The Italian Embassy to the Department of State


The Italian Ambassador encloses herewith a memorandum dated July 22, 1945, which has been received by [from] the Italian Ministry of Foreign Affairs as a reply to the memorandum handed by the State Department to the Italian Economic Mission of March 6, 1945,6 regarding the various problems of economic and financial character which were discussed between the Mission and the State Department.

The time which has elapsed from the date of the memorandum here enclosed has brought about some events which may render it necessary to consider under a new light some of the problems outlined in the memorandum.

The Italian Embassy feels, however, that the memorandum in question may serve a useful purpose of stating the point of view of the Italian Government on the economic and financial situation of the country and on the provisions necessary to face the present difficulties.

The Italian Ambassador therefore would be very grateful if the competent American authorities will kindly give full consideration to the problems and the proposals contained in the memorandum in question.


The Italian Ministry for Foreign Affairs to the Department of State

The Italian Government has examined with the greatest attention the Memorandum of the State Department, in which the Government of the United States has outlined its point of view regarding problems which were the subject of the long and profound discussions [Page 1279] which took place between the officials of the competent American Departments, on one side, and the members of the Italian Mission, on the other.

The Italian Government is happy to be able to express its conviction that these contacts, which allowed to bring the most urgent problems of the Italian economy to the attention of the American Government, have made it possible to establish a concrete basis for the most ample future developments of the relationships between the two countries and for the reestablishment of normal economic and financial relations, according to the mutual desire of both nations. Moreover, the reopening of diplomatic missions in Washington and in Rome has furthered without doubt the realization of these objectives.

The Italian Government has also noted with satisfaction that the Government of the United States shares the opinion many times expressed from the Italian side, that the adoption of a series of measures for the solution of the most acute problems of the present economic emergency in Italy is urgently needed. Such problems are related to financial and commercial matters, and also to the juridical status of Italian concerns in the United States.

Nevertheless, the Italian Government has noticed that the Memorandum of the State Department did not indicate, as forthcoming, the solution of the problems of financial and economic character, which had already been presented to the Allied Governments by the Italian Government and which the Economic Mission had amply illustrated. Such problems refer to the essential and undeferrable needs of the Italian people, and the failing of their solution may present the greatest dangers and jeopardize the economic collaboration to which Italy is invited, and as stated below, she would be happy to give.

The Italian Government trusts therefore that the requests, upon which it finds necessary to insist with the present document, will be taken under careful and urgent consideration, with a view of finding those practical solutions for which the Italian Mission, together with the competent officers of the American Administration, had already accomplished a substantial work of preparation.

Financial Questions

The conversations which have taken place on the financial questions have permitted to enlarge, from the technical standpoint, the examination of the problems which formed the object of the note transmitted on January 9 to the Head of the Allied Commission, Admiral Ellery Stone, and also to the Ambassador of Great Britain, Sir Noel Charles. In such a note the Italian Government has stated its point of view concerning the urgent measures of a substantial character, the adoption of which seemed urgently needed for reasons of equity, and for the [Page 1280] purpose of counteracting a financial and monetary crisis without precedent.

During the period of time which has elapsed from the presentation of such a note, Italy has continued to contribute to the common war effort with every means at her disposal, and within limits consented by the United Nations. After the end of the war in Europe, Italy has continued to give her economic contribution in connection with the presence of Allied troops on Italian soil, and has also joined the Allies in the war against Japan, expressing its readiness of taking its share in this struggle with every possible means. The Italian Government has imposed on its citizens fiscal burdens so heavy that the contributing capacity of the Italians has now reached the extreme limit of saturization. In spite of this, the deficit of the state budget has continuously increased, the danger of inflation has become graver, and the necessity of urgent remedies always more evident.

