740.00112 European War 1939/10430: Telegram

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

2527. Reference your 2489, March 27. The following are the views of the Department, Treasury and FEA.

1.
The approach to the problem of controlling objectionable activities of Swiss banks proposed in your telegram under reference and previous communications is approved subject to the following.
2.
You are requested to forward to the Department as soon as it is available the list which results from your discussions with MEW. It is our view that the list should contain a hard core of transactions from which under no circumstances would we recede in the negotiations with Nussbaumer. It should be understood that the complete list, clearly indicating the points from which no recession will be made, is subject to approval in Washington prior to the commencement of the negotiations. The American delegates will then be given full authority to negotiate with Nussbaumer subject to the understanding that the final result of the negotiation shall be transmitted to Washington prior to final agreement. It should be clearly understood that Washington may suggest any amendments and may insist, if such amendments are [Page 715] not agreed to by the Swiss, that no statement be made; in which event the British and United States Governments will, of course, feel free to list without further warning any Swiss institution which engages in objectionable transactions.
3.
The delegates should exercise care in their discussions with Nussbaumer not to permit any ground for misunderstanding on his part that any of the types of transactions which may be the subject of concessions which they may make will be regarded as approved transactions by the American and British Governments. It should be made clear to Nussbaumer that omission of certain types of transactions from the list does not constitute a commitment on our part not to regard such transactions as undesirable at a later date or under certain circumstances or to take appropriate action with respect thereto. The list itself when finally presented to the banks should contain a statement to that effect.
4.
In connection with numbered paragraph 1 of the telegram under reference, it should be made clear that we will regard certain financial transactions as undesirable even though they are connected with permitted trade under the War Trade Agreement and that there will be other transactions that we will regard as permissible if connected with permitted trade under the Agreement but will be cause for listing if not so connected. Certain transactions will, of course, be unsatisfactory because they relate to violations of the Agreement.
5.
In order to make the approach effective, any breach of the terms should result in immediate listing regardless of the institutions concerned. You are requested to ascertain whether MEW agrees with this suggested strict enforcement of the terms.
6.
We concur generally with the first sentence of the last paragraph of your reference telegram. It is suggested that an indication to that effect be inserted in the statement to Swiss banks. It is assumed, however, that in any specific case where deletion would be of definite advantage to us, appropriate arrangements could be made to accomplish such deletion. In this connection it is suggested that you collaborate with MEW in drafting a form of undertaking which could be used in cases where the bank had evidenced a tendency to evade the spirit of the statement without specific breaches of its terms and also in cases where the bank was listed for a breach of the statement but where it was believed after a period that the bank should be deleted subject to an undertaking backed by a bond exacted by the British. The drafting of such an undertaking should not, however, be allowed to delay the negotiations.
7.
In view of numbered paragraph 7 of your reference telegram and of paragraph 2 of this instruction, Treasury and FEA are not commenting of [on] your 2308 of March 21.23
8.
Plakias and Peterson are authorized to attend the conference with Nussbaumer at Lisbon. Travel authorization follows. Please inform Department when Bliss,24 Peterson, and Plakias plan to leave for Lisbon and approximately how long you expect they will remain there.
Hull
  1. Not printed.
  2. Don C. Bliss, Commercial Attaché in the United Kingdom.