852.31/6–2248
Memorandum by the Director of the Office of European Affairs (Hickerson) to the Under Secretary of State (Lovett)
Late in March, General Anderson told me of the Air Force’s desire to have some of the most modern equipment installed on the three big airfields in Spain in connection with possible future use of those fields by American military planes. We agreed that the best means of proceeding would be a private loan for the purchase and installation of such equipment. Secretary Forrestal concurred and sent two officers to discuss the question with Mr. Aldrich1 of the Chase Bank. I do not know the details of that conversation but was advised that Mr. Aldrich said the Bank would be glad to discuss such a loan with representatives of the Spanish Government. On April 6, 1 wrote Culbertson in Madrid concerning the matter, stating that Chase would be prepared to discuss such a loan but that no Export-Import Bank or other US Government financial participation was contemplated. A copy of my letter is attached.2 Colonel Miller, our Air Attaché in Madrid, was here at the time and may have got the impression that Secretary Forrestal had obtained Aldrich’s agreement to furnish the loan regardless of security.
A Colonel of the Spanish Air Force and a representative of Iberia Airlines have been here for some time negotiating with Chase for a loan both for airport equipment and for planes. We hear from the Bank, from the Spanish Embassy here and from our Embassy in Madrid that the Spanish representatives got the impression that the loan had been completely arranged, regardless of security, and that all they had to do was come to New York and sign. Chase has asked for gold coverage and the Spanish are unwilling to give it.
In an effort to straighten the matter out, Achilles, after checking with Blum3 in Forrestal’s office, has told the Bank and the Spanish Embassy that as far as we are aware, the Spanish were told in Madrid, and in any event they should have been told, that the position of the State and National Defense Departments is that this Government hopes the loan can be worked out satisfactorily, that Chase was prepared to discuss such a loan, but naturally the terms and security must be worked out in agreement between the Spanish and the Bank.
Schermerhorn, Chase’s Washington representative, stated this morning that the Bank would probably refuse the loan unless the Spanish were willing to offer gold or unless someone in either State or National [Page 1040] Defense specifically told them that the national interest required the loan to be made regardless of collateral. This was passed on to Forrestal’s office.
I understand Forrestal plans to consult you about this. I recommend that we give our position, namely, that both Departments are interested in seeing the transaction completed but that the terms must be worked out between the Spanish and the Bank unless Forrestal is sufficiently interested to ask the Bank to make the loan without security, in the national interest.4
If there should be any publicity concerning the matter, our position would be that we favored the loan in the interest of promoting safety in international aviation.5
- Winthrop Williams Aldrich, Chairman of the Board of the Chase National Bank of New York.↩
- Not found in Department of State files.↩
- Robert Blum, economist in the Department of State, temporarily attached to the Department of Defense.↩
- Marginal note to this paragraph: “Passed this on to Forrestal. L[overt]”.↩
- Telegram 385 of June 30 informed the Embassy in Spain that the Departments of State and National Defense had decided that it would not be justifiable to tell the Chase Bank that “national interest required loan be made regardless collateral”. The telegram further stated that Baraibar had again been informed that participation by the Export-Import Bank was not possible, and that he expected the Spanish negotiations with the Chase Bank to fail unless the Spanish Government agreed to put up gold collateral, as the Bank required.↩