Office of the Historian

862.24/7–947: Telegram

The Secretary of State to the Embassy in Italy

secret
us urgent
niact
Washington, July 9, 1947—4 p.m.

1090. Dept desires your comments soonest possible re Taff’s phone conversation with Genl Connolly FLC on 7 July.1 Understand Taff reported Min of Treas2 stated Ital Govt not willing agree at this time to amendment Corbino-Bonner surplus property agreement3 to avoid twenty-eight million downward adjustment in one hundred sixty million settlement figure.

Apparently this development will seriously interfere contemplated arrangements transfer army equipment. In view apparent impossibility Itals undertake even nominal commitment on long range credit basis; impossibility FLC effect transfer gratis under surplus property act; [Page 936] and now obstacle transfer under revision general surplus property settlement, request your recommendations. In your discretion you might wish to point out to Minister Treas or De Gasperi importance of obtaining settlement now in view of substantial concessions by US now being negotiated with Lombardo mission. In view nature certain materials involved in surplus property settlement Dept reluctant to discuss question with Lombardo but you might deem it advisable that tie up with Wash discussions be made by you in Rome. While Dept would not hold up signing agreement with Lombardo unless Ital yielded on surplus property, history of latter discussions indicates Ital refusal at last moment to enter into proposed surplus property agreement may be based on misunderstanding our intentions which might be corrected by reference to substantial concessions we are negotiating in Wash. If you approached Ital you could also point out that settlement now on surplus property taken in conjunction with settlement Wash would constitute complete settlement on all known claims US against Ital. Otherwise, US would, even after signing agreement with Lombardo, have outstanding a claim arising out of retransferred lend-lease property, with original cost 110 million dollars, which has not been made subject for discussion Lombardo, but has been reserved for inclusion in settlement surplus property discussions Rome. For your info OFLC Wash unable concur with Tail’s suggestion that title to all remaining surplus Italy be transferred Ital Govt immediately on basis of undertaking by latter to reach agreement on price and payment terms within three months.

For your info only, agreement with Lombardo may be signed middle to latter part week July 14.4

FLC deferring further action pending receipt ur views and report results ur discussions Rome, if any.

Marshall
  1. No record of this telephone conversation has been found.↩
  2. Gustavo del Vecchio.↩
  3. See Foreign Relations, 1946, vol. v, p. 932.↩
  4. See editorial note, p. 956.↩