852.75 National Telephone Company/70: Telegram

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

99. My 97, December 1, 6 p.m.38 Zulueta asked me to come to see him yesterday evening. It became clear that he had been told to find out how much you would require and how little you would accept.

I answered that I had no word to add or to subtract from the note of protest; that you were concerned with the principle of sanctity of contract upon which there could be no discussion; that the Spanish Republican Government had already recognized this principle and the validity of the contract; that if a revision were desired the means [Page 572] to bring it about already existed and that you could approve no proposal based on nullification or denunciation of the contract.

The Prime Minister has been in constant conferences with opposition leaders with, I understand, a view to, (1) devising a way to “inutilize” nullification bill and, (2) to form “united front” in his support. Should we find the action decided upon by his Government inadmissible the chances for an acceptable reply to our note of November 23 are not bright. Latest reports indicate that though it may accept principle of revision by negotiation it would reserve all clauses of the contract which are “in derogation of Spanish sovereignty” such a reservation would present an impossible situation for the company.

Cabinet is now meeting in extraordinary session to study telephone question.

  1. Not printed.