Office of the Historian

811.20 Defense (M) Spain/819: Telegram

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

Washington, July 26, 1943—midnight.

1600. USCCO57 1490. Under our May 26 directive,58 you are authorized to make purchases of up to 1,500 tons of tungsten ores in Spain, provided your expenditures do not exceed $60,000,000. This amount is in addition to authorizations outstanding on May 1, last amounting to $22,000,000, totaling $82,000,000 in all. This refers to COUSC 1666, July 6 (Embassy’s 1751).59

Under May 24 directive58 issued here, further authorization is given you to expend up to $2,000,000 in order to purchase tungsten-producing properties and facilities, together with facilities for refining. This latter authorization also covers purchase of leases or options on such properties or facilities, as well as for concluding any other arrangement whereby the enemy is prevented or hindered from acquiring tungsten or tungsten-producing properties or facilities, subject in each instance to prior approval by Washington.

In the agreed opinion of the Department and OEW,60 first preemptive importance continues to be attached to wolfram which accordingly takes precedence over all other purchases. There is substantial agreement between OEW and MEW61 that the minimum [Page 636] amount of wolfram required by the enemy’s iron and steel industry is between 4,000 and 4,300 tons of 65% concentrates. If the present rate of acquisition is continued, by the end of 1943 some 2000 tons will have been obtained by Germany from Spain and from Portugal an equal amount.

Acquisitions of the enemy in Spain from January to May inclusive, 1943, on a graph show that during January, February and March, purchases by the enemy were substantially consistent, that there were reduced purchases in April but that volume of purchases recovered in May. If Germany, therefore, continues present rate of acquisition, minimum enemy requirements will be satisfied, and although stockpiling by enemy has been prevented by our preclusive program, as well as acquisition of tungsten by enemy for secondary uses, it is imperative that we do something more than merely acquire all further production increases in Spain, since by obtaining such increases we do not reduce purchases by the enemy. We must wean away the enemy’s principal suppliers, as well as purchase all further increases in production.

Referring to COUSC1641, June 24, Embassy’s 1666, it is recognized by Department and OEW that successful operations often require immediate decisions by the field. The Anglo-American Committee is therefore authorized to make final decisions involving purchase or lease of additional mines or claims and also to enter into total output contracts of such mines whenever situation is so urgent in Committee’s judgment that the particular transaction could not be cleared in time with Washington and London. The foregoing delegation of authority to the Anglo-American Committee, however, is subject to parallel action by the British.

In the meantime, specific authority is hereby given to the Committee to make its own decision regarding purchase or lease of Sanfinx mine or in entering into a contract with Sanfinx management for total output of the mine. This refers to your COUSC 1609, May 29, Embassy’s 1437.62

The Department and OEW agree that the following points be considered in deciding what type of arrangement is most desirable in connection with any particular mine; that is, whether it should be in the form of a contract for the total production, purchase, or lease:

(a)
Will wolfram production be limited by the proposed arrangement?
(b)
Is a base for smuggling operations afforded by the property?
(c)
In case the Iberian Peninsula is shut off from communication with the enemy, can our obligation to pay out money be terminated under the proposed arrangement?
(d)
From a long-term point of view (for example, 6 months) would the proposed arrangement involve the least expenditure?
(e)
Would it be possible for us to make payment under the proposed arrangement in sterling or dollars rather than in pesetas?

Due consideration should be given to the abovementioned points by the Anglo-American Committee in deciding the Sanfinx proposition or any other wolfram mine proposition, even though the Committee may decide in such cases that such points are not the only controlling factors. When a final decision is made in Madrid, please report in each case by airgram to Washington showing how application has been made of each of the above-mentioned five points. In case these five points have not been the basis of the decision, please give detailed explanation of determining factors.

Repeated to London.

Hull
  1. Designation used by the U.S. Commercial Company in telegrams sent through the Department to the Company’s representative in Spain.↩
  2. Not found in Department files.↩
  3. Not printed.↩
  4. Not found in Department files.↩
  5. Office of Economic Warfare, successor agency to the Board of Economic Warfare.↩
  6. British Ministry of Economic Warfare.↩
  7. Not Printed.↩