611.6531/86: Telegram
The Ambassador in Italy ( Long ) to the Secretary of State
[Received 9:05 p.m.]
90. For the Secretary from Child.1 Following report of my conversation with Under Secretary for Commerce Asquini prepared by Tittmann2 who interpreted:
“Asquini immediately produced statistics showing that Italy’s exports to the United States were only 50 percent of her imports from that country and that Italy’s trade deficit with the United States was larger than with any other country. The perpetual deficit with the United States heretofore has never been an alarming factor in Italy’s commercial balance since this was always offset by favorable trade balances with other countries, together with other favorable items in the international balance of payments. Recently, however, a worsening of these favorable trade balances, and of other items, had rendered the large deficit with the United States a problem of great delicacy. Signor Asquini stated that there were only two ways of solving the problem: either to increase the sale of Italian products in the United States, in order to provide exchange to pay for imports from the United States, or to cut down imports from the United States, starting with cotton. He was not in favor of trade restrictions but he added that Italy was ready for any sacrifices if this latter course became necessary. He produced samples of clothing materials which could be used in substitution for cotton textiles. One was half cotton and half hemp and the other all hemp, hemp being produced in Italy. He admitted that the cost of production would be higher but added that just as in war time the cost of production did not enter the question so it would not be a factor in this commercial war. The cost of running the railroads by electricity was higher than if coal were used but the Italians were willing to bear it in order not to import coal for which they could not easily find the foreign exchange to pay. The [Page 585] same would hold true for cotton. Signor Asquini said that the Government was ready to impose a prohibitive duty on foreign cotton just as had been done in the case of wheat, regarding which commodity Italy was now self-sufficient, and to subsidize factories in Italy that produced the above-mentioned cotton substitutes, but that he would not do this if he could have in time assurances from the United States that the sale of Italian products would be increased there in order to provide foreign exchange for the purchase of cotton. He warned that once the Government had started subsidizing these factories it will be impossible not to continue to do so even if the United States changed its policy in favor of Italy. He intimated that the time element was important.
Signor Asquini did not seem to be informed as to the progress of the tariff bargaining bill in Congress and seemed disappointed that something could not be done immediately.
Mr. Child said he understood the statement as presented by Signor Asquini and stated that many countries were interested in elaborating some method of regulating bilaterally commercial relations. He asked among other possibilities about a committee composed of two American and two Italian members which would meet every so often both in the United States and in Italy in order to keep up to date suggestions for bilateral arrangements that might be entered into between the two countries. Signor Asquini agreed that this would be a good idea.”
Please inform Commerce. [Child.]