852.48/269
Memorandum by the Chief of the Division of European Affairs (Moffat)
Mr. Moffat asked Mr. Meana52 to call to speak to him with regard to an informal inquiry made by the Spanish Ambassador, both of Mr. Welles and of himself. As we understand it the question raised by the Ambassador was the following:
“The Spanish Government proposes to have Spaniards resident in this country set up a corporation; the Spanish Government would turn over to that corporation Latin American or other securities owned by the Government; the corporation would put up these securities as collateral for loans from American banks; the money borrowed would be expended for humanitarian relief work in Spain.
“Is there any method by which this program could be accomplished without violation of Section 3 of the Neutrality Act?”53
Mr. Moffat said that there had been considerable discussion of this proposal among the interested Divisions of the Department and that the conclusion was reached that to carry out the program as stated above would be a violation of Section 3 of the Neutrality Act. On the other hand, the authorities felt that the desired end could be legally accomplished: (1) if the Spanish Gov’t were to sell the securities in question instead of using them as collateral for a loan, or (2) if the proposed corporation should obtain the proposed loan from Canadian or other foreign banks outside the United States instead of from American banks.