865.51/8–946: Telegram

The Acting Secretary of State (Clayton) to the Chargé in Italy (Key)


1725. Reference despatch 3929, Aug 9 on proposed note to Italian Foreign Office concerning a possible loan from US:

Dept agrees on urgency preparation of basic material for consideration of Italy’s 1947 import requirements and her need for financial assistance. Italian Emb in Washington already received informal suggestion to this effect from Cleveland last June.
Wording of proposed note AmEmbassy however implies probability of US loan to Italy to meet 1947 financial deficit. According to present thinking in Dept suspense account and possible 1946 Eximbank loan should furnish credits to meet late 1946 basic requirements, and industrial reconstruction 1947 deficit be met by International Bank. Post-UKRRA relief grant to Italy for 1947 food deficit under Dept consideration. Undesirable for US to suggest 1947 loan especially as 1946 Eximbank loan application still pending.
Dept suggests that AmEmbassy informally call attention Italian Govt necessity Italian authorities start immediate preparation of type material described your despatch 3929, such material useful whatever the form of international financing. Material should also cover (a) economic effects of planned imports, degree of industrial and agricultural reactivation, level of consumption; (b) balance of payments, including invisible items and, to the extent possible, breakdown exports all merchandise by principal commodity groups and markets; (c) estimates formation and distribution national income pre-war and throughout transitional period.
Following your suggestion Havlik, new chief ED, discussed informally this problem with Sacerdoti and economic officials Italian Emb and handed them rough draft of suggestions for presentation of Italy’s 1947 estimated requirements, including sample form to be followed for justification of cotton requirements based on appendix A, despatch 3939 [3929]. Preparation loan applications along special project lines was also suggested. Copy of draft mailed by pouch. Sacerdoti, leaving by plane for Rome Aug 27, requested to inform Italian Govt.
Dept still considering candidate for economic advisor requested under urtel 2139, Apr 25.73
Despatch 3924, Aug 7,73 on relations with UNRRA Italian Mission being answered by pouch.

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