740.00112 European War 1939/11133
The Swiss Minister (Bruggmann) to the Chief of the Eastern Hemisphere Division (Merchant)
My Dear Mr. Merchant: With regard to the compensation trade between the United States/Great Britain and Switzerland, I am informed by my Government that proposals have been recently submitted to the Commission Mixte in Berne, according to which Switzerland would be agreeable to import on a compensation basis raw cotton and raw wool instead of critical materials, such as rubber, toluol, copper etc. against exports from Switzerland to this country and Great Britain.
The reason for this proposal is that my Government is anxious that the United States and Great Britain be placed into a more favourable position, enabling them to take advantage of the established quotas for which “Geleitscheine”36 have been secured. At the same time such orders, as placed by the United States and Great Britain, would alleviate unfavourable employment conditions which are the direct result of Switzerland’s very substantial reductions of exports to Germany.
I understand that at present the open balance of unused import facilities from Switzerland amounts to approximately 28 million Swiss francs which figure takes into consideration all orders placed in Switzerland up to the present moment.
My Government suggested to the Commission Mixte that goods be imported from Switzerland immediately for about 10 million Swiss francs against which amount Switzerland would be enabled to import for 9 million Swiss francs raw cotton and 1 million Swiss francs raw wool.
In connection with this proposal I would like to draw your attention to the fact that these shipments could be made from Swiss-owned stocks overseas, wherefore the Allied reserves would not have to be drawn on in any way. Furthermore, my Government is prepared to give every assurance that any article manufactured from the imported raw cotton or raw wool be destined for home consumption only.
Regarding the question of imports from Switzerland, I wish to point out at this opportunity that there is available an unused balance of over 10 million Swiss francs for machine tools (items M6), wherefore shipments of this category alone could suffice to exhaust the proposed compensation arrangement.
[Page 723]With reference to the open balance of Swiss francs 759’785 in favour of Switzerland, which figure I communicated to the F.E.A. with my letter of April 19,37 my Government proposed to the Commission Mixte that a third sector of the Compensation Agreement be established, whereby for this amount Switzerland is desirous to import as before such raw materials as are exclusively destined for the Army. Details regarding the desired items are at present being worked out by the Swiss Army authorities and will be submitted in the very near future.
Since the proposals outlined to you above are undoubtedly of great beneficial interest to all parties concerned, I sincerely hope that an arrangement may be worked out in the very nearest future along the lines set out by my Government.
I would appreciate it if you would inform me of your reaction to these proposals, and should you wish to discuss the matter with me, I hope that you will not hesitate to advise me to that effect.
Yours sincerely,