The Acting Secretary of State to the Ambassador in Italy (Kirk)
66. Following is for your information on program of discussion with Italian technical mission. Mission arrived in Washington [Page 1223] November 10 with letters from Bonomi40 to President, Secretary and Secretary of Treasury describing the mission as “fully accredited” by the Italian Government.41 In preliminary discussions to ascertain purpose of visit, mission indicated desire to discuss measures to stabilize and provide backing for the lira, credits, return of gold seized by Germans, Allied military expenditures in Italy, the centralization of the note issue in the Bank of Italy, and the participation of Italy in various United Nations economic organizations. They described financial and monetary questions as key to Italian problems and expressed hope of learning extent to which Allied support would be given in backing currency. Generally, they intend to find out where Italy stands in relation to United Nations in economic and financial matters.
Mission was reminded that United States is merely one of United Nations and was told that some of these points could not be discussed in detail. It was suggested that they direct their attention to specific practical problems in Italo-American relations. They were told that discussions would be carried on at technical level.
Discussions have followed two general lines. The principal discussions have related to financial matters and have taken place with Treasury. Italians have outlined their problems in detail and have urged (a) steps to regularize financial relations with the Allies in such a way as to permit Italian Government to control internal finances, to put lira on a firm basis, and to be informed of what its assets and liabilities are; (b) that the United States make available to Italy the dollar equivalent of lira expenditures of our forces in Italy for purposes other than troop pay, plus the dollar value of any excess of supplies and resources furnished us on a requisite basis over supplies which we furnish to Italy.
Treasury is about to hand the mission a statement on these proposals which will say:
- We view with sympathy Italian desire to assume responsibility for entire note issue and will discuss Italian request with British, to whom Italian Government should also make known its views.
- (As reported in a separate telegram, we have already proposed this to the British in connection with the discussions in CCAC).
- We are prepared to enter into an agreement governing financial arrangements arising out of the operation of American troops in Italy, designed to formalize present procedures. (This would transfer the troop pay arrangement from a unilateral American statement to an undertaking as part of agreed procedures.)
- We will take steps aiming to provide the Italian Government with full information relating to transactions affecting American-Italian relations.
- We will assist the Italian Government to mobilize its foreign assets to the maximum.
This statement constitutes in effect an acceptance of the first group of Italian proposals and rejection of the second. For reasons which have been explained to you in connection with the proposed lira account (see Deptel 396, November 7),42 it is impossible for us to pay dollars for expenditures for our forces in Italy other than troop pay. However, we are asking the War Department to agree to replace free of charge any goods requisitioned or purchased with lire which are in short supply and use of which necessitates current replacement by importation. We have given similar undertakings to the continental Allies. Although such an arrangement would probably have limited practical significance in Italy, it would seem to us to be of some value from a political viewpoint.
The mission has also been provided with information concerning the procedures under which AM lire are issued, and figures on total issues of AM lire and issues to American forces and to Italian agencies. Detailed information has also been provided on standing of post-liberation dollar accounts.
In addition to the financial conversations, discussions have been arranged for the mission on the subject of trade, the current status of Italian assets in this country, trading with the enemy restrictions, the proclaimed list, etc. While the interest of the mission in these subjects has been primarily in their relationship to the Italian financial position, we think that the discussions have been of value.
We anticipate that our conversations with the mission will end in about two weeks. We plan to give them a consolidated memorandum stating our position and views on the principal points covered during the discussions. In addition to these specific points, we hope to give them a general statement of our attitude toward Italy’s economic problems, indicating our sympathy and interest but also making clear the limitations on our ability to help Italy.
We also plan to issue a press release indicating in very general terms the nature of the discussions, portraying them as laying the basis for the resumption of normal economic relations between the two countries, and suggesting that they will eventually be followed by some agreements.
It would be desirable if this statement could be made a joint one with the Italian Government.[Page 1225]
The Department’s general attitude toward the discussions has been that they would perforce be mainly explanatory and informative, but that the mission should not be allowed to return home without accomplishments. We will try to make the memorandum summarizing the discussions as substantial as possible. The press release will necessarily be thin. We see nothing to be gained from an overblown statement and think that directing publicity toward the fact that we are trying to work out detailed economic problems by joint discussions is the best approach.
(We gather from the mission that the Italian Government has discouraged press discussions of the mission, and its members have scrupulously refrained from giving out information to the press here.)
Exactly what the Italian Government expected the mission to accomplish is far from clear to us. We have gathered that no precise instructions were given the mission and assume that it was expected to find out how matters stood and to do the best it could. That the Italians had hopes of obtaining something substantial would seem to be indicated by the fact that the mission was armed with full powers in the face of our agreement to receive it only in an unofficial capacity. We for our part are convinced that the achievements of the mission, though perhaps disappointing to it and to the Italian government, will have been far from negligible. It has effectively served to present and explain concrete Italian problems, to promote goodwill, and to lay the basis for later solutions. It might be well for you to convey this thought in any informal discussions with officials of the Government.
We plan to inform the British of the conversations and to show them for their information the statements we will give the Italians before they are handed to the mission. The mission had planned to go on to London but we understand the British are not prepared to receive them at this time.
A full record of the discussions has been made and copies of minutes and documents are being sent you by mail.
Department would welcome any comments you may have.