765.84/2176
Memorandum by the Under Secretary of State (Phillips) of a Conversation With the Italian Ambassador (Rosso)
The Italian Ambassador informed me this afternoon that, on his way through New York yesterday, he had learned that the Federal [Page 808] Reserve Bank had recently circularized the more important banks in New York, asking for data concerning credit and banking operations made by them with Italian banks and Italian concerns; he had also gathered that this action had been taken under instructions from the United States Treasury; whatever had been the intention or the reason for this action the definite impression had been created, said the Ambassador, that the United States Government was engaged in an effort to curtail all such ordinary commercial transactions with Italy; he would like to know what the meaning of it was because, in view of the impression already created, it would seem to him that we had gone beyond the stage of neutrality.
I replied that, while I had no accurate knowledge of any step which the Treasury had taken in this regard, I was confident that any inquiry which it made through the Federal Reserve Bank of New York applied to both belligerents rather than to Italy alone; it was natural that, in the circumstances, the Treasury might wish to obtain such information, but that the Ambassador was not justified in assuming that the gathering of information forecast the application of anything in the nature of sanctions, which was, I supposed, what he feared. He admitted that this was so and said that he would be grateful if I could advise him that the inquiry concerned both belligerents so that he might keep his Government properly advised.
The Ambassador then gave me his view of the attitude of this country towards the Italo-Ethiopian controversy; he realized perfectly our position of neutrality, our desire not to become involved in any way, and then referred to the neutrality legislation, which he said did not operate fairly on both parties; he, himself, had wondered at the efforts which the Government was making to discourage trade with the “belligerents”; actually, of course, this applied only to Italian trade, and could only be regarded as having been directed against Italy; and the warning against traveling on Italian vessels was merely another indication of the attitude of mind of this Government with regard to Italy. Certainly the proclamation could have no bearing upon Ethiopia. The Ambassador said that the impression was gaining ground rapidly throughout Europe that the United States was responding to the appeals of the League rather than maintaining a position of neutrality; while, of course, lie realized that the League was not dictating to this country, nevertheless, this Government appeared to be very responsive to the situation developing in Geneva; while at first the efforts of the League members had seemed to be a genuine desire to preserve peace, now all the world knew that it was the British Government which was forcing their views upon the League; the British Government was dominating the situation and was even attempting to force certain somewhat reluctant countries to vote in the League in accordance with the wishes of Great Britain. [Page 809] He, the Ambassador, assumed that the British Government was in close touch with us with regard to its program. I at once denied this and told him very definitely that we had not been approached by any Government with regard to League activities or the position which the League might take in carrying out its policy of sanctions. The League’s efforts, the Ambassador insisted, were not genuine League efforts, but represented substantially the British policy; it was becoming evident more and more that the British Government were determined to force Italy to a position where her “back was against the wall”; he himself could not understand the reason or the occasion for this hard British policy. Certainly Mussolini had on several occasions announced publicly and officially that Italy had no intention whatsoever of disturbing any British interests; moreover, it had been made plain that the Italian expedition was directly, solely and exclusively against Ethiopia, and yet far from being a slackening in British pressure, there was noticeable each day an increase of British pressure against Italy. The Ambassador said that in spite of such disquieting reports he had been hopeful and was still hopeful that some conciliatory steps would be taken to avoid the spread of the conflict, but he had to admit that yesterday and today the reports which he had received were of a very serious nature and were most disquieting.
I said that the Ambassador was right in his estimate of the determination of this country to keep out of the conflict; I reminded him that our study of neutrality had begun about a year and a half ago, before there was any indication of trouble between Italy and Ethiopia; as a matter of fact, it had been stimulated by the fear that there was to be trouble again with Germany; our studies had been transferred to Congress, where, as he knew, certain legislation had been enacted just before the end of the session; he had, of course, an opportunity to note the intense interest throughout the country in our position of neutrality while such matters were being discussed by the Executive and in Congress; students all over the country were deeply interested in the subject, and there was scarcely a newspaper which had not discussed it. The entire stage for neutrality, therefore, was set before the Italian-Ethiopian conflict, but when that broke out, it was natural that the legislation should apply immediately to it; if our position of neutrality acted somewhat unevenly in certain aspects between the two belligerents, that was not our fault but the fault of circumstances. I said that in my opinion the driving force which had led to our almost fanatic desire to keep aloof from European conflicts came from the realization that our contribution to the World War had had no lasting accomplishments and that our sacrifices, therefore, had not made the world a better place to live in; this feeling went very deep, not only in the generation which took part in the [Page 810] War, but in the younger generation which was just beginning to have a voice in such matters.
I referred to the Ambassador’s opening remarks with regard to the Federal Reserve Bank in New York and said that I would get in touch with the Treasury and ascertain precisely what action had been taken, and would be in a position shortly to give him further particulars.
As he was leaving the Ambassador said that he had kept away from the Department in order to avoid unnecessary publicity, but that he did not wish us to get the impression that he was in the slightest degree avoiding the Department for any other reasons. He asked me to say to the Secretary that he had called on me this afternoon rather than upon the Secretary merely to avoid any possible false construction which the press might make upon his visit. Should the Secretary have anything to say to him or desire to see him, he would, of course, be glad to respond at once.