352.1153 St 2/22: Telegram
The Chargé in Spain ( Blair ) to the Secretary of State
[Received 5:40 p.m.]
10. Embassy’s 7, January 19, 12 noon. In the first valuation proceeding, certain installations at Santander with book value of three million pesetas owned by Deutsch, French citizen, have been valued by Government and monopoly representatives at nine hundred thousand pesetas. Method employed by Government representatives is intentionally to undervalue specific properties and will effectually preclude consideration of the value of the business as a going concern. When the French representative objected to this method he was informed that the monopoly company would only take the property at a low and even nominal value because much of the property was not necessary for the monopoly’s operation and that the lower the valuation the higher would be the monopoly profits. The Treasury delegate stated that his function was to defend the interest of the treasury and [Page 841] not to administer justice. In the second meeting when the valuations were objected to he said that he was only obeying formal instructions of the Finance Minister. Above-referred-to valuations are tentative as the Spanish cabinet can review them on company’s appeal but they show the spirit guiding the monopoly and substantially deny Primo’s promises of fair and generous treatment. [Paraphrase.] As the French Ambassador is greatly concerned, he has today requested immediate authorization from the French Foreign Office to present a further note which would threaten reprisals against Spanish interests in France if French petroleum interests in Spain do not receive immediate and fair compensation.
The most opportune moment has now arrived, I believe, to refute categorically the arguments in the Spanish note dated December 28 and to place squarely before the Spanish Government a definite query of the United States Government that it desires to know whether the constitution and the civil code in fact no longer protect property in Spain, so that it is at the mercy of the Spanish Government’s latest decree. I refer to this Embassy’s telegram No. 1, January 5, 11 a.m. Further, the Embassy might opportunely state that it is informed as to the evaluation commission’s methods which are entirely contrary to assurances by Primo de Rivera and Finance Minister Sotelo. Without further energetic protest, I fear the Spanish Government will regard the American attitude as acquiescing in the present procedure, and this will prove to be a dangerous precedent in the future for American interests in Spain. I refer to this Embassy’s telegram No. 9, January 26, 10 a.m.10 [End paraphrase.]
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