Foreign Relations of the United States: Diplomatic Papers, 1945, Europe, Volume IV

865.50/10–1845: Telegram

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

Rome, October 18, 1945—6 p.m.
[Received October 20—2:35 a.m.]

3135. Urtel 1824, Oct 12 and mytel 3096, Oct 15. Representatives of US and UK Embassies, Allied Commission, FonOff, Finance and Treas Ministries and Gambital^18a attended meeting Oct. 15 called by Storoni, Commerce Undersecretary, to discuss problems of resumption of private trading.

Memorandum presented by Storoni states that Italian Govt proposes to resume private trading as rapidly as possible renewing application of normal pre-war licensing and related legislation which still exists unchanged. Intergovernmental trading would still be possible through present ICE procedure but what [that?] form of trade is described as of entirely exceptional and emergency character and necessary principally for trade with countries with which resumption of private trading may be delayed.

Private trading envisaged by Storoni is described in memo as follows:

Exports: Govt determines exportable surpluses. Exporter concludes contract, requests export license from Undersecretariat for Foreign Commerce (to be formed) and when granted presents goods to customs. If payment will be in foreign exchange exporter exhibits to customs certificate of approval issued by an authorized bank against undertaking of exporter to cede foreign exchange to Italian Govt. If payment in clearing exporter presents to customs a declaration of amount of lire proceeds of sale.

Imports: Govt prepares a general import plan indicating goods, quantities and relative priorities in light of needs of domestic economy. Importer negotiates with supplier and when terms defined requests import license either direct from Undersecretariat or through Chamber of Commerce. License presented to customs which exercises control and issues import receipt. If payment is to be made in exchange customs receipt and invoice are presented to authorized bank. If by clearing customs approves declaration of amount owed in lire and importer makes payment to authorized bank.

Miscellaneous: Undersecretary may authorize imports of goods where no exchange transfer is involved private compensations and imports resulting from foreign credits or for manufacture on commission if he finds proposed operations are convenient and useful. Storoni stated that Govt is “very diffident” regarding private compensations.

Storoni emphasized that altho he personally would like to see virtually all imports handled through private channels he feels that Govt probably would want to continue to handle critical items through official channels and that it is impossible to state how much of imports could be left to private trade until UNRRA picture is clarified. He thought that if UNRRA were to handle most critical items (coal, wheat, petroleum, et cetera) much or all of the remainder depending on extent of UNKRA program might revert to private trade.

Under foregoing plans recourse to ICE would no longer be obligatory and ICE would resume normal pre-war functions which might include assistance to private exporters in overcoming transport difficulties.

Memo concludes by listing three problems which it is said must be overcome if private trading is to be resumed at early date:

1. Customs services must be fully reactivated on all frontiers and in all ports. Storoni emphasized this is essential, stated that customs is now scarcely functioning at all and that he will address special communication to AC on subject.

2. Italian foreign exchange office which will receive dollar proceeds of Italian exports to US as before the war should be permitted to dispose of dollars for purchases of imports without necessity of obtaining specific US Treasury approval each transaction. May Embassy assume that Treasury action mentioned in second sentence of paragraph 2 (C) (urtel 1824) will take care of this problem? (Actually memo stated that agreements regarding payments should be reached with US and UK to assure crediting of export proceeds in manner distinct from Govt credits and thus to permit import purchases specifically against such proceeds. Memo added parenthetically that it would be desirable to have foreign exchange proceeds utilizable for purchases on any market. To this British colleague immediately objected).

3. Limitations on Italy’s foreign trade deriving from the extensive list of important items still included in category “A”¹⁹ and from requirement that Allied agreement be obtained on exportable surpluses should be reduced and progressively eliminated. Storoni said he would communicate with AC on this point.

Embassy informed Storoni that US favors resumption private trading as soon as possible and that he will no doubt shortly receive from FonOff note on subject addressed by Embassy to Italian Govt.

It would be useful to Embassy to know what outlook is for relaxation of limitations mentioned under 3 above. In that connection I believe that it would be entirely consonant with our efforts to obtain return of private trading on widest possible basis if pressure were brought to bear to bring about immediate and thorough review of Italy’s category “A” list (which for example still includes citrus fruits) and if clarification were sought promptly regarding the exact extent of Allied Commission’s power in reviewing exportable surpluses.

Officials in Commerce Subcommission believe that they may disapprove the export of a product or commodity if the same or similar item is included in essential import program. Italian Govt argues that if it should have to export freight cars made in Italy in order to obtain Polish coal or textiles in order to obtain Swedish cellulose such exports should be permitted. As further example I understand that Eximbank will approve credits to Italy for purchase of urgently needed US cotton and that Italian Govt must guarantee repayment of dollars on short term. Since payments must be expected to result from proceeds of finished textile exports Italian Govt must be assured that it will be able to export textiles. It would seem to me that AC should screen exportable surpluses only in light of Allied military needs and of commodities in extreme short supply.

Kirk

1. Ufficio Italiano dei Cambi e Passaggio, the Italian Office of Exchange and Passage.
19. See aide-mémoire of February 24, 1945, from the Acting President of the Allied Commission to the Italian Government, p. 1244, for explanation of categories “A” and “B”.