865.24/10–1345: Telegram
The Ambassador in Italy (Kirk) to the Secretary of State
[Received 5:25 p.m.]
3083. In letter dated October 11 to ANLC (Army-Navy Liquidation Commission) copy of which was sent to Embassy, Italian Government summarized its price policy with respect to sale of surplus property in Italy as follows:
(Paraphrase begins): (1) For all foodstuffs clothing and items of prime necessity sales would be at cost price with distribution through government organizations wherever possible to eliminate speculative profits (e.g. sepral). (2) Cost prices would also be fixed for items which could give special impetus to resumption of production of particular importance to recovery of national economy. Objective in this instance would also be to distribute material directly to producers avoiding intermediary speculators through Consorzii, chambers of commerce, etc. (3) All the remaining items sold by Allies to Italian Government except those which would be transferred directly to Italian Government agencies would be sold for what the open market would bring. The methods which would be employed in this connection would be such as might be dictated by necessity of speed in disposal to avoid losses from deterioration and theft. Prices of such items would be reduced as additional lots are placed on the market.
A price policy of the type described above is required for deflationary effects to bring Italian market into equilibrium with foreign markets on the basis of rate of exchange as near as possible to present rate of 100 lire to dollar established by Allied authorities. Sale of surplus property on basis of prices corresponding to present rate of exchange would permit extraordinary profits to be realized by privileged groups of speculators.
Sale of surplus property at declining prices just under market prices in addition to permitting Treasury to pursue deflationary policy would provide the means by which a reserve may be constituted to meet eventual losses which may result from following: (a) Since prices will decline as material is fed into market, prices may decline very much below present level (b) End balance of surplus property may be for practical purposes unsalable (c) Losses from management and control of large amount of property whose custody and protection for well known reasons is far from adequate. (End paraphrase)
The above policy statement was prepared at request of Embassy and Tasca in view of significant contribution which [sale?] of US surplus property in Italy could make to Italian budget if proper price policy were adopted. Re my telegram 3006 October 8. In our view Italian Government is in general approaching problem correctly.
Economic adviser to Army-Navy Liquidation Commission Paris is visiting Rome for purpose of drafting comprehensive plan for [Page 1295] transfer en bloc to Italian Government of all surplus property available in Italy against receipt financing to be worked out simultaneously or subsequently. Proposal would be taken to Washington for approval. He estimates surplus property available now at only 200 to 250 thousand tons (200 to 250 million dollars) owing to large quantities being absorbed by UNRRA for Yugoslavia and Albania. See Caserta’s 3837 October 9.18
Repeat to Treasury from Tasca.
- Not printed.↩