865.24/4–1645: Telegram

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

654. From Treasury for Tasca.80 A Mission from the Office of the Army–Navy Liquidation Commissioner, headed by Mr. Livingston L. Short, has departed for Italy to deal with the disposal of surplus Army-Navy property in Italy and will contact you on its arrival in Rome. It is our understanding that this Mission will carry out its negotiations with the Italian Government through the American Embassy, and you should cooperate fully with respect to the financial aspects of these negotiations.

State and Treasury have worked out with the Mission the basic principles governing disposals as follows:

Insofar as possible, all sales of surplus property will be made to the Italian Government at negotiated prices. The Italian Government will be expected to pay dollars currently for items of surplus property when the Italian Government would have purchased similar [Page 1254] goods for dollars in the absence of a surplus sale. All other surplus property will be sold for lire to be deposited in a special account in the name of the Treasurer of the United States. The Italian Government would recognize its obligation to convert the lire balance in this account into dollars and a funding arrangement would eventually be negotiated by State and Treasury with the Italian Government.
Agreement would be reached with the Italian Government that the funds in the special account would be available for certain limited uses. We would not expect to use the funds in the account to meet military expenditures or to pay for exports from Italy. However, we would desire to use the funds for non-military expenditures of the United States Government and for certain other purposes such as tourist expenditures, personal remittances to Italy, American charitable, educational and scientific expenditures, and servicing of American ships in Italian ports. The exact uses will of course have to be negotiated.
The Italian Government would guarantee the balance in the lira account so that the dollar equivalent of the balance would in no way be altered by exchange fluctuations.

We are sending you by despatch copies of various memoranda and letters relating to the disposal of surplus property in Italy for your guidance and information. Please keep us fully informed of developments relating to this matter. [Treasury.]

  1. Henry Tasca, of the Treasury Department, on special mission to Italy.