352.115/87: Telegram
The Acting Secretary of State to the Third Secretary of Embassy in Spain (Wendelin)
128. American-owned cotton at Barcelona and Tarragona is gradually being taken over by local authorities without compliance with terms of purchase which uniformly required establishment of dollar credits in New York to cover contract price. Cotton was financed by the American shippers through New York banks, and unless dollars are immediately made available to meet maturing obligations many of these firms, especially the smaller firms, face disaster. The conditions under which the cotton business is carried on make it impossible for most shippers to accept anything but cash dollars in payment, and assurance of ultimate payment will not prevent serious disaster to them.
In view of the present low supply of cotton in Spain and its steady depletion the necessity of prompt efforts on the part of the Spanish authorities to maintain a continued supply of cotton for the operation of mills is apparent. This can best be done by immediate recognition [Page 718] by such authorities of the terms of the contracts under which the American-owned cotton now in Spain was to be delivered, that is, by the establishment of dollar credits in New York, and by official assurance that the Government will make prompt provision for the necessary transfer of dollars to New York in payment for this and any additional cotton that may be needed. In no other way can the American shippers be given adequate protection and at the same time continued supplies of cotton be assured.
The owners of the cotton have requested that, unless arrangement for payment as outlined herein is made, demand be made for permission to remove to neutral ports their cotton now on the docks at Barcelona and Tarragona.
Please take up matter with Foreign Office in an endeavor to effect an arrangement for prompt payment in dollars in New York, or for removal of the cotton from the Spanish ports. Report results.