651.5231/119
Memorandum by the Chief of the Division of Western European Affairs (Moffat)
The Spanish Ambassador called this morning and asked if I had been following the recent conversations for a trade agreement with Spain. I told him that I had been following them only in a desultory fashion. He said that they were not going at all well, that the one criterion by which they were judged in Madrid was whether or not they would help Spain reduce her adverse commercial balance. Our proposals while designed to liberalize trade would, on the other hand, result in an increase of this adverse balance.
Just today he had read in the newspapers that the Franco-Spanish negotiations were on the verge of collapse. France was demanding impossible concessions and was trying to wipe out the favorable Spanish commercial balance. This would leave Spain with even less exchange to pay us than formerly. However, it was deflecting Spanish interests in our direction and he felt that if we could moderate our demands so as to give Spain an opportunity to increase her sales here over and above the increase in our sales in Spain, it might be possible to obtain results quickly.
The Ambassador also called attention to the fact that the British had recently sent a mission to Spain for the purpose of putting pressure on the Spanish Government. The Government had asked the [Page 696] mission to take four trips to different parts of Spain and they had returned convinced that the Spanish Government was doing everything within its power to favor international trade.
He said that he was coming back in a few days to see Mr. Sayre in the hopes that “we might be willing to modify our requests to some degree with a view to concluding a speedy and satisfactory agreement.