The Chargé in Spain ( Culbertson ) to the Secretary of State
77. Information we obtain lends definite color prediction Minister Industry and Communications [Commerce]1 (Embdes 46 January 312) possible economic collapse in Spain in six months or so in absence outside aid. Precarious economic situation subject conversation everywhere one goes and is definite concern everyone Spain. Governments anxiety evidenced by its willingness mortgage gold obtain recent 25 million credit from Chase.3 Embassy not prepared concur fully collapse will come since Spain over centuries shown ability live on little or nothing. However if present drought continues (rainfall September to January inclusive 40 percent below thirty year average) causing poor crops and increasingly severe electricity restrictions (Barcelona factories now have public power six hours weekly), if private enterprises continue unable meet bank obligations, if Argentina does not supply wheat or should curtail present credits and Spain’s grain crop should be failure, I do not see how Spain’s economic [Page 730] and social structure can hold together indefinitely. All foregoing ifs quite possible, if not probable.
As seriousness situation increases pressure of necessity might well bring about change present economic policies and shake up government. Mild rumors latter point persist. However Franco could be stubborn enough pull temple down on selves especially since unable determine what concrete benefits, if any, might come from outside were he adopt new policies, new measures.
Economic breakdown by no means certainty, but clearly possibility. It would seriously affect Spanish political stability with no immediate alternative to replace Franco which could control situation. Economic and political breakdown or disintegration in Spain bound have severe repercussions on our aims economic political rehabilitation Europe. Such eventuality not in our interest nor that France and UK. I feel risk should be weighed carefully against present political objections. If they not overriding suggest as first step (if we wish avoid risk breakdown) offer Spain immediate access equal terms with others Exim Bank, leaving to bank determination credit risk and conditions. In exchange obtain from Spanish government assurances fair equal treatment American trade and investment.
- Juan Antonio Suances Fernàndez.↩
- Not printed.↩
- On February 9 the Chase National Bank had announced the extension of a $25,000,000 fully secured revolving credit to the Spanish Foreign Exchange Institute. On February 18 officials of the bank discussed the course of the negotiations leading to the credit and indicated that Spanish officials were now willing to remedy objectionable economic practices and policies in order to qualify for further private or official U.S. loans. Memorandum of conversation, not printed, 852.50/2–1849.↩