865.4061 Motion Pictures/64a

The Secretary of State to the Chargé in Italy (Kirk)

No. 736

Sir: Reference is made to the Department’s telegrams Nos. 78, July 2, 8 p.m. and 107, August 8, 2 p.m.; also your Nos. 247, July 3, noon, 309, August 3, 7 p.m., 318, August 7, 11 a.m., and 325, August 11, 11 a.m.,30 relating to certain new regulations whereby the transfer abroad of proceeds for the rental of films in Italy would be limited and any remittances above the designated amount would have to be deposited in Italy in blocked accounts to be drawn upon only with official authority and for utilization in investment in Italian film products.

You are requested to make preliminary informal representations to the Italian authorities, pointing out to them that the effect of these [Page 361]regulations, if applied, would be to render virtually impossible the continued export of American films to Italy, thereby causing grave prejudice to an important American group doing business with Italy and constituting a serious setback in the trade relations between Italy and the United States.

You are requested, furthermore, unless you perceive objection, to leave the enclosed Memorandum with the Italian authorities.

Very truly yours,

For the Secretary of State:
E. Walton Moore
[Enclosure]

The Department of State to the Italian Foreign Office

Memorandum

On the afternoon of August 5, 1936, the representatives of American film distributors in Italy were informed by the Italian Theatre Federation of new regulations whereby the transfer abroad of proceeds from the rental of films in Italy would be limited to the global sum of ten million lire annually and any remittances above this amount would have to be deposited in Italy in blocked accounts to be drawn upon only under official authorization and for investment in Italian film products. Moreover, the distributors were notified that of the ten million lire only eight million lire would be allotted to established film importers roughly in proportion to their business for 1934–1935, and they would be allotted a global import quota of 250 pictures. “Sporadic importers” would have allotted to them two million lire for transfer abroad and 50 films.

In addition, as a prerequisite to continue the importation of foreign films, the distributors were asked to obtain from the foreign parent companies signed acquiescence to the new regulations and an agreement to continue the supply of films to Italy in normal amounts, based on the average of 1934–1935.

Frankly stated, since the normal earnings of foreign film companies in Italy last year was between forty and fifty million lire, these regulations would mean that as a price for remaining in the Italian market American companies would be obliged to leave three-fourths of their future profits in Italy to be used in financing a competing industry. No option would be allowed for the supplying of films only up to the amount of money allowed to be exported, for the privilege of taking out the 25 percent would be conditioned on the leaving in of 75 percent. In other words, these regulations would compel American film companies should they wish to remain in the Italian market, to continue their business in full normal value and to accumulate in Italy three lire for every one taken out.

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In the view of this Government these regulations, if applied, would virtually place a prohibition on the importation of American films into Italy and would cause a grave prejudice to the trade relations between Italy and the United States.

  1. None printed.