Foreign Relations of the United States, 1946, The British Commonwealth, Western and Central Europe, Volume V
Mr. Randolph Paul, Special Assistant to President Truman, to the President
Dear Mr. President: I have the honor to submit to you a report on the negotiations between the Delegations of the United States, the United Kingdom, and France, on the one hand, and the Swiss Delegation on the other, on the subject of German external assets in Switzerland. These discussions in which I participated with my colleagues, Mr. F. W. McCombe, representing the United Kingdom, and Mr. Paul Charqueraud, representing France, covered the period between March 18 and May 26, 1946.
In the accord signed in Washington and dated May 25, 1946,2 the Allied objective of eliminating German assets in Switzerland which might be used in waging a future war has been achieved. To this end procedures have been agreed upon for the liquidation of German property by a Swiss agency which will work in close cooperation with a Joint Commission on which the Governments of the United States, the United Kingdom, France, and Switzerland will be represented. The settlement not only provides that information will be exchanged between the Swiss agency and the Joint Commission, but also that the Joint Commission will be able to pass on the qualifications of purchasers of German property.
The proceeds of the liquidation of German property in Switzerland are to be divided equally between Switzerland and the Allies. The exact amount of the German property will be finally determined by the authorities set up to handle this problem. The United States will receive 28 percent of the proceeds allocated to the Allies under [Page 203]this settlement, in accordance with the Paris Reparation Agreement,3
The Swiss Government will pay 250 million Swiss francs in gold in settlement of the claims of the Allied Nations signatory to the Paris Reparation Agreement and their banks of issue for restitution from Switzerland of monetary gold. The gold will go into the gold pool established by the Paris Reparation Agreement.
I hope that the agreement which has been reached will be quickly and fully implemented on both sides. For our part, a heavy responsibility will fall upon the American Legation in Bern. I am sure that you will agree that adequate personnel should be recruited for this important work.
In closing, I should like to mention the able assistance which has been given to me by officers of the State and Treasury Departments in the negotiation of this accord. Without the efficient aid of the State Department’s Division of Economic Security Controls and the Treasury’s Foreign Funds Control, these discussions could not have been satisfactorily concluded.
Report by Mr. Randolph Paul Concerning Allied-Swiss Negotiations on German External Assets in Switzerland4
Background of Negotiations
The problem of German external assets, including assets in the neutral countries, has been of long concern to the Allied Governments. In August 1944, the 44 United Nations represented at the Bretton Woods Conference adopted Resolution VI, calling upon the neutral governments to take all necessary steps within their respective jurisdictions to: (1) immobilize looted assets; (2) uncover and control enemy property; and (3) hold German assets for the disposition of the post-hostilities authorities in Germany. (See Appendix A for text of Bretton Woods Resolution VI.5) Subsequently, in February 1945, prior to the cessation of hostilities, the Governments of the [Page 204]United States, United Kingdom, and France sent a special mission (commonly referred to as the Currie Mission) to Switzerland to secure Swiss cooperation in immobilizing enemy property within its jurisdiction. (See Appendix B for text of agreement between Currie Mission and adopted legislation to provide for the return to its rightful owners took specific measures to block German assets within its jurisdiction and adopted legislation to provide for the return to its rightful owners of looted property found within its jurisdiction. (See Appendix C for text of decrees of Swiss Federal Council relating to Safehaven problems, etc.)
The importance with which the Allied Governments viewed German external assets, especially in the neutral countries, was emphasized in the Potsdam Declaration of August 2, 1945, issued by the governments of the United States, United Kingdom, and Union of Soviet Socialist Republics. Articles 3 and 4 of this Declaration provided that the Allied Control Council for Germany should exercise control over and have the power to dispose of German external assets not already under the control of the United Nations. In addition to allocating the disposition of German external assets, the Potsdam Declaration provided that the United States, United Kingdom, and other appropriate members of the United Nations, exclusive of the Union of Soviet Socialist Republics, would derive reparation payments from German external assets in neutral countries. (See Appendix D for text of Potsdam Declaration.7)
On October 30, 1945, pursuant to the Potsdam Declaration, the Allied Control Council for Germany issued Law No. 5. One of the primary objectives of this vesting decree was to promote “international peace and collective security by the elimination of the German war potential.” (See Appendix E for text of Law No. 5.8)
In February 1946, the Swiss Government was invited to send a delegation to the United States to discuss with representatives of the governments of the United States, United Kingdom, and France, questions arising out of Law No. 5 as it related to German external assets in Switzerland and the Principality of Liechtenstein. The representatives of the United States, United Kingdom, and France were also acting on behalf of the governments of Albania, Australia, Belgium, Canada, Denmark, Egypt, Greece, India, Luxembourg, Norway, New Zealand, the Netherlands, Czechoslovakia, Union of South [Page 205]Africa, and Yugoslavia. (See Appendix F for text of note to Swiss Government.)
The Swiss Foreign Office was advised informally that the discussions in Washington would deal with: (1) the marshalling and liquidation of German assets in Switzerland and the utilization of the proceeds from the liquidation for reparation purposes; (2) procedures for the return to rightful owners of looted property, including gold looted by the Germans which might have found its way into Switzerland. In addition, the Allied Governments indicated that after these basic objectives had been attained they would take up with the Swiss Delegation questions relating to the Proclaimed and Statutory Lists,9 the status of Swiss assets blocked in the United States and other Allied Nations, and Swiss claims against Germany.
