File No. 652.119/378
The Ambassador in Spain ( Willard) to the Secretary of State
[Received December 30, 3.30 p.m.]
960. Department’s 802 December 26, 6 p.m. After full discussion with French Ambassador he will make agreement, between Allies and the United States on one side and Spain on the other, such as is desired by the King (see Embassy’s 950 December 25, 8 p.m.) and as is reported by French Ambassador to be now under consideration by the Allied representation in Paris; authority is requested to inform Foreign Office immediately as follows: that on account of our growing needs and the needs of our cobelligerents and after January 1, 1918, the embargoes against the exportation of certain commodities as proclaimed by the President under date of July 9 and August 27, 1917, respectively,1 will be enforced and that [Page 1226] no amendment to exceptions thereto will be made except in exchange for reciprocal permits to export those articles the exportation of which is prohibited here.
The Embassy ventures again to suggest that the enforcement of our embargo especially on cotton is absolutely essential in order to secure these commodities. It appears that our embargo up to the present time has not been enforced for the Embassy is informed through newspapers, and otherwise, that there is now in transit from the United States and due in Barcelona within next fortnight more than 30,000 bales of cotton.
If this policy is followed all attempts to secure from the Foreign Office reciprocal exchanges of embargoed commodities are useless. …
Referring again to Inter-Allied Conference now being held in Paris as reported by French Ambassador, but concerning which this Embassy is without information, such negotiations should include the important question of rate of exchange between respective countries, parties thereto. Embassy agrees with King and Foreign Office that negotiations should be promptly inaugurated and if possible definite arrangements consummated. However, in meanwhile and supplemental to above suggestion, Embassy submits following modus vivenddi:
When application from any source is made to War Trade Board for permit to export to Spain and if War Trade Board feels justified (in view of our needs, needs of cobelligerents and other countries not directly applicable to Spain) in granting requested permit, that before doing so the application be submitted through the Department to the Embassy, first for its investigation concerning political activities of consignees and possible ultimate destination of commodities involved and second as a basis of exchange with Foreign Office, that War Trade Board withhold said permit until the receipt of Embassy’s confidential report; and finally that such permit be granted or refused in accordance with Embassy’s report, but without comment.
By this method Embassy will avoid undesirable charge of operating black list here and will in each case of refusal be able to set up our own needs as defense against the charge of retaliation. Embassy will also be in position, as much to be desired, of approving confidentially through Department applications to export to our friends in Spain and for disapproving those to our enemies. Instructions are anxiously awaited.