File No. 652.110/1306
The Ambassador in Spain ( Willard) to the Secretary of State
[Received August 6, 6.45 a.m.]
1632. For Leffingwell from Davis:
No. 3. Spanish are especially aroused over sinking of steamship Ramon de Larrinaga loaded with petroleum because Germans had granted safe conduct for vessel. Suggest we be authorized inform Spanish authorities petroleum thus lost will not be deducted from regular allotment. Besides assisting in negotiating credits, such an offer could probably be used advantageously in obtaining withdrawal of embargo against export of horses and mules which Pershing considers of the utmost importance. Please consult War Trade Board and advise me immediately.
In order to strengthen our position with Spanish authorities, suggest that any concessions or announcements to Spain be made through American representative here rather than through Spanish Ambassador Washington.
As we are committed to furnish certain quantities of oils and cotton until expiration present agreement, we have not very much to trade on except bunkering of Spanish vessels. I hope this latter can be used to some advantage and that coal so supplied shall be paid for in pesetas. It now appears that Smith can arrange to secure some Spanish tonnage by private charter. Unless this can be paid for in dollars it will increase our peseta requirements.
Withholding shipments [in] advisable. Because of geographical location, Spain cannot furnish anything to Germany with possible exception of oil for submarines but Commander Tobey, assistant to Admiral Sims, informed me latter has no fears of this because there is not sufficient tonnage to furnish Spain with its requirements and leave any [for submarines. Holding up shipments] on technical grounds seems to have caused mistrust, and irritation without accomplishing desired results. Think we can accomplish more through liberal frank policy by explaining that we wish to furnish them as much as possible even at [some] sacrifice, but that we cannot afford to do so unless they likewise assist us in getting our requirements here. French and British Treasuries have come to conclusion that commercial blockade for Spain unnecessary and [inadvisable], and that agents of our Navy are in touch with situation and would know immediately if Spain allowed any supply to go to submarines. At any rate it seems that advantage in obtaining here certain important supplies urgently required by our army would outweigh any possible risks of German submarines securing small amount of oil.
[Page 1694]Spanish cotton mills are running half time and there is little likelihood of an accumulation of reserve cotton supplies. To keep employees contented and avoid uprisings, wages are being paid for full time and price of cotton [goods] sold principally to French is raised according to arrangements for [their bearing half the?] cost. Spanish Government has organization which I am informed is efficient for supervising the distribution of cotton and oils; but it seems [more] advisable to run any possible risk of having Germans purchase cotton for storage at present prices than to [have them] purchase later at lower prices or for us to ship gold in payment of our purchases here. I am to have conference here tomorrow with army purchasing agents and other Government representatives. Spanish Ministers are all scattered on vacation but Ambassador Willard expects Minister of State here tomorrow, at which time my credentials will be presented, after which I can much better negotiate.