854.24/81: Telegram

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

7117. For the Department and Board of Economic Warfare. Embassy’s 7081 of December 14, 9 p.m.26 In compliance with the instructions contained in your telegram No. 6155 of December 4, midnight26 and previous instructions cited therein, the compensation agreement with Switzerland was concluded yesterday by an exchange of five letters between Dr. Hans Sulzer of the Swiss delegation on one side, and Mr. Dingle Foot, Parliamentary Secretary of the Ministry of Economic Warfare, and Riefler on the other. The texts of the letters are as follows:

First letter.

“Dear Dr. Sulzer, We wish to inform you that His Majesty’s Government in the United Kingdom and the Government of the United States of America are prepared to avail themselves during the first 4 months of 1943 of the new facilities for exports described in your letter of 8th September last27 which have been offered to them by the Swiss Government, the decision to apply for the present to a first tranche for the approximate equivalent of Swiss francs 2½ millions [Page 402] as set out in the attached schedule. The Swiss Government will issue the necessary export permits and use their best endeavors to procure the corresponding German and/or Italian transit permits and any other facilities necessary for the effective despatch, transport and shipment of the goods in question.

2.
(a) The British and American Governments will issue for the countervalue of the Swiss francs 2½ million navicerts and/or export licenses for, and will make available for export to Switzerland, 100 tons toluol, 200 tons copper, 200 tons rubber and 7 tons nickel, and for the balance every effort will be made to make available tinplate, dynamo sheets and/or ordinary steel sheets in approximately equal parts; if these goods are not available, or if the Swiss Government so desire, other goods as mutually agreed may be substituted therefor.
(b) The right of the Swiss Government to obtain the necessary navicerts and/or export licenses for the goods mentioned under (a) will become effective simultaneously with the granting of Swiss export licenses and German and/or Italian transit permits for the goods specified in the said schedule to an approximately equal value. The Swiss Government will use this right in part amounts of not less than 300,000 Swiss francs each.
(c) The above mentioned goods are destined for the exclusive use of Swiss military authorities.
(3)
In regard to the use of the remaining facilities for the export of Swiss goods mentioned in your letter of September 8th and any corresponding Swiss import facilities from overseas, the three Governments will make the necessary arrangements in due course.
(4)
In the event of any new circumstances arising which in the view of any of the three Governments concerned shall render the effective exchange of goods hereunder impossible, they shall immediately consult together as to the action to be taken.
(5)
If you will be so good as to confirm that the arrangements set out above are acceptable to you, we suggest that this letter and your reply should constitute an agreement between our three Governments.

Signed by D. M. Foot and W. W. Riefler”

Second letter.

“Dear Professor Riefler, I have to acknowledge the receipt of the letter of today’s date addressed to me jointly by Mr. Foot and yourself, informing me that:

[Here follows repetition of provisions stated in letter above.]

I have pleasure in confirming that the arrangements set out above are acceptable to me, and I agree that your letter and this reply (which I am also addressing to Mr. Foot) should constitute an agreement between our three Governments.

Signed by Hans Sulzer”

Third letter.

“Dear Dr. Sulzer, Referring to our letter of today’s date, concerning the compensation agreement, we herewith confirm our verbal declaration made during the discussions that new approaches, such as those hitherto made by the British and American representatives in Switzerland, to Swiss firms in the metallurgical and watch industries will for the time being be brought to cease.

Signed by D. M. Foot and W. W. Riefler”

[Page 403]

Fourth letter.

“Dear Professor Riefler, I have to thank you for your letter of today’s date, signed by Mr. Foot and yourself, confirming that the British and American representatives in Switzerland will for the time being refrain from new approaches, such as those hitherto made, to Swiss firms in the metallurgical and watch industries.

Should the question of similar approaches to firms in other industries arise, I wish to express the hope that, whenever possible, the Swiss Government will be given an opportunity for the discussion of such cases in the Mixed Commission before action is taken. I feel that it is only fair to warn you that, if such approaches are made to firms in other industries, the German Government may consider that the conditions on which it gives its consent to the compensation agreement are not being fulfilled, and that it may consequently refuse Geleitscheine.

I am writing in similar terms to Mr. Foot.

Signed by Hans Sulzer”

Fifth letter.

