740.00112 European War 1939/5909: Telegram
The Ambassador in Spain ( Hayes ) to the Secretary of State
[Received July 2—12:18 p.m.]
835. The British have again expressed their objection to separate economic negotiations with Spanish Morocco as reported in my 746, June 18, 6 p.m., and 752 June 19, 6 p.m. Ellis Reese the Financial Counselor discussed the matter with two members of my staff and presented arguments which were similar to those of the Minister Counselor. Ellis Reese is of the opinion that separate negotiations with Orgaz will have an unfavorable effect upon our relations with Madrid officials in connection with our program in Continental Spain. He is also of the opinion that the two areas having common currency and export regulations and not having a customs barrier should be as a unit for purposes of preemptive buying.[Page 471]
The UKCC42 formerly operated in Morocco directly under London. The Madrid office now exercises supervisory functions over British purchases in Spanish Morocco. Purchases up to now have been small in volume and constituted mainly of skins. However, we have been asked the specific question whether these purchases are for joint account.
The British were told that we have received no information to indicate that the USCC43 in Madrid is to participate in the Moroccan program. The British hope to have our support in recommending against separate negotiations but they have been told that we have no instructions and can only report the discussion to Washington.