352.1153 St 2/63

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

No. 835

Sir: I have the honor to refer to the Embassy’s despatch No. 824 of March 7th last,26 concerning the latest developments in regard to the expropriation of property on behalf of the Spanish Petroleum Monopoly.

Since this despatch was written, I have received a letter from General Primo de Rivera which is in identic form to letters received by the British and French Embassies informing me that in the future the Valuation Commission, or Jury, is to receive new instructions in regard to the treatment of the expropriated interests.

In order to be able to transmit this communication to the Department as soon as possible, I have held up the pouch for one day, and I am enclosing herewith the Spanish text and English translation thereof of General Primo de Rivera’s letter together with the new rules prescribing the procedure to be followed by the Valuation Commission.

I am today telegraphing a summary of the concessions made, Embassy’s telegram No. 37, March 9, 5 p.m.,27 as it seems important that the Department should know the latest developments in the matter, and I will analyse more carefully in a future despatch the text of the rules in question.

I am, however, enclosing herewith a legal opinion of Mr. Gonzalez, the lawyer of Babel and Nervion,26 which throws considerable light on the wording of the rules and while I believe that a considerable advance has been made in regard to the satisfaction of the legitimate claims of the companies in question, I nevertheless concur in Mr. Gonzalez’s opinion that the wording of the rules is ambiguous and may well cause considerable difficulty in the future.

I have [etc.]

Ogden H. Hammond
[Page 858]
[Enclosure—Translation]

The President of the Spanish Council of Ministers (Estella) to the American Ambassador (Hammond)

My Dear Mr. Ambassador and Friend: I take pleasure in sending you, herewith enclosed, a copy of the modifications which have been made in the rules for the valuation of petroleum property, such rules to cover equally both Spanish subjects and foreigners. As you will observe, the best guarantees are provided in these rules in accordance with the desires that have been expressed, and I hope that for this reason the interested companies of your nationality, as well as the government which you so worthily represent, will understand and appreciate the spirit of conciliation and the desire to reach satisfactory results which animate us.

I take [etc.]

Marqués de Estella
[Subenclosure—Translation]

Spanish Rules for the Valuation of Petroleum Plants

The procedure of the Petroleum “Valuation” Jury will be governed by the following rules, when the representatives of foreign companies again appear before it:

A.
The interested parties may present to the Jury all documents which they consider pertinent, it being also understood that they will be obliged to present all other documents which the Jury may consider necessary for the proper documentation of its decisions.
B.
Every vote will be preceded by a discussion of all the elements in the case, if so desired by the interested parties, in order to fix the terms and bases of each matter. The representatives of the expropriated interests may be accompanied by judicial and technical experts.
C.
The minutes of the meetings shall report the discussions in full, although this does not mean literally, as long as the substance of the allegations and arguments, which each member of the Jury may consider it expedient to make appear therein, is stated. For this purpose, the minutes will be revised before they are definitely approved.
D.
In further valuations the Jury will proceed to make the appraisals covering, as heretofore, the actual value of the plants and physical property, taking into consideration their industrial efficiency and state of preservation, the Jury’s policy to be inspired by a spirit of the greatest impartiality, cordiality, and reasonable compromise. In case of disagreement in regard to the value of lands, the appropriate municipality will be requested to furnish an official valuation.
E.
Upon the conclusion of the valuation of plants and physical property, the Jury, using its discretion in the appreciation of the statements made and the data produced in support of the same, will fix, if there are just grounds therefor, a total indemnity for each enterprise or entity expropriated, taking into account such other factors which it may consider computable for inclusion in the indemnity, independently of the intrinsic value of the plant and the physical property; in regard to this latter amount an appeal may be made to the Council of Ministers, in the same way as for the other valuations above-mentioned.
F.
The expropriated interests may collect immediately under full reserve of all of their future legal rights, and on account of the quantity which may finally be definitely assigned to them, a sum equal to the amount of the valuation which may have been made by the Jury.

  1. Not printed.
  2. Supra.
  3. Not printed.