352.1153 St 2/68: Telegram
The Ambassador in Spain (Hammond) to the Secretary of State
[Received June 1—9:05 a.m.]
56. Reference Embassy’s despatch No. 875, April 17,34 and 917 [915], of May 23, last. On May 29th the French Ambassador communicated to Primo the direct text of instruction from Briand which is the strongest communication yet sent, summary of which is as follows:
- (1)
- Spanish Government has replied to French communications stating that procedure of monopoly directly violates French treaty of 1862 and international law.
- (2)
- Commission has wilfully undervalued physical property and refused to give adequate compensation for good will resulting thereby in actual confiscation of investment. The seizures have taken place without previous indemnity in accordance with treaty, the trade have been deprived of any ordinary judicial course, and appeal to Council of Ministers, which means in effect Finance Minister, is worthless.
- (3)
- French Government instructs Ambassador to bring this directly to Primo’s attention “feeling sure that when he understands the facts that he will take disciplinary measures regarding officials who have violated French rights; that all the earlier inadequate awards be annulled and that total indemnity be paid not only for the physical property but for the prejudice caused by the arbitrary stoppage of an industry.”
I understand that the French Government thinks that an indemnity of at least fifty per cent of the value of the physical property is the least that could be accepted as total compensation.
[Page 865]The Spanish Government has refused to take the net earnings of the companies capitalized at four and one-quarter per cent over a fiveyears’ period as the basis for a total indemnity in accordance with existing Spanish railway legislation in case of expropriation by the state. Valuation Commission has likewise so far refused to review awards made before new rules transmitted with Embassy despatch 835, March 9, were effective. This occasions serious loss in appraisal of part of physical property of American interests. Shell Company has been offered about 10 per cent less than the physical value of its entire property, plus 8 per cent for good will and liquidation, which it has refused. On this basis Standard Oil Company subsidiaries claim that they would not even receive the capital value of their investment.
Under the circumstances I am sending another note to the Spanish Government35 along the lines of the Department’s past instructions and renewing general claim for prompt and adequate compensation.