852.75 National Telephone Company/421: Telegram
The Ambassador in Spain ( Hayes ) to the Secretary of State
[Received June 2—12:47 a.m.]
1927. With despatch 2362, April 21,48 there was transmitted a copy of note 2258, April 4, addressed to Minister for Foreign Affairs following instructions in 877, March 29.[Page 426]
On May 6 I sent the Minister a follow-up personal note and in my conversation of May 25 I called to his attention the fact that I had received no response.
I have been in close touch with Caldwell who believes as I do that pending outcome of his present informal discussions for the sale of the property reported in my despatches 2383  April 27, 2442, May 8 ,49 it was inadvisable for me to press the matter vigorously. Should present negotiations be successful the American interest would be safeguarded by the sales arrangements.
The status of the sales negotiations, as reported to [by?] La Puerta50 to Ackerman51 yesterday, is that Franco52 has agreed to all of the principal ITT desiderata except one. As a prior condition, dollar exchange would be made available for arrears owing to ITT; purchase price would be paid by an initial payment of approximately 30% and the balance by 5 annual equal installments; in the interim voting control would remain with ITT. The CTNE would contract with ITT for service and operational management, including purchasing, both from abroad and from Standard Eléctrica. Franco objected to the price asked by ITT for its shares, namely, 3,000 pesetas, but informed La Puerta he would approve purchase at 2,500 pesetas per share.
When I informed Caldwell of this conversation he was greatly elated. Although he has not been authorized to accept a price as low as 2,500 pesetas he seemed to believe that the difference is not so great that it cannot be spanned.
For my part I shall save my elation until the projected arrangements take written form.