852.5151/276: Telegram
The Secretary of State to the Counselor of Embassy in Spain (Thurston)
386. Pertinent portions of your telegram No. 753, August 27, 5 p.m. and your 755, August 28, 11 a.m. have been transmitted to National Foreign Trade Council which, as stated in our telegram No. 375 of August 14, 2 p.m., is interested in obtaining assurances, on behalf of American creditors, from the Spanish Government for the conservation of blocked peseta accounts awaiting dollar exchange. Further consideration is being given to the advisability of endeavoring to obtain specific assurances from the Spanish Government with regard to blocked peseta accounts in private banks or authorization for their transfer to the Bank of Spain, and as soon as the Department is informed of the opinion of the Council in this regard you will be further advised.
The Department was informed in a telegram from Ambassador Bowers dated September 22 that “Negrin prepared to offer precise assurances regarding American blocked money involving substantial [Page 549] cash payment and short-term bonds for balance.” In view of this report and your report that Miles M. Sherover has been authorized by the Spanish Government to discuss the matter of liquidation of these blocked accounts with American creditors, you are confidentially advised that the Department has been informed by the National Foreign Trade Council that inasmuch as the acceptance of Spanish Government obligations in liquidation of blocked American credits might be construed as inconsistent with the provisions of the Neutrality Act3 applicable to Spain, the Council does not intend to conclude any negotiations on this basis while the Spanish conflict continues. Pending the outcome of the existing conflict in Spain the acceptance of Spanish Government bonds or other obligations in whole or partial payment of these credits may also be inadvisable from the point of view of their conservation and full eventual liquidation.