852.75 National Telephone Company/95

Memorandum by Mr. Ellis O. Briggs of the Division of Western European Affairs

Mr. Frank Page telephoned me from New York (3 p.m.) to say that he had just been informed from Madrid that Prime Minister Azaña this morning sent for one of their representatives and stated:

The Government has abandoned its position that the contract is “illegal”, and will prevent the nullification bill from coming to a vote in the Cortes;

That the Government will name a commission composed of three members of the telephone interests and three representatives of Government to study revision of the 1924 contract on the basis of mutual consent.

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Prime Minister Azaña added that in the event of interpellations by members of the Cortes followed by a vote of confidence, he expected that his Government would be sustained.

The same information has apparently been communicated officially to Ambassador Laughlin by the Ministry of State today, so that we shall probably receive confirmation by telegraph during the next few hours. Both Mr. Page and Colonel Sosthenes Behn, who subsequently took the phone, expressed very deep appreciation for the support and assistance given to their interests by the Department of State.

Mr. Page quotes Captain Rock as characterizing the Spanish political situation as “very serious”. Captain Rock said this morning that the Government has mounted machine guns “in every important telephone exchange in Spain”; that troups [troops] “of unquestioned loyalty” have just been moved into Madrid; and that a feeling of uncertainty and nervousness is widespread. A general strike is feared, although no definite date is mentioned. Captain Rock believes that although agitation comprises elements of the extreme left and extreme right, the former predominates.