Foreign Relations of the United States: Diplomatic Papers, 1944, Europe, Volume IV

740.00112 European War 1939/7–844: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

London, July 8, 1944—9 p.m.
[Received 10:30 p.m.]

5414. For Department and FEA from Riefler and Lovitt.

1. Last night⁶⁷ Keller presented the formal Swiss proposals offering further cuts in Swiss priority exports to the Axis. They coincided with the advance notice from Bern (see Bern’s 1146, July 3 repeated to Department as 4228⁶⁸). Keller stated that the proposals he now made were as far as the Swiss Government could go and were made on the basis that raw materials would be made available to the Swiss.

2. Before presenting the proposals, Keller explained that Switzerland had done much unilaterally during the course of the negotiations to meet us in various directions. He stated that the reductions imposed on Swiss exports to Germany had resulted in a clearing commitment of 924 million Swiss francs, an amount well within the limits previously promised. Exports to Germany had been reduced to a level of from 25 to 26 million Swiss francs per month while imports from Germany were at 42 million leaving 17 million Swiss francs per month surplus exports from Germany to cover invisible items. Transit through Switzerland has been rigidly controlled. Swiss exports to Japan had been brought down to 1,000 pounds sterling last month and consisted entirely of books and watches. These instances were cited to show how the Swiss had worked to meet our demands.

3. The unused balances of export quotas referred to in reference cable are less serious than we earlier anticipated. They amounted to 8,639,000 Swiss francs, as follows:

(a) For Germany, 884/889B textile machines 4,964,000 Swiss francs, MDY dynamo electric machines 370,000, M3 hydraulic and wind motors; pumps 200,000. M4 steam machines 400,000, M7 foodstuffs machinery 776,917, A/B bicycles and parts 133,956, A/F magnetos of all kinds, 706,000.

(b) For other Axis countries, 882 E/H refrigerating machinery 110,884/889B textile machinery 180,000, M9 other machinery, NES 800,000.

4. Most of our discussions centered on the provision of the December agreement providing for an immediate conference to meet the new situation which would result from an opening of the Swiss frontier. We asked for assurances that upon this contingency, the Swiss would be in a position to make an immediate further reduction in their exports to Germany. Keller could not give us such an assurance. He maintained that if the Swiss entered into a trade agreement with Germany covering the next 6 months, they would be bound to continue any exports agreed upon for that period so long as Germany lived up to her side of the bargain. We told Keller that this was entirely unsatisfactory and at odds with what we had the right to assume under the December agreement. We urged him to take this point up with his Government at once with a view to including in the Swiss-German agreement now being negotiated a proper escape clause to meet the situation envisaged.

5. Keller stated that any new Swiss-German agreement would be kept in suspense until July 14 and that until that time, no exports of Annex I items would take place other than unused balances from the first half of the year.

6. Our next step seems clear. The proposed reductions better those of the informal offer which we are already agreed are advantageous enough to be clinched. We have therefore prepared a letter to Keller offering to continue the December agreement provided the Swiss are willing to incorporate all the new reductions without raw materials from United States. On our part, however, we will grant the carryover of unused balance so [of] items in Annex [I] as listed in (3) a above, the special quotas for flour milling machinery, thermometers and locomotives, and amendments of articles 7 and 8 of the December agreement along the lines requested by the Swiss. With respect to locomotives, however, we impose a condition to the effect that deliveries be postponed until September. We will also expand the food and fodder import quotas under the December agreement to include related agricultural requirements such as copper sulphate and certain chemicals and to do our best to supply malt for brewings as well as to adjust the fats and oils quota to meet Swiss requirements more adequately. We also state that if they incorporate a satisfactory escape clause in their trade agreement with the Germans which will permit them to meet our desires upon the opening of the Swiss frontier, we recommend the granting of navicerts for the shipment to and storage at Lisbon of cotton and wool. The terms upon which we would agree to the on carriage of these foods to Switzerland and the opening of other quotas would be disclosed when the frontier was open and transit facilities restored. On Viscoe Swiss case, we take the position that we could not discuss it further until we had received the Swiss reply to proposals made by the Black List authorities.

7. This letter had been posted but was recalled from the mail room upon receipt of British Embassy’s telegram 1443 of July 7 to MEW from which we assumed you were sending parallel telegram. The letter is in line with your views as expressed in British Embassy’s telegram but the tactics envisaged are different. Embassy and MEW would prefer to proceed along the above lines and we urgently request your authority to do so. It should be noted that storage of goods at Lisbon should have considerable appeal to the Swiss. At the same time our control is preserved.

8. MEW agrees with us that your suggested approach to the Swiss Minister on the highest political line should be helpful. If this is done, the Swiss Minister should be told that the negotiators in London are offering the Swiss a more liberal agreement under the circumstances and that our proposals should be accepted without quibbling.

Repeated to Bern as our No. 209. [Riefler and Lovitt.]

Winant

67. Apparently reference is to a meeting of July 6.
68. Not printed.