Personnel of Allied and Swiss Delegations
United States. In February 1946, Mr. Randolph Paul was designated Special Assistant to the President in charge of the Allied-Swiss negotiations for the United States Government. For two years during the war Mr. Paul was General Counsel of the Treasury Department and Acting [Assistant] Secretary of the Treasury in charge of Foreign Funds Control. Mr. Paul was chiefly assisted in the negotiations by representatives of the State Department including Mr. Seymour J. Rubin, Deputy Director of the Office of Economic Security Policy; Mr. Walter S. Surrey, Chief of the Division of Economic Security Controls; Mr. Daniel J. Reagan, Counselor for Economic Affairs, American Legation, Bern; Messrs. Harry Conover, Morton Bach, and Karl Hapke, Economic Analysts, American Legation, Bern; Mr. Albert H. Robbins, American Embassy, London; and by representatives of the Treasury Department including Mr. Orvis A. Schmidt, Director of Foreign Funds Control; Mr. Joseph B. Friedman, Assistant General Counsel; Mr. James H. Mann, Treasury Representative, American Legation, Bern; Mr. Melville E. Locker, staff member of the General Counsel’s Office of the Treasury; and Mrs. [Page 206]Rella R. Shwartz, Chief of Enforcement Division, Foreign Funds Control. Mr. Irving H. Sherman and Mrs. Virginia M. Mannon served as consultants. The Departments of State, Treasury, and Justice made additional technical assistance available to Mr. Paul.
United Kingdom. Mr. F. W. McCombe, Chief of Charitable Institutions, was head of the delegation from the United Kingdom. Mr. McCombe, who had been in the British Embassy in Washington during the greater part of the war, working on economic warfare problems, was assisted by Mr. Albert Frost of the British Embassy in Washington.
France. Mr. Paul Charqueraud was head of the delegation from France. He was Director of the Blocus Division of the Foreign Office and served as French representative on the Currie Mission. Mr. Charqueraud was assisted by M. Emile Guionin of Blocus, and Messrs. Marcel Vaidie and Bernard Peyrot des Gachons of the French Embassy in Bern.
Switzerland. Mr. Walter Stucki, Chief of the Division of Foreign Affairs, Federal Political Department, was head of the Swiss Delegation. Mr. Stucki was assisted by M. Eberhard Ernst Bernhardt, Chief of Federal Administration of Finance; M. Alfred Hirs, Director General, Member of Directorate, of Swiss National Bank; M. Max Schwab, Director, Chairman of Board, Swiss Office of Compensation; Professor Dietrich Schindler, Legal Consultant, Federal Political Department; M. Reinhardt Hohl, Chief of Claims and Foreign Interests Section, Federal Political Department; and a group of technical experts. Professor William Rappard was adviser to the Delegation.
Developments During Negotiations—March 18–April 17, 1946
Allied Opening Statements. The Allied-Swiss negotiations were conducted in Washington. The first plenary session was held on March 18, 1946. In his opening statement Mr. Paul advised the Swiss that:
- The dual objectives of the negotiations were to eliminate the German war potential in Switzerland, and to make all German assets in Switzerland available for reparations.
- The Allies in no way questioned the principle of neutrality and were fully cognizant of Switzerland’s difficult position during the war.
- The Allies sought complete cooperation of the Swiss in making German property and German assets available for reparation and reconstruction in such a manner as to eliminate the use of German assets in Switzerland for future war or aggression. In no way was neutral property nor assets of Switzerland or her nationals encompassed within the Allied objectives.
The opening statements of Messrs. McCombe and Charqueraud underscored Mr. Paul’s remarks. In addition, Mr. Charqueraud referred to the problem of looted property, including gold. (See Appendix G for texts of Allied opening statements.)
Swiss Opening Statement. In his opening remarks Mr. Stucki stated that:
- Switzerland’s war record during the war years was above reproach.
- Switzerland had long opposed Naziism.
- The Swiss opposed application of Law No. 5 to Switzerland as an act in contravention of Swiss sovereignty. If the Hitler Government had made such a request of Switzerland before the outbreak of the war, or during the war, the Swiss Government would not have honored it. The legal status of the Allied Control Council in Germany was no different than the legal status of the Hitler Government of Germany.
- Under the Swiss constitution the Swiss had no right to expropriate any assets in Switzerland nor to hand them over to a third party. Looted property, however, could be returned to lawful owners.
- If it were possible to find a solution that would take into account national and international law, as viewed by the Swiss Government, the Swiss “would be most happy and very ready to cooperate with all good will toward this realization.” (See Appendix H for text of Mr. Stucki’s opening statement.)
Allied Answer to Swiss Legal Arguments. During the first week of negotiations the Swiss dealt almost exclusively with their view of the legal obstacles to the application of Law No. 5 to Switzerland. On March 19, the Allied Delegations set forth their views on this legal question in a memorandum to the Swiss as follows:
- The Allied Control Council for Germany constituted the present de facto government of Germany.
- The only legal act necessary on behalf of the Swiss Government was recognition of the binding effect of Law No. 5 in Switzerland under accepted principles of comity and international law.
