File No. 763.72112/1442

The Minister in Switzerland ( Stovall ) to the Secretary of State

No. 159]

Sir: I have the honor to refer to my despatch No. 151 of July 2,1 in reference to the importation of raw materials into Switzerland. The Consul at Basel reports that there is comparatively little at present coming into Switzerland.

The Allies charge that Switzerland has been the medium through which food supplies have been received by the Central powers.

It is said that the food supplies in Switzerland are running short and that the future is threatened.

Switzerland has supplies lying in the French docks which will not be permitted to proceed to Switzerland until certain assurances and bona fide guarantees are given that these will not be reexported to Germany or Austria. The Allies purport to name all conditions under which food will be released to Switzerland; viz., that only such quantities as are actually necessary for Swiss consumption and Swiss [Page 291] trade with the Allies and neutrals will be permitted to enter. Of foodstuffs she will be permitted to import only as much as she is able to establish proof of need; of raw materials she is to give guarantees that neither the raw materials nor the finished products thereof will be sent out of Switzerland to the Central powers.

In order that these conditions may be carried out there is to be formed a Swiss Import Committee, such as exists at present in Holland, and only such concerns or individuals are to belong to this committee and receive shipments of goods as have not been actively engaged in furnishing supplies to the Central powers. This committee is to be directed by Englishmen, appointed for the purpose of seeing that the terms of this import committee are strictly carried out. It further appears that this last condition is the obstacle chiefly in the way of the agreement being signed. The Swiss claim that they can be trusted to carry out any agreement which they make. Up to the present time an understanding has not been reached. Many of the Swiss, especially the Basel and other German Swiss, loudly proclaim their unwillingness to submit to British control of their commerce and denounce the English in no uncertain terms.

On the other hand Germany has given notice that, in case Switzerland permits this import committee to be formed and operated, it will completely shut off the supply of coal, which, unless England supplies that product, would close all the industries in Switzerland, except those operated by hydroelectric power.

Some Swiss have intimated that they would rather have Switzerland go to war on the side of the Central powers than to submit to the dictation of England. These are of course the most violent in their feelings. Up to the present time the Allies have not wavered in their negotiations from their demand that they dictate the head of the committee and are refusing to permit goods to be released to Switzerland: In the meantime the situation is becoming more delicate, and the supply of food is approaching a state of shortage. The rank and file of the people are said to be unaware of the situation, and it is to be hoped that it will be settled before food reaches prohibitive prices and also before the situation becomes known.

Owing to the reported activity of some of the shipping agents in Switzerland in receiving merchandise and reshipping it to Germany and Austria, the Allies refuse absolutely to permit any consignment whatever to reach them. At present only certain agents who have shown friendliness in the past are permitted to receive shipments. Just how the Federal Council will settle the matter remains as yet to be determined.

In addition to the above, and which has been one of the chief causes of the present difficulty, is the “Compensation Trust,” which is an agreement entered into between Germany and Austria on the one side and Switzerland on the other, whereby for certain supplies released by Switzerland to the Central powers, Switzerland in turn had released to her certain needed supplies. The details of this agreement are not available but are generally reported known to the importers and exporters as well as the terms of the agreement. In other words, Germany and Austria stipulated what they needed that Switzerland could supply and what they would be willing to release to Switzerland in return. Relative values were not considered, but simply relative needs, and the amounts to be compensated are often [Page 292] disproportionate. For instance, it is understood that 100 pounds of copper would secure the release of many tons of sugar or coal. This extended up and down the list in proportion to the respective needs and to the ability of each to export.

This agreement worked without any serious hitch until Italy entered into the conflict. Now Switzerland cannot supply Germany and Austria without getting the supplies first through the Allies.

What will be done in Switzerland to avoid future trouble is as yet undetermined.

I have [etc.]

Pleasant A. Stovall
  1. Not printed.