The Italian Government, in the certainty, that the American Government will have appreciated in their full value the sacrifices sustained by Italy in the common war effort, and the action which the Italian Government has constantly taken to strengthen its contribution, is honored to answer Points 1, 2 and 3 outlined in the Memorandum of the State Department as follows:

1) The Italian Government holds it indispensable to assume full responsibility for the financial administration of the whole country as soon as possible.

2) The war being over in Italy, the Italian Government feels that the opportune moment has arrived for a definite settlement of the relations arising between the two governments for the issuance of the allied military currency.

3) The Italian Government is happy to welcome the proposal (point 3 of the American Memorandum) concerning a draft of an agreement to normalize the financial relations between the two countries, as deriving from the participation of the American forces in the military operations in Italy. The Italian Government is confident that the aforesaid agreement will keep in just consideration, with the view of the granting of a counterpart, the various contributions made by Italy at the cost of great sacrifices. The Italian Government entertains the hope that the acceptance of such request will be facilitated by the great understanding shown by the Government of the United States toward Italy and by its awareness of the critical Italian financial situation.

4) Regarding point 5 of the Memorandum, the Italian Government notes with satisfaction the friendly intentions of the Government of the United States, and will be happy to know the effective measures, [Page 1281] with which the promised aid could be realized so that Italian foreign exchange assets may reacquire their availability and be ready to be used for the reconstruction of the country.

5) Notice has also been taken of the decision of the Government of the United States to credit to Italy the counter-value in dollars of the sums assigned and to be assigned for the maintenance of American diplomatic and consular [personnel?] in Italy.

Commercial Questions

6) As for problems of a commercial nature, the Italian Government shares the hope, expressed in point 8 of the Memorandum, that Italy be in a position to begin, as soon as possible, the reconstruction of her own economy. It declares itself in agreement with the statement contained in the same point 8, according to which the economic structure of Italy must be adapted to the natural resources and to the aptitude of the population, so that production can meet, as soon as possible, the free international competition without the necessity of resorting to discriminatory or restrictive systems.

7) The Italian Government does not ignore the many difficulties which are today an obstacle to the resumption of commercial trade between the two countries (point 9 of the Memorandum) and which are due to the lacking of the fundamental conditions for such resumption, in particular the means of maritime transport. Nevertheless it is perhaps not premature to entertain the hope that on the initiative of the Allied Governments the first steps will be taken so that Italy may reacquire that liberty of movement and that position in the international economic field, which will contribute to make of her an active element in the world economic reconstruction.

In this connection, the Italian Government renews the requests which on various occasions have been submitted, that the Government of the United States may use its good offices with the view of obtaining that Italy may be admitted to participate in the organisms of economic financial and commercial character, decided upon at Bretton Woods as well as in other international conferences.

8) The provisions agreed upon by the United States of America and Great Britain to confer on Italy a greater liberty of action in the direction of commercial policy with foreign countries have been favorably greeted in Italian official circles. With particular reference to the problems concerning the placement of Italian products in foreign countries (point 10 of the Memorandum) the Italian Government calls the attention of the Government of the United States to the importance of the exports for the Italian economy, especially at the present moment when all normal sources of credit and foreign currency have been exhausted

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The Italian Government is ready to study this important problem with the Allied authorities, and it hopes that it can be solved taking into account the following elements:

The necessity of disposing of a sufficient quantity of Italian products particularly wanted in foreign markets for the resumption of trade with neutral countries.
The necessity of obtaining the highest prices offered by the International market for exports.
The necessity that the currency obtained from exports be left at the free disposal of the Italian Government.

9) The Italian Government is grateful for the assistance offered (letter d of point 10). Regarding the second paragraph of the same letter d, the Italian Government renews the request already advanced to be admitted to participate in the United Maritime Authority, so as to be placed in a position to represent directly the Italian needs for the allocation of naval tonnage concerning transportation to and from Italy. The Italian Government, although it realizes that the question of naval tonnage is a cause for preoccupation for the Allies, it feels bound to point out again the necessity that a certain number of merchant ships be placed at Italy’s disposal for her indispensable elementary needs, specially at the present moment in which the purchases of first aid for the reconstruction of Italy have to be speedily carried out.

