852.75 National Telephone Company/7
Memorandum by the Under Secretary of State (Castle)
The Spanish Chargé d’Affaires, whom I was unable to get on Saturday, came in to see me this morning and I read him the translation of the bill which has been introduced doing away with the telephone company. I pointed out to him that this was one of the most high handed performances I have ever known a government to take and told him that we could not stand passively at one side while American interests were being played with in this way. I pointed out that, when one government succeeds another government, it endorses the legal acts of the preceding government, that there was nothing in the telephone contract which was illegal at the time it was made and that, for the government now to declare it illegal and to declare those responsible for the contract also responsible for indemnification was fantastic.…
The Chargé said it was the opinion of his Government that any contracts made during the time of Primo de Rivera were illegal. [Page 562] I said that neither we nor the rest of the world could admit that and that I thought he ought to warn his Government of two things, that if this expropriation were put through in a way which injured the American company, we should not only protest, but should have a perfect right to demand indemnity and second, that if this went through it would be certainly a staggering blow to Spanish credit in this country.