811.20 Defense (M) Spain/732: Telegram

The Consul General at Algiers (Wiley) to the Secretary of State

786. Following from Murphy for Department, Treasury and BEW. Your 766, April 22 evidently crossed our 64, April 21.43 We propose with the British to submit proposals to the French in the following sense if you concur. The British are cabling London in parallel terms. Your No. 938 of April 24 to Madrid44 has just been received. We believe it confirms the approach suggested in this telegram which attempts to recapitulate and apply in detail the substance of previous communications. We feel, however, that we shall meet difficulties with the French particularly on consignment of goods to North Africa.

Negotiations looking to a resumption of trade between North Africa and the Iberian Peninsula should be undertaken in Madrid and Lisbon between the representatives of the Spanish and Portuguese Governments respectively on the one hand and representatives in each city of an inter-Allied committee on Iberian trade with North Africa on the other. These special committees will consist of British, French and American members in view of the inter-relations of all Allied commerce with Spain and Portugal directly reflecting common problems and policies of supply, shipping and economic warfare.
The objective of the negotiations will not be a formal agreement but a memorandum statement of the proposed trade program to be signed by British, American and French representatives.
The commodity lists, which are to be the basis of the program are being reviewed here in the light of the North African supply problem. [Page 40] We assume that they have already been cleared by Washington from the economic warfare point of view but we await London’s views which may be brought here by Wyndham White who is expected soon.
The management and administration of the program when established should conform closely to the arrangements made for United States purchases in the Iberian Peninsula which, as we understand them, utilize UKCC as agent for USCC in the interests of efficient, simplified and coordinated purchasing and handling with US representatives protecting USA interests on the Administrative Committee. Consignment outward from North Africa would thus be to the UKCC as agent for the appropriate French agency and transfer would take place in Portugal or Spain. We should prefer the consignment of goods to North Africa to correspond to the consignment of other imports controlled by NAEB for ultimate transfer to our forces or the French authorities as the case may be. If, however, the French propose to create a commercial company of their own we would propose consignment to the three commercial companies, the executive agent however to be UKCC whose representatives are on the staff of NAEB thus facilitating the integration of all imports into a single program.
We assume that neutral ships would be used, but permission for each sailing must first be obtained from C. Inc. [C. in C.] here.
Prices will necessarily be the subject of extended negotiation here and in Madrid and Lisbon in the light of circumstances referred to in previous telegrams on this subject.
It will be understood that any balances resulting from the trade in favor of French North Africa will be available for the Allied program of economic warfare in Iberian Peninsula. Different assumptions about prices to be established and the volume of trade to be realized have given rise to differing estimates as to nature of the trade balance which will result. We are continuing to study means of meeting a balance of trade against North Africa in this connection. We are inquiring further as to the size and nature of French North African balances which may be available in Spain and in Portugal. We should like instructions on the possibility, suggested in Madrid’s 910, April 14, that such deficits be met if necessary out of our supply of pesetas and escudos, resulting from our exports to the Iberian Peninsula, presumably with reimbursement to us out of French North African dollar funds.
Preliminary ship-by-ship exchanges of phosphates and supplies urgently needed here should be undertaken if the shipping situation permits. There is French reluctance to allow this but we should emphasize that in the interests of the war it is essential to obtain. Iberian supplies and to employ their ships in carrying them. Such trade will almost certainly be negligible for some time to come for [Page 41] urgent shipping reasons. We shall endeavor to have it agreed that pending ultimate agreement this trade will be conducted by the commercial companies.
We had assumed that the negotiations with Portugal would be undertaken first. Your 927 to Madrid April 23 implies, however, that trade with Spain is the more urgent. We shall not comment to the French on this point until further instructed.
This telegram has also been approved by Treasury and BEW members of NAEB.

To the Department; repeated to London, Madrid and Lisbon. [Murphy.]

  1. Telegram No. 64 not found in Department files.
  2. Not printed.