“Dear Dr. Sulzer, Mr. Riefler and I have now considered the points which you and Professor Keller raised at our interview on Thursday last.28

As regards textiles, we are afraid that it is not possible for us to make a concession in advance of a general agreement. We were, however, impressed by what you had to say about the need for fodder for Swiss horses, especially those belonging to the army or which might be needed by the army. We are therefore prepared to grant navicerts or export licenses for 8000 tons of oats, on the following conditions:

(1) That during the forthcoming quarter ending 31st March 1943, the Swiss Government will not permit the export from Switzerland of any horses whatsoever (2) that so far as the Swiss Government are able to ensure it, these oats shall be fed exclusively to horses and not to cattle; (3) that this consignment of oats shall be treated as part of the compensation deal.

You will appreciate that we have only had a few hours in which to consider this specific point, and we are not yet in a position to guarantee that oats to this amount will be readily available. But if our conditions are accepted we will use our best endeavors to see that they are shipped.

This concession of 8000 tons of oats is designed to meet the immediate and urgent requirements which you explained to us. If, on your return to London, an agreement can be reached, we on our side shall of course be prepared to consider a higher quota for the period ending 31st March 1943.

The result of this arrangement will be as follows:

With the compensation deal signed your Government will at once be free to place orders for the various commodities therein set out, but substituting oats for an equivalent value of iron and steel, if they so desire. I told you on Thursday that even before you obtain Geleitscheine for any of the goods ordered by us, we shall be prepared, [Page 404] as a gesture to the Swiss Army to release either 50 tons of rubber or 50 tons of toluol for immediate shipment. If, however, your Government prefers oats and they are readily available, Mr. Riefler and I will recommend to our Governments the substitution of oats for rubber or toluol.

The third point you raised was with reference to group 3 of the machinery formula. You asked us whether we could not diminish the number of items in this group and thus indicate the particular articles to which we were attaching the greatest importance. I am afraid we cannot promise more, at the present stage, than to consider this request. If your Government will agree to the principle of reductions item by item, as distinct from a global reduction, it may possibly be worth our while to reduce group 3 still further. But until we know whether they are willing to do so I do not think that very much purpose would be served by further consideration of these details.

Signed by D. M. Foot”

We are sending by air mail the originals of letters Nos. 2 and 4 and the enclosure to No. 1,29 which is the detailed list of the Swiss machinery products desired by us drawn up in accordance with your earlier instructions.

It will be noted that the compensation agreement is identical with our previous instructions and reports. Under the general heading “iron and steel products to make up the balance of $600,000,” the Swiss desired to specify tinplate, dynamo sheets and ordinary steel sheets, subject always to our supply position. After our agreement to this wording in accordance with your instructions to offer “such other products as may be desired by the Swiss and can be spared,” the Swiss suddenly asked whether they could substitute oats up to 8,000 tons for the greater part of the iron and steel schedule. We accepted this proposal in line with the instructions under reference, but decided to handle the problem through a separate letter to Sulzer. The Swiss also indicated they might prefer the oats to be shipped immediately even before the 50 tons of rubber or toluol which we had said could be despatched on signature of the agreement. They indicated the Swiss Army was interested in oats in order to maintain their horses in good shape.

It will be noted that we were able to keep our concession regarding black list pressure on individual firms well within the discretion permitted by your instruction. Ministry of Economic Warfare has instructed its Legation in Bern to see to it that the Swiss military authorities are informed that certain quantities of toluol, or rubber or oats are available for immediate shipment.

Separate message oh status of finance agreement follows. All questions relating to the proposed new war trade agreement and the re-establishment [Page 405] of blockade quotas for industrial raw materials have been postponed until the new year when the Swiss delegation will return from Bern after consultation with their Government on these problems. They state they are now impressed with the seriousness of our demand that real limitations be imposed on the export of arms, ammunition, and machinery to the Axis and will endeavor to obtain the necessary authority from their Government.

Not repeated to Bern.

We assume the Department will inform Bern and issue appropriate instructions30 in conformity with letter No. 3.

Winant
  1. Not printed.
  2. Not printed.
  3. Not printed, but see telegram No. 4138, September 9, 8 p.m., from the Minister in Switzerland, p. 397.
  4. December 10.
  5. Transmitted to the Department by the Ambassador in the United Kingdom in his despatch No. 6834, December 21, not printed.
  6. The Department sent information and instructions to the Minister in Switzerland in telegram No. 2864, December 18, midnight; not printed.