740.00112 European War 1939/5134: Telegram

The Chargé in the United Kingdom (Matthews) to the Secretary of State

1498. With reference to the Embassy’s telegram 1457, March 26, officials of the Ministry of Economic Warfare conferred this morning with the Swiss delegation. The meeting was attended by Riefler of the Board of Economic Warfare and Somerville and Adams6 of the Embassy.

The discussion at this meeting and a preliminary one held Wednesday7 may be summarized as follows:

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The Swiss delegation placed before the meeting a suggested list of Swiss goods to the value of 2½ million Swiss francs per month for export to the United States, the United Kingdom and the British Empire. The Swiss are negotiating simultaneously in Berlin and Rome where approval in principle has been obtained although the individual items in the list have not yet been approved in detail by the German Government.

In return for these exports the Swiss would want to obtain imports of equal value from the United States and the British Empire. They would wish to be assured not merely of navicerts or export licenses for these goods but the actual supply of the goods. Apart from this they would seek restoration of the other quotas for imports of which they might be able to find a supply. They also hope for relief from the Blockade Committee’s recent reduction to 5 percent of the permissible enemy content in Swiss exports.

Within the assured 2½ million francs per month the Swiss would propose to acquire iron and steel and certain non-ferrous metals and to export the following Swiss customs tariff items in roughly the following order of importance by value: 934a finished detached parts of watches; M 6 machine tools; M 9 machinery not mentioned elsewhere; MDY dynamo-electric machines; 769 B screws and nuts; 9361 motor car watches; M 5 motors driven by gas, petroleum, benzine; 830 B rivets and screws; 753/56 precision tools; 935D–936D chronographs; 747 watchmakers’ tools; 834–36 wares of copper; 937 astronomical, geodesical, mathematical instruments; 809A1–3 ball bearings; 930A detached parts of watches, roughly shaped.

The British conferees took the list under advisement. Pending a further study of the list and the general proposals of the Swiss, they made a preliminary informal statement of the following views: the figures for Swiss exports to the Allies should remain on a global basis as to countries. (The Swiss had stated that they had resisted German efforts to have them specify the proposed Swiss exports by the particular countries of destination to prevent diversions between the United States, Canada and Great Britain).

If the present negotiations should result in an agreement (which is still subject to considerable scepticism) the mutual obligations provided for in it would have to be fulfilled simultaneously so that Swiss exports to the Allies would not lag behind imports from them.

If it were found possible to give any assurances regarding the supply of materials to Switzerland, the list of such supplies would have to be subject to review periodically since the supply situation cannot be foreseen long in advance in either the United States or Great Britain.

If Berlin and Rome approved a satisfactory specific list of proposed Swiss exports to the Allies, the British Government might then [Page 380] agree to the Swiss proposals, subject to the approval of the United States. In view of its importance for supplies, the Swiss conferees said they would of course want the agreement of the United States, and would want it given at the same time the agreement with the British Government was made.

The foregoing refers to the 2½ million Swiss francs worth of imports for which the Swiss would want assurances as to supply. In addition the British might reopen the general navicert quotas, without any supply guarantee, although the size of the reopened quotas would be a matter for examination.

The British participants declared categorically that they could not let any materials go into Switzerland for the manufacture of goods for the Axis. The Swiss did not protest this principle but expressed fear that a too rigid adherence to it in practice might cause German retaliation that would be damaging to the Allies themselves; they feared that if nothing containing any component however small of imported ingredient were exported to Germany the Germans would say that no coal could be allowed to Switzerland for operating any factory that made goods for export to the Allies.

The British stated they could not waive uniformity in the new rule permitting not more than 5 percent content of enemy material in neutral exports but that “for the present” sympathetic consideration would be given to individual applications for exceptions to avoid hardship where neutral exports contained more than 5 percent but not more than 25 percent enemy materials.

The British requested a copy of the text of the obligation undertaken by the Swiss Government vis-à-vis the German Government to route all exports by rail over Bellegarde in the “Geleitschein” system. The Swiss promised them a copy.

The British and Swiss conferees agreed to have their experts begin a detailed study of the list of proposed Swiss imports and exports which is now in progress.

The Swiss announced that a director of the Swiss National Bank would arrive in London shortly to discuss exchange matters at the request of the Bank of England.

Prior to their preliminary statement of views above, the British asked the Swiss conferees what advantages the Germans expected to get in return for their approval of the present proposals. Dr. Sulzer8 replied that the Germans expected the Swiss to retain their freedom to use imported materials for the manufacture of goods for export to Germany, a freedom which had been admitted in the War Trade Agreement. There would of course be no re-export en etat. Professor [Page 381] Rappard9 indicated that the Germans, for no altruistic motive, also had an interest in ensuring that Switzerland’s food supplies be continued.

If the United States Government would like to have the proposed arrangement cover other items than those listed above of which it may wish to secure a supply from Switzerland, Embassy should be advised immediately since it will probably be difficult to alter the list after the negotiations have taken a definite course.

Matthews
  1. Ware Adams, Consul and Second Secretary of Embassy in the United Kingdom.
  2. March 25.
  3. Hans Sulzer, head of the Swiss delegation in London.
  4. Presumably William E. Rappard of the Swiss delegation.