811.20 Defense (M) Spain/1203: Telegram
The Ambassador in Spain ( Hayes ) to the Secretary of State
[Received December 12—1:38 p.m.]
3637. My 3532, December 1, 7 p.m. Carceller98 informed Ackerman December 8 that our request for a wolfram embargo is being given consideration and that the probable political and economic consequences are being carefully weighed. Carceller believes such a prohibition would be the first step toward breaking off relations with Germany as the latter would undoubtedly consider it to be an unjustified unneutral act in view of the fact that Spain has a large exportable surplus which Germany is disposed to buy in terms of goods needed by Spain. Although fully aware of the economic advantages being obtained from the Allies, Carceller stated Spain is contributing goods to the Allies which are useful to them and Spain is also receiving benefits from its trade with the Axis which will continue so long as a neutral position is maintained. Spain cannot discount the possibility that if wolfram exports are prohibited Germany may retaliate either by sinking Spanish ships or discontinuing to supply Spain with goods or both.
The loss of a single ship would be serious in view of Spain’s dependence upon its overtaxed mercantile marine especially for such vital commodities such as wheat. Should the Allies make ships available to Spain sufficient to compensate for any possible losses by German action and apart from political and military considerations Spain would still have to weigh whether other compensatory advantages offered by the Allies would be sufficient to offset present German-Spanish trade.
[Page 665]During the last few months Germany has shipped to Spain over 500,000,000 pesetas of military equipment in addition to substantial quantities of machinery, seed potatoes and other products and an arrangement is being concluded whereby Spain will obtain 20,000 tons Rumanian wheat. The recent volume of German trade has been such that the German debt to the clearing has been reduced by more than 100,000,000 pesetas [since?] the beginning of the year. Germany has been acquiring only such Spanish goods as represent exportable surpluses and these at very high prices sometimes well above the prices which the Allies are willing to pay. Before Spain can decide whether to prohibit wolfram exports it would wish to know the extent to which the Allies are willing to compensate Spain for the possible political and economic consequences of German reaction and also for the pecuniary losses incident to cessation of wolfram purchases. He expressed doubts that we would be prepared to make a proposal which would offset the disadvantages Spain perceives. He has an open mind however and would consider objectively any proposal we wish to make. As a gesture of his sentiment to us and to overcome any possible difficulty in the conduct of our economic warfare program as relates to wolfram purchases in Spain he would be willing to advocate to his Government that it agree to make available the sums of pesetas we require to continue our wolfram purchases and to hold the corresponding dollar values in the United States until after the war when they would be expended for American goods. He believes this has the attraction of ensuring a considerable trade with Spain in immediate postwar years.
Ackerman pointed out that the Minister was obviously overlooking the fact that the goods we are now and have been making available to Spain represent a sacrifice to our war effort and that in our future programs we must consider whether the benefits we are obtaining from Spain compensate for what we are giving.
Furthermore there is no assurance that we shall continue to purchase wolfram for an extended length of time and should we cease voluntarily we might then find it inconvenient to continue making accessible to Spain the goods it needs. This alone merited most careful consideration of the Spanish Government, but if the Minister felt Spain must have additional compensation, we too had an open mind and would examine any proposals Spain wished to make. We of course do not know Spanish needs as intimately as Spaniards themselves. Although the proposal concerning credits for postwar needs is interesting it cannot be considered in any sense as an answer to our request that wolfram exports be prohibited. In conclusion the Minister stated he would continue to give thought to our request but hoped his proposal would be transmitted to Washington.
[Page 666]It would appear that decision on our request rests largely with Carceller and from above conversation it is equally apparent that he will temporize as long as possible. After discussing this matter with British Embassy we shall submit our further comments.
- Demetrio Carceller Segura, Spanish Minister of Industry and Commerce.↩