740.00112 European War 1939/5404: Telegram

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

2428. To Perkins from Riefler. Mr. Stirling, head of Peninsular Section of M.E.W. and who is in direct charge of Swiss negotiations for M.E.W. asked me to attend a meeting at his office with Messrs. Sulzer and Keller10 of the Swiss Delegation. The meeting was called by Stirling as a result of a misunderstanding which arose at an earlier meeting of Keller, Easton,11 Adams, and Seebohm, head of the Neutral Trade Department of the Ministry of Economic Warfare, when the subject of specific limitations to be placed on various Swiss exports to Axis Europe, if agreement to current negotiations is reached, was under examination. At this meeting Keller had taken the position that no specific limitations could be put on Swiss exports of machinery to the enemy even though these exports contain industrial raw materials received through the blockade. Stirling wished to take the occasion presented by this development to call in Swiss delegation officially. He pointed out to them forcefully that M.E.W., in the preliminary understanding under which the delegation was despatched here had stated that the negotiations were held subject to the principle that materials received through the blockade were not subject to export to enemy countries. While M.E.W. had undertaken to discuss particular situations on their merits, the discussion in the earlier meeting referred to raised a question as to the possibility of a misunderstanding which he desired to clear up.

The ensuing discussion lasted for an hour and a half and was extremely revealing. It was the first time since my arrival that I felt I was getting near to the heart of the Swiss problem. A full report [Page 382] will be sent on as soon as Stirling’s minutes are at hand. Meanwhile, I wish to report one special phase of the discussion which went directly to the basis of the bargaining program proposed by B.E.W. You understand that the Swiss have not yet been informed of the nature of the B.E.W. proposal. It differs so radically in its general form (though not in many of its particulars) from lines along which negotiations have started that it has not seemed wise to confuse the situation further until B.E.W. and M.E.W. have reached an understanding. The whole discussion, therefore, proceeded on basis negotiations have taken to date. This is important in that Swiss did not know B.E.W. is proposing a reduction in food rations as bargaining weapon.

During meeting Stirling was superb. This [His?] manner was friendly but his pressure on Swiss for reductions in their exports, particularly of machinery to Germany, was absolutely relentless. He went over every possible contingency and never conceded the objective. Swiss were visibly very worried. There was no question of their intense desire to stop further penetration of Germany into their economy and of their anxiety to think of means of doing so. To them Swiss independence is at stake. They have been willing to accept all sorts of limitations on various other exports but they appear absolutely convinced that they could not “get away” with an open prohibition or limitation on exports of machinery. Finally towards the end of the discussion, with bother [both] Stirling and myself taking a very firm attitude, Keller broke out along the following lines: “We cannot have unemployment in the metal industry, particularly that employing highly skilled labor. It is impossible politically for us to tell our people they must go on relief because we will not let them manufacture for Germany, especially when Germany is willing to furnish all of the materials and we furnish only the employment. You can cut down on our food if you want to go that far and we can tighten our belts and still remain free, but if you force us to throw our skilled workers into unemployment they will either go to Germany to work and we won’t dare to stop them under the circumstances, or they will force us to come to terms with Germany completely.”

Sulzer kept on emphasizing the fact that Swiss manufacturing was now at capacity and that the way out was to plan competitive orders in Switzerland so that there would not be idle industry available for German orders. He thought special negotiations now under way here if successful would have effect of reducing exports to Germany correspondingly. He also stated civilian watches were now on free export lists and that orders on our part for watches would reduce German takings.

I am impressed with sincerity of Swiss and with the potency of their arguments. Would it not be possible to work on a B.E.W.–M.E.W. [Page 383] program directed toward cutting Swiss dependence on Germany by providing employment for skilled Swiss workers. Elements of such a program would be:

(1)
Promotion of purchases of Swiss manufactured articles now on free list, such as pumps, watches, et cetera from non-Axis sources, United States, Latin America, et cetera,
(2)
Development of a preemption program on articles not open for export during war, under which Swiss manufactures would be bought and stored in Switzerland for post-war delivery, and,
(3)
Conclusion of an understanding with Swiss military authorities directed towards increasing drastically the diversion of Swiss industry to armament manufacture. Such manufacture would have to be solely for the needs of the Swiss Army and might require some release of industrial raw materials on our part. A preemption program for storage would also require an agreement with respect to payment on our part, e. g., blocked gold stored in United States against manufactured commodities stored in Switzerland.

I wish you would give serious consideration to the points raised in this cable because I do not feel that we will gain our objective, namely, a decrease in [Swiss] economic contribution to Germany, by curtailment of food imports. [Riefler.]

Winant
  1. Paul Keller, Swiss delegate in charge of trade agreements at London.
  2. Maj. John Easton, Assistant Military Attaché in the United Kingdom.