852.75 National Telephone Company/44: Telegram

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

90. Your 101, November 22, 6 p.m. Have today addressed the following “urgent” note to the Minister for Foreign Affairs:

“Under explicit instructions from my Government, I have the honor to present its formal protest against any such action in grave prejudice to an American investment of the first importance as would result from the adoption of the bill now pending in the Cortes for the nullification of the contract of the National Telephone Company of Spain with the Spanish state.

Acting on previous instructions, I presented the views of my Government to the President of the Council of Ministers, who received me on Monday last, the 21st of this month, and I reminded His Excellency of the repeated assurances given by the Government of the Republic that engagements entered into with the previous regime would be respected. I informed him of the seriousness with which my Government viewed the situation created by the bill under consideration and I asked him to assure me that his Government would oppose unilateral action against the company.

My representations to Senor Azaña appear to have been unavailing, for I am informed that during parliamentary interpellations of last evening an announcement was made from the Government bench to the effect that the measure, when reported out of committee, would meet with the Government’s approval.

Under date of August 5 last, in document No. 3–74998 issued by the Sub-Secretaryship of the Presidency of the Council of Ministers, the Prime Minister declared in connection with an appeal against an order of the Minister of Gobernación which authorized the establishment of telephone services other than those of the National Company, the following:

‘That the order … violates the legal status of contractual character solemnly established between the state and the National Telephone Company and could, in case it were made effective, give rise to alternative in indemnification by the company against the state, which should be avoided, because of their probable issue.’

[Page 567]

Moreover, I venture to cite a passage from Note verbale No. 168, in the case of Godfrey J. Cook, a citizen of the United States, addressed by the Ministry of State to this Embassy under date of August 29th:

‘The Minister of State may only assure the Ambassador of the United States [of] America that in no case will contractual obligations between the two countries be disavowed when they are legitimately invoked.’

These two official statements by Your Excellency’s Government can be taken in no other sense than as an application of principles formally enunciated during the early days of the Republic, and in these circumstances I am constrained to express surprise that legislation injurious to foreign interests in its interference with the contractual rights of the telephone company should receive the countenance of Your Excellency’s Government in the consideration which the Cortes is now giving the matter, especially when legislation empowering the Government to revise all existing telecommunication contracts on a basis of mutual agreement had already been enacted and promulgated in the Official Gazette as late as the 20th of this month.

In virtue of the established facts of the case, my Government urgently seeks the prompt and energetic intervention of that of the Spanish Republic for the protection of the contractual rights which safeguard this American investment for whose defense my Government hopes it will not be obliged to consider independent measures.

I avail myself, et cetera.”

(Passages in subquotation are in Spanish in true reading of note).

I am requesting an interview with Azaña.