852.6363/75: Telegram
The Ambassador in Spain (Hammond) to the Secretary of State
[Received 4:30 p.m.]
112. Department’s 73 [83], November 1, 6 p.m. British Ambassador has sent a note to the Spanish Government stating that his Government expects that an agreement regarding price will be made with any British interests affected by the monopoly and that adequate compensation must be made before expropriation. He fears that monopoly company may take over certain parts of property and refuse to take over others. Property not taken would [be valueless] thus devote [devoting] only 60 million pesetas to payment for existing distributing and manufacturing plants which Standard Oil Company’s representatives estimate have a total replacement value of about 200 million pesetas. In view of British action I venture to suggest that we warn Spanish Government that we view with concern any action which will deprive American interests of the use of their property and investments made in good faith under former legislation and that we expect immediate and fair reimbursement for all such investments as may be either taken over or rendered valueless by the monopoly. The procedure outlined in the decree for taking over property foreshadows long delay, be valueless,19 and he believes this is a very serious aspect of the situation.
It seems to me that, in view of the precipitate action by the Spanish Government in depriving companies of their right to do business in Spain which was granted under former legislation, it is only fair that the Spanish Government should make adequate compensation for the entire investment made in good faith in Spain irrespective of whether it is actually needed to operate the monopoly. Considering the position taken by the British Government and the fact that the monopoly capital seems totally inadequate to provide fair reimbursement for foreign investments, I am apprehensive that British interests may endeavor to secure priority of payment by the monopoly thus jeopardizing payment to American interests.
A well-founded report is to the effect that monopoly intends to rewrite assessment of value and naturally it will be to the advantage of monopoly company to withhold payment for seized property as long as possible.
[Page 683]Today I have just been informed that the American Republics Corporation through its subsidiary the American Export Corporation has secured a contract from the Spanish Government to assure the petroleum supplies of monopoly for 5 years at prevailing market prices from Texas producing districts, therefore it would seem that seizure of property on behalf of the monopoly is to be anticipated in the immediate future as at present monopoly has no storage or distributing facilities.
- The phrase “be valueless” apparently should have occurred where bracketed in above.↩