740.00112 European War 1939/5419: Telegram
The Ambassador in the United Kingdom ( Winant ) to the Secretary of State
[Received 8:45 p.m.]
2496. For Perkins from Riefler. We are engaged in a campaign of economic and political war with Germany through Switzerland. So far (1) we have won most of our nonphysical objectives (intelligence services, moral support, et cetera) but (2) the Axis have won the physical objectives in the sense that they have succeeded in diverting a huge proportion of the Swiss economy to manufacture for their benefit.
We have won our nonphysical objectives, primarily because of the sympathy of the Swiss for the democratic side and because of the Swiss will to be free. Despite great shrewdness and skill on the part of Ministry of Economic Warfare in securing and implementing war trade agreement of 1940, we have been much less successful than the Axis with regard to (2) fundamentally because we were trying to persuade or force the Swiss to impose unemployment on themselves while the Axis was always ready to give as much employment as the Swiss would accept. So long as the final offers from the two sides remain unemployment as compared with employment, the Axis are bound to win in the end. We may gain a tactical victory when conditions are ripe, but the Axis nevertheless will win the campaigns.
I believe we should embark on a completely new policy designed to deprive the Axis of the use of Swiss skilled labor by providing alternative employment within Switzerland for goods: (a) for internal consumption, (b) for the Swiss Army, (c) for export to non-Axis destinations and (d) for storage within Switzerland. The outline of such a program, positive in approach, was indicated in yesterday’s Embassy cable No. 2428.13 This program would not have been possible financially before we entered the war. It would depend primarily on Board of Economic Warfare for support because Board of Economic Warfare is the organization that has the resources required for its implementation.
The experience of Great Britain so far in this war demonstrates that it is economically possible to maintain full employment internally even in an industrial country heavily dependent in ordinary times on export markets, provided essential food supplies and some raw materials are available from abroad. We are already prepared to furnish these food supplies to the Swiss. Unless the Axis interferes [Page 385] therefore with a new positive prohibition it would not be impossible to work out a program with the Swiss that will leave a minimum of free resources available to work for the Axis. The first element in such a program would require definite moves on our part to increase orders from non-Axis sources for Swiss exports now on the free list. Surely we can order and probably find use for much greater quantities of these commodities than we are now taking. Our Latin American division together with Rockefeller’s14 office can probably persuade our Latin American allies and associates to increase their takings from Switzerland also. The second element in the program would be a secret offer to the Swiss Army to cooperate with them in building up the strongest possible army within Switzerland, provided that the armament was fabricated within Switzerland. This would require the supply of some raw materials on our part, but we would gain (1) because an increase in the military establishment would operate to absorb manpower within Switzerland, thus reducing unemployment, (2) because a drastic conversion of Swiss industry to munitions manufacture would absorb industrial facilities now available for manufacture for the Axis and (3) because a growing Swiss Army, in the military situation as it is developing within Europe, would help shift the military balance of power there. The third element in such a program would require the institution on our part of a preemption program within Switzerland. Under this program we would undertake to place orders with Swiss factories working on highest priority exports to the Axis, storing the commodities received from them for delivery after the war.
Such a program could go very far to win our campaign of economic warfare within Switzerland. It could only be stopped by drastic Axis interference, which would have to be positive interference outside the scope of present Axis-Swiss agreements. Each month it went on without such interference would find the Swiss and ourselves in a stronger position relative to the Axis. If the Axis did interfere, it would have to take the full blame in the eyes of the Swiss people.
This program is my own suggestion formulated as a result of weighing all the factors involved, here on the spot. I have not spoken of it to Ministry of Economic Warfare. I would appreciate your reaction. If you do not wish to undertake a new policy such as this, I would recommend adoption of policy similar to that contained in Ministry of Economic Warfare’s cable to Hall. See Embassy’s cable No. 2455 of May 6 [7]. [Riefler.]