852.75 National Telephone Co./371: Telegram

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

379. My 232, June 22, 9 p.m., paragraphs 2 and 3. I have continued to press Suñer to carry out his promise to send for the telephone company’s president and the Ministry’s delegate on the board and to impress upon them Suñer’s declaration that the Government would loyally maintain the company in the status quo of 1936. This up to the present he has failed to do. Furthermore, elements within the telephone company with the open support of the Government delegates on the board are continuing to create a most difficult situation and have attempted in effect to nullify the promises of the Caudillo and of Suñer regarding the return of the telephone company to the direction and control of the American strategic [majority?] stockholders. With regard to this latter phase I have also communicated the facts to the people [Minister?] of Gobernación and have insisted that his promises and those of the Caudillo be carried out. Up to the present all of my efforts to persuade the responsible members of the Spanish Government to give effect to their promises concerning the telephone company have remained without effect. Furthermore, Colonel Behn has unsuccessfully used every device and stratagem to attempt to overcome the opposition to the company existing within the Government as well as within the telephone company itself.

It now seems quite evident that the telephone company case is perilously close to again becoming a political football and there are numerous indications that the Spanish Government intends to use the company as a bargaining point in obtaining various items from the United States, principally gasoline at the moment.

In view of this situation I have requested another interview with Franco at which time I will, unless otherwise instructed by the Department, again insist that his promises with respect to the company be loyally carried out in good faith.

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In the meantime a serious situation has arisen with regard to the supply of American gasoline for Spain. Further, a director of the oil monopoly confirms the report that the United States was considering the establishment of a quota for the supply of American gasoline to Spain and that no gasoline would be supplied until such quota was decided upon. The director added that the amount now being discussed was 500,000 tons semi-annually which amount he declared was “satisfactory”. However the former representative of the Atlantic Refining Company in Madrid states that this is just double annual Spanish requirements prior to 1936. It would appear that a million tons of gasoline is considerably in excess of actual Spanish requirements even though it is recognized that consumption has increased over that obtaining in 1926 [1936?].

In spite of the fact that I have endeavored, as has the Department, to keep the telephone company case upon a basis of good faith and equity it is being borne upon me that the Spanish Government insists on using the case as a quid pro quo and as a bargaining point for advantages desired by it.

I therefore am reluctantly forced to suggest to the Department the advisability of delaying any decision with regard to supplying gasoline or any other commodity to the Spanish Government on any terms until the promises made to me by Franco and by Suñer are backed up by effective action. With this in mind the Department may desire to consider the advisability of informing Cárdenas at such time as the Department may consider appropriate that the telephone company case is still in a most unsatisfactory state in spite of the categoric assurances given by the Spanish Government and that until effective and satisfactory action in the matter is taken by the Spanish Government that we for our part would be unwilling to make any arrangement to supply Spain with gasoline or any other commodity. It is believed that an intimation of this kind would have an immediate and salutary effect upon the attitude of the Spanish Government.