- The Swiss fear that bona fide refugees from Germany would be covered by the terms of Law No. 5 was unjustified. Article 3 of Law No. 5 made the law applicable only to assets owned by German nationals who enjoyed full rights of German citizenship under Reich law at any time since September 1, 1939, and who at any time since that date had been in the territory then under control of the Reich Government. Accordingly bona fide refugees in Switzerland who were deprived of their citizenship by the Nuremburg laws, or political refugees whom the German Government might have deprived of their citizenship, were specifically excluded from the effects of Law No. 5.
- Law No. 5 did not request the Swiss Government to give extraterritorial effect to a confiscatory law. It provided that the question of compensation to Germans whose property was covered by the decree [Page 208]was a matter to be settled by the Allied Control Council. In this connection, it was the intention of the governments of the Allied Delegations to recommend to the Allied Control Council that compensation in reichsmarks be paid to persons affected by Law No. 5. Moreover, by virtue of the current importation of foodstuffs into Germany by the Allied Nations, over-all compensation to Germany was in effect being made.
- The implementation of Law No. 5 by the Swiss would not violate the principles of neutrality. International law encouraged recognition in any jurisdiction of a duly authorized government and of the laws of a foreign government. Reference was made to the action of the United States Government in connection with the decrees issued in 1940 by the Royal Netherlands Government-in-exile and the Norwegian Government.
- The Swiss had no basis upon which to make an analogy between the Hitler regime and the Allied Control Council. Account must be taken not only of the character of the government now making the request, but also the use to which the Allied Control Council intended to put the assets. (See Appendix I for text of Allied note.)
First Swiss Proposals. On March 21, after a day’s consideration of the Allied memorandum of March 19, the Swiss submitted the following proposal:
- The Swiss Government would, through appropriate measures, liquidate all property in Switzerland owned by Germans in Germany.
- The assets derived from the liquidation would be earmarked for Swiss claims against Germans in Germany.
- To provide the Swiss with a legal basis for effecting this plan, the Allied Control Council should assume the liability to collect in reichsmarks debts owing to Swiss nationals by Germans in Germany. These reichsmarks would be devoted to compensating Germans whose property or assets in Switzerland were liquidated pursuant to the Swiss proposal. (See Appendix J for text of Swiss proposal.)
Allied Reply to First Swiss Proposal. The Allied Delegations refused to accept the Swiss proposal. In a memorandum on March 22, their objections were summarized as follows:
- The Swiss proposal requested the Allies to direct their objectives to the single purpose of making the Allied Control Council a collection agency for the sole benefit of the Swiss claimants against a bankrupt Germany, even including those claimants whose claims arose through assisting Germany during the war.
- The Swiss proposal ignored all aspects of the security objective. It indicated no willingness to provide for Allied-Swiss cooperation to realize this objective.
- Implicit in the Swiss proposal was a recognition that there were no constitutional difficulties involved in Swiss liquidation of German assets in Switzerland, which could not be overcome if compensation in reichsmarks were paid to German owners and creditors whose property was covered by Law No. 5.
In the same memorandum the Allied Delegations outlined a plan to further constructive discussion of the problems, proposing that:
- German assets as defined in Law No. 5 should be liquidated by an agency to be designated by common agreement between the Swiss Government and the three Allied Governments.
- Proceeds of liquidation should be deposited in a special account in the Swiss National Bank.
- The sum so deposited should be transferred to the three Allied Governments on their request, subject to deductions of proper Swiss collection expenses.
- Agreement on the above should become effective at the time that the proper Allied authorities provided compensation in reichsmarks to Germans whose property would be liquidated, with the exception of war criminals, etc. (See Appendix K for text of Allied memorandum of March 22.)
Swiss Reaction to Allied Proposal. The Swiss reaction to this Allied proposal indicated that the reasons for the Swiss failure to comply with the Allied requests were reasons of expediency and not of law. The Swiss immediately agreed to waive their claims against Germany arising out of advances made by Switzerland to Germany during the course of the war. They intimated, however, that other Swiss claims would entirely exhaust any funds which might arise out of liquidation of German property in Switzerland. In the light of the Allied memorandum, they indicated that they could not accept the Allied proposal, but would look to international arbitration for the solution of the problem. (See Appendix L for report of conference of March 22.)
In a subsequent memorandum of March 25, the Swiss pointed out that:
- They would be willing to keep the Allied Governments fully advised of measures taken by the Swiss in ferreting out German assets, although they would not permit administrative activities of foreign officials on Swiss soil.
- The only manner in which German assets in Switzerland could be liquidated and turned over to the Allied Control Council would be for the Allies to turn over Swiss assets in Germany to Switzerland on the basis of a “capital clearing.”
- In no event could the Swiss enter into an agreement which would provide for German assets in Switzerland to be devoted to reparations. They considered that participation in such a program would be contrary to all principles of neutrality. (See Appendix M for conference of March 25, including text of Swiss memorandum of March 25.)
Establishment of Technical Committees. On March 25, it was agreed that progress of the negotiations would be improved if committees were established to deal with particular problems. Three committees were therefore established: (1) a Committee on Procedures, to determine procedures for liquidating German assets in Switzerland; [Page 210](2) a Committee on Claims, to consider Swiss claims against Germany; and (3) a Committee on Gold, to discuss principally the status and treatment of the looted gold in Switzerland. Several meetings of these committees were held during the week of March 25.
