852.00/4235: Telegram
The Consul at Seville (Bay) to the Acting Secretary of State
17. Approximately 3,000 veteran Italian infantrymen in Spanish uniform with officers arrived in Seville last week. About the same time, an armed Italian transport apparently laden with army supplies moored in port. An Italian Red Cross Unit of 24 trucks with supplies reached Seville December 39 [29?]. It is reported that 1,000 Irish volunteers commanded by General O’Duffy have arrived in Caceres coming mostly by way of Lisbon.
In informed circles it is felt that fall of Madrid will not be long delayed. The drive on Jaen, an important olive oil production center, is progressing successfully and Malaga will be the next objective of Queipo’s forces. From sources considered reliable it is said military leaders have decided they will not rebuild Madrid after it has been captured as the cost would be prohibitive and that the seat of Government will be established in Seville. Industry as well as government, it is maintained, will be decentralized.
Exportations of olive oil are practically prohibited as supplies are said to be sufficient only for domestic consumption and large reserves are needed when Madrid falls. Rumors are that Germans have demanded 30,000 tons of that commodity in payment of war material which if acceded to practically gives them a corner on existing available [Page 621] supplies and enabling them to sell with profit in New York. Capture of Jaén and Malaga would release huge stores of olive oil but it is feared stores will be destroyed by Red forces when attacked. Rumors also are that Germans have demanded and obtained contract for 300,000 tons iron ore from Spanish Morocco.
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