Memorandum of Conversation, by the Chief of the Division of Investment and Economic Development (Fetter)

Participants: Mr. Clayton14
Mr. Tarchiani (the Italian Ambassador)
Dr. Ortona (Economist, Italian Embassy)
Mr. Fetter

Subject: Italian Request for an Export-Import Bank Loan.

The Ambassador spoke of the desperate economic situation of Italy and of the urgent need for a large credit from the United States. He presented to Mr. Clayton an aide-mémoire13 in regard to the credit needs of Italy, a copy of a letter of February 14th to Mr. Martin of the Export-Import Bank requesting a line of credit of $940,000,000 for use in 1946,15 and a copy of a letter of January 31st, 1946, from the head of the Italian Technical Delegation in Washington to the Italian Ambassador.13

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Mr. Clayton indicated his appreciation of the difficult financial situation in Italy but said that a loan of anywhere near the size requested was out of the question at this time and pointed out that the major part of the credit needs of Italy should be met by the International Bank. He also said that even if a credit of this size were made available, the supply situation in the United States would make it impossible for the American economy to furnish goods to this amount in 1946. He also spoke of the relation between reparations and an Export-Import Bank credit and said that it would be extremely difficult to consider any substantial Export-Import Bank loan until the whole reparations question had been finally settled.17

The Ambassador reiterated the desperate need of Italy and pointed out that an election would be held within the next few months and that if the Italian voters were not properly fed in the weeks preceding the election it might be very difficult for the present government to remain in power. Mr. Clayton stated that the request would be carefully studied by the Department, but repeated that under present circumstances it would be out of the question for Italy to receive a loan of any where near the size asked for. Dr. Ortona said that Italy had just signed the $25,000,000 cotton loan.18

The Ambassador referred to the desire of Italy to join the Bretton Woods institutions19 and presented an aide-mémoire requesting American support of the Italian application for participation in these agreements, and requesting that Italy be invited to send an observer to the forthcoming meetings at Wilmington Island.

The Ambassador presented an aide-mémoire in regard to the food situation in Italy urging that the American Government request UNRRA to increase the Italian allocations.

The Ambassador presented an aide-mémoire asking the American Government to use its good offices to bring about the return to Italy of some 350,000 tons of Italian ships now in the shipping pool.

Mr. Clayton said that sympathetic consideration would be given to the matters in these three aides-mémoire but made no commitments to the Ambassador.

  1. William L. Clayton, Assistant Secretary of State for Economic Affairs.
  2. Not printed.
  3. Not printed; the letter estimated that Italy, in order to restore its industry and economy, would require imports for 1946 with a total dollar value of $1,700,000,000 of which it was expected that $760,000,000 would come from proceeds from exports, troop pay, emigrants’ remittances, loans from other countries, and other international resources (865.51/2–1446).
  4. Not printed.
  5. For documentation on the problem of reparations in the meetings of the Council of Foreign Ministers and at the Paris Peace Conference, see volumes ii, iii, and iv.
  6. In telegram 378 of February 15, the Department informed the Embassy in Rome that the agreement on Italian cotton credit was not yet signed, although the Export-Import Bank had by letter offered credit to the Italian Government several weeks before (865.51/2–846). With regard to the signing of the agreement, see telegram 745, April 1, to Rome, p. 901.
  7. For documentation on the Bretton Woods institutions, see volume i.