811.20 Defense (M) Spain/1257

Memorandum of Conversation, by the Chief of the Eastern Hemisphere Division (Labouisse)

Participants: Mr. G. F. Thorold } British Embassy
Mr. Quintin Bridge
Mr. W. Stone } Foreign Economic Administration
Mr. W. Riefler
Mr. R. Dangerfield
Mr. P. Culbertson } Department of State
Mr. H. K. Fleming
Mr. H. R. Labouisse, Jr.

The meeting was called by Mr. Labouisse to discuss a proposal put forward by the British as a possible compromise to our request for a wolfram embargo. London had suggested that we might accept the compromise whereby the Spaniards would limit exports of wolfram to Germany to 60 tons a month.

Mr. Labouisse pointed out that the estimated German acquisitions of Spanish wolfram in 1943 were in the neighborhood of 1,400 tons. As to the Spanish production, he added that estimates indicated German-owned mine production at between 40 and 60 tons per month; that the Sante Combe production was estimated at between 120 and 180 tons per month, and that we presumably had tied this production up for four months; and that the balance of Spanish [Page 330] production was presumably in the neighborhood of from 200 to 250 tons per month.

Mr. Labouisse also emphasized the great importance which this Government attached to preventing wolfram from going to the enemy and said that the British suggestion of 60 tons a month was, to his mind, far from satisfactory. He stated that, in his opinion, if we could not obtain the complete embargo, the furthest we should go would be to have the Spaniards agree to limit exports to all destinations to prewar levels which he estimated at between 400 and 500 tons per annum. If the Spaniards would agree to such a restriction, at least half of the exports should be for our account, thus limiting German takings to not more than 250 tons per year.

Mr. Culbertson said that the Department placed the demand for a wolfram embargo at the top of the list of our demands against Spain.

Mr. Thorold stated that his Government attached greater importance to stopping the espionage activities in Spain and, possibly, to the recall of the Blue Division, although the British also considered it extremely important to stop the movement of wolfram to Germany. Mr. Thorold asked at what point we would be willing to compromise the wolfram question. Mr. Culbertson said that we did not wish to compromise it and intended to instruct our Ambassador to continue to press for a complete embargo. Mr. Thorold considered this reply unsatisfactory and expressed the opinion that some agreement should be reached between our two governments as to the type of compromise we would be willing to make in the event a complete embargo proves impracticable.

Mr. Riefler stated that unless a complete embargo were obtained, it would be extremely difficult to prevent wolfram from going to Germany in large quantities. Even a small quota for Germany would not prove very helpful to us, for it could be used as a cloak to move larger quantities. He therefore urged our holding out for a complete embargo.

Mr. Thorold asked if it was the opinion of the U. S. Government that we would remain adamant in this demand and refuse to compromise. Mr. Culbertson replied that the answer to that question could not be given until we had received from the Spaniards some idea of what they would do on our various demands, and that it was impossible to come to any decision as to our last line of retreat on the wolfram matter until further developments had taken place. He emphasized that, for the present, we intended to hold out for a complete embargo but that, of course, we realized that the entire situation must be kept flexible. In short, he said that he wished to force the Spaniards to act and not have our Ambassador put in the position of making some counter proposals to the Spaniards.

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Mr. Labouisse suggested that Mr. Thorold might advise his Government that it was our opinion that a compromise whereby the Spaniards would be permitted to export 60 tons of wolfram a month to Germany was tantamount to our giving in completely on the wolfram embargo question for the reason that the Germans, while taking 720 tons a year legitimately, would smuggle considerable additional quantities and very likely would obtain as much as they did in 1943. Mr. Riefler agreed.

No counter proposal, setting a figure for exports to Germany, was suggested to Mr. Thorold, and the matter was left that we considered it premature to discuss a possible compromise on the wolfram matter, the Department and FEA considering it more desirable to await further offers of settlement from the Spaniards.

Henry R. Labouisse, Jr.