865.50/4–2547: Telegram
The Acting Secretary of State to the Embassy in Italy
us urgent
583. A. For Emb’s confidential information only, Dept now investigating needs for immediate and longer-run stabilization Ital economy. Basic questions being considered include (1) is stabilization impossible without important changes Ital economic policies, especially toward price and wage stability; (2) is it necessary emphasize production for domestic consumption rather than for export in order to permit most rapid improvement living standards, and (3) what outside financial assistance necessary to facilitate stabilization program over say five-year period and especially to induce adoption sound internal programs and measures.
B. Dept now analyzing Ital political and economic situation, impact of economic assistance already given, and magnitude and nature additional economic assistance required to achieve long-run economic stability if combined with appropriate changes Italy’s economic policies.
C. Request Emb give highest priority to submit latest information not previously forwarded on present situation, changes since Liberation and future prospects re following points, assuming no change Italy’s policies:
- (1)
- Agricultural and industrial production;
- (2)
- Standard of living, with special reference to (a) per capita availability of principal consumer goods and (b) real wages and the changing distribution of real income among manual laborers, salaried employees, farmers, entrepreneurs etc.;
- (3)
- Investment, with special emphasis on (a) reconstruction activity, (b) investment in new industries and (c) inventories and hoarding;
- (4)
- Relations between domestic prices, world prices and the exchange rate;
- (5)
- Foreign trade and the balance of payments.
D. Request also (1) Emb’s evaluation current govt economic policies, (2) detailed suggestions re changes required on economic grounds, and (3) political implications of adoption such changes. Please consider particularly govt policies following fields:
- (1)
- In general;
- (2)
- Taxation;
- (3)
- Currency inflation;
- (4)
- Wages;
- (5)
- Rationing, price control, allocation of raw materials;
- (6)
- Control of foreign trade and foreign exchange;
- (7)
- Public and private investment;
- (8)
- Unemployment.
E. Appreciate magnitude of task inherent preparation detailed replies. Advise if material can be received here by May 20 and advance summaries cabled before May 7.