852.75 National Telephone Co./205
Memorandum of Conversation, by the Chief of the Division of European Affairs (Moffat)
During the course of a conversation this afternoon with the Spanish Ambassador, I asked him what progress he had been able to report concerning the International Telephone and Telegraph Company in Spain. He said that he had made quite an effort on behalf of the Company when he was in Burgos. The situation, however, was about [Page 847] as follows. The contract between the Company and the Spanish subsidiary was so onerous that it would have to be modified. It contained provisions regarding management, earnings and gold payments, which, in effect, meant that all Spain was working for the benefit of the Company.
The whole business had been started in the wrong order. The Spanish State, instead of giving the concession to the Spanish Company, which, in turn, could make terms with the I. T. and T., had given the concession to the I. T. and T., which had then been able to impose its terms on the Spanish Company. The Company was undoubtedly unpopular throughout Spain, as despite the protestations of complete neutrality on the part of Colonel Behn, the public at large felt that he had been a little too favorable to the Loyalist side. Cárdenas said that a great deal of this was not Colonel Behn’s fault, but having remained so long in Madrid in 1936, having had to entertain Loyalist generals, having had to see the telephone building used for artillery spotting, et cetera, the impression could not be lightly destroyed.
With this background, Cárdenas found two points of view in existence in Spain. He had taken the position that the Spanish Government must come to an amiable understanding with the Company for the modification of the contract or it would lose all support in the United States. He had spoken even with Franco personally. For my confidential information and not to be repeated to Colonel Behn or Mr. Page, he found considerable personal feeling against Colonel Behn on the part of Franco. This apparently had resulted from a promise Colonel Behn had made to Franco as far back as 1934 that if ever Spain needed help he would be prepared to give it; Franco felt that Colonel Behn’s unfavorable reception of one or two messages he had sent him during the hostilities was tantamount to a breach of this personal promise. On the other hand, Cárdenas did not feel that General Franco would allow this personal feeling to color his judgment, and there were four officials in Spain—the Under Secretary of the Foreign Office, the Secretary of the Presidencia, the Minister of Finance, and the Vice Minister of Finance—all of whom were in favor of coming to an amicable understanding with the Company.
Mr. Cárdenas knew that the matter had dragged on a long time, but said he had done as much as he could without destroying his influence by being considered “more American than the Americans”. He said that Mr. Page was going to call on him in a day or two and I told him that he could talk to Mr. Page frankly and freely, as he was in the immediate personal entourage of Colonel Behn, and enjoyed his complete confidence.