852.75 National Telephone Company/12–844: Telegram

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

3973. Embassy’s 3945 December 5, 10 a.m. At a meeting between Carceller and Caldwell yesterday at which de la Puerta and Ackerman were present former agreed to request Franco upon latter’s return to Madrid Monday to authorize lifting of censorship on all conversations between Caldwell and Behn and also to rule that labor decree of September 24 does not now apply to Telephone Company. After exhaustive exploratory discussions principally as to necessity of modifying expired concession contract so as to meet certain government objections Carceller and Caldwell agreed there appears to be a sufficient meeting of minds for negotiation and that discussions should continue. In principle it was agreed that CTNE would remain a privately owned corporation, that larger part of American owned shares would be sold and that it should continue to supply technical assistance. Price method of payment conditions of technical contract were not discussed in detail. Another meeting is to be held next week but as subjects will be primarily related to specific changes in contract [Page 442] and other technical aspects Embassy does not propose to have observer present.