352.1153St2/115: Telegram

The Chargé in Spain ( Whitehouse ) to the Secretary of State


14. Your telegram No. 7, February 25, 7 p.m. I talked to the French Ambassador yesterday afternoon; he said that the French Government had momentarily considered the possibility of taking retaliatory action such as that referred to in your telegram but had given up the idea.

He had interviewed Primo de Rivera a few days before and had explained at length the arbitration proposal and had pointed out that the arbitration would cover merely the amount of the indemnity to be paid and would not have anything to do with the monopoly. Primo de Rivera replied that under such conditions it would be rather an expert appraisal than an arbitration and the Spanish would undoubtedly win, and that he did not wish to discuss arbitration, moreover, as he was prepared to re-examine the French companies’ claims in the Council of Ministers if they would submit figures for the total sums they wanted. He did not want any detailed estimates and made it clear that any increase which might be granted would be on the valuation of physical properties and not an increase either in the percentage given for good will or for discharged employees. In this manner any increase granted to the French companies would not have to be given to the Shell which had accepted the valuation.

The French Government has agreed to this and the French companies are now preparing the required figures. The French Ambassador believes, and I am inclined to agree with him that Primo de Rivera, wishing to avoid arbitration, is sure to offer an increase but it will be small in comparison with the demand made by the companies.

In view of the circumstances, it is my opinion that it will be wiser to await the outcome of the French note before taking any further steps. The French Ambassador likewise is of this opinion.

Copies have been sent to London and Paris.