852.75 National Telephone Co./339: Telegram

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

73. My 65 [66], April 9, 6 p.m. After sufficient time for calm consideration of the situation created by the refusal of the Chief of the Spanish State to receive me upon your instructions, I believe that the following points require special consideration:

I should emphasize that prior to discussing with the Foreign Minister the question of an interview with Franco I had handed to him a memorandum which embodied completely the aide-mémoire contained in the Department’s 36, April 2, 6 [7] p.m., including the last discretionary paragraph in this telegram. Therefore, the decision of Franco not to receive me was arrived at in full knowledge of your view that the telephone company case constituted a pivotal point in our relations with Spain and was far from being limited to a question of “interior relations within a company and of contracts between companies not subject to state intervention”. Furthermore, I am reliably informed that my memorandum was considered by the Council of Ministers before the decision not to receive me was arrived at.
These circumstances amply confirm my growing suspicion that at least the stronger elements in the Spanish Government have desired to retain the telephone company case as a bargaining point for obtaining future credits or concessions from us when these are urgently required, and that to this end every possible means would be employed to delay a final and favorable decision in the matter.
I feel even more strongly that it is useless and might logically have an adverse effect for me to take any further steps with the members of the Spanish Government unless and until that Government fully realizes that the telephone company cannot be used as a club to extort concessions but that a satisfactory solution of the case is actually a matter of principle and the pivotal and cardinal point in the establishment of a satisfactory basis upon which can be built a mutually desirable relationship between the two countries.

Under these circumstances I respectfully submit the following recommendations:

That the Department advise the Spanish Ambassador in Washington in no uncertain terms that it considers the telephone company case as it has now developed as being not an internal matter of a domestic corporation not subject to state [apparent omission] as the Foreign Office has maintained but rather that it represents a test case in the relations between our two countries and that for this reason you have instructed me to present the matter to the Chief of the Spanish State himself.
That the controversy has now resolved itself into the question of whether the Spanish Government intends in good faith to carry out its contractional obligations to an American company as set forth in its repeated assurances to this Government a decision which cannot fail to influence directly our views as to the reliability of any further assurances of the Spanish Government on other matters.
That under these circumstances we are forced to state quite definitely to the Spanish Government that we cannot accept that Government’s assurances “that American economic interests in Spain are guaranteed by Spanish law and in accordance with international procedure” until the good faith of that Government has been demonstrated by action rather than words, namely the actual return of the management of the company to its American majority stockholders.

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With reference to my personal letter to Welles of April 1st:75 in the event the Department agrees with my suggestion that I visit briefly the United States you may also consider it desirable in the absence of some immediate and concrete action on the part of the Spanish Government to place the present unsatisfactory relations on an improved basis and as a means of emphasizing the seriousness of the matter for me to inform the Foreign Minister that in view of this situation I am instructed to return to the United States in order to report personally.

  1. Missing from Department files.