611.5231/976: Telegram
The Chargé in Spain (Johnson) to the Secretary of State
[Received 4 p.m.]
37. My telegram No. 33, May 21, 10 a.m. Following up Ambassador’s interview I have had long conversations with Sub-Secretary and Chief of Overseas Division, Ministry of Foreign Affairs, and dwelt upon situation described in Department’s telegram 28, May 17, noon.
Aguinaga stated that England and France are both demanding approximation of equalization trade balance with Spain thus demanding just what Spain is asking of us. If no agreement is come to with France and England, Spain will have no foreign exchange with which to pay for her imports and the peseta would fall dangerously.
Spain disapproves of all quotas but has been forced into her present position. It is impossible for Spain to base our automobile contingent on the years 1927 to 1929 as, if she did so, commercial agreement would be impossible with France and England and Italy and Germany as well. I pointed out, giving exact figures, the enormous difference in the number of our automobiles imported ‘27 to ‘29 and in the annual importations since the Spanish tariff has discriminated against us and stated that a contingent based on the latter period would be impossible for us to accept. Aguinaga said that Calderón had already been instructed to make a slightly better offer. I replied that this would be [Page 711] useless and that we must have at the very least a contingent based approximately upon our percentage of participation during representative years when tariff discrimination did not exist. Aguinaga promised to instruct Calderón further in the sense that he should increase the offer already made.
As to tariffs, I inferred from Sub-Secretary’s remarks that most-favored-nation tariffs will, subject to negotiations, be accorded automobiles and other products of special interest to us. Some slight reductions below such tariffs possible in rare instances.
According to best information available Minister of Finance has decided to let exchange problem alone, hoping that it will solve itself as, Owing to present long delay in securing exchange, imports will probably decrease and as commercial treaties under negotiation should rectify balance of trade. He is said, however, to be considering possibility of seeking foreign credits.
Former head of Inter-Ministerial Committee on Foreign Trade who is now economist, Cortes Committee on Trade and Commerce, has stated treaty must at least appear to favor Spain or it will have small chance of ratification by Cortes.
In conclusion, desire invite attention cotton situation. Cortes ratified commercial agreement with the Argentine yesterday which guarantees annual purchase of 13,500 metric tons Argentine raw cotton. Understand similar provision for purchase of even larger quantity may appear in the treaty now in negotiation with Brazil. These concessions will decrease already diminishing participation our cotton Spanish market.