740.00112A European War 1939/278136/11

The Assistant Secretary of State (Acheson) to Mr. Winfield W. Riefler, Special Assistant to the Ambassador in the United Kingdom (Winant)

My Dear Winfield: Several of us in the Department have carefully considered the problem raised by your letter of February 24 with reference to increasing the deterrent effect of the threat of listing by creating an uncertainty as to the post-war sanctioning of the List.

Let me say at the outset that we recognize that the war trade lists in Europe differ radically, both in basis and function, from the lists in Latin America. We recognize also that any action which would contribute to the uncertainty of firms which trade with the enemy regarding their post-war trade position would increase the effectiveness of our economic warfare program in Europe. The question in our minds has, of course, been whether the advantages which would result from an announcement of the character suggested by the British would, in fact, be sufficient to justify the risk, both to our economic warfare program in Latin America and to our objectives in other fields.

Your letter is addressed primarily to canvassing the advantages which would flow from an announcement. Before taking up this subject, I should like in a very general way to set forth our present ideas on the consequences which we should like to avoid.

  • First, we do not feel that the time has come to make a definite decision as to whether the war trade lists, in whole or in part, should be retained for any given period following the cessation of hostilities. In saying this, I am not rejecting the possibility that the lists may in fact be used for purposes akin to those you discuss on pages 5 and 6 of your letter,29 although we tend to doubt whether the lists in Europe are so constructed as to make such use feasible. Being unready to make such a decision at the present time, we are reluctant to issue any statement in the form of a commitment which might prejudice our freedom to choose what the future may determine to be the most desirable course of action.
  • Second, we do not want to set in motion a chain of events through which we could be maneuvered prematurely into a public commitment regarding the post-war use of the war trade lists.
  • Third, we do not want to take any steps which Axis propagandists could use to damage us out of proportion to the gains that might accrue to us from those steps.
  • Fourth, we do not want to take any steps which might increase resistance to the list in the other American Republics and thereby prejudice our political and economic warfare programs in the other American Republics.

One of the principal difficulties we have with the suggestion that a public statement be issued is the effect that any such statement would probably have in Latin America. You will realize as well as I that with respect to the Proclaimed List, our relations with the other American Republics are wholly different from our relations with the neutral European countries. Ever since its inception the other American Republics have been strenuously opposed to the list. Their opposition has been based on considerations not applicable to the European neutrals. It was urged at first that the maintenance of the list was inconsistent with our Good Neighbor policy. Later, after most of the other American Republics had broken off diplomatic relations with the Axis and many of them had declared war, their opposition was predicated on the theory that the maintenance of the list was an affront to the sovereignty of countries which were our allies. We have been able to counteract this opposition in part by justifying the list as an emergency measure designed to prevent United States goods from falling into the hands of inimical persons in the other American Republics during the war. Having in mind the opposition of the list on the part of the other American Republics, I am sure that you will understand that any suggestion that the list or certain portions thereof be maintained after the war would greatly strengthen that opposition and might interfere with important objectives.

Our views on these points naturally set the limits to any action which we are prepared to take. As indicated in the last paragraph of our A–138 of October 16 [10], 1942,30 we are prepared to have our missions approach individual firms directly with a view to impressing upon them the possibility that the lists may be extended into the postwar period. Suggestions as to the details of that approach are set forth in an airgram which we are despatching. Our missions would seem to be in a position to single out firms which would probably be influenced by a fear of the post-war effects of listing, and to instill in such firms the proper doubts as to the future. This procedure has the merit of selectivity, and of avoiding the problems involved in a general [Page 334] public statement. We are also prepared to consider supplementing this direct approach to individual firms by a planted newspaper article of the general type which you suggest.

We doubt that the foregoing measures would inevitably produce a situation which would require a clarifying statement of the question either in the House of Commons or here. However, if this situation should develop, the matter could be handled by a pronouncement along the general lines suggested at the bottom of page 4 of your letter. We do not feel that such a statement need put us in a defensive position, although paragraph 5 of the Embassy’s telegram 6128 of November 231 indicates some British apprehension on this score.

