Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

740.00112A European War 1939/278136/11

Mr. Winfield W. Riefler, Special Assistant to the Ambassador in the United Kingdom (Winant), to the Assistant Secretary of State (Acheson)

[London,] February 24, 1943.

Dear Dean: The problem of our future listing policy in neutral European countries continues to bother me. I have just been reviewing our despatches with the Department on the subject and still feel that the point of view here in London has not been adequately appreciated at home. I may be wrong in this because practically everything I have to say has been adequately covered in our communications to you, particularly in our telegram of October 30 and your very complete reply.⁷

Your reply seems to me to portray a conviction that listing is effective mainly because it imposes a legal bar to business in or with the United Nations, thus reducing the ability of the listed firm to contribute to the Axis cause. As a result it is implied that the vigor of our listing policy is measured by the proportion of potential firms that are actually listed. Although I have not participated in listing policy with respect to Latin America, it is my impression that these assumptions are correct for the great majority of firms in that area.

I do not believe that the same assumptions are always correct with respect to firms in European neutral countries contiguous to the Axis. This is particularly true in the case of certain very important firms located in Switzerland. Here many of the important firms whose contributions to the Axis we would like to diminish or stop have long had important trade contacts both with the enemy and overseas. The Axis is in a position to eliminate their overseas trade. We are not in a position to impose a physical barrier on their trade with Axis-Europe. These firms consequently may receive large current orders from the enemy which they are in a position to fulfil without direct obstruction on our part. They may, also, however, have minor orders from overseas which we can obstruct. To list such firms at the present time does not necessarily interpose a bar upon their ability to manufacture for the Axis. It may simply eliminate their current overseas business. This can frequently be made up by additional business for the Axis. When we threaten to list such firms, therefore, we simply force them to choose between Axis orders which they have the ability to fill and overseas orders, the continuation of which are uncertain because of Germany’s counter-blockade. Aside from the stigma that attaches to listing, it may clearly be to the short run advantage of such firms to accept listing on our part rather than to face the loss of their German business. If they do so, they lose current contact with overseas trading outlets it is true, but this loss of contact may not seem serious if they anticipate an early end of the war.

These circumstances are clearly different from those prevailing in South America where firms are dependent upon us for supplies, equipment, shipping, financing, et cetera. The listing of a Swiss firm because of business with Germany unless it is dependent on supplies imported through our blockade (a condition which applies to very few firms at present) does not put it out of business. It may not in fact reduce its current operations at all because any orders which it loses by virtue of our listing can be more than made up by the orders that the Germans are willing to place. Under these circumstances a firm listed in Switzerland is in a sense a firm lost to us. It represents a defeat because it means that the firm has chosen to commit itself entirely to the Axis and to turn its entire capacity to the use of the Axis. Once a firm is listed we can only affect its further contribution to the Axis by putting pressure on the Swiss economy as a whole through further modification of the War Trade Agreement⁸ or through our other blockade policies. The latter, though they may be effective so far as the economy as a whole is concerned, do not affect immediately or to any great extent the operations of the most important Swiss firms of all, i.e. those engaged in highly specialized manufacture for whom the Germans are willing to furnish raw materials from their war reserves.

Going back now to the proposition laid down above with regard to the assumptions of listing policy in Latin America, I think it might fairly be stated that the vigor and effectiveness of listing policy with regard to firms in European neutral states, particularly in Switzerland, is not to be measured by the number of potential firms that are actually listed. This results because the listing of such firms does not affect their ability to carry on business and to accept contracts with the Axis. The effectiveness of our listing policy in Switzerland is to be measured rather by the difference between their current deliveries to the Axis and those they might have made if we had not been in a position to threaten them with inclusion on the black list.

What is it then that gives any effectiveness at all to our listing policy in Switzerland? The answer, I think, lies along the following five considerations:

1. Listing involves a clear loss of current export outlets overseas. This, as noted above, is not of major importance in certain important cases because it can be offset by increased Axis orders.

2. Listing involves the loss of established trade connections overseas. This consideration has been of considerable importance. It may now lose a great part of its value since Swiss firms are quite optimistic with respect to an early United Nations victory.

3. There is a stigma of considerable importance attached to listing. This will increase the effectiveness of listing as victory seems near.

4. Listing involves apprehension over the future availability of assets controlled in United Nations’ countries.

5. Listing raises fears that once the war is over competitive non-listed firms will be the first to re-establish their business overseas.

These last three reasons will become, increasingly, the main reliance of our listing activities. The last two will only apply, however, if the firms threatened with listing fear that the lists will be maintained for a period after the close of hostilities. If they are convinced that the United Nations propose immediately on the close of hostilities to eliminate the lists, the lists themselves tend to lose their effectiveness. While these considerations apply particularly to neutral firms manufacturing for the enemy in Switzerland, they are also applicable to certain firms in Portugal, and to a lesser degree, in Spain, Sweden, and Turkey.

These considerations seem to me sufficiently important to warrant a joint Anglo-American move designed at least to raise the fear that the lists will be maintained in certain cases for a period after the close of hostilities. I am fully aware that such a move would require careful consideration to insure that it did not backfire in Latin America and that it did not violate the pledges, express or implied, of the Atlantic Charter.⁹ I do not feel that a solution of these problems is necessarily beyond the realm of possibility.

[Here follows a discussion of possible announcements by the United States and British Governments regarding post-war treatment of persons and firms in neutral countries who had aided the Axis.]

The justice of maintaining the lists for individuals and firms, particularly those in neutral countries, who, after warning, have continued to aid the war effort of our enemies would, I think, be generally recognized. Clearly, the end of the war should not mean that we drop our discrimination against those individuals who have participated in the visa extortion racket. Swiss residents who participated in this racket may have gotten rich by helping to blackmail some Jewish refugee in Latin America to pay over funds for the release of a relative who in fact had already died in a concentration camp. So long as these participants stay in Switzerland we cannot touch them or their funds. They have instead been put on our lists. I see no reason whatever why the end of hostilities should be the occasion for ending such penalties as are involved to these individuals by being on the lists. Clearly, also, it should not be hard for the public to understand the reasonableness of denying future trading facilities in our markets to firms in neutral countries, who, after warning of the consequences, continued to manufacture for the enemy, especially when such manufacture was outside their normal business, as in the case of fuses. Finally, I doubt whether the Ford distributor in Switzerland who is repairing trucks for the German army, will get much sympathy if, in fact, he fails to receive the Ford Agency again after the war. As you may know he laughed at our threats to list him (1) on the grounds that he got no value out of his Ford connection during the war, and (2) that Ford would have to continue with him after the war because of the value of his distributing organization. He was convinced the lists would be dropped after the war.

Please forgive me for writing at such length to bring this matter again to your attention. You may, and probably have, already given it full consideration. I think it is sufficiently important, however, to merit reconsideration if the aspects of the problem outlined above were not appreciated when we had the matter up before.

Very sincerely yours,

Winfield W. Riefler

7. Neither printed.
8. Anglo-Swiss-U.S. War Trade Agreement effected by exchange of notes dated December 19, 1943; for texts, see Foreign Relations, 1943, vol. ii, pp. 888–892.
9. Joint statement by President Roosevelt and Prime Minister Churchill, August 14, 1941, Foreign Relations, 1941, vol. i, p. 367.