File No. 652.119/820
The Ambassador in Spain ( Willard ) to the Secretary of State
[Received May 5, 10.11 a.m.]
1293. War Trade Board [from Chadbourne]:
44. After as careful study as possible of commercial agreements and their operation to date, have reached following conclusions based on facts hereinafter stated.
- (1)
- Our agreement was canceled ipso facto by the failure of Spain to extend credit of 35,000,000 pesetas to France on March 20. We nevertheless continued to act as though agreement was in force until April 23 when credit of March 20 under French agreement was given.
- (2)
- We began to comply with terms of our agreement at once. Spain did not grant the few requests for export permits made by us March 12 until April 12. We could properly have rescinded agreement any time between say March 20 and April 12, on this account.
- (3)
- On April 5 we applied for new lot of permits. Of this lot only rice and olive oil are specifically mentioned in agreement, the rest depending on general non-embargo clause, article 10. Under article 3 we were entitled to 2,000 tons of rice at once. Got only 1,000 tons. We were also granted permits on April 20 for 1,000 tons olive oil, 5 tons olives, 500 tons beans, 10 tons candles, 50 tons Spanish beans.
Export taxes are imposed on rice and olive oil which can be done under terms our agreement and French, but should not have been done in this particular case, as taxes were put into effect after our applications were made and after they should have been granted, had Spain been prompt. Export tax on beans and Spanish beans not justified in my opinion, evidently imposed under general clause of law of March 20, 1906. Refusal of permit for sheet iron probably justified; refusal of permit for 1,000,000 railroad ties justified, but [they] should have given us part.
[Page 1679]My opinion is that we should have rescinded agreement on failure of Spain to grant us permits and extend French credit before April 25. We are now requesting that export taxes be removed. Have wired about export taxes to Colonel Dawes and he is willing to wait to see, saying that taxes can be avoided. He advises not to insist on railroad ties. I call your attention to the fact that Spain’s attitude on these agreements is one of getting much and giving little while she watches who will win the war. Allies’ vacillating policy has given German influence upper hand here. As a matter of policy you would certainly do better to start afresh. Chadbourne.