352.1153St2/119: Telegram

The Ambassador in Spain ( Hammond ) to the Secretary of State


27. I have just been advised in strict confidence by a telephone message from Paris that the Standard Oil subsidiary, Babel and Nervion, has decided to agree to the latest Spanish offer of settlement made through the French Foreign Office amounting to 24,975,000 pesetas, payment to be made at the guaranteed rate of exchange of 29.23 pesetas to the pound, this in accordance with the Shell settlement. This amounts to a payment of approximately 25% for good will over the physical value of the property. Five percent interest from date of expropriation is allowed and the company is relieved from paying any liquidation taxes whatsoever. The French oil companies, Deutsch and Desmarais, have received similar proposals but are still holding out for 30% payment for good will. The Standard Oil Company desires that this matter be treated as strictly confidential until the Spanish Government has definitely agreed to a separate settlement.

In my opinion this latest Spanish offer has been brought about as a result of the long and concerted French and American pressure and it is my opinion that the Spanish Government will be inclined to treat the Standard Oil Company separately on account of its immediate acceptance since this will establish a good precedent for the treatment of the other French companies. It is my hope that this comparatively favorable settlement will be made at once in view of the uncertainties of the existing political situation in Spain.