611.5231/1065
The Ambassador in Spain (Bowers) to the Secretary of State
[Received December 31.]
Sir: I have the honor to acknowledge the receipt of the Department’s cable No. 77 of December 12, 5 p.m., regarding certificates to importers issued by the Spanish Foreign Exchange Control Board. This cable cited the Department’s cable of September 3rd and the Commercial Attaché’s Special Weekly Financial Report of November 25th.
I replied to the first of the above mentioned cable instructions in my cable No. 57 of September 7, 12 noon. During the interview with Sr. Aguinaga, therein described, I left with him an Aide-Mémoire requesting that the United States be included among those countries, importers from which may receive insurance against exchange fluctuations on amounts covered by exchange applications in payments of imports. The Spanish Government has, however, seen fit to stick to its policy to grant such insurance only to those countries with which it has a favorable balance of trade and maintains that in so doing no discrimination is practiced.
In my despatch No. 947 of November 12th,36 I included a translation of the Decree of November 8th regarding the issuance of certificates to importers.37 I said in this despatch:
“The certificate in question amounts in effect to a promissory note without a due date. It is difficult to see, however, how such a note without a date of maturity can be negotiated. Various bankers whom I have consulted state that they would not think of discounting a note without a due date. Therefore, unless the Decree is clarified and amplified it is difficult to see how it will do importers much good.”
The only development since that time is the issuance on November 20th by the Exchange Control Board of a circular, a translation of which was enclosed in the Commercial Attaché’s Financial Report of November 25th. Mr. Nufer states in this report that it will be seen from the Exchange Control Board’s circular that certificates of a certain character will be issued only in the case of imports from England, France, Holland and Switzerland. He made this statement in view of the fact that Section 3 of the circular states “The following three types of certificates are established; … B. In foreign currency (in the case of exchange insurance)
While it is true that certificates “B” can only be issued to those countries which enjoy exchange insurance, namely England, France, Holland and Switzerland, this fact changes little if any the present [Page 738] situation. In other words, these four countries which formerly were given the right to apply for exchange insurance on the basis of a 1 per cent premium now get the same exchange insurance plus a certificate to the importer showing the exact amount of the respective foreign exchange which the Exchange Control Board will release at “the proper time”. These certificates have no maturity date and are, therefore, in the opinion of the Embassy, non-negotiable. The limiting of the right to apply for such a certificate would not seem then to constitute an appreciable “extension of discrimination against the United States.” The certificate changes the situation only in that the exporter may have a paper, provided it is endorsed and forwarded to him by the importer, showing the amount of foreign exchange which he will eventually receive. Since the importer previously received documentary proof of the insurance given, the change is very slight.
I have taken advantage, however, of this new development to take up again with the Foreign Office the whole question of exchange insurance, and in addition to requesting that such insurance be made possible for goods imported from the United States I have also asked that “B” certificates be issued to importers of goods from the United States.
Respectfully yours,