Lot 54–D 328

Memorandum by the Deputy Director of the Office of European Affairs ( Hickerson ) to the Secretary of State


According to the Italian Embassy, De Gasperi will want to talk with you on the following matters:

Italian Colonies: De Gasperi will again ask US support for the original French plan of an Italian trusteeship over the former colonies when the CFM Deputies meet to discuss this problem.
Surplus Italian Naval Units: De Gasperi is most anxious that we permit the Italians themselves to scrap the surplus naval vessels allocated to the US.
Yugoslav Attitude on Italian Treaty: The Prime Minister will endeavor to explain why the Italians feel they can sign the treaty only if the Yugoslavs also sign, and will ask your opinion of the probability that the Yugoslavs will accept the treaty.

These are all questions which have a great influence on Italian public opinion, and De Gasperi feels that favorable answers to them will go far towards pacifying the political uneasiness in Italy, and thus strengthen the moderate element.

In addition, the Prime Minister will probably mention some of the economic matters which he will take up in greater detail with Mr. Clayton:

Eximbank Loan: To the Italians, this much discussed subject has become a barometer of American confidence in Italy. When the press reported some weeks ago that the loan was off, lira quotations suffered their worst break to date, and rose again only after your statement that the loan was still under consideration. De Gasperi feels that the loan has now acquired an importance far beyond its financial significance, and is therefore the greatest single factor in what we do for Italy.
Purchase of More Liberty Ships: Italy now desires to buy another 50 Liberty ships, in addition to the 50 already contracted for.
Return of Italian Assets in US: We are committed to the return of the major part of Italian assets in the US, and there remains only to work out the method by which this will be done, possibly in a general financial settlement between the two governments. It is hoped that we can tell De Gasperi while he is here that we intend to cancel Italian indebtedness for the civilian supply program; that an additional [Page 838] $50 million in the non-troop-pay account is now available for the Italians; and that arrangements have been completed for the use by Italy of the two Conte ships for repatriation of prisoners of war and the emigration of displaced persons from Italy to places of re-settlement in South America.

You may wish to suggest to De Gasperi that he discuss with Mr. Clayton the negotiation of a new commercial treaty to replace the modus vivendi of 1938 [1937].1 An outline of our proposals can be given to the Italians now, and our draft of a treaty can be presented to them in a few weeks.

Finally, the Prime Minister can be expected to talk to everyone in sight about wheat and coal, which are of prime importance to Italy. Fortunately, the prospects for increased shipments of both commodities seem somewhat brighter, and of course we will do the best we can to meet Italian essential requirements.

John D. Hickerson
  1. Throughout 1946 Mr. Dunn had served as Deputy in the meetings of the Council of Foreign Ministers and in the meetings of the Deputies in the negotiations of the treaties of peace with Italy, Rumania, Hungary and Bulgaria. Although he had been designated Ambassador to Italy on July 25, 1946, he did not present his credentials in Rome until February 6, 1947.