Mr. Thomas W. Lamont of J. P. Morgan & Co. to the Secretary of State

Dear Mr. Secretary: As I explained to you over the telephone this noon I found when I returned to my desk this morning that a cable had just arrived from Rome transmitting a request from our correspondents there, the Bank of Italy, that we should kindly arrange for them the banking credit of $50,000,000 which I discussed tentatively when I was in Rome early last month.

For your exceedingly confidential information, the Bank of Italy, together with the Bank of Naples and the Bank of Sicily, (being the other two leading banks in Italy) are joining in arranging this credit with their friendly banking correspondents in America. The term of the credit will be for six months, with an option of renewal for a further period of six months. These banks together will engage in case the credit is not otherwise discharged at maturity, to ship gold to discharge the credit. The Government undertakes to grant authorization for such shipment of gold, if it should prove necessary, and, as a matter of good faith, will undertake to guarantee the credit.

The Bank of Italy explains that with the tendency of Italian exchange rather weak it deems it prudent to arrange this banking reserve looking forward to legitimate stabilization of the lira, although it is opposed to the policy of the Bank to attempt any appreciation of the lira through artificial means.

While, as explained to you, Mr. Mellon and Mr. Hoover, we regard this as a banking matter and so very different from any foreign government loan issued in this market; nevertheless, we are happy as we wrote you some time ago to keep you informed as to any considerable banking transaction of this kind. We plan to proceed with our arrangements [Page 359] in the matter promptly, and I shall take the liberty of telephoning you some time tomorrow to ascertain whether the information above recited is sufficient for your purposes.

With great respect [etc.]

Thomas W. Lamont