The British Embassy to the Department of State


His Majesty’s Government are in general agreement with a policy vis-à-vis Spain, recommended by His Majesty’s Ambassador at Madrid, the principal features of which are that food should be sent now, as famine is imminent this month and might cause General Franco’s Government to throw in its lot more entirely with the Axis; and that control should be fully retained over the programme of supply by the United States and British Governments. Specific recommendations are that the United States should at once send a wheat ship to Spain, and that His Majesty’s Government should open discussions for the further supply of wheat and credits to Spain. His Majesty’s Government believe that the delay in the execution of these proposals which would be involved by attempts to obtain further assurances of Spanish non-belligerency over and above those which have already been obtained from General Franco, Senor Suñer and the new Minister of Commerce would not be worth the extra value of any such further assurances. His Majesty’s Government would however state in detail the assumptions upon which they are prepared to help. These assumptions are

The continued non-belligerency of Spain.
The removal of obstacles which now impede Anglo-Spanish trade.
A fairer attitude in the press and
A just treatment of British subjects in Spain.

As stated His Majesty’s Government agree generally with this policy. They propose therefore to continue negotiations for facilitating supplies to Spain from the sterling area and from other countries on the basis of a definite programme. This will involve an increase of credits and His Majesty’s Government are at present prepared to grant additional credits up to a limit of £2 millions by the end of March 1941. The rhythm of supply will be controlled in accordance [Page 832] with the rationing policy which is already in force and which will effectively prevent the accumulation of stocks or an increase in Spain’s war potential. This rhythm can be interrupted through the export licensing machinery and by the refusal of navicerts if there is evidence of any change in Spanish policy.

His Majesty’s Government therefore venture to hope that the United States Government will decide upon the immediate despatch of a wheat ship and continue negotiations for an American loan to Spain for wheat and possibly for other commodities. If these loan proposals mature, one commodity in which it is to be presumed that the United States Government will be interested is cotton. His Majesty’s Government would not be averse to seeing cotton excluded from those commodities which United States might supply under loan, for they would then allow Spain to buy cotton with sterling in Brazil which is extremely short of sterling. The Spanish Government have in fact asked urgently to be allowed to buy Brazilian cotton with sterling up to £100,000. His Majesty’s Government propose to allow this: but they will not allow similar operations on a large scale if the United States Government wish to include cotton in any loan negotiations with Spain. His Majesty’s Government would in any case like to keep closely in step with the United States Government in all questions of supply and credits to Spain.

The policy on which His Majesty’s Government propose to embark with the hope of the collaboration of the United States Government may seem to the latter open to the objection that Spain sympathizes politically with the Totalitarian powers. This has of course always been the case, but His Majesty’s Government cannot disregard the fact that General Franco has given assurances that there will be no change in Spain’s policy of non-belligerency. His Majesty’s Ambassador at Madrid is convinced, and His Majesty’s Government as stated above share his view, that if the United States were now to withdraw their offer of economic help there is a very serious risk that Spain will be driven into the arms of Germany and the British cause would greatly suffer. His Majesty’s Government would regard it therefore as being entirely in accordance with the United States Government’s policy of co-operating with Great Britain if the United States Government were, for their part, to take the action recommended above.