10) Point 11 of the Memorandum confirms the decision of the Government of the United States and of Great Britain to meet the most urgent needs of Italian agriculture and industry with the aid of furnishing an initial quantity of capital goods for the work of reconstruction.

With the liberation of the whole of the national territory the first-aid program originally drafted for the liberated territory of central and southern Italy had to be appropriately revised and adapted to the new situation which has arisen.

The Italian Government is at present studying a program for 1946 which will presently be submitted to the American Government for examination.

The Italian Government desires in this connection to call the attention of the Government of the United States to the grave situation in which Italy would find herself if the essential imports for civil population would be in any way interrupted, such as food supplies, fuels, clothing, medicines and certain raw materials which were included in what originally has been defined as Program A. In this connection the Italian Government has the honor to indicate the necessity that the shipment of the essential supplies be at any rate assured and speeded up as much as possible.

[Page 1283]

For what concerns the merchandise and the materials intended for the reconstruction of industry and agriculture, the Italian Government points out that the credits in dollars, derived from the equivalent of the troop’s pay, in itself already very inadequate for the minimum Italian needs, will rapidly exhaust themselves with the withdrawal of the troops from Italy because of the end of the war. Such being the circumstances, it would be less and less possible to meet the financing of such imports. The Italian Government finds it, therefore, necessary to point out to the American Government the disastrous situation which would face Italian economy, if the complete program of the Italian requests, already in themselves minimum, should not be fulfilled.

The Italian Government will be grateful therefore if the Government of the United States would examine the possibility of granting also to Italy the means for financing the imports, mentioned in the above said plan, by resorting to those methods and institutions of which the United States are making use or the use of which will be contemplated in the future for the needs of the reconstruction of war devastated countries.

11) The Italian Government shares the hopes formulated by the Government of the United States in point 12 of its Memorandum that private commercial relations between the two countries be restored as soon as possible.

12) The Italian Government is happy to express to the Government of the United States its sincere desire to collaborate toward the formulation of a program of concerted action which will assure, in the spirit of the joint declaration of August 14, 1941 of President Roosevelt and of Prime Minister Churchill,7 the expansion of production, of employment, of exchange and of consumption of goods, the elimination of all forms of discriminatory treatment in international commerce and the progressive reduction of trade barriers.

The Italian Government is ready to sign an agreement of such a nature, and in the form of the exchange of notes enclosed in the Memorandum, as a starting point of the discussions of the problem in its concrete developments. Such aspects can, for Italy be summed up in the necessity of reconstructing her destroyed system of production, of restoring those industries which are considered vital, of stabilizing her currency: in short, in the necessity of realizing the indispensable requirements for the reconversion of an economy, previously based on an isolationist and autarchic orientation, and now destroyed and impoverished by the war, to an economy capable of meeting foreign competition.

[Page 1284]

It is the keen desire of the Italian Government that this transformation and reconstruction of Italian economy be brought about in such a manner as to render as efficacious as possible the collaboration of Italy in the development of international trade, and, at the same time, in such a manner so as to insure employment to the excessive population which must find the necessary means of subsistence through a just development of domestic industries, through her traditional agricultural work, and also, wherever possible, by participating in the productive activity of other countries.

In accepting the invitation to sign the note concerning the formulation of a program of economic policy, inspired by the necessity of the greatest possible development of international trade, the Italian Government is prompted by the desire of collaborating with the Government of the United States in their task of rebuilding and recovering the world economy, on the success of which depend the well-being of all nations and the maintenance of a long period of peace.

Nevertheless, the Italian Government is well aware that the realization of such a program could be barred by the tendencies, prevailing in some countries, bound to the formation of regional groupings, within which, the relations among the participating States would be regulated on the basis of preferential treatments.

