Memorandum by the Under Secretary of State (Welles)


The Italian Ambassador called to see me this afternoon. The Ambassador told me of his earlier conversations with Mr. Sayre and Mr. Dunn with regard to the signing of the new commercial treaty between [Page 470] the United States and Italy. He explained to me that the Danubian preferences would be abolished as of January 1 next, with the exception of the Austrian preference, and that, on this basis, he believed that all obstacles to the signing of the treaty had been removed. He told me that he had been informed by the Department that, owing to the time required for receiving in Washington a signed copy of the treaty from Rome and the time needed for ratification by the United States Senate, it would be materially impossible for the treaty to be ratified by the Senate here by the 15th of the coming month of December, and that it had consequently been arranged that the two Governments by means of an exchange of notes would tide over the period until the new treaty became operative. He appeared to be entirely satisfied with the arrangements proposed and said he was strongly recommending to his Government that the exchange of notes procedure be agreed to.

The Ambassador then said that, once this step had been taken, he hoped that negotiations for a trade agreement between the United States and Italy could be commenced. He said that on his recent trip to Italy this autumn he had obtained the agreement of the Minister of Foreign Trade, Signor Guarneri, to the commencement of negotiations, and that he had made it clear that Italy would have to agree to the importation of American manufactured products, such as automobiles, in return for concessions on our own part. He told me of a conversation he had recently had with Mr. Henry Ford, who was interested in the trade agreement negotiation, and of his own—the Ambassador’s—regret that the efforts of Mr. Ford to establish a factory in Trieste some years ago had not proved successful owing to the opposition of the domestic Italian automobile interests.

The Ambassador then went on to say that he felt that the autarchic system was a system which was highly detrimental to economic stability and to enhanced prosperity in his own country. I said that this would seem to be most evident when one realized how thoroughly uneconomic it was for Italy to devote man power and wealth to the manufacture of synthetic gasoline in Italy, not only of inferior quality but at a cost far superior to imported gasoline, when the public and internal communications could be benefited by the free importation of natural gasoline at low prices and the human energy and wealth, now devoted to the production of bad synthetic gasoline at high prices could be devoted to the manufacture of goods which Italy could export in return for natural gasoline. The Ambassador said that this was a perfect illustration of what he had in mind, and that for that reason: he believed that liberal trade policies were the only sure policies in [Page 471] the long ran. He said that Italy had been forced into an autarchic system two years ago as a result of sanctions, and that a certain measure of self-dependence for a nation like Italy, which possessed no natural resources, was probably desirable, but that if carried to excess, it was a ruinous policy.

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S[umner] W[elles]