The activities of the committees and further over-all discussions were unexpectedly suspended because of Mr. Stucki’s departure for Switzerland on March 31 to report to his government and receive new instructions.
On March 29, prior to Mr. Stucki’s return to Switzerland, the Allies summed up their position in a memorandum stating that:
- The word “reparations” was apparently being misunderstood by the Swiss. The Swiss were not being asked to participate in a punitive program, but rather in a program of reconstructing the damage and losses suffered during the war. The Allies recognized that Swiss nationals suffered losses, but the Allied losses were more extensive in character and included damages directly attributable to the war, from which the Swiss had escaped.
- To remove any criticism that they were attempting to invade Swiss sovereignty, the Allies proposed that the liquidation of German interests be handled by a Swiss agency which would cooperate with a joint Swiss-Allied commission. Disputed questions were to be referred to arbitration.
- The Allies could not recognize the various categories of Swiss claims against Germany. They proposed that the only way Switzerland could now secure any compensation for her claims was to agree to settle the matter with the Allies on a basis consistent with Germany’s status as a bankrupt nation.
- The Allies were prepared to agree to “retrocede” to Switzerland a percentage of the proceeds resulting from the liquidation of German assets in Switzerland.
- The first $25,000,000 collected from the liquidation of German assets was to be turned over to the Inter-Governmental Committee on Refugees, in accordance with the Paris Reparation Agreement, to be devoted to the relief of non-repatriable victims of Nazi action.
- The Swiss regulations and public declarations with respect to looted property should be applied to gold. At least $200,000,000 worth of gold transferred by Germany during the war to institutions in Switzerland was loot. (See Appendix N for text of Allied memorandum of March 29.)
Subsequently, on March 31, a supplemental memorandum was presented to Mr. Stucki. It included technical facts with respect to looted gold in Switzerland. After discounting certain classes of Swiss claims against Germany such as, for example, the German deficit in the Swiss-German clearing, the memorandum proposed the allocation to Switzerland of 20 percent of the proceeds of liquidation of German assets in Switzerland plus a 2 percent collection fee. (See Appendix O for text of Allied memorandum of March 31 on gold and percentages.)[Page 211]
Swiss Second Proposal. Mr. Stucki returned to Washington from Switzerland on April 9. He first communicated with the Allied Delegations on April 11 in a letter which summed up the current Swiss position on the issues being negotiated:
- The Swiss Government did not recognize that Law No. 5 gave the Allies any legal claim for the surrender of German assets in Switzerland.
- The Swiss considered inequitable the Allied proposal that Switzerland participate to the extent of 20 percent in the proceeds of liquidated assets. They again recommended that the issue be submitted to an international court of arbitration.
- The Swiss characterized as incorrect the Allied estimates and conclusions with respect to looted gold in Switzerland. The Swiss National Bank was innocent in connection with its purchases of gold from the Germans during the war. The question of restoring possibly looted gold to the legitimate owners could only be decided by the Swiss Federal Tribunal.
- Despite the above, the Swiss Government was willing to cede to the Allies, for the rehabilitation and reconstruction of Europe, a percentage of the proceeds of the assets liquidated in Switzerland belonging to Germans residing in Germany. In addition, the Swiss Government agreed to submit to the Swiss Parliament a proposal to make available to the Allies a part of the gold which the Swiss National Bank acquired from Germany after February 23, 1944, the date on which Switzerland received notice of the Declaration on Gold Purchases. (See Appendix P for text of Declaration on Gold Purchases of February 22, 1944, to which all United Nations subscribed.10) These Swiss concessions, however, were contingent upon the unblocking of Swiss assets in the United States and the termination of continued discriminations against Switzerland. (See Appendix Q for text of Mr. Stucki’s letter of April 11.)
Allied Reply to Swiss Second Proposal. On April 12, on behalf of the Allied Delegations, Mr. Paul replied to Mr. Stucki’s letter of April 11, pointing out that:
- German assets in Switzerland were German assets and not Swiss assets. The present government of Germany had the right to immobilize the foreign assets of persons and institutions subject to German jurisdiction.
- Referring the matter to arbitration would not provide the practical measures for meeting with the problems at issue. It would merely cause a deterioration of German assets which had to be liquidated, and possibly prolong measures which the Allies would be required to maintain to insure that no German assets failed to be uncovered.
- The requirement that the Swiss agree to make a portion of the proceeds, derived from the liquidation of German assets, available to the Allied Governments was not one of law, as the Swiss Delegation [Page 212]itself had already conceded, but one of expediency to be decided as a political act by the Swiss Government itself.
- The United States Government agreed that upon the successful conclusion of the present negotiations with Switzerland, it was prepared to discuss procedures for the unfreezing of legitimate Swiss assets in the United States. The Allied Delegations agreed to examine further the economic controls which might be presently affecting Switzerland. These controls were matters of domestic law. Each country had the right to forbid its nationals to have financial or commercial dealings with persons who gave aid and comfort to the enemy.
- To assist in the speedy resolution of the questions at issue, the Allied Delegations recommended that drafting committees be set up to work out appropriate agreements. (See Appendix R for text of Mr. Paul’s letter of April 12.)
On April 17, Mr. Stucki replied to Mr. Paul’s letter of April 12 indicating that:
- The Swiss were willing for the present to waive further legal discussions, but that they might feel obliged to return to their proposal for arbitration of the main issues.
