352.1153 St 2/90
The Chargé in Spain (Whitehowe) to the Secretary of State
[Received July 3.]
Sir: I have the honor to refer to the Embassy’s despatch No. 932 of June 12th,39 having to do with the Petroleum Monopoly, and to [Page 870] submit a further report on recent developments. In this despatch reference was made to the attitude of Mr. Westcott, the British Director of the Shell interests, who, having been to London recently, had advised Sir Henri Deterding that it would be better to accept some 25,000,000 pesetas on account of the Shell claims, reserving all rights to any future claims for the value of going concern and good will.
The French Embassy and the various French and American interests affected by the Monopoly considered that the acceptance of any sum on account at the present time would weaken the diplomatic position and would at the same time play into the hands of the Spanish Government, which would be able to announce that it was meeting fairly the claims of the foreign companies driven out of business in Spain. The Standard Oil Company therefore decided to send Mr. Brewster, the Managing Director in Madrid, to London, to put the issues involved more clearly before Sir Henri Deterding, and Mr. Brewster accordingly had two interviews with Sir Henri in London on June 12th and 13th. The net result of these interviews was that the Shell Company telegraphically instructed its Madrid representative to hold his hand until the middle of July pending the results of the French negotiations referred to in the Embassy’s confidential despatch No. 932 of June 12th last. In this connection I think it is only fair to state that the Standard Oil officials have made every effort to co-operate with both the French and British interests involved, in order to obtain as far as possible a united front, and the more broadminded and less selfish attitude of these officials has been extremely helpful in the course of these long drawn out negotiations.
The French Ambassador was gratified at this result, and I understand that the French Foreign Office was pleased at the effort made by the Standard Oil Company to obtain a united front of all the interests involved, thus preventing the Spanish Government from dealing piece-meal with the companies.
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In the meantime, the position of the principal American industries concerned is as follows: in accordance with repeated requests which the Embassy has made, both verbally and in formal notes, the Valuation Commission has been instructed to reconsider its earlier unfair awards, and at the end of last week, representatives of the Babel and Nervion Company came to a tentative agreement with the Valuation Commission to accept some 19,300,000 pesetas for the whole of its physical property. This is of course exclusive of the 3% already offered to the Shell Company (a sum payable arbitrarily under Spanish law on any transaction involving expropriation [Page 871] by the State) plus 5% for general indemnity, and presumably the same offer will be made to this Company. As against this sum, the Company considers that its total assets, including trade marks, good will and value of going concern, are 36,000,000 pesetas, and it is accordingly addressing a protest to the Council of Ministers asking that reasonable indemnity be given on the basis of its total claims.
In regard to the figure of 19,300,000 pesetas tentatively agreed upon, the Company considers that this is less than the cost of reproducing the property in question and is therefore unfair, but it is nevertheless disposed to settle on this basis on condition that some substantial concession above the supplementary offer of 8% above referred to is obtained.
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In view of the developments of the last two weeks and in accordance with the Department’s telegraphic instruction No. 38 of June 1st, 6 p.m., authorizing me to second the protests of the French Embassy if it seemed expedient, I believe the moment is now opportune to give more tangible support to the latest French negotiations. I shall therefore endeavor to see General Primo or the Finance Minister in the near future and try to impress upon them the desirability of making some fair, definite and immediate settlement.
I have [etc.]
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