The Ambassador in Spain (Hammond) to the Secretary of State
[Received 1:40 p.m.]
103. As it appears that American business interests are becoming anxious because of the uncertainty of a prolongation of the present commercial modus vivendi, I would suggest that negotiations be instituted at once looking to an indefinite prolongation of the agreement with a clause providing for denunciation by either side on 3 months’ notice. There might be used as a basis for negotiation my note presented August 18 [17?]56 wherein the Spanish Government was warned that should most-favored-nation treatment not be continued, the American Government would regard all commercial arrangements now existing as denounced by Spain. It might also be pointed out that inasmuch as a number of Spanish grievances are now being considered, a discontinuance of most-favored-nation treatment after November 26 might have a prejudicial effect on the attitude of the United States on those subjects.[Page 731]
Pending the outcome of such negotiations I would strongly recommend that no report on Kisliuk’s investigations57 be issued and I would like authority to so inform him. I would also recommend favorable action on the Spanish request that Kisliuk should also investigate the tomato situation in the Canary Islands. The remedying of at least one Spanish grievance would have, I feel, a very beneficial effect on the negotiations.
I understand that treaty negotiations between Spain and Italy are proceeding slowly and that so far the 3 months’ denunciation clause has not been invoked, nor is it likely to be in the near future. Accordingly a continuance of most-favored-nation treatment would give the United States the advantages of the existing treaty between Spain and Italy for several months at least.