The Secretary of State to the Ambassador to Spain (Weddell), Temporarily in Washington

Sir: Reference is had to the informal approaches which were made to you recently by representatives of the Spanish Government in Madrid, and which have also been made to this Department and other agencies of this Government in this country, regarding the possibility of obtaining credits in the United States, particularly with a view to the purchase by Spain of American agricultural products such as cotton and corn.

You are authorized upon your return to Madrid to indicate to the appropriate officials of the Spanish Government that it may be possible to give consideration to the extension of credits to make possible the exportation to Spain of American agricultural products, particularly those of which there are surpluses under control of governmental agencies in this country.

With respect to cotton, it is believed that the best procedure would be for the Spanish Government to approach the Export-Import Bank of Washington with a view to renewing the credit arrangements which were made with that institution in July 1939 covering the purchase by Spain of 250,000 bales of American cotton. With respect to corn or other products you may state that this Government would be prepared to give sympathetic consideration to any proposals that the Spanish Government may care to make. Such proposals should be submitted to the Department of State through the Spanish Ambassador in Washington.

You should make clear to the Spanish authorities that the possibility of the extension of credits by agencies of this Government to enable the Government of Spain to acquire certain products in this country will naturally be dependent upon a number of factors. In the first place, it will be dependent upon the existence of available surpluses for export in the United States and upon the credit facilities available at the time in question from the Export-Import Bank or other agencies of this Government. You should make it particularly clear that the extension of credit facilities in any form by any agency of this Government will be contingent upon the definite maintenance by Spain of its neutral status in the present European war.

In discussing the foregoing matter with the Spanish authorities you should of course point out that any extension of credits by this Government would naturally be predicated in the first instance upon the [Page 804] assumption that the Government of Spain is desirous of maintaining and developing friendly commercial as well as political relations with this country.

Reference is had in the foregoing connection to your despatch no. 370 of April 4, 194011 on the subject of blocked funds owing to private American creditors in Spain. You are authorized to address a note to the Minister of Foreign Affairs calling his attention to the existence of a large amount of blocked funds owing to private American creditors in Spain. In so doing you should express the interest of your Government in the steps that may be taken for the liquidation of these blocked accounts, which date back to before the beginning of the civil conflict in Spain in 1936. You should request a formal expression of the attitude of the Spanish Government with respect to these debts and should inquire whether the Spanish Government is prepared to discuss the matter with the American creditors. In the event that the Spanish Government is prepared to do so, you may inform the Minister of Foreign Affairs that this Government will endeavor to notify the interested American creditors accordingly.

Very truly yours,

Sumner Welles
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