- They had never maintained that German assets in Switzerland were Swiss and not German.
- They could in no way admit that foreign assets should be liberated without parallel repatriation of Swiss assets in the corresponding countries.
- They considered that they had been discriminated against by the continued application of the freezing control to Swiss assets in the United States and by the continued application of the Statutory and Proclaimed Lists.
- They were willing to proceed immediately with the drafting of an agreement along general lines, but preferred that all technical points be negotiated and concluded in Switzerland. (See Appendix S for text of Mr. Stucki’s letter of April 17.)
Negotiations with Respect to Looted Gold in Switzerland. It will be recalled that in a memorandum of March 31 the Allied Delegations furnished the Swiss with certain facts upon which the Allies based their conclusions that at least a minimum of $200,000,000 worth of gold looted by Germany was transferred to Switzerland during the course of the war. On April 4, in Mr. Stucki’s absence from Washington, Professor Rappard, Special Adviser to the Swiss Delegation, addressed a letter to Mr. Paul requesting further detailed information on the question of looted gold in Switzerland. (See Appendix T for text of Professor Rappard’s letter of April 4.)
In a letter of April 9, Mr. Paul replied to Professor Rappard. Mr. Paul did not answer specific questions raised by Professor Rappard, but he pointed out that:
- None of the information requested by the Swiss Delegation with respect to the gold problem had any relevance to the acceptance by the [Page 213]Swiss of the principle advocated by the Allied Delegations that the Swiss should restore to the Allies looted gold which was acquired from Germany.
- The Allied Delegations considered as looted gold all gold acquired by Germany under conditions such as those set forth in the United Nations Declaration of January 5, 1943. (See Appendix U for United Nations Declaration of January 5, 1943, Regarding Forced Transfers of Property in Enemy-Controlled Territory.11)
- In the event Switzerland agreed to restore looted gold to the Allies, appropriate arrangements could be made for the protection of the Swiss Government. (See Appendix V for text of Mr. Paul’s, letter of April 9.)
On April 13, the Swiss Delegation submitted a memorandum on the looted gold problem to the Allied Delegations. This memorandum, among other things, stated that:
- The Swiss estimated the legitimate pre-war gold reserves of Germany at $450,000,000 (1,800,000,000 Swiss francs). This figure was to be contrasted with the Allied estimate of $160,000,000 as the legitimate pre-war gold reserves of Germany.
- Switzerland transferred a considerable portion of the gold she received from Germany to third parties.
- Switzerland did not have concrete information on the German looting of gold.
- The Swiss did not consider that the Belgian gold they purchased from the Reichsbank was looted gold. (See Appendix W for text of Swiss memorandum of April 13.)
On April 17, 1946, the Allied Delegations submitted to the Swiss Delegation comments on the Swiss memorandum of April 13. The Allied memorandum reiterated the view, expressed in Mr. Paul’s letter of April 9, that Switzerland must accept the principle of turning over to the Allies looted gold which the Swiss had accepted during the war, and further noted that:
- The Swiss estimate of the legitimate pre-war gold reserves of Germany was incorrect.
- Switzerland was responsible for all gold shipped to her from Germany. The fact that some of this gold may have been sold to third parties did not relieve the Swiss of their responsibility.
- (Switzerland could not plead that she was ignorant of the looting tactics of the Germans. The neutrals were on notice as early as January 5, 1943, of Allied concern with German looting of property and what constituted looted property. The Allies could not accept the date February 23, 1944, as the definitive date for determining what constituted looted gold.
- The Allies could not accept the Swiss view that the Belgian gold was not loot. (See Appendix X for text of Allied memorandum of April 17 on gold.
On April 20 the Swiss Delegation replied to the Allied memorandum of April 17, in a note setting forth that:
- The statements and figures in their memorandum of April 13 were correct.
- Swiss purchases of gold during the war conformed to the laws of neutrality.
- The Czechoslovakian and Austrian gold could not be considered as looted gold, since the Allies themselves did not question these acquisitions when they were made.
- Neither the date February 23, 1944, nor any other date was decisive as to whether Switzerland should surrender gold.
- Switzerland could never recognize the Belgian gold which it purchased as looted gold.
- The Swiss Delegation was under instructions to state “finally and categorically” that neither the Federal Council nor the Swiss National Bank had a legal or moral obligation to restore gold to the Allied countries. If the Allies rejected the Swiss offer, i.e., their verbal offer of $25 million of gold as a contribution for the reconstruction of Europe, then the matter would have to be referred to a Swiss tribunal. (See Appendix Y for text of Swiss memorandum of April 20.)
On April 23 the Allied Delegation replied that under the circumstances set out in the Swiss note they could not accept the statements made by the Swiss Delegation in its memorandum of April 20, and that they considered no Swiss tribunal competent to decide the issue. (See Appendix Z for Allied memorandum of April 23.)
In discussing this memorandum with the Swiss Delegation, the Allied negotiators stated that Switzerland was liable to restore to the Allies approximately $130,000,000 in gold. The Allied records revealed that at least this amount of the Belgian gold, which was looted from France by the Germans, was transferred by Germany to Switzerland during the war.
