611.5231/1037: Telegram

The Secretary of State to the Ambassador in Spain (Bowers)

67. It has come to the attention of the Department that the representatives in Spain of an American firm interested in withdrawing capital funds from that country are actively discussing with the Spanish Government the possibility of Spain’s obtaining credits from the United States, perhaps in connection with the proposed trade agreement, these credits to be used not only to facilitate the transfer of commercial payments to American exporters but also to liquidate blocked capital funds belonging to American nationals. We are fearful that as a result of these discussions the Spanish Government may attempt to make the conclusion of a trade agreement dependent on the granting to Spain of American Government credits and we are very anxious that the question of an agreement with Spain shall not be complicated in any way by the question of credits. If any American firm requests your cooperation in making arrangements for the extension to Spain of credits which will make possible the transfer of American capital funds now blocked in that country you should reply that the primary object of any trade agreement with Spain will be the facilitation of commercial exchanges between the two countries and that, therefore, special measures for the liquidation of blocked capital funds do not fall within the scope of the proposed agreement.

Provision will be made in the eventual trade agreement, of course, for fair and equitable treatment of our commerce in regard to the allotment of foreign exchange.

Hull