The Secretary of State to the United States Political Adviser for Germany ( Murphy )

701. Urtels 335, Aug. 21 and 403, Aug. 30. For your information Depts views on resumption of trade relations between Germany and neutral countries are governed by following considerations.

Neutrals should not receive preference over or indeed share equally with liberated areas in allocation of German exports in short supply.
German exports to neutrals should be paid for in free foreign exchange or in goods constituting essential German imports as defined by JCS 1067,90a and specifically not in Reichsmark balances accumulated by such countries.
Such exports should in no circumstances be handled in neutral countries by German firms or individuals, including particularly those on Proclaimed List.91
No irrevocable commitments should be made for future deliveries of such exports in view of possibility that they may prove useful bargaining weapon in negotiations to recover German assets in neutral countries.

Dept would be willing to modify Para 41c of JCS 1067 only if foregoing limitations were retained. Dept also believes that in view of the policy considerations involved no substantial trade relations with neutrals should be authorized by any zone commander unilaterally but that agreement on any proposed trade arrangements with neutrals should be sought on a quadripartite or at least a tripartite basis, even if such arrangements involve exports from and imports into only a single zone.

You are requested to ascertain present state of plans for trade with neutrals and to report your views as to whether modification of Para 41c in manner outlined above would be desirable at this stage.

Respecting trade with Austria (urtel 487, Sept 10) Dept sees no objection to interim trade arrangements between control authorities of [Page 1536] Germany and those of Austria, or between control authorities of Germany and Italy. Such arrangements if confined to goods considered approved essential imports for countries involved would reduce Allied supply commitments to these countries.

  1. See footnote 82, p. 1527.
  2. The original proclamation of “The Proclaimed List of Certain Blocked Nationals” was made by President Franklin D. Roosevelt on July 17, 1941; for text, see Department of State Bulletin, July 19, 1941, p. 41. The Proclaimed List was designed to control rigidly the export of specified articles to those persons named on the list, in the interest of maintaining the security of the United States. The list was to be published in the Federal Register with additions and deletions, as circumstances required. For documentation, see Foreign Relations, 1941, vol. vi, pp. 268 ff. Further documentation on application of the Proclaimed List in the Western Hemisphere is contained in bilateral compilations concerned with Axis influence in certain of the American Republics. For documentation on Anglo-American cooperation on policies and problems concerning the Proclaimed and Statutory Lists in the Eastern Hemisphere, see Foreign Relations, 1944, vol. ii, pp. 154 ff., and ibid., 1945, vol. ii, pp. 827 ff.