740.00112 European War 1939/10902: Telegram
The Minister in Sweden (Johnson) to the Secretary of State
[Received 9:44 p.m.]
1909. Following from Griffis and Poteat for Department and FEA. After 3 weeks’ negotiation here with which you are familiar, we were handed this week letter from SKF in which they purport to describe their position and the position which we have taken. Paraphrase of this letter given in Legation’s telegram 1910, May 28, 6 p.m.63 (482, May 28, 6 p.m. to London).
This letter was accompanied by a proposed contract and a proposition whereby SKF would cease shipments of all so-called aircraft ball bearings to Germany and occupied satellite countries. Note that Waring has cabled description such bearings to London repeating to Washington. Proposition included right of substitution of other bearings to equal kronor value for such aircraft bearings during balance of 1944 trade agreement. We have now retraded [sic] this proposition so that following agreement offered by SKF which, though it had not received formal approval by Government of Sweden, we have representation from company that such approval may be considered a certainty if United States and British Governments approve. Please note that no bearings of any kind have been shipped to enemy countries since May 12 and letter contains extension of such agreement to June 5. However, on account rumors in Göteborg where factory is located regarding piling up of stocks with no shipments being made in more than 2 weeks implying some sort of secret embargo, we shall probably have to consent to small shipments next week approved by Waring in order to complete agreement and prevent violent enemy repercussions. Suggested agreement follows:
- 1.
- Bearings: The balance of the quota for 1944 as of May 12, 1944, for shipment to Germany 15,685,000 kronor; to other Axis-controlled countries 3,582,000; total 19,267,000 kronor. The deduction of aircraft [Page 555] bearings as per SKF catalogue 1940 (for detail see Waring’s cable) against outstanding orders as of May 12, 1944, will amount to 5,061,000 kronor to Germany, and 1,500,000 to German-controlled countries for a total of 6,561,000. This leaves a balance in kronor of 10,624,000 to Germany, 2,082,000 to German-controlled countries or a total of 12,706,000. A division of these totals by the 7 remaining months of 1944 gives a monthly quota total of 1,518,000; 298,000 to German-controlled countries or a total of 1,816,000. The shipments to Germany for the months June, July and August under new agreement will be cut 50% or 760,000. The shipments to German-controlled territories are to be left undisturbed, Waring having examined the orders and having concluded that they are not of sufficient importance to warrant a controversy. The shipments will therefore amount to 298,000 making a total of 1,058,000. It is understood that the ration [ratio?] between roller bearings and ball bearings will be maintained, that is, the deductions must follow rate only on each of these two categories in accordance with the previous understanding under the trade agreement.
- 2.
- Machinery for bearings: The quota in this category for 1944 is 1,960,000. Deliveries between January 1, 1944, and May 12, 1944, amount to 95,000 kronor leaving an undelivered balance of 1,865,000 kronor (no orders are shown for German-controlled territory and none have been accepted). A division of the balance of 1,865,000 by the remaining 7 months of 1944 gives an average of 266,000 per month. Under the present proposal 50% of this monthly total may be delivered from June 1 through August 31 or a monthly total of 133,000.
- 3.
- After September 1, 1944, the remaining part of the total quotas of 1 and 2 above can be delivered plus that part of the quota represented by the deducted aircraft bearings but in substitution thereof, but only in equal monthly installments.
- 4.
- Other important deliveries of small lots of standard bearings listed in the aircraft catalogue may be made on a showing of exceptional circumstances if the approval of such shipments is previously given by Waring as arbitrator.
Note that in substance the proposed agreement will mean a reduction to approximately one-third of the quotas for the period in question, May 12 to September 1.
Both Waring and ourselves are entirely aware of the opinion in EWD London that the small type aircraft bearings may be of less importance to Germany now than the large type. However, reference to the aircraft catalogue list will indicate that a considerable number of types considered important are also included. It is our opinion that in terms of the complete embargo formula, we could not force final deal to include more than aircraft catalogue list. We anticipate the Swedish Government may formalize the SKF agreement by declaring a Government embargo on these types and accordingly we felt that the retrade proposal offers an imperative face-saver for the Swedish Government.
[Page 556]Substance of proposed contract is stated above but company has endeavored to stipulate that Allied Governments shall not now or in future undertake reprisals in any form whatever towards SKF or affiliated companies. We have stated plainly that we expect Governments, as military situation develops, to reserve all rights of suggestion, negotiation, threats, reprisals or otherwise. Our liability in this contract consists solely of agreement (see your 919, May 15, 8 p.m. repeated to London as Department’s 3877) to take up and pay for any goods ordered by Germany or affiliates which by reason of embargo delay or otherwise attributable to this agreement fail of acceptance and payment by enemy. Under political, military and other conditions existing here we recommend the acceptance of this agreement unless our Government is willing to take immediate strong and direct action against both company and Swedish Government to enforce complete embargo. We would appreciate instructions to close this deal waiving no existing rights of later negotiation or action to improve deal if in the judgement of United States Government the changing military situation or other considerations or events makes such action desirable. We have offered to discuss purchasing possible 1945 SKF sales to enemy as outlined by you in your telegram 919, May 15, 8 p.m. repeated to London as Department’s 3877, but have stated that this arrangement is not subject to negotiation except on basis of complete embargo of bearings and machinery of all types for 1945. This negotiation they are either unwilling, or are under orders of Government not at this time to discuss. Cannot emphasize too strongly necessity for complete secrecy in Washington, London, Sweden if deal approved, and company stipulates that if deal made, any public statements must be submitted to respective Governments before being published. Company asked termination [determination?] from Department if commitment of our Government in note of April 1364 for use of best efforts of return of company’s German properties in case of German reprisals holds if the proposed agreement is made. Asks also if affidavits of SKF officers as to ownership and voting power of SKF Sweden mailed by pouch to Department about 2 weeks ago have reached Washington. Please note that our secret agreement as to all exports may expire June 5. Please, therefore, expedite our further instructions in this matter. [Griffis and Poteat.]
My 481, May 28, 4 p.m., repeats this to London.