654.6231/262: Telegram
The Minister in Switzerland ( Harrison ) to the Secretary of State
[Received April 10—9:38 p.m.]
2258. My 2220, April 8 (199 to London).5 Commercial Attaché6 and his British colleague7 called upon Dr. Hotz8 and Professor Keller9 at the latter’s request on April 9.
Hotz opened by confirming that the Federal Council was sending a delegation led by himself, Dr. Homberger and Mr. Kohli to Berlin on April 12 to negotiate a new trade agreement. He then repeated what Sulzer10 had told me, namely, that the arrangement now made with the Germans would liquidate outstanding obligations on both sides under agreement of July 1941.11 During the last 3 months January through March German coal deliveries had been roughly one-third less than the 150,000 tons per month provided for in that agreement. Total arrears under the old agreement amount to roughly 950,000 tons from which deliveries for the first 3 months of this year amounting to 300,000 would be deducted. This leaves a balance of 650,000 tons which the Germans propose to liquidate over a period of about 4 months. Arrears would similarly be made up by the Germans with respect to iron and petroleum products. In return the Swiss would apply the outstanding balance of the “credit” amounting to about 280,000,000 francs to the payment of goods ordered by the Germans prior to January 15, 1943.
. . . . . . . . . . . . . .
Turning to the question of the forthcoming negotiations Hotz stated that from the Swiss point of view the pivotal point in the negotiations in Berlin would be the obtention of coal supplies through the Axis counter-blockade.
On the main points of the negotiations his instructions from the Federal Council which he disclosed in the strictest confidence are as [Page 828] follows: First, to insist that undesirable exports on orders placed after January 15 shall be limited by quotas based upon the exports of 1942 with reductions in the sense desired by our negotiators at London; second, to press for improvement in the operation and continuance of the Berlin protocol. (Germans have now given an assurance that they will grant Geleitscheine 12 for the first month’s tranche without delay and that the German Legation would now be able to issue these documents without reference to Berlin. Swiss would also propose the carrying forward of any unused portions of quotas from 1 month’s tranche to another under the protocol; third, no future advances by way of credits would be made into [to] the clearing. Credit facilities would only be given in proportion to the quantity of coal and coal products delivered monthly.
Credit authorizations based on a figure of 170 francs per ton and Swiss would endeavor to keep to the lowest possible figure which Hotz indicated would result in a credit very appreciably lower than that of the 1941 agreement. Hotz stressed that this feature should be kept most secret. The new credit would come into effect if and when monthly coal deliveries exceed the 150,000 tons of arrears under the old agreement. Swiss hope to be able to manage that a part of the new credit would be used to facilitate normal peacetime exports even in such materials as embroidery.
Swiss instructions also included a demand for an air service as I reported in my telegram under reference which if conceded they did not expect would be allowed for more than diplomatic mail although they would ask for postal facilities. They excluded the possibility of passengers being allowed.
The Swiss envisaged that the agreement would remain in force until the completion of the delivery of 1,800,000 tons of coal and coal products (over and above the arrears previously referred to) for they estimate that this will take a year.
Hotz and Keller emphasized on political grounds the absolute necessity under which the Swiss found themselves to arrive at an agreement with the Germans to obtain coal their most vital requirement and to secure some freedom for their foreign trade through the counter-blockade. They stated that they hoped the Swiss position could be presented to you in a sympathetic light and that you would give weight to their assurances that they would make every effort in the course of the coming negotiations to secure a satisfactory reduction in undesirable exports.
Commercial Attaché and his British colleague expressed their personal view that you would probably not regard the situation with favor. They emphasized that the crucial point in the London negotiations had been our requirement of a reduction in undesirable exports.
[Page 829]The effect of the arrangement to liquidate the agreement of 1941 coupled with any arrangement under a new agreement would be a substantial rise in undesirable exports as Sulzer had admitted to me and probably to the end of this year if not longer. At this stage of the war it could only create a bad impression whatever the cause might be that such a rise should take place. This impression would be even worse if as a result of the negotiations for a future agreement a substantial reduction in undesirable exports was not achieved.
However, for the Department’s background Commercial Attaché and his British colleague are not surprised or too concerned over the arrangement for liquidating the past arrears which had already been indicated by Hotz (see 6th paragraph of my telegram No. 448, January 20—57 to London13). They consider, however, that it is of the utmost importance that the Swiss should be deterred by fear of unfavorable reaction on our side from making concessions to the Germans in the course of the coming negotiations. They recommend that a warning in this sense should be conveyed to the Swiss Ministers in Washington and London.14 I agree.
They are satisfied with the frankness with which Hotz and Keller stated their case and disclosed (for the first time) the instructions which they had received from the Federal Council for the conduct of the negotiations. They have also the impression that the Swiss will not fail this time to keep us informed of these negotiations insofar as our interests may be affected. It is significant that Keller stated that the Swiss had already paid heavily for the agreement of 1941 owing to the British reaction in cutting quotas. It may be added that they are certainly not anxious to enter into an agreement which might provoke further retaliatory measures on our part.
Repeated to London.
- Post, p. 900.↩
- Daniel J. Reagan.↩
- John G. Lomax.↩
- Jean Hotz, Director of the Division of Commerce, Swiss Department of Public Economy.↩
- Paul V. Keller, Swiss Delegate in charge of trade agreements.↩
- Hans Sulzer of the Swiss Trade Delegation.↩
- Concerning this agreement, see W. N. Medlicott, The Economic Blockade, vol. i, in the British civil series History of the Second World War (London, His Majesty’s Stationery Office, 1952), pp. 587–588.↩
- Licenses or guarantees of safe conduct.↩
- Not printed.↩
- Charles Bruggmann and Walter Thurnheer, respectively.↩