652.1115/90: Telegram

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

490. My No. 459, August 19, 1 p.m.,12 last paragraph. An official of the Ministry of Industry and Commerce who stated that he was speaking in the name of the Minister has called on me at his request. He stated that Spain was rapidly approaching a crisis particularly as regards supplies of wheat, gasoline, cotton and certain other foodstuffs and raw materials. It had been hoped that the current wheat crop would be sufficient to relieve one of the most pressing problems but recent reports had revealed a desperate situation in this regard and the deficit would be at least 1,300,000 tons and perhaps considerably more. Spain had been able to obtain supplies of Australian wheat amounting to roughly 200,000 tons but this amount was only a [Page 806]drop in the bucket and the time element involved in the arrival of this grain in Spain would be disastrous. He said that the Minister of Industry and Commerce had asked him to place before us the following concrete proposition with a view to ascertaining our reaction thereto:

Spain needs a credit of $100,000,000 of which approximately $70,000,000 would be expended in the first year principally for the following commodities: $22,000,000 for wheat; $20,000,000 for gasoline; $20,000,000 for cotton with the remainder spread over machinery and equipment such as tractors, certain amounts of corn and possibly scrap iron, rubber, et cetera. It was proposed that this credit be liquidated over a period of 20 years through annual shipments to the United States of between ten and fifteen thousand tons of olive oil. He estimated that this would have a total annual value of approximately $5,000,000.

I took occasion to explain to the representative that I had discussed in some detail several months ago with the Caudillo15 the possibility of supplying to Spain certain surplus commodities from the United States provided certain conditions were met.

He asked what these conditions had been and I replied that one of the principal conditions was the continued neutrality [of] Spain in the present war. It would also have to be clear that the Spanish Government is interested in maintaining and developing friendly commercial and political relations with the United States. Furthermore there should be evident a willingness on the part of Spain to consider such problems as the United States Government might desire to be solved in the same friendly spirit as they would expect us to regard their own problems and desires.

I went on to say that we had no indications of how the United States Government would view the proposal made by the Ministry of Industry and Commerce but that we would refer it by telegraph for such instructions as the Department may consider appropriate.

In considering the whole matter it is becoming more evident that internal conditions in Spain are rapidly approaching a most dangerous stage and that the only points from which relief can be expected are either from the sterling area or from the United States. It is also becoming more evident that the present Government of Spain is endeavoring to resist pressure to enter the war and that they will probably continue to do so unless and until Axis pressure becomes so strong as to force them in without regard to their own desires. It is also believed that the time element is of great importance and that every month that Spain remains out of the war strengthens the possibility that with a change in the current of events the present [Page 807]Spanish resolution to maintain the country’s attitude of at least “non-belligerency” may be progressively fortified. However, unless some relief particularly in the way of foodstuffs is forthcoming from some quarter, conditions may be expected to become so chaotic that internal uprisings in Spain will become a distinct possibility with the result that the present regime which appears to be steadily more inclined against entering the war may either be forced to accept complete Axis domination or be supplanted by other elements who might seize any opportunity to relieve themselves of internal dissatisfaction by a foreign adventure however hazardous to the future of Spain.

These considerations are respectfully submitted to the Department with the thought that in considering any credits particularly with regard to surplus commodities it might be well under present circumstances to take into account the possible intangible benefits to be gained by the extension of such credits as well as and alongside the problem of the eventual repayment of these credits. For these reasons I am strongly inclined to recommend a more benevolent attitude toward Spanish necessities at this particular time than might be desirable or reasonable under ordinary conditions. While it is of course realized that a credit of $100,000,000 is of considerable financial importance and the security offered in exchange may be of much further value or interest to the United States its influence upon the future course of Spain’s foreign policy might be well worth the investment even if repayment were delayed over a considerable period of years.

In this general connection I may add that recent conversations with the British Ambassador16 and members of the British Embassy have made it quite clear that the British Government are inclined to help Spain to a substantial degree “on the gamble” that the present regime thus fortified may be able to maintain its present position of non-belligerency at least for “a few more months”. In such conversations the possibility of “second peninsula war” was not raised and the hope was expressed that even if Spain is eventually forced into the war by Germany whether by invasion or otherwise the people at least will be on the side of Great Britain when the “time comes”.

The Department will recall in this connection the considered opinions set forth in my telegram 304, July 5, 1 a.m.17 together with statements made to me by the Minister for Foreign Affairs reported in my No. 406, July 29, 9 p.m.18

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I will appreciate the Department’s telegraphic instructions as to the nature of the reply I should make to the Ministry of Industry and Commerce.

Weddell
  1. Post, p. 896.
  2. Gen. Francisco Franco, Spanish Chief of State.
  3. Sir M. D. Peterson.
  4. Not printed; it reported that an invasion of Portugal by Spanish forces or Spanish forces in cooperation with the Germans was unlikely due to an anticipated German attack on England (740.0011 European War 1939/4415).
  5. Not printed; the Ambassador reported that the Spanish Foreign Minister, Juan Beigbeder, denounced as baseless the idea that Spain intended to commit any hostile act against Portugal. In support of his statement the Foreign Minister announced that a treaty of amity would shortly be signed between the two countries (740.0011 European War 1939/4913).