740.00112 European War 1939/10737: Telegram
The Minister in Sweden (Johnson) to the Secretary of State
[Received 3:34 p.m.]
1634. For Crowley, Currie,44 Scheuer45 and Stone from Griffis. Mr. Douglas Poteat and I called on Mr. Marcus Wallenberg at his apartment yesterday, Monday afternoon, May 8 at 5:30 and after usual amenities immediately started a discussion of question of export of ball bearings and ball-bearing machinery to Germany. Mr. Wallenberg explained at length Swedish position in matter and enlarged upon what he claims to be additional difficulties created through publicity which have developed as result of exchange of aide-mémoires between the two Governments and subsequent publicity connected with dispatch to Stockholm of representatives of Foreign Economic Administration. We recalled to him that he himself had urged the usefulness of substantial pressure and publicity from America and referred to fact that this was all water over the dam, that we were here merely as two businessmen attempting to work out a commercial arrangement with businessmen which he represented. I stated that I had been correctly informed both in United States by his old friends and by both our American and British associates in Stockholm that he was entirely friendly and that we could frankly put our case in his hands. Accordingly we stated in words of one syllable that our instructions were definite to attempt to conclude the negotiations during the current week, failing in which we should leave Sweden. We stated that we desired a complete embargo of every type of ball bearing and ball-bearing machinery to be immediately placed in effect and to last for duration of the war. As a quid pro quo we were prepared to assume [Page 532] all unfilled German orders taken in accordance with the trade agreement for the year 1944 and, assuming that the arrangements for 1945 would under no conditions have been higher, we were prepared to place orders for 1945 delivery for approximately the 1944 German ceiling, or something under 30 million kronor, making a total flat figure of approximately 50 million kronor. We stated that we were prepared to hold SKF harmless against any suits or actions for damages which might arise as result of any alleged breach of the German contract.
Mr. Wallenberg stated that he feared that this was impossible and that the company would under no circumstances agree but that it was conceivable that some form of compromise might be worked if small shipments of bearings might continue to Germany.
We pointed out that this solved nothing; that any breach of the German contract would involve the enmity of Germany and that the German objections to such a course could be little increased if shipments were discontinued entirely; in other words, that nothing would be gained and the irritation in the United States would remain even as the German enmity continued.
Mr. Wallenberg spoke at great length upon an alleged agreement of the Swedish Government which assured the Government enforcement of the Swedish contract, and stated that as an inherent part of the war trade agreement with Germany, there was a clause which committed the Swedish Government not only to grant export licenses but see to it that the orders were fulfilled. He stated that the commercial negotiations in the matter were inextricable from the relations of the Swedish Government with Germany.
An opening from one of Mr. Wallenberg’s remarks made it possible to state that they had no doubt considered an embargo on ball bearings and ball-bearing machinery to all belligerents for the duration of the war under the theory that this industry had become the source of irritation in their relations to all belligerents, Allied and Axis alike, and that it seemed intelligent to develop the theory that the way out on the matter was a complete embargo to all belligerent nations after making a commercial contract which would ensure the continued employment of their men and a stockpiling of Anglo-American purchases here in Sweden for the duration of the war. Despite the fact that Mr. Wallenberg continually came back to the impossibility of a complete embargo against Germany, the discussion was held definitely and to the end to the theory of an embargo against all belligerents, to which the British Ministry of Economic Warfare has, of course, consented. At the very end of the conference Mr. Wallenberg seemed convinced, and so stated, that this method was probably the [Page 533] way out and gave a definite implication that the Swedes might find other much needed exports for Germany to satisfy it on this point.
Throughout the conference Mr. Wallenberg stated that both he and many members of the Swedish Government were convinced that the ballbearing question had been magnified out of all logical proportions and that they were convinced that the real motive of both the aide-mémoire and the present negotiations might be a sinister one with an entirely different basic purpose such as further involving the Swedes in bad relations with Germany or that the United States itself was attempting to create through many self-serving declarations a case against Sweden.
We stated categorically and with deep integrity that this was not the case; that the United States planned nothing in the present negotiations which did not appear on the surface; that the United States was deeply sympathetic with the position in which Sweden found herself, and that we believed that once the question of exports of war materials to Axis nations was settled, it seemed entirely improbable that any other matters would develop to threaten Swedish-American friendship. For tactical reasons we agreed momentarily that the ball-bearing situation had been exaggerated and was becoming a forest fire of public opinion in the United States and Great Britain. Accordingly it was obvious that it could not be of such importance to the Germans that it could not be easily solved.
Mr. Wallenberg himself brought up the question of the veiled threats of blacklisting. We stated that this was exactly what we feared as our only basis for blacklisting was trading with the enemy and as trading with the enemy was practiced by practically every important corporation and individual in Sweden, we felt that a black list having once been established against SKF it could not fail to spread to include substantially all Sweden with unbelievably disastrous consequences to the trade relations of Sweden and the Allies for many years to come. We endeavored to point out that since the matter in their minds was not of supreme importance to Germany, it might be settled by some other form of tribute; a complete embargo would be accepted by the people of the United States and Great Britain as an astounding gesture of good will towards us with immeasurable future advantage to Sweden during the war and post war trade.
Mr. Wallenberg continually referred to the sanctity of contracts and the unwillingness of either the Company or the Swedish Government to be charged with violation of the German contract. We endeavored to point out that far above the morality of contracts was the duty and responsibility of the Company and the Government towards the Swedish nation and that any move which was a defined advance [Page 534] towards the safety and integrity of Sweden was in a category higher than the sanctity of a commercial contract.
Mr. Wallenberg, after a conference with Mr. Hamberg on the telephone, stated that it was impossible for Mr. Hamberg to come to Stockholm until Wednesday46 due to the fact that he was preparing his annual report to stockholders. We emphasized the fact that our stay was short and that time was of the essence. Mr. Wallenberg agreed to attempt to persuade Mr. Hamberg to come and we have just received word that Mr. Hamberg is now in Stockholm and we shall see him this afternoon. [Griffis.]