moderate amount of tin plate for which numerous applications have been received.

In the event that the Spanish Government is prepared to initiate discussions along the lines indicated we shall, of course, wish to bear in mind the four numbered points set forth in our no. 350 of December 19, 7 p.m.18 relative to the attitude and intentions of the Spanish Government. Upon the initiation of such discussions we should wish to make public the statement, or a statement similar to that, quoted in the last paragraph of our no. 350. We should, of course, wish to have such a statement of our position given the fullest possible publicity in Spain in order that the Spanish people as a whole may be fully aware of our attitude and intentions with respect to Spain.

Hull
  1. See Department of State Bulletin, September 28, 1940, p. 250.
  2. Foreign Relations, 1940, vol. ii, p. 848.