The Italian Government further realizes how the thorough destructions of wealth caused by the war, the failing of certain previous sources of credits in foreign countries and the urgent needs of the reconstruction make it extremely arduous for Italy to solve the problems of her balance of payments which are so intimately related to the program of domestic and foreign economic policy.

Nevertheless, the Italian Government is confident that it could count, also in the future, on the powerful aid of the United States of America, in order that Italy may overcome such grave difficulties and be placed in a condition of efficaciously collaborating in the work of development of world economy.

The Italian Government shares the general point of view of the Government of the United States also for what concerns the progressive reduction of customs’ duties, a fundamental element for the restoration of an international economy based on a regime of competition. The Italian Government finds it opportune nevertheless to point out that the present Italian rates expressed in paper lire and unchanged with respect to prewar times, have lost all protective effectiveness in relation to the prices of goods in lire which have increased enormously. The reduction of the customs’ duty must be therefore understood not in the absolute sense, but according to the incidence of such duties when a new economic situation will be shaped through the stabilization of the currency, the restoration of the public budgets and the reconstruction of the productive and commercial life of the country.

[Page 1285]

13) Regarding the clause of the most favored nation treatment, (point 14 of the Memorandum) the Italian Government is in agreement with the United States Government in expressing the wish that commercial relations between Italy and the United States should continue to be guided, as they were in the past, by the unlimited and unconditional application of the most favored clause. It seems advisable to add that this attitude has been maintained by Italy also in the past, and that the provisions establishing limitations on the imports have been adopted in Italy only after other countries had placed grave and decisive limitations on the functioning of a plurilateral system of commerce.

14) The Italian Government expresses its readiness to collaborate with the Government of the United States for the fullfillment of the objectives indicated in point 15 of the Memorandum, and it hopes that the mutual efforts of the two countries may promote as soon as possible an expansion of world commerce in its classic and traditional lines.

Italian Property in the United States

15) The communications formulated in points 16 and 17 of the memorandum have been received with notable interest. Italy has already taken steps by a decree of February 1, 1945, for the revocation of provisions and measures previously adopted in matters of properties belonging to the Governments of the United Nations and to their citizens and institutions.

Since the juridical status of the above said properties and assets is, through the said decree on the way to normalization, the Italian Government hopes that analagous measures in favor of the properties and assets of the Italian nation, citizens and institutions in America will be reciprocally adopted also on the part of the Government of the United States.

16) The decision of the Treasury Department of the United States to authorize, by means of the issuance of licenses, any transaction concerning the import of goods and products from Italy, constitutes a further step toward the normalization of the relations between the two countries.

17) As to point 18 of the Memorandum, it will be opportune that the Government of the United States confirm that, in the eventuality that the payments of the Italian goods to be exported to the United States are to be made in lire, the relative authorization will be made expressly, and in every instance, by the Italian Government.

18) Finally, regarding point 19 of the Memorandum, the Italian Government has already done what was in its power in order to cooperate with the economic warfare and since some time has proceeded to sequestrate the properties and assets of enemy citizens and [Page 1286] institutions, which consequently cannot be either exported or concealed.

If, on the other hand, the Government of the United States intended to refer, with the above mentioned point 19, not to the treatment of enemy properties in Italy, but to other problems deriving from the administration and the availability of enemy properties, the Italian Government will appreciate knowing the American point of view with greater precision, declaring itself from the present moment willing to examine eventual requests and suggestions with a full spirit of understanding and collaboration.

19) The Italian Government avails itself of this occasion to express the hope that through the friendly understanding of the United States Government it will be possible to achieve the solution of the problems outlined in the Memorandum and to strengthen the ties between the two countries in the financial and economic field furthering that collaboration which is profoundly wished by the Italian people.

  1. Department’s memorandum of March 6 not printed, but for summary, see telegram 461–463, March 8, to Rome, p. 1250.
  2. Foreign Relations, 1941, vol. i, p. 367.