852.75 National Telephone Co./326

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

Dear Mr. Welles: Ere this you will have received my telegram giving the text of the note from the Spanish Government concerning their attitude and policy toward the Telephone Company.

I delivered my note on December 30 and had a lengthy talk with the Minister. In the course of this conversation I had occasion to rub [Page 857] in the fact of our surprise that while one hand was being extended to solicit a credit, the other was holding a big stick over important American interests.

During this visit the Minister called up the Secretary of the Presidency and had a longish talk with him and it was arranged that the Minister should either discuss the subject at the Cabinet meeting fixed for the same afternoon or else talk it over with the Caudillo63 following the meeting. The Secretary referred to is a Colonel in the Army and it is he who was instructed to prepare a report on the subject of the Telephone Company for the information of the Caudillo and the Cabinet.

There were great goings on at Zaragoza following the first of January and there also took place on the 6th the popular Festival of the Kings. For these reasons, as Beigbeder explained to me, he was unable to see me before today. After handing me the note the Minister went over it paragraph by paragraph but succeeded only in still further blurring the impression which I had received from my reading of it. He began by remarking that the note was intended to be vaga y simbólica, to establish a principle, and to clear away clouds—(hacer desvanecer nubes.)

The first paragraph he said represented the attitude of his Government, viz., that all American interests in Spain would be safeguarded.

With regard to the second paragraph, relating to the depuración of the personnel of the Telephone Company, he said that this meant that if Señor X had to leave, that Señor Y would be permitted to carry on exactly the same functions. Pie constantly returned to this, and finally I remarked that I could not see that it made much difference since the Telephone Company was not master in its own house.

With regard to the fifth paragraph he said that the Company had not exhausted its legal remedy, and therefore was premature in seeking governmental intervention. I said that this rather surprised me because there is no conflict whatever between the American Company and the Spanish Company; that the difficulty arose from the Government’s attitude; further that discussions had been going on for months, more recently between Behn, as Director of the Spanish Company, and the Minister of Gobernación, until the latter had practically refused to see him for further discussions, and this coupled with a complete lack of courtesy. Here the Minister evaded comment.

He then remarked that the Company should have made a petition to the Government for relief. I pointed out that Behn, as Director, had made a petition. He said he meant a formal petition—one in writing.

[Page 858]

He seemed later, however, to somewhat shift from this position, and to return to the idea that the Company should seek its legal remedy.

He laid great emphasis on the fact that in the fifth paragraph the seeking of a legal remedy would apply not only to a non-fulfillment of contract but even to hurt or damage to legitimate interests—(lesión).

I then remarked that it was evident that all of Behn’s interviews, and the 4 to 5 months which he had spent in trying to settle the matter went for naught, to which the Minister replied with a torrent of words concerning the stockholders of the Company and their power to elect directors and expressed surprise that they had not been called together to take action.

The interview consisted almost wholly of a monologue on Beigbeder’s part, with references to apparently irrelevant things. He is a Spanish edition of Saavedra Lamas.64

In conclusion the Minister repeated his statement that the Company should exhaust its legal remedy and further that if there was anything in his note which was not clear he would be glad to see me daily for further discussions.

During the afternoon Scotten65 and I have gone over the whole subject with Caldwell of the Telephone Company and the latter is suggesting to Behn, now in London, to have Frank Page go down to Washington and visit the Department. It would seem, as suggested in my telegram of tonight, that there are no steps to be taken at the moment by the Embassy; the next move would seem to be one for the Telephone Company.

Meanwhile, as you are aware, we are being pressed by the Minister of Finance66 in the matter of subsidiary coinage for his Government. The Commercial Attaché67 is today making known to him the data communicated through the Department. Behn gained the idea before his departure that the Finance Minister would eventually ask for a credit from us to cover this mint operation. The Commercial Attaché will, in his discussion with the Minister of Finance, keep the matter on a purely purchase and sale plane; should the Minister hint at a credit, he will be told to initiate that with me directly or through the Finance Minister.

I really feel that after 5 months of backing and filling with Behn, coupled with their requests for credits, that we should now clamp down hard. I venture to think you are of the same opinion.

Very sincerely yours,

Alexander W. Weddell
  1. Gen. Francisco Franco, Spanish Chief of State.
  2. Former Argentine Minister for Foreign Affairs.
  3. Robert M. Scotten, Counselor of Embassy in Spain.
  4. J. Larraz López.
  5. Ralph H. Ackerman.