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

No. 1297

Sir: I have the honor to refer to a voluntary report dated February 7, 1939, entitled Jewish Owned Securities, Frozen Bank Accounts and Italian Exports, from the American Consul General at Milan.45a

On page 3 of the Consul General’s report there is what purports to be a summary of regulations dated January 24, 1939, dealing with bank accounts of foreign Jews residing in Italy and conditioning their bank withdrawals. The Consul General interpreted these regulations in the following sense:

(1) Ascertainment of property to be transferred abroad.

All property, incomes and bank accounts of foreign Jews must be declared to the tax office. A detailed list must be furnished and if any liabilities are existing they must be indicated clearly. Transfers are allowed only for property regularly declared to the tax office and taxes (income or other) have been paid.

For banking accounts a special account named “accounts of foreign Jews”, or “dossiers of foreign Jews”, must be opened. Every foreign Jew is required to concentrate his assets in one account at one bank acting as agent for the Bank of Italy.

The deposits (accounts) may be used for the payment of 40% of the domestic price of goods chosen from the attached list, to be exported to countries with free exchange and with which Italy has no “clearing” agreements, nor “compensated trade”, while the remaining 60% will have to be paid in foreign currency to the National Institute of Foreign Exchange.

As if appeared from this version of the new regulations not only that all foreign Jews in Italy would be required to declare their [Page 651] property to the tax office, but that each of them would be required to concentrate his assets in a single bank account, it was deemed advisable to request the Consul General to furnish the Embassy a copy of the document upon which he had based his report. The Consul General promptly complied with this request and there are transmitted herewith a copy and an English translation of the Circular Letter containing the regulations in question.46 An examination of them would seem to indicate that the above-mentioned impression was incorrect and that compliance with the requirements cited in the Consul General’s report is incumbent only upon those foreigners of the Jewish race who desire to avail themselves of the “facilities” offered by the regulations for the transfer abroad of assets owned by them in Italy.

Occasion was taken to discuss these regulations when the Counselor of the Embassy called upon the Director General of the Department of Transoceanic Affairs at the Foreign Office on February 14. It was made clear to that official that if the Italian Government persisted, in spite of our Government’s declared position in the matter, in expelling American citizens from Italy, bur Government could not accept the procedure embodied in these regulations as an adequate or satisfactory solution of the problems to which they were intended to apply.

The Director General pointed out that adoption of the procedure in question was optional on the part of the persons concerned; if they did not wish to avail themselves of it, there was no provision in the Circular Letter which would prevent their spending their money freely in Italy. His attention was invited to the fact that persons required to leave Italy could not be expected to derive much comfort from the knowledge that they could utilize here their funds on deposit in this country. He replied that as the laws stood at present there was nothing to prevent foreign resident Jews leaving Italy from returning as visitors when they wished to do so and remaining here for as long as six months at a time.

Respectfully yours,

William Phillips
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  2. Neither printed.