It would be necessary to work out very carefully in advance the tenor of any statement which circumstances might require. It should, as you say, disclaim any intention to project the lists into the peace as part and parcel of the post-war régime. It should indicate that we are studying an orderly method for eliminating the lists at the end of the war. It should point out that adjustments upon the cessation of hostilities inevitably take time to effect. It should be stated that the problem is believed to be capable of rapid solution in regions far removed from the scene of conflict. It might also imply that the most serious problem would probably obtain where firms have been actively engaged in equipping or servicing the military machine of the enemy, a machine which we are determined to demobilize, or where firms have made special contributions to the economy of our enemies. We do not believe, however, that a public statement following generally the lines suggested by the British and committing us to project the lists into the post-war period would be desirable. Although we recognize that such a statement would be good background for case-by-case negotiations, we doubt that it would add sufficient force to such negotiations to justify the risk of the concomitant disadvantages which we have set forth in our previous communications. In this connection, we have been acutely conscious of a basic dilemma: The weaker the statement we issue, the less its deterrent effect; the stronger the statement, the greater the danger that it would drag us into the difficulties we have discussed in our previous airgram and telegram. In considering the possible advantages which might be expected to flow from a statement, we have found it difficult to see how a statement sufficiently guarded to avoid the propaganda and Latin American problems would have any significant deterrent effect.

A consideration of various approaches by which we could indicate the possible extension of the lists in the post-war period, and thereby reduce the amount of the neutral economic potential available to the enemy, focuses on our present listing policy in Europe. As I understand [Page 335] it, our lists in Europe omit many firms, some of them extremely important, which are eligible for listing because they are important suppliers of the enemy or because of other enemy connections. Some of these firms are not listed because we have had some hope of persuading them to reduce the extent of their dealings with the enemy. These are the firms at which your proposal would be directed. In addition, it is my impression that there are many other firms which are not listed, in spite of their eligibility, either because our missions wish to avoid difficulties with the neutral governments, or because the number of those firms is so great that their inclusion would debase the significance of listing. We concur in this selective process and agree that reliance on negotiations with, and pressure on, particular firms is preferable to wholesale listing. However, it seems to us that the absence from our list during the war of firms which are notorious for their enemy connections will inevitably tend to reduce the effectiveness of any general or specific threat to punish some listed firms after the war. The expansion of sanctions flowing from listing will, of course, not persuade firms who have no fear of being listed. For these threats to be effective, it would appear to be necessary to follow them up by a vigorous albeit selective listing policy. In particular, this should involve an attempt to secure undertakings from firms whose dealings with the Axis we desire to affect, followed by listing where undertakings or performance is not forthcoming. In this connection, we understand it to be the view of our missions in Madrid, Lisbon and Stockholm that we should not engage in more extensive listing. Madrid in particular has expressed the view that we should concentrate on confidential lists and refrain from further significant additions to the published list.

Finally, in approving the case-by-case approach, we have assumed that the operations of the firms whose policies we might expect to affect are sufficiently significant to justify taking whatever risks these techniques might involve. In connection with our future consideration of any supplementary measures designed to create an atmosphere of uncertainty as to the post-war status of the list, we feel that it would be essential in order intelligently to balance the advantages and disadvantages to have some estimate of (1) the number of enterprises that would be affected, and (2) the nature and extent of their dealings with the enemy which we could hope to curtail. We recognize the difficulty inherent in making any estimate of this kind. However, it is clear that if the group is in fact small, it would be unwise to run the risk involved in issuing a general statement in order to secure a comparatively unimportant additional deterrent. We would welcome information on these specific firms, and your further views and those of the M.E.W. people.

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The foregoing, as I indicated at the outset of this letter, represents the views of those of us in the Department who have considered the problem. In order to take the steps which we now consider feasible, we prepared an airgram to you asking you to take the matter up with the British along the lines of the ideas expressed in this letter. While we were in the process of taking the matter up with other interested agencies here, through one of those unfortunate slips which occur from time to time, our airgram became detached from the rest of the file and went out to you as our A–775 of June 3. As you will have seen from the telegram which I sent you today, our discussions with the other agencies have disclosed a feeling on the part of Treasury and BEW32 that a public statement should be issued. In our discussions with these two agencies, they have raised much the same considerations in favor of a statement as have been brought out in our previous correspondence and discussions with you and which have already entered into the judgments expressed in this letter. We are looking forward to receiving a rather full report from you on the problem and on the views of the British which will enable us to reach some final conclusion.

Sincerely yours,

Dean Acheson
  1. See last two paragraphs of letter of February 24.
  2. Foreign Relations, 1942, vol. v, p. 295.
  3. Foreign Relations, 1942, vol. v, p. 297.
  4. Board of Economic Warfare.