852.6363/145: Telegram
The Ambassador in Spain (Hammond) to the Secretary of State
[Received 2:55 p.m.]
100. Department’s 67, December 4, 9 p.m. On November 30th, French Ambassador sent note to Foreign Office reiterating former complaints in regard to treatment of French interests by oil monopoly and stating that failing an adequate and satisfactory settlement by mutual consent the French Government would have to demand arbitration under the Franco-Spanish treaty of 1904. [Paraphrase.] I am told by the French Ambassador that he attaches the highest importance to some support from the American Embassy to this French note because the concrete threat of international arbitration may well induce the Spanish Government, now obviously worried, to make a satisfactory offer of settlement. [End paraphrase.]
Accordingly, on December 4th I sent a note to General Primo de Rivera basing my action upon your strictly confidential instruction number 462 of September 18th when you informed Monsieur Briand that we were in absolute accord with the French Government in regard to obtaining adequate compensation for the expropriated companies and on the assurance of the Standard Oil Company’s representative here that failing a satisfactory settlement he was willing to abide by an eventual arbitral decision. Text of my note is as follows:
“My French colleague informs me that he has written Your Excellency to the effect that, failing to secure an adequate and prompt settlement of the claims of the French petroleum companies by the Spanish Government, he has been instructed to demand international arbitration in accordance with the Franco-Spanish convention of 1904.
My government is in complete accord with the French Government regarding the obtaining of adequate and prompt compensation for the expropriated companies and I, therefore, take this occasion to inform you that failing a fair settlement by mutual agreement the arbitration proceedings about to be demanded by French Ambassador seem to offer the only satisfactory solution of this problem which has been so long under discussion.
I must, moreover, inform Your Excellency that the American interests involved include a substantial French participation and that these interests will abide by whatever decision may be rendered by arbitral tribunal.”
I believe that we could not demand arbitration as a right but, in view of French minority interests in Standard Oil Company here and in view of Primo de Rivera’s assurance to me that all interests would receive equal treatment, we will profit by French initiative. For this reason it seemed necessary to give immediate support to preliminary move of French Ambassador on November 30, the more so as British Company, tired of fighting without Foreign Office support, has accepted Spanish Government’s offer of some thirty million pesetas with a guarantee exchange of 29.28 to the pound sterling under protest. British company’s attitude is that it prefers to take ready money and that it will profit should arbitral tribunal award higher valuation to other companies. [Paraphrase.] Although negotiating over arbitration and terms of reference will be protracted, I believe the Spanish Government may well be influenced by the solidarity of France and the United States at this time to settle satisfactorily, thus avoiding being unwillingly dragged before an international tribunal. [End paraphrase.]
Text of French note of November 30 follows by pouch.48
- Not printed.↩