665.006/63: Telegram
The Ambassador in Italy (Long) to the Secretary of State
[Received February 21—4:20 p.m.]
84. My 80, February 20 [19]. While retaliation is not one of the nobler impulses, sometimes events seem to justify it. Italy has taken the drastic step of preventing practically all imports, which affects America more than any other country because we were the biggest exporter to Italy. Italy intends to achieve an absolute parity of trade balance as composed of visible items with each individual country and this would result in discrimination against the United States. [Page 524] There are other and invisible items such as immigrant remittances, compensation to veterans resident in Italy, tourist expenditures and freight, mail and passenger tariffs on Italian ships. These items provide Italy with many millions in foreign exchange measured in dollars and would probably turn the ultimate balance in favor of Italy if the exact balance on visible items is achieved. To prevent or to diminish the credits constituting these invisible items—or even to retard through administrative delays the forwarding of these credits—might place Italy in a position so she would be willing and even anxious to make exceptions in favor of the United States.
Italy practically has disavowed in spirit the most favored nation clause and so is not in a position to appeal to it for protection. She now hopes to arrange bartering agreements to circumvent labor leaders and trade barriers.
Under these circumstances I recommend to your immediate and careful consideration the emplacement of restrictions, limitations or delays on credits moving to Italy including the discouragement of American passengers and freight moving on Italian lines or if this proves not to be feasible the raising of our tariffs on Italian products.