On April 24 Mr. Stucki, replying to the Allied note of April 23, insisted that the Swiss courts were competent to consider the issue. In addition, he stated that the figure ($130,000,000) lay beyond every possibility of the Swiss Government and the Parliament. In this connection he referred again to his earlier proposal which in effect indicated that the Swiss Government might be willing to recommend to the Swiss Parliament that it approve a voluntary gold contribution to the Allies for rehabilitation purposes. (See Appendix AA for text of Mr. Stucki’s letter of April 24.)
Swiss Proposal of Withdrawal of Black List. On April 17, 1946, the Swiss Delegation submitted a memorandum to the Allied Delegations requesting withdrawal of the Proclaimed and Statutory Lists and List of Enemies (Black List) in the light of the following: [Page 215]
- The lists were injurious to the Swiss economy. Maintenance of the lists would undoubtedly increase unemployment and might provoke political and social unrest.
- The Swiss Government, throughout the war, strictly conformed to international law, including the Hague Convention, and required of all its nationals strict observance of commercial treaties concluded between Switzerland and the Allies, including those which limited Swiss freedom of trade. Swiss nationals acted within the framework of Swiss legislation, even if they did contribute through exportations to the German war effort.
- From 1940–1944, the export of war materials to Germany admittedly increased. However, shortly after the outbreak of war, at the urgent request of the British and French Governments, Switzerland suspended its regulations prohibiting the export of arms and munitions. As a neutral, Switzerland could not suspend its Arms Embargo with respect to the Allies and maintain it with Germany.
- The procedure of listing individuals and firms, because of their relation with Swiss nationals already listed, was irreconcilable with Swiss sovereignty.
- The “black lists” had lost their reason for existence with the end of the war. During hostilities, they were incompatible with international law; today they constituted an unjustifiable violation of these principles. (See Appendix BB for text of Swiss memorandum of April 17 on withdrawal of Black List.)
Development Leading to Agreement—April 17–May 26
Subsequent to April 17 the Swiss and Allied Delegations proceeded with the drafting of a proposed agreement, and on April 17 and 18 the Delegations exchanged preliminary draft accords. However, the negotiations and further work by the Drafting Committee were interrupted on April 23 due to a difficulty in arriving at a decision on two basic points: (1) the percentage of German assets which the Swiss should receive in satisfaction of their claims against Germany; and (2) the amount of gold which Switzerland should restore to the Allied nations as a result of her acquisitions of looted gold from Germany during the war. This interruption was confirmed by an exchange of letters between Mr. Paul and Mr. Stucki. (See Appendix CC for text of letters of April 24 of Mr. Paul and Mr. Stucki.)
Between April 23 and May 2 Mr. Stucki had no contact with the Allied Delegations. However, during this period Mr. Bruggmann, the Swiss Minister to the United States, conferred at various times with Mr. Paul; Assistant Secretary of State Clayton; Secretary of the Treasury Vinson; and officers of the Department of Justice, looking toward a settlement of the Swiss-Allied negotiations.
During this period Mr. Bruggmann addressed a letter to Mr. Clayton reiterating the Swiss views on the Belgian gold question. (See Appendix DD for text of Mr. Bruggmann’s letter of April 30.)[Page 216]
On May 2 Mr. Clayton replied to Mr. Bruggmann’s letter, pointing out that the information in Mr. Bruggmann’s letter had already been given to the Allied Delegations by the Swiss Delegation. Furthermore, Mr. Clayton re-affirmed the rights of the Allied Governments to question the validity of Swiss rights to property acquired from Germans which the Germans had requisitioned from other countries. (See Appendix EE for text of Mr. Clayton’s letter of May 2 to Mr. Bruggmann.)
Between April 23 and May 2 the Allied Delegations gave further study to the Swiss observations concerning the amount of looted gold for which Switzerland was liable. The Allied Delegations concluded that for purposes of these negotiations they might exclude Austrian gold from the category of looted gold. On this basis the Allied Delegations revised downward their estimates of the amount of looted gold transferred to Switzerland. However, the Swiss Delegation took the position that Switzerland could not be held liable to restore the entire amount of looted gold which was transferred from Germany to Switzerland, since a portion of this amount was merely deposited in Switzerland and subsequently transferred from Switzerland to third countries pursuant to orders of the Reichsbank, as depositor. The Swiss admitted, however, that they had purchased $88 million of gold traceable originally to Belgium from Germany during the war. But in no event would they concede that they were liable to restore this amount of gold to the Allies.
On May 2, Mr. Stucki re-entered the negotiations and proposed to meet the two basic points at issue as follows: A 50–50 split on the proceeds of the German assets in Switzerland and a payment of 250 million Swiss francs, or approximately $58.14 million, in settlement of the gold question. In view of the fact that this proposition was made to the Allied Delegations as the final offer of the Swiss Government, the matter was referred by Mr. Paul, for the United States Delegation, to the Secretaries of State and Treasury for their recommendations and by the British and French negotiators to their respective governments. Mr. Paul also sought the advice of Senator Kilgore, Chairman of the Subcommittee on War Mobilization of the Senate Committee on Military Affairs.
