Lot 60 D–137: Box 1

Minutes of the Twenty-sixth Meeting of the National Advisory Council (and the Eighth Meeting of the U.S. Top Committee on French Financial Negotiations), Washington, May 9, 1946

[Page 908]
Present: Secretary Fred M. Vinson (Chairman), Treasury Department Col. Carl Pforzheimer—Visitor
Mr. W. L. Clayton, State Department
Mr. George Luthringer, State Department
Mr. Victor Longstreet, State Department
Lt. Col. C. J. Shields, Office of Foreign Liquidation Commissioner, State Department
Mr. Herbert Parisius, Commerce Department
Mr. Frank Isenhart, Commerce Department
Mr. Marriner S. Eccles, Board of Governors, Federal Reserve System
Mr. J. Burke Knapp, Board of Governors, Federal Reserve System
Mr. Wm. McC. Martin, Jr., Export-Import Bank
Mr. Herbert Gaston, Export-Import Bank
Mr. August Maffry, Export-Import Bank
Mr. E. M. Bernstein, Treasury Department
Mr. Harold Glasser, Treasury Department
Mr. Frank Coe (Secretary), Treasury Department
Mr. Allan J. Fisher (Assistant Secretary), Treasury Department

[Here follows item 1, not printed.]

2. Transfer of Non-Troop Pay Dollars to Italy

The Chairman asked about the status of the transfer of non-troop pay dollars to Italy. Mr. Coe said that $50 million would be transferred as soon as the Comptroller General and Congress concurred. Discussions had taken place with the Comptroller General, who wanted some technical details explained. The Chairman said the matter would be taken up with the Appropriations Committee at the earliest possible date.

3. Proposed Reconstruction Loan to Italy

Amount of Loan.—Mr. Clayton recalled that the Technical Committee recommended that the Council approve consideration of a $150 million loan to Italy (NAC Document No. 8646). He moved that the Council approve consideration by the Export-Import Bank of a credit of $100 million to Italy at this time. The adequacy of this amount was discussed. Mr. Clayton said that if the Export-Import Bank should get further lending authority State would consider lending Italy another small credit of say, $50 million. The Italians will have to get along on a great deal less from the Export-Import Bank than they need, and will have to apply to the World Bank within a short time.

Mr. Knapp pointed out that UNRRA has a $450 million program for 1946 which will disappear next year, and that even with the amount [Page 909]of foreign help the Italians are getting this year there is nothing left for rehabilitation purposes but merely enough to keep them alive. Mr. Clayton doubted whether Italy could get anything like $450 million from the World Bank.

Mr. Eccles thought this Italian situation should be brought to the attention of Congress. Mr. Clayton agreed but said they would like to see action on the $100 million promptly.

Reparations.—Mr. Eccles asked whether there was any question of the funds being used for reparations. Mr. Clayton said that there would be no reparations out of current production. The U.S. would agree to a reparations program involving transfer from Italy of military production facilities not convertible to peacetime use.

Mr. Knapp inquired whether there was any thought that Italian gold and foreign exchange holdings might be used as sources of reparations. Mr. Luthringer said the issue of gold and foreign exchange was still open. We are asking for the return of Italian gold to Italy minus specific claims such as those of Yugoslavia. Our position would be against the use of gold to pay reparations. On external assets our position would be that the various United Nations take the Italian assets in their territories or as much as needed to meet their claims. We would favor the return of assets in neutral countries to Italy but would be willing to consider that Italian assets in satellite countries might be used for reparations. State had asked Secretary Byrnes whether it was appropriate to go ahead with the Italian loan. An affirmative reply had been received.

Mr. Eccles thought that in dealing with France and Britain we should have assurances that gold and foreign exchange will be returned to Italy. Mr. Luthringer said that no country would waive claims for reparations, since there was the possibility that Russia, Yugoslavia and Greece may put in claims later. Mr. Clayton remarked that the French were not at the Potsdam Conference but that the British stood by us in our position that there should be no reparations from the Italians.

Mr. Eccles said that in approving a credit of $100 million and the release of non-troop pay to Italy he would like the record to show that the NAC is conscious of the problem and is taking these steps with the understanding that neither the French nor the British will use Italian assets in their possession for reparations. The Chairman asked Mr. Clayton to find out about this point before the Council takes action.

Mr. Clayton agreed to send a message to the Secretary of State asking for assurance that neither the French nor the British will either claim or take reparations from Italy.47

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Action of the Council.—Mr. Clayton requested action on his motion on the understanding that the answer to the inquiry would be satisfactory. Mr. Martin questioned whether this was good procedure. The Chairman agreed and thought the record would be much better if we had a prior commitment. Mr. Clayton withdrew his motion for immediate action and the Council agreed to defer action until an answer was received.48

[Here follows item 4, not printed.]

  1. Not printed.
  2. Telegram 2232, May 10, to the Secretary in Paris, read: “Before recommending consideration by Eximbank of $100 million credit to Italy, the NAC wishes to know that neither the Brit nor French will claim or take reparations from Italy.” (865.51/5–1046)
  3. In telegram 1045 of May 10, the Acting Secretary informed the Chargé in Rome that the Export-Import Bank loan for Italy was still under consideration by the N.A.C. and that consultations with Congress were expected soon regarding the transfer to Italy of non-troop pay lira expenditures (865.51/5–546).