The Secretary of State to the Ambassador in Italy (Fletcher)

No. 352

Sir: On July 31 Mr. Thomas W. Lamont, of J. P. Morgan and Company, telephoned to me saying that he understood that Blair and Company were negotiating to loan twenty-five million dollars to the Italian State Railways and that he would like to know, for his own information, what would be the attitude of this Government. I told [Page 361] him confidentially that the Italian Ambassador had called on me and left a Memorandum3 which stated in substance that his government would like to know what would be the attitude of the State Department if the Italian Government should seek to make further loans in New York. He stated that they contemplated making a loan with Morgan and Company and the Chase National Bank. I informed Mr. Lamont that I had told the Italian Ambassador that I did not think the Government could look with favor on such loans so long as the Italian Government had only made an offer which, as it was perfectly aware, we could not even consider as a basis of discussion for a settlement. Mr. Lamont stated that his firm was not negotiating a loan with the government and that their attitude was that until Italy had done more than she had at present, they would not consider the subject of a loan and that he had so informed the Italian Ambassador. He said the Italian Ambassador replied he was aware that the offer they made would not be acceptable to the United States. I told Mr. Lamont that they should not then have made such an offer. Furthermore, I said that so far as Blair and Company negotiations were concerned, we would consider the loan to the Italian State Railways in exactly the same position as a loan to the government and that I had told the Italian Ambassador I would see Mr. Mellon on Monday and answer his note, but that my attitude was as I have expressed it.

I am [etc.]

Frank B. Kellogg
  1. Probably refers to note verbale of July 27; not printed.