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1968 NOV 23 02 09 CONiHRIHTIAL HCE214 
PAGE 01 STATE 27·6947 
82 
ORIGIN SS 70 

INFO sso 00,cco 00, NSCE 00,/070 R 
DRAFTED BY:E/OMA:ML MILNE APPROVED BY:E/IMA:TO ENDERS EUR/SPP:MR. LANDAU TREASURY:MR. PETTY CSUBS) 
075498 0 R 230 t40Z NOV 58 ZFF 4 FM SECSTATE WASHDC TO AMEMBASSY MADRID IMMEDIATE INFO AMEMBASSY BONN AMB~BASSY BRUSSELS AMEMBASSY LISBON ANEMBASSY L0i'1DON AM EMBASSY PARIS 
AMEMBASSY ROME 
AMEMBASSY THE HAGUE 
L ST ATE 27694 7 
L IMDI S GREENBACK 
REF: MADRID 5992 
SUBJ: SPANISH CONCERN OVER FINANCIAL CRISIS 
I. DEPENDING ON YOUR FEEL FOR SITUATION YOU MAY WISH DRAW ON FOLLOWING POINTS IN TALKING TO APPROPRIATE SPANISH OFFICIALS. WE DON •r WANT TO MAKE A DEMARC HE NOW AND ANYTHING YOU SAY SHOULD BE LOW KEY. 
A. SPAIN HAS STAKE AS WELL AS WE AND OTHER COUNTRIES IN ORDERLY ANO STABLE WORLD MONETARY SYSTEM. SHOULD THERE BE A FRENCH. DEV Al..UATION AND SHOULD THIS TRIGGER SIMILAR ACTION BY ANY OTHER COUNTRY THIS COULD START CHAIN REACTION END RESULT OF WHICH COULD LEAVE SPAIN IN WORSE POSITION THAN IT WOULD BE IN BY HOLDING 
ITS PRESENT RATE. 
B~ IF SPAIN SHOULD DEVALUE PESETA THIS YEAR IT WOULD BE THE ONLY 
DECLASSIFIPD C9 NEI QEIJ II AL E.O. 12958, Sec. 3.5 State Dept. Guidel~ 
By (f-:: ,NARA, Dote <}°"'-:}A> I 
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PAGE 02 STATE 276947 

EUROPEAN COUNTRY DEVALUING TWICE IN TWELVE MONTHS. THIS COULD 
HAVE ADVERSE EFFECT ON PEOPLE ·s CONFIDENCE IN SPAIN .·s ECONOMY. 
ALSO MIGHT HAVE IMPACT ON FOREIGN INVESTMENT IN SPAIN. 

C. OUR IMPRESSION HAS BEEN THAT SPAIN•s BALANCE OF PAYMENTS 
POSITION HAS BEEN IMPROVING THIS YEAR. WE NOTE RESERVES AT END 
AUG WERE DOLS 1.-11 BILLION COMPARED WITH DOLS 950 MILLION AT 
END OF MAY. 

D. IMPACT OF A FRENCH DEVALUATION ON SPANISH TOURIST RECEIPTS 
COULD MORE ADVANTAGEOUSLY BE OFFSET BY SPECIAL MEASURES IN THAT 
AREA RATHER THAN BY DEVALUATION OF PESETA. 

E. RECENT CAPITAL OUTFLOWS FROM SPAIN MAY WELL BE ONLY TEMPORARY 
BACKWASH OF GENERAL SPECULATION IN EXCHANGE MARKETS AND THUS NOT 
AN APPROPRIATE BASIS FOR PESETA DEVALUATION. IT IS TO BE NOTED 
BOTH BRITISH AND BELGIANS HAVE MADE STRONG STATEMENTS TO EFFECT 
THEY WILL NOT CHANGE THEIR EXCHANGE RATES ALTHOUGH BOTH HAVE 
EXPERIENCED RECENT CAPITAL OUTFLOWS • 

. GP-3. RUSK 
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(EP.OX FROM QU i: CK COPY