811.20 Defense (M) Spain/962: Telegram
The Acting Secretary of State to the Ambassador in Spain (Hayes)
Washington, August 21,
1943—5 p.m.
1788. USCCO 1525. Your 2156, August 14, COUSC 1738. Embassy’s 2156 crossed London’s Camer 280 which was repeated as London’s no. 60 to Madrid.
- 1.
- The Department, Treasury and OEW have agreed to proceed along the lines set out in London’s cable. Please take up with Embassy and request that negotiations along those lines be instituted with the Spaniards.
- Rather than attempting to convert a given sum or to establish a continuing sale of gold to the Spaniards, the proposal is, in essence, to convert currently pending export licenses (USCC and UKCC) into exportable gold as a one-shot transaction. It is believed that if such a deal can be arranged, you will be in possession of sufficient funds to continue your preclusive operations for another 6 weeks to 2 months.
- 2.
- The following comments relate to the British suggestion:
- (a)
- If we are correctly informed, the British have a clearing arrangement with the Spaniards which limits Spanish sterling balances to 1,000,000 pounds. We understand a proposal has been made to increase this amount to 1,500,000 pounds. They are willing to convert any balance in excess of that amount—up to the total of this transaction—into gold, either earmarked for delivery to the Spaniards after the war, or, alternatively, to be shipped immediately, if that is necessary.
- (b)
- The position of the United States differs in that all dollar balances may at any time be converted into earmarked gold at the request of the Instituto. If necessary, we would be prepared for the purpose of this transaction immediately to make available to the Spaniards at the Federal Reserve in New York freely exportable gold in the amount of the total peseta equivalent of export licenses pending for USCC, plus the export taxes, converted into dollars at the rate of $35.00 per ounce of fine gold plus customary handling charges, which is ¼ of 1%. This means that transportation costs are to be to the account of the Spaniards.
- (c)
- The rate specified in your reference telegram no. 2156 is the old gold peseta rate which equals 32.67 cents a peseta. Such a rate is of course totally unacceptable. All dealings must be handled on the basis of the present official dollar peseta rate of exchange which is 10.95.
- (d)
- The British estimate that the amount involved in this operation is approximately 20,000,000 dollars gold, or roughly, an amount equivalent to the joint fund. Should pending licenses (USCC and UKCC) exceed this amount you are authorized to reasonably in-, crease the amount to cover our share of these needs.
- 3.
- Camer 280, paragraph 5, points out that although it is desirable for both Governments to proceed along similar lines, nevertheless, it may be necessary for each side to make different arrangements. Reference to paragraph 2 (a) and (b) above will make this clear to you. You are herewith authorized to proceed immediately to make the best arrangements possible so that there shall be no break in our operations.
This cable has been cleared with Bernstein of Treasury,66 Wyndham White of British Embassy,67 OEW and USCC.
Welles