852.6363/92
The Ambassador in Spain (Hammond) to the Secretary of State
[Received December 16.]
Sir: Kef erring to the Embassy’s despatch No. 638 of November 23, 1927,25 regarding the Spanish Petroleum Monopoly, I have the honor to submit a further report concerning recent developments.
In the last paragraph of the above referred to despatch reference is made to the seizure of the Porto Pi Company by the representative of the Spanish Government (the Director of the Stamp Tax) acting on behalf of the monopoly. In this connection I am enclosing herewith copy of a letter from Mr. Henry Bedford, Paris director of the Standard Oil Company of New Jersey who was in Madrid last week, to Mr. Blair,25 in which he gives his views of the seizure proceedings. Mr. Bedford also enclosed with his letter a statement in regard to the seizure, a copy of which is also enclosed herewith.25
The Department will recall that the Porto Pi Company has been importing Russian oil, and as reported in a previous despatch on this subject25 it is commonly believed that Mr. Juan March, one of the largest owners of the Porto Pi, originally encouraged the Spanish Government’s plans for an oil monopoly hoping to use this threat against the Shell and Standard interests to force them to divide the whole of the Spanish business with the Porto Pi Company. I have been informed that in the last few months March has done everything possible to buy off the Monopoly, even offering 6,000,000 pesetas to the Spanish Government for a military hospital in Morocco if the Government would change its plans, but his efforts have been unavailing.
Up to the present time nothing has been done in regard to the reimbursement or ascertaining the value of the Porto Pi plants, and the recent seizure is a good example of the arbitrary powers with which the Government has armed the Petroleum Monopoly. In my last despatch on the Petroleum Monopoly I reported that in all [Page 696] probability other seizures could not be long delayed, and as this despatch is being written I have been informed that an order is being prepared today in the Ministry of Finance for the seizure of one of Babel and Nervion’s plants. (Babel and Nervion is one of the Standard Oil Company of New Jersey’s subsidiaries in Spain.) Within the last week this company has been requested to store oil for the Monopoly, but it was decided to refuse to do so as it is feared that it might prejudice its future position. The cargoes which the Monopoly wished to store were the cargoes another Standard Oil Company subsidiary had sold to the Monopoly, as reported in the Embassy’s despatch No. 638 of November 23rd. I am transmitting herewith copies of the Spanish text, with translation thereof prepared by Babel and Nervion, of a letter sent to Babel and Nervion by the Petroleum Monopoly dated November 27th, and Babel and Nervion’s reply thereto dated November 28th. The Department will recall that the Shell Company took the same position when it was requested to store oil for the Monopoly, and it will now be interesting to see how the Monopoly meets the situation. (See page 2 of the Embassy’s despatch No. 638 of November 23.)
This morning a notice appeared in the press stating that the Monopoly has made arrangements for full supplies of petroleum products for the year 1928. From all the information available it is hard to believe that this statement is accurate, and it would appear that it is largely bravado and also an effort to reassure intelligent public opinion which is now rather worried about the future. …
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The above mentioned developments are the most important which I have heard of during the past week, and I am now forwarding this despatch in haste by the pouch which leaves this evening. The Embassy staff is following all developments as closely as possible, and I shall forward another despatch on the Petroleum Monopoly, reviewing the situation, by the next pouch.
I have [etc.]