Secretary of the Treasury Vinson, Assistant Secretary of State Clayton, and Senator Kilgore were each of the view that the United States Government should accept the Swiss offer. They did not believe that an agreement with the Swiss, which would secure wholehearted support by the Swiss of the Allied economic security objective, should be jeopardized for the sake of a few more dollars. Moreover, [Page 217]to obtain a few more dollars it would be necessary to continue wartime restrictions at a time when antagonism was increasing everywhere against such controls. The French and British Governments apparently shared the same views, since the Delegations of those governments were authorized to accept the Swiss offer. The French Delegation attached to its acceptance the condition that Italy and Austria should not share in the gold received from Switzerland. After consultation, the Delegations of the United States and the United Kingdom accepted this condition, on the proviso that Italian and Austrian rights should in no way be jeopardized in the final understanding.
In view of these recommendations, on May 21 Mr. Paul delivered a note to Mr. Stucki accepting the Swiss offer of one-half of the proceeds of the liquidated German assets and 250,000,000 Swiss francs in settlement of the gold claims of the governments for whom the Allied Delegations were acting. In accepting the offer the Allied Delegations stated that:
- The Swiss should permit the Allies to draw advances immediately to be devoted to the rehabilitation and resettlement of non-repatriable victims of German actions.
- Property within Switzerland of victims of Nazi action, who had since died and left no heirs, was to be put at the sole disposal of the Allied Governments.
- Official German property to which the Allies took title by virtue of the Act of Surrender was not subject to the 50–50 division which would be applied to other German assets to be liquidated pursuant to the proposed agreement with the Swiss.
- They assumed that the Swiss Government would submit to the Allies detailed information covering gold deposited by Germany in Switzerland for transfer to other countries, and would furnish the Allies with other information to assist them in tracing gold which might have been looted by the Germans. (See Appendix FF for text of letter from Mr. Paul to Mr. Stucki of May 21.)
On May 22, Mr. Stucki replied to Mr. Paul, acknowledging acceptance by the Allies of the final Swiss offer. In this letter he made the following additional points, some of which raised further questions to be resolved in the negotiations:
- The Swiss disagreed with the Allied definition of the German assets subject to the agreement.
- It will be recalled that in Mr. Stucki’s letter to Mr. Paul, dated April 11, Mr. Stucki stated that the Swiss Government was willing to cede to the Allies a percentage of the proceeds of the assets liquidated in Switerland belonging to Germans residing in Germany. The scope of the German property which the Swiss intended to cover by their proposal differed from the scope of German property as defined by the Allies. In the first Allied draft accord of April 17, the “German [Page 218]property”, which was the subject of discussion, included not only all property owned or controlled by Germans residing in Germany, but also “all property owned or controlled by any person of German nationality outside of Germany, including Switzerland.” The latter expression was to apply to persons who had enjoyed full rights of German citizenship under Reich law at any time since September 1, 1939, and who at any time since September 1, 1939, had been in any territory under the control of the Reich Government, but it was not to apply to citizens of any country annexed by Germany since September 31, 1937. The expression was also to include any persons who the four Governments agreed should be repatriated to Germany because of their activities on behalf of the Third Reich. It was not to apply to the property of bona fide German refugees.
- Further details would have to be discussed with respect to the type of additional gold information the Swiss were to furnish the Allied Governments.
- Switzerland was prepared to make certain advances to the Allies from the account of their share in the liquidation proceeds to be used immediately for the rehabilitation of victims of Nazi action.
- The Swiss reserved comment on the Allied proposal that the property within Switzerland of victims of Nazi action, who had since died and left no heirs, be placed at the sole disposal of the Allied Governments.
- Switzerland disagreed with the opinion that the Allies acquired title to official German property in Switzerland as a result of the Act of Surrender. (See Appendix GG for text of Mr. Stucki’s letter of May 22.)
On May 26, 1946, the final agreement with the Swiss was signed. It consisted of an Accord, an Annex, a gentlemen’s agreement, and an exchange of letters between the Swiss Delegation and the Allied Delegations.12 The Accord provided that:
- German Property covered by Agreement. The Swiss Compensation Office would investigate and liquidate all property in Switzerland which was (a) owned or controlled by Germans in Germany; and (b) owned or controlled by persons of German nationality who were to be repatriated.
- Compensation to Owners of Liquidated Property. Germans whose property was liquidated would have a right to compensation in German money. Switzerland would furnish out of funds available to it in Germany one-half of the German money necessary for this purpose.
- Joint Commission. The Swiss Compensation Office would investigate and liquidate German property in cooperation with a Joint Commission composed of representatives of the United States, [Page 219]British, French and Swiss Governments. Decisions of the Swiss Compensation Office were to be subject to review on request of the Joint Commission as well as private persons.
- Apportionment of Liquidated German Assets. The proceeds of the liquidated German property should be divided on a 50–50 basis by the Swiss and Allied Governments. The Swiss Government would bear the cost of administration and liquidation of German property.
- Swiss Contribution to Allied Gold Pool. The Swiss Government would make available to the three Allied Governments 250 million Swiss francs payable on demand in gold in New York. In return the Allied Governments agreed to waive in their name and in the name of their banks of issue all claims against the Swiss Government and the Swiss National Bank in connection with gold acquired during the war from Germany by Switzerland.
- Removal of Economic Restrictions on Switzerland. The United States Government would unblock Swiss assets in accordance with procedures to be established immediately.
- The Allied Governments would discontinue without delay the “black lists” as they applied to Switzerland.
- Interpretation of Accord. Differences of opinion with regard to the interpretation of the Accord might be settled by arbitration.
