740.00112 European War 1939/10762: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received May 12—12:28 p.m.]
3854. [1.] Reference Embassy’s immediately following telegram 3855 to Department (Bern’s to London),32
[2.] Foot and I33 saw Keller today. We told him definitely and frankly that further progress in the Swiss negotiations depended upon further drastic cuts in Swiss exports to the Axis in the items on Annex I of December 19 agreement. We handed him a proposed revision of the Annex in which fuses, arms, ammunition, ball-bearing and machine tools were given nil quotas for the last half of 1944 while other items were cut drastically from first half of 1944 [apparent omission] stated that if the Swiss accepted the schedule we thought that supplies for which they had asked might be made available in most categories and that we could come to agreement on our other outstanding points. We stated also that our interest in making supplies available depended primarily on securing reductions in these important items.
3. Keller stated categorically and definitely that if this were our attitude there was no basis for an agreement, that the reductions in Annex I of the December agreement were already very large and that the further reductions which he had offered in his March 23 [memorandum?]34 constituted his absolute and final instructions with respect to all items except the item of textile machinery where he had subsequently received authority to make an adjustment. He also stated that he saw no advantage in even referring our proposal to Bern because he [apparent omission] from his experience there in January and the instructions he had subsequently received that Bern would not accept nil quotas on any of the items where we had asked [Page 720] for nil quotas nor did he think that Bern was prepared to go beyond the drastic reductions which were already in effect or offered. Before he left he took our proposal for study but reiterated categorically that concessions further than those already offered on the item covered by Annex I of the December agreement were out of the question. He agreed that he was duty bound to tell Bern about our demands and as he was not now permitted secret contact with Bern he also agreed to the messages going forward through our Missions.
4. We pressed Keller vigorously for any indication of willingness to make concessions on particular items especially ball bearings but here too he was completely adamant simply stressing that his current offer already reduced exports of this item to negligible proportions.
5. Keller also pointed out that there was no utility in discussing the availability of supplies in return for our demands, since Germany would block Swiss access to outside supplies were Switzerland to impose the reductions which we had put forward.
6. We were prepared for strenuous resistance by Keller to our demands, but not for a complete refusal to discuss further the items on Annex I of the December agreement. It is difficult to imagine that the offers put forward by Keller on March 23 represented the maximum to which he was instructed to go, particularly in view of the fact that we know, on the basis of our own undertaking with SRJ, that maximum exports of ball bearings from Switzerland in the last half of 1944 will amount in fact to little more than 350,000 Swiss francs, as compared with the ceiling for ball bearings put forward by the Swiss on March 23 at one million six to six [sixty-six?] thousand Swiss francs for Germany. Keller refrained at this point therefore from advancing a concession which would have gone far toward meeting one of our demands. It may be that Keller is ignorant of the details of our undertaking with SRM but this seems doubtful. Bern’s 689 of April 25, (which is being repeated to you) [apparent omission] also indicated that it would seem possible for the Swiss to consider cuts more drastic than those proposed in the memo of March 23 in the ceilings established in the December agreement for fuses and arms and ammunition, (10 percent of 1942).
7. I have an impression that the new attitude taken by Keller may reflect a policy decision taken by the Swiss Government with reference to our current campaign, vis-à-vis the neutrals. This campaign is now highly publicized and its progress in each country is being watched closely on all sides. The Swiss Government may have decided that at this stage of the war it would prefer to forego supplies, the acquisition of which is made dependent on acquiescence in publicized demands for embargoes. They may reason that, should the war end soon, their present stocks will carry them through until [Page 721] they again have access to outside supplies, while should the war be prolonged, their access to outside supplies will in any case remain dependent on German acquiescence, which will not be forthcoming should they give in to our pressure. The apparent lack of interest in supplies of industrial raw materials also probably reflects the fact that recent discussions in Bern with respect to the continuation of the Compensation Agreement have indicated to the Swiss the possibility of obtaining supplies through that channel.
8. Our proposals now being transmitted to Bern through our Missions. If Bern backs up Keller’s position, we would suggest that we be authorized to continue the December agreement provided it includes the March 23 additional reductions. Our concession would be limited to the suggested minor alterations in articles 7 and 8A. This course would involve continuance of the coal credit and transfer guarantee to the end of the year but without any increase in German indebtedness in the clearing. It might also involve agreeing up [as?] to the special quotas for locomotives, flour milling machinery and thermometers, as stated in our 3433 April 26 and 3700 May 7 ,35 but we would not yield on these points unless necessary. We would insist at the same time on obtaining other objectives such as those relating to exports to Japan and transit through Switzerland. We would grant no raw materials but merely continue the food and fodder quotas established in the December Agreement. This would insure our retention of the advantages established in the December Agreement and would reduce aggregate Swiss exports to Axis of items covered in Annex I of the Agreement by 18,977,000 Swiss francs, less 2,266,000 (special quotas for locomotives, flour milling machinery and thermometers) net 16,711,000 or by approximately 12 percent below the ceilings established for the first half of 1944. It is an agreement the Swiss could accept without fear of German retaliation and would still leave our control of industrial raw materials in reserve to bargain against further reductions if the opportunity subsequently arose. Such opportunities may well arise again when the current publicity has died down.
9. If this course is adopted no commitments under the Compensation Agreement should be made for important commodities such as cotton or wool for which the Swiss have also been bargaining here.
Sent to Department. Repeated to Bern as 115.