865.4061 Motion Pictures/97: Telegram

The Acting Secretary of State to the Ambassador in Italy ( Phillips )

189. Your 540, December 21, 11 a.m. Mr. Will Hays has submitted the following views with regard to the Italian situation:

“The American companies are able to concur in the details of the accord outlined in the note from Count Ciano to the Ambassador and received by the Ambassador on December 19. Provided, however, that this concurrence is on two necessary assumptions: first, that the terms of the note do not require any company to spend in Italy any amount of their excess unless they so desire. We understand that any spending in Italy is subject to the terms outlined in the note and feel sure that there is no actual or implied obligation to spend any amount of excess but suggest Ambassador be sure of this because companies could not make commitment in advance to spend any part of excess. The second assumption is as to the following provision in note from Ciano: ‘Sums in excess of 20,000,000 lire which may eventually accrue to the benefit of American films imported in Italy remain as I have already mentioned to you at the free disposal of the American exporters, etc.’

We assume that this means that either in the case where an American company distributes through an Italian company or by Italian interests either as its agent or licensee, or in the case where an American company distributes through an Italian company wholly owned by the American company, any excess is at the free disposal of such American principal at its discretion subject to the control provided by the terms of Count Ciano’s note to the Ambassador. Also we concur in the Ambassador’s suggestion that he endeavor to reach informally an arrangement whereby before the definite allocation of the 20,000,000 exportable lire is made a representative of the Motion Picture Producers and Distributors of America will be given an opportunity informally to discuss this allocation with the Theater Federation to the end that we may give any aid possible in developing the fairest possible allocation, a result which is desired by both the Federation and ourselves.”