865.51/3–845: Telegram

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

461–463. Discussions with Quintieri–Mattioli mission were concluded on March 6 and mission is leaving United States today for Italy.

Memorandum was handed mission on March 673 covering points, on which we felt it possible to make statements. Copy of statement has been airmailed to you.

Summary follows:

United States Government has welcomed initiative of Italian Government in sending mission and feels that discussions have been helpful. United States desires restoration to normal basis as promptly as possible of economic and financial relations between the two countries. However, owing to war conditions and legal consequences of state of war between the two countries, this objective can be achieved only by gradual process.
Memorandum includes a statement on financial points along the lines summarized in Deptel 66, January 13 to Rome.
United States will pay dollars for all post-liberation diplomatic expenses in Italy.
Memorandum notes that the mission has raised the question of foreign exchange payments for military expenditures in Italy other than troop pay and for supplies and services furnished on a requisition basis. This subject has been regarded as inappropriate for discussion with mission, but mission has been informed of difficulties attaching to this proposal. Memorandum further notes that similar request has been made formally by the Italian Government to AC and to U.S. and British Governments and states that reply will be made to the Italian Government in due course.
Memorandum sets forth substance of revised export policy (reference Tam 456, February 9) and indicates willingness of United States Government to issue licenses under Trading-with-the-Enemy Act74 to permit the importation of Italian goods into the United States.
Memorandum states that Italian Government with AC advice and assistance will be authorized to prepare a supply program for rehabilitation items.
United States is willing to enter into agreement on economic policy objectives (Deptel 175, January 3175). Text of proposed note [Page 1251] on this subject was handed Italian mission. Neither the memorandum nor the draft note mentions article VII76 of the lend-lease agreements.
United States is granting unconditional most-favored nation treatment to Italian exports to this country and we expect reciprocal treatment for American commerce as Italian foreign trade revives. At a later date we may wish to propose negotiation of commercial agreement embodying reciprocal assurance of such treatment. United States desires that trade between the two countries be expanded as rapidly as possible and be returned at an early date to private channels.
Memorandum describes action which has been taken by Alien Property Custodian to relax controls over Italian pre-war assets. However, ultimate disposition of such assets remains to be determined in the light of American claims against Italy after consultation with other Allies.
Speed with which restoration of Italian external financial and trade relations can be restored to normal will depend to substantial extent on cooperation of Italy with Allied economic warfare measures.

Re penultimate paragraph Deptel 66, January 13, record of discussions has not been put in final shape and has not been mailed to you as yet. It will be sent out in a few days.

Reurtel 199 January 23,77 no press release is being issued here. However, press inquiries will be answered along lines of following statement, text of which has been made available to Italian mission.

For the past several months, an economic mission representing the Italian Government has been engaged in discussions with experts of the interested agencies of the United States Government regarding economic problems of mutual concern to the two Governments. The mission is headed by Baron Quinto Quintieri and Mr. Raffaele Mattioli.

The discussions have included both financial and trade matters and have afforded an opportunity for a full exchange of views between the two Governments on these subjects. Consideration has been given in particular to the problems involved in the restoration of normal economic relations between the two countries. Substantial progress has been made in exploring the steps in this regard which will be necessary on the part of each Government, and a basis has been laid for future action.

The discussions have now been concluded and the mission is returning to Rome to report to the Italian Government.

Text of memorandum was handed to mission at formal meeting presided over by Assistant Secretary Dunn. It was made clear to the mission that we recognize memorandum does not cover certain points which they raised with us, such as credits, lend-lease, and [Page 1252] Italian participation in Bretton Woods Agreements.78 They were told that the omission of these points should not necessarily be regarded as indication of negative viewpoint on our part but merely that we do not feel time is ripe for discussing these subjects. The mission indicated appreciation of our difficulty but expressed hope that further steps would be taken shortly.

Length of memorandum precluded possibility of reading and discussing it at the meeting and mission made no statement of reaction to the memorandum. However, in informal conversation after the meeting they raised two points:

Is there any possibility of United States paying dollars for military expenditures other than troop pay and requisitions of United States forces in Italy? It was pointed out to them, as had been done on numerous occasions during the course of the conversations, that such a step would place Italy on a more favorable basis than France, Belgium and other Allied countries. In these countries, we pay dollars for troop pay, but obtain supplies and services for our troops on reciprocal aid.
Mission asked for information as to scope of program for furnishing rehabilitation supplies and method of financing program. They were told that we are not in a position to give a final answer on this point, but that it will probably be financed by troop pay dollars.

  1. Telegram sent in three separate sections numbered 461, 462, and 463, dated March 8, 7 p.m., 8 p.m., and 9 p.m., respectively.
  2. Not printed.
  3. Approved October 6, 1917; 40 Stat. 411.
  4. Not printed; in this telegram the Department advised that it was considering an early proposal to the Italian Government of an exchange of notes embodying substance of article VII of the Mutual Aid Agreements (840.50/1–3145).
  5. For text of article VII, see Department of State Executive Agreement Series No. 241, or 56 Stat. (pt. 2) 1433.
  6. Not printed; in this telegram Ambassador Kirk expressed hope that it would not be necessary for Department to issue a press release regarding nature of Quintieri–Mattioli discussions in Washington (865.51/1–2345).
  7. For documentation regarding the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, July 1–22, 1944, see Foreign Relations, 1944, vol. ii, pp. 106 ff.; for texts of Articles of Agreement of the International Monetary Fund and Articles of Agreement of the International Bank for Reconstruction and Development, formulated at Bretton Woods, see Department of State, Treaties and Other International Acts Series No. 1501, or 60 Stat. (pt.2) 1401 and 1440.