- Effective Date of Accord and Annex. The effective date of the Accord and Annex was to be the date on which the Accord and Annex were approved by the Swiss Parliament.
The Annex elaborated on the matters covered by the Accord, defining in greater detail (a) the procedures to be employed by the Swiss Compensation Office in cooperation with the Joint Commission in uncovering and liquidating German property in Switzerland; (b) the method for compensating owners of liquidated property; (c) organization and functions of the Joint Commission; (d) conditions under which German property would be sold; (e) methods for arbitrating differences between the Swiss Compensation Office and the Joint Commission. In addition the Annex provided that:
- Financial Assistance to Non-Repatriable Persons. The three Allied Governments might draw immediately up to 50 million Swiss francs upon the proceeds of liquidation against their share of liquidated German property. This advance was to be devoted, through the Inter-Governmental Committee on Refugees, to the rehabilitation and resettlement of non-repatriable victims of German action.
- Patents, Trademarks, and Copyrights. Pending multilateral arrangements, no German-owned patent in Switzerland should be sold or transferred without the concurrence of the Swiss Compensation Office and the Joint Commission. Moreover, no German-owned trademark or copyright should be sold without the concurrence of the same authorities.
- Property of the German State.
The provisions in the Accord and Annex did not cover
property of the German State in Switzerland, including
property of the Reichsbank and the German railroads.
Under the Gentlemen’s Agreement there was an
- The Swiss Compensation Office would dismiss personnel, regardless of position, from business enterprises to be liquidated, if the Swiss Compensation Office and the Joint Commission agreed that these [Page 220]employees were a threat to security objectives; and (b) Allied personnel would be available to assist in some of the investigations to be conducted by the Swiss Compensation Office.
In their letters to Mr. Stucki the Allies:
- Agreed to furnish the Swiss Government before January 1, 1948, lists of persons of German nationality who were neither residents of Switzerland nor domiciled in Germany, whose property would remain blocked pending their repatriation or the decision of the competent government against their repatriation.
- Suggested that a simple and inexpensive procedure be established for the restitution of property taken from victims of German exploitation.
- Reserved (a) the rights which they claimed over property of the German State in Switzerland, and (b) the right to request the Swiss Government to reconsider the provision of the Accord by which sums payable through the German-Swiss clearing were not to be regarded as German property.
In his several letters to the Allies Mr. Stucki:
- Asked special protection of Swiss interests and property in the territories in which the three Allied Governments exercised supreme authority.
- Stated that the Swiss Government would examine (a) the question of taking appropriate steps to insure that unsecured creditors of Germans whose property was to be liquidated should not be paid from the proceeds of liquidation, and (b) the matter of putting the proceeds of property in Switzerland of heirless victims of German aggression at the disposal of the Allies for relief and rehabilitation purposes. (See Appendix HH for texts of Accord, Annex, Gentlemen’s Agreement, and Letters.)
[Negotiations between the United States, the United Kingdom, France, and Sweden concerning German external assets in Sweden and related questions began in Washington on May 29 and culminated in an Accord on July 18, 1946. For text of this Accord, see Department of State, Treaties and Other International Acts Series No. 1657, or 61 Stat. (pt. 3) 3191. For text of the Agreement between the United States and France, July 18, on the allocation of the proceeds of German assets to be received from Sweden as a result of the Swedish-Allied Accord of July 18, see Department of State, Treaties and Other International Acts Series No. 1731, or 61 Stat. (pt. 4) 3840. An article by Mr. Seymour J. Rubin, Deputy Director of the Office of Economic Security Policy, Department of State, and Chief of the United States delegation for the Allied-Swedish negotiations, commenting on the Accord and the discussions leading thereto, is printed in the Department of State Bulletin, July 27, 1947, page 155.]
- For text of the Accord and Annex, see Department of State, Treaties and Other International Acts Series No. 5058; United States Treaties and Other International Agreements, vol. 13 (pt. 1), p. 1118.↩
- Reference is to the Agreement on Reparation
from Germany which entered into force January 24, 1946; for
text, see Department of State, Treaties and Other International
Acts Series No. 1655, or 61 Stat. (pt. 3) 3157. For related
Foreign Relations, 1945, vol. iii, pp. 1357– 1506, passim.↩
- None of the appendixes referred to in this Report are printed herein.↩
- For text, see Proceedings and Documents of United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1–22, 1944, Department of State publication 2866 (Washington, Government Printing Office, 1948), vol. i, p. 939.↩
Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1499.↩
- See Official Gazette of the Control Council for Germany, No. 2 (November 30, 1945), p. 27.↩
- 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 original proclamation
was made by President Roosevelt on July 17, 1941; additions
and deletions were made as circumstances required. 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.; ibid., 1945, vol. ii, pp. 827 ff. Documentation for the period after 1941 on application of the Proclaimed List in the Western Hemisphere is contained in bilateral compilations concerned with Axis influence in certain countries of Latin America in the Foreign Relations series. The Statutory List was the British counterpart of the Proclaimed List.↩
text of the U.S. Statement on Gold, see circular
airgram, February 22,
Foreign Relations, 1944, vol. ii, p. 213.↩
- Text is printed in
Foreign Relations, 1943, vol. i, p. 443.↩
- Exchange of letters not printed; for citation to text of Accord and Annex, see letter dated June 3, from Mr. Randolph Paul to President Truman, p. 202.↩