865.50/7–2547
The Ambassador in Italy (Dunn) to the Secretary of State
No. 1341
Subject: Report on the visit to Rome of the Honorable William L. Clayton, Under Secretary of State for Economic Affairs
Sir: I have the honor to report that the Honorable William L. Clayton, Under Secretary of State for Economic Affairs, arrived in Rome late in the evening of July 22 and left Rome for Geneva at 5:30 p.m. on July 24.
In the morning of July 23 I took Mr. Clayton to call upon the President of the Council of Ministers, Signor De Gasperi, and the Vice President of the Council of Ministers and Minister of the Budget, Signor Einaudi. I gave a luncheon for Mr. Clayton on that day, which was attended by Signor De Gasperi, Signor Einaudi, Count Sforza, Minister of Foreign Affairs, Marchese Taliani, Chief of Protocol of the Italian Government, and members of the Embassy staff. At five o’clock that afternoon I took Mr. Clayton to call upon Count Sforza, the Minister for Foreign Affairs.
On the morning of July 24 Mr. Clayton was received by the Pope. He held a small background press conference for American correspondents at the Embassy at 11 a.m. and at 12 o’clock attended a meeting in Dr. Einaudi’s office composed of Dr. Einaudi, the Minister of the Treasury, Dr. Del Vecchio, the Minister of Finance, Signor Pella, the Minister of Industry and Commerce, Signor Togni, the Minister of Foreign Trade, Signor Merzagora, and the Chief Commissioner of Food, Signor Ronchi.
The President of the Council of Ministers gave a luncheon for Mr. Clayton on that day and in the afternoon Mr. Clayton held a conference [Page 946] with members of the Embassy staff on the subject of the general economic and financial situation in Italy.
In his conversation with Mr. Clayton, Signor De Gasperi touched on the political situation as it related to the matter of the ratification by Italy of the Peace Treaty. He said he anticipated considerable difficulty in the Assembly on this matter but that the Government was determined to press forward with its request for approval of the ratification and intended to leave the responsibility for acceptance or rejection of the Government’s position to the General Assembly itself. Signor De Gasperi also spoke of his hope for support of the present Government by the United States, particularly in providing for food grains for the next twelve months. He said that Italy needed to import during the present fiscal year ending June 30 next, 2,900,000 tons of grain in order to maintain the present ration and the Prime Minister remarked that the present Government should not, at least, reduce the ration from that established by the last Government in which the Communists participated. Signor De Gasperi said he hoped to get 700,000 tons of wheat from Argentina, and possibly Turkey, which would make the amount they would ask from the United States 2,200,000 tons. He said the first question was to obtain the allocation of that amount to Italy and the second question was to obtain assistance in the form of credit for purchase of the wheat. He said also that it was important to make an effort to have the delivery facilitated and expedited in order to save the expense of transporting wheat from one section of Italy to another, which was itself uneconomic. Mr. Clayton stated that there was a good crop of wheat in the United States this year, even better than last year, although the corn crop would probably not equal that of last year. He stated further that one of the great difficulties in exporting wheat from the United States was the railway transportation, as the grains had to be carried distances of from 1,000 miles or more to the seaboard and this created difficulties in regard to the rail transportation. He said, however, that the President had granted priorities for the use of cars for the transport of wheat for export and had also granted priorities in shipping so that the problem was now principally one of obtaining the transportation to the seaboard. Signor De Gasperi expressed deep appreciation for all that had been done by the United States for Italy in the past and expressed his confidence that the present Government could meet its difficulties if it had some assistance in meeting its balance of payment.
Signor De Gasperi said that he was faced with a Communist Party in Italy which was under the leadership of a very shrewd politician, Palmiro Togliatti, who had been Secretary General of the Comintern, [Page 947] and he pointed out that with the Soviet suspicion and mistrust of all foreigners, his appointment as Secretary General of the Comintern was an indication of the confidence the Moscow Government had in him.
The Prime Minister asked Mr. Clayton his opinion of the possibilities of the Paris meeting of sixteen nations in connection with General Marshall’s proposal. The Under Secretary replied that there was a great opportunity for the European countries concerned to produce a plan for integrating their economy and providing for real recovery in Europe with a minimum of assistance from non-European countries. He called attention to the fact that Europe during the past fiscal year imported coal from the United States to a value of $750,000,000, which was entirely uneconomic and was more than Europe could normally pay for and at the same time pay for imports of food and other materials.
