852.75 National Telephone Co./253: Telegram
The Chargé in Spain (Matthews) to the Secretary of State
[Received May 12—9:12 a.m.]
47. I feel that the time has come when I should lay before the Department the attitude of the Spanish Government toward the interests of the International Telephone and Telegraph Corporation and towards Colonel Sosthenes Behn97 personally. The implications behind this attitude I believe can hardly be viewed with optimism by that concern and a situation in some way similar to that which arose in 193198 may be in the making.
Early in March Colonel Behn filed with Quinones de Leon99 an application for permission to enter Spain. That application has not yet been acted upon (though one for another American in his company filed simultaneously was granted 10 days ago). The representatives of his company in Spain were then orally and informally advised by the Nationalist authorities that he should expect no favorable reply until recognition of their Government by the United States (It is my belief that this statement was largely a mere excuse which was intended to and did serve to forestall further efforts for the time being to obtain Colonel Behn’s entry permit.) Following recognition and my arrival here, the company’s representatives under the direction of Caldwell1 vigorously renewed their efforts through many sources [Page 821] to invoke action. As I have been doing in the case of other Americans desiring to enter or leave Spain and in accordance with the procedure suggested to me on my first visit to Burgos, I addressed a note verbale to the Foreign Office on April 15 requesting that Colonel Behn, an American citizen with important business interests in Spain requiring his personal attention, be permitted to enter the country. The company’s representatives ascertained that the Colonel’s case was a special one receiving the Government’s careful attention and was not merely the usual case of routine delay. On April 27, having received no reply to my note, I discussed the matter with the Under Secretary for Foreign Affairs at Burgos. Barcenas confirmed to me the strong character of Behn’s application and the fact that there was opposition in Government circles to granting it. He added that Behn had been “maladroit” in implying at the time of his application that once in Spain he might be able to hasten our recognition of the National Government, an implication which seriously offended Spanish pride and sensibilities. (I subsequently discussed this point with Colonel Behn and am inclined to believe that this unfortunate approach was due in part at least to overzealousness on the part of Quinones de Leon at the time of forwarding the application.) Barcenas added that there was also certain resentment against the Telephone Company’s attitude during the war and mentioned that Colonel Behn had “twice gone to Barcelona”. The Under Secretary while making it clear that the matter “was not in his hands” said that the question was to come before a Cabinet meeting the following day on the basis of my note and that he was hopeful that he would be able to give me a favorable reply thereafter. I waited a further 10 days and on May 6th sent a carefully worded and extremely polite personal letter to Barcenas reminding him of our conversation and inquiring as to the status of the case. I added that if the Government did not feel that it could act favorably on the application I should appreciate being informed of that attitude and the reason therefor, as I naturally felt that I should communicate the facts to my Government. I have, to date, received no reply to that letter. On May 7, a representative of the company saw Colonel Ungria, Chief of the Spanish Police and Military Intelligence, with whom he is on the closest personal terms. Ungria, who enjoys an excellent reputation, who is high up in Government counsels and who is a loyal friend of Behn, told this representative in confidence after earlier investigation that there was nothing further he could do on the case and that “it was now up to Washington”.
The steps which I have taken on Colonel Behn’s behalf have been on my own initiative. I have, however, informed him thereof and have consistently urged him to be patient. I do not believe, however, that [Page 822] I can in fairness ask him any longer to refrain from taking the matter up with the Department and I presume the International Telephone and Telegraph Corporation officials will shortly call at Washington to explain the company’s position during the war and request the Department’s assistance.
Of more importance than the personal inconvenience to Colonel Behn is the question of the Spanish Government’s motives and intentions. It has seemed clear to me from the outset that behind the refusal to let Colonel Behn into the country probably lay far reaching intentions affecting the future position of the International Telephone and Telegraph interests in Spain. Colonel Behn was quite a figure here and I suppose that stories of his influence and of persuasion must be almost legendary. It is but logical, therefore, that if the Government or certain members thereof have plans for the future of the Telefonica which are prejudicial to the company’s existing contracts they should feel that these plans may best be matured with Colonel Behn outside of Spain and the company’s interests here in less competent or authoritative hands. Given the intensely nationalistic feeling of “the new Spain” and their ambitious program of reform it is but natural to suppose that they must cherish the thought of “freeing” the country from the “foreign monopoly which controls their vital communication system”. Just how far they may intend to go or what means they may intend to apply I do not know and I doubt if they have as yet formulated any definite program in this respect. In fact I have no real tangible evidence that they harbor any such designs whatever. Since the fall of Madrid however they have permitted no Americans or other foreign officials of the Telefonica to have anything whatsoever to do with the company’s operation or administration. They orally stated when they first [omission?] requested Caldwell and his associates to leave the building immediately after [apparent omission] curtly that it was merely “pending recognition by the United States”. Following our recognition they stated that the Government’s operation of the Telephone Company would continue “during the existence of a state of war”. It is perhaps significant that on the other hand no effort has been made to interfere in any way with the operation of the company’s manufacturing subsidiary, the Standard Electrica de Espana, which is in no sense a public utility. (There is though apparently a tendency to place orders for needed material with other concerns rather than entirely with that company as was heretofore the case for certain types of equipment.) There has also apparently been some criticism in the Government of the existing contract between the Telefonica and the International Telephone and Telegraph Company of Spain whereunder the former pays the latter [Page 823] 4½ percent its gross revenues or approximately 60 [omission?] pesetas per annum (based on the first 6 months of 1936).
It is only fair to say that at first neither Colonel Behn nor his representatives here were inclined to share my views as to the Government’s intentions.
They were reluctant to believe that this Government could contemplate any serious measures against the company and were more inclined to attribute the refusal to admit Colonel Behn to the general scramble for jobs and intrigues now going on within the company’s Spanish personnel under the guise of “depuracion” and particularly to the desire of the Government’s appointed manager to retain his position of authority. (The latter a man named Mestre formerly managed the company’s small Canary Islands plant where he developed a close and loyal friendship for General Franco which after the war broke out resulted in his being given control of the Telephone Corporation in Nationalist Spain.) I think now however that Colonel Behn is coming to agree with me on the motives behind his exclusion and is coming to realize the unpopularity of the Telefonica and the resentment in Nationalist Spain of its failure to do more “to help their cause in the hour of need”.
The question of how much foreign, especially German, influence may have to do with the matter of course comes to mind. Behn and his associates are inclined to think that the “critical internal situation” may be a factor in the Government’s desire to retain administrative control of the company. Personally I am much inclined to doubt this (and Ungria said the idea was “childish”) for the simple reason that if war broke out the Government could immediately resume administration of the company without difficulty. On the other hand it seems probable that the Germans for their own end may have encouraged the Spanish Phalangists in their nationalistic ambitions with respect to the company particularly, as the opposition to Colonel Behn’s entry appears to lie primarily with Serrano Suner2 and Colonel Fuset (Judge Advocate of the army and close personal adviser to General Franco). I think, however, the real motives behind the Government’s attitude at present arises first from an intention to restrict the rights or privileges hitherto enjoyed by the company (refraining from even toying with the idea of Government acquisition of the telephone system) and secondly from definite animosity against the company for its “failure to help in the war”.
I have given this lengthy background to prepare the Department for the company’s call upon it and to request such further instructions [Page 824] as it may care to send me. If it desires to press the issue of Colonel Behn’s entry as I believe it should, it may wish to discuss the matter with Cardenas simultaneously with such further representations as it may wish me to make.
Copy to Paris.