852.75 National Telephone Company/12–544: Telegram

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

3945. Carceller has informed Embassy verbally that he had been named by Franco to resolve the telephone problem by direct negotiation with the ITT. It was pointed out to him that Embassy [Page 440] expects Spanish Government make it clear that the order of the Ministry of Labor prohibiting employment of foreigners in public utilities (Embassy’s desptach 3158, September 30) would be repressed or interpreted as not applying to the CTNE; that there be rescinded or reinterpreted the edict of the Presidency of the Government denying legal validity to acts of the stockholders or directorate until such time as CTNE had placed a majority of its common shares in Spain and that ITT representatives in Spain should be given right to uncensored communication by telephone with his principals in US. Carceller agreed to discuss first point with Minister of Labor and to take under consideration second and third points.

In view of significance of telephone problem to political and economic relations between United States and Spain Carceller requested that Embassy name an observer to sit in on all conferences. He has also invited Caldwell and Ackerman for luncheon on Wednesday67 for an exploratory talk. Latter invitation we have accepted on understanding it does not involve any commitment on behalf of US Government. Our feeling is that if exploratory discussion reveals a possible basis for negotiation between the parties concerned Embassy forthwith should withdraw from formal participation therein.

Your attention is directed to Embassy’s 3944 even date.68

  1. December 6.
  2. Not printed.