Mr. Clayton took occasion at this point to suggest to Signor De Gasperi that some thought be given in connection with the Paris drafts to the necessity for restoration of sound currencies in the European countries as a means of promoting exchange of goods and thereby increasing production generally. He said that in his opinion any plan which left out financial and monetary problems as they existed in each country and their relation to the exchange of trade would be incomplete. The conversation ended after a short reference to the position of the Soviet Union with respect to the Paris Conference and the attitude of that country also toward the ratification of the Treaty of Peace for Italy.
In the conversation with Signor Einaudi, Vice President of the Council of Ministers and Minister of the Budget, the subjects touched on were the Paris Conference, the balance of payments position of the Italian Government for the remaining six months of this year and the first six months of 1948, the food situation, and the financial situation of Italy at the present time and in the immediate future. The discussion of the Paris Conference was very much along the same lines as the conversation with the Prime Minister, although Dr. Einaudi did say that he had received a request from Signor Campilli, the Italian representative on the Conference in Paris, for a financial expert to deal with financial and monetary problems. He said he was at the moment endeavoring to send one of the very best financial experts in Italy and hoped that he would be free to go. With regard to the Italian balance of payments, Signor Einaudi handed Mr. Clayton a memorandum,1 a [Page 948] copy of which is enclosed, and the discussion followed the general lines of the information contained in that memorandum.
Signor Einaudi related the food situation also to the balance of payments position and explained how the requirements for an increased import of food this year were due to the poor crop in Italy and the fact that the exports had not yet reached the point where the foreign exchange thereby gained sufficed for the import of necessary materials and fuel and food.2
On the financial situation Dr. Einaudi stated that there had been no change in the Italian tariff since 1921 with the exception that some two years ago the ad valorem duty was increased about 3½ times and as the price level had increased 40 or 50 times since the 1921 rate, this meant that the actual ad valorem duty on goods imported into Italy amounted to only 2 or 3% of the value. He said there had been another tax of 5% of the value of the goods as a service charge and this had recently been raised to 10% in order to cover an increase granted by the Cabinet to the salaries of the State employees. Mr. Clayton pointed out that the tariff itself was not always the greatest obstruction in international trade but it was often other restrictions and obstacles which could be just as obstructive as a high tariff.
Dr. Einaudi then explained the taxation system in Italy, stating that the rates of taxation for definite categories of income were in general very high but as they were based on valuations which were very seldom 100% of the value of the income to be taxed the eventual rate of taxation was not as high as was provided for under the law. He said he felt that the tax rates were as high as could be supported by the people at this time but that a simplification of the rates and application of the law could perhaps provide for a more effective collection system.
All the further points covered in this conversation are included in the memorandum Dr. Einaudi handed to Mr. Clayton during his call.
During the call on Count Sforza, Minister for Foreign Affairs, the conversation was rather general in tone, Count Sforza being interested in Mr. Clayton’s ideas about the Paris Conference and about the general economic situation in the United States. There was nothing particularly new that came out in this conversation which had not been discussed in Mr. Clayton’s previous calls, but Mr. Clayton also took occasion at this time to call Count Sforza’s attention to the advisability of having the Paris Conference include a reference to the financial and monetary problems in the European situation.
[Page 949]A report on the discussion which took place at the meeting in Dr. Einaudi’s office on July 24, which was attended by the financial and economic Ministers of the Cabinet as well as the High Commissioner for Food, is contained in a memorandum by Mr. Walmsley, which is attached herewith.3 Mr. Byington, Mr. Walmsley, and I accompanied Mr. Clayton to this meeting.
Mr. Clayton, upon leaving Rome, said that while he had had rather full information with regard to the food situation here and the Italian financial situation also before he came to Rome he was interested in meeting the members of the Government and was satisfied that they were an earnest and competent group of officials who were doing their very best in the interests of their country for the promotion of its economic recovery.
I wish to express my appreciation for Mr. Clayton’s visit here as it was a source of encouragement to the Italian Government in that they felt they had an opportunity to put their case to an important American official who is concerned with the problems with which they are confronted. Mr. Clayton’s tact and interest in dealing with the officials during his visit was deeply appreciated by them and they all expressed themselves as extremely gratified on his informed understanding of the Italian situation.
Respectfully yours,
- Enclosure 1, “Deficit of the Italian balance of payments, as a consequence of the war and financial requirements,” not printed.↩
- Enclosure 2, “Memorandum on the Production of Cereals in Italy,” not printed.↩
- Enclosure 3, “Memorandum of Conversation: Italian Food and Agricultural Crisis” July 24, 1947, not printed.↩