852.00/7014
The Consul at Milan (Sholes) to the Secretary of State
[Received December 1.]
Sir: I have the honor to report that some striking details have been obtainable locally from well known and necessarily anonymous sources, concerning Italian and German raw material imports from [Page 444] Spain, since the fall of Bilbao, the latter apparently enjoying priority rights in the matter because of the comparative incomplete state of German armaments.
Before the capture of Bilbao and the Spanish mineral belt by General Franco’s forces, iron, ore and manganese imports from “White Spain” were negative as the trade movement between the two countries for the first six months ended June 1937, showed only 5,116 tons, whereas two months later these figures had increased to 23, 192 tons—eloquent testimony of the economic rehabilitation in Nationalist Spain, especially when it is remembered that these figures are insignificant compared with the movement to Germany, which appears to be obtaining wheat, wool, hides, skins, olive oil, sugar, ores and pyrites in large quantities from the Iberian Peninsula, in exchange for chemicals and “machinery”.
An interesting side light on the situation is the fact that until the liberation of Bilbao, Italy’s principal item of import from Spain was olive oil, which began entering this country after Malaga and Andalusia, with the aid of Italian “volunteers”, fell into the hands of General Franco. In fact, olive oil continues to head the list of imports, some 5,824 metric tons valued at L. 3,510,000 having entered Italy during the first 8 months of 1937.
According to this Consulate’s sources of information, the pyrites first imported went mostly to the ILVA foundry at Genoa, but that quantities are now reaching the foundries in this and other sections.
When the future of Italo-Spanish trade is discussed here, it is pointed out that at the beginning of the war in Spain, practically all the gold, mineral and agricultural wealth of the Peninsula, with the exception of wheat and wine, was in the hands of the Madrid Government, whereas today the reverse was true.
It appears to be no secret that General Franco is liquidating Italy’s and Germany’s “advance mortgage” almost exclusively with raw materials, beginning with olive oil, and because of the great rise in prices, has greatly simplified matters for the Nationalist Treasury.
[Here follows a table showing the leading items of Italian imports for the first 8 months ending August 1937.]
Respectfully yours,