362.1153 St 2/72
The American Ambassador in Spain (Hammond) to the President of the Spanish Council of Ministers (Estella)36
Dear Mr. President and Friend: I have received a memorandum from the Section of Commerce of the Ministry of State, dated May 18th last, which refers to our conversation on May 11th and to the brief suggestion in the form of a memorandum which I left with you, all having to do with the valuation of one of the petroleum enterprises which have been forcibly seized by the Spanish Petroleum Monopoly before January 1, 1928. The point of view set forth in this memorandum hardly seems to me to accord either with the spirit of the new rules laid down by you in February for the guidance of the Valuation Commission, or with the assurances which you have given me in the past in regard to fair and equitable treatment of the interests involved.
Leaving aside for the moment the technical details of a possible method of valuation which I referred to in my conversation with you, as a basis of a fair settlement, and which is referred to in the above mentioned memorandum of May 18th, I must recall to your attention our conversations of last autumn and of last winter, when we first discussed the question of the forcible seizures on behalf of the Petroleum Monopoly of enterprises largely owned by American interests.
At that time, in accordance with my Government’s instructions, I informed you that a very unfavorable effect on public opinion had [Page 866] been created in the United States by the sudden and arbitrary seizures of lawfully constituted enterprises—seizures which were illegal in accordance with previously existing Spanish constitutional and civil law. You then assured me that full and fair compensation would be given to all the interests affected.
The fact remains, however, that although the companies have been for five months deprived of all their property and their privileges of doing business in Spain, no compensation has as yet been paid, and the expectation of my Government that fair, full and prompt compensation should be received by the interests involved, has not been fulfilled.
Since the coming into force of the new rules which you prescribed for the guidance of the Commission last February, I understand that the valuation of the physical property of American owned companies has been made on a more satisfactory basis, although even these physical valuations are materially below the book values of the companies. The Commission has, however, refused to review its earlier awards made before the coming into force of these new rules, and as these earlier awards often only gave fifty percent of the real value of the seized property a serious loss necessarily results.
I must therefore request you to set aside the earlier awards, which would seem to be against both the letter and the spirit of the rules of February, and grant compensation for physical property on a uniform basis.
Further, I had hoped that paragraph E of the regulations above referred to would provide a fair basis of compensation for the business of the companies, the operations of which were forcibly arrested by the various Royal Decrees and Ordinances of 1927; but I understand that the Commission refuses to interpret this paragraph on any broad basis.
In view of your past assurances that you intended to give just and “equitable” treatment to the interests involved—assurances which I have naturally communicated to my Government—I should be greatly obliged if you would inform me that the Valuation Commission will review its earlier unfair awards, in accordance with the spirit of the rules above referred to, and that prompt payment will be made for the losses resulting to American interests.
I am [etc.]
- Copy transmitted to the Department by the Ambassador as an enclosure to his despatch No. 929, June 6, 1928; received June 18.↩