840.50 Recovery/9–1647
The Italian Ambassador (Tarchiani) to the Acting Secretary of State
Dear Mr. Lovett: Following our conversations of the other day,1 I enclose herewith some tables2 which show the magnitude of the problem of the Italian requirements for the next months.
The tables here submitted are the following:
- a)
- Table n. 1 reflects the immediate problem confronting the Italian Government for the purchases to be made in U.S.A. from now to the end of 1947. No funds are at present available to the Italian Government for such purchases. Should funds not be forthcoming and said purchases not be effected, a complete breakdown of the Italian economic system would occur. The table in question includes the amounts of basic essential commodities, like coal, cereals and P.O.L. products, in excess of those now being financed under the grant-in-aid program as within the limits so far indicated by the American competent authorities, plus other items absolutely indispensable to maintain the minimum production level of Italian industries in the above said period. The total requirement for these undeferrable purchases amounts to approximately 190 million dollars, for four months, or an irreducible minimum of more than 47 million dollars per month. I wish to point out that this figure does not include purchases to be made in other countries, for which payment in dollars is required.
- b)
- Table n. 2 estimated balance of payments for the second semester 1947 showing a deficit for such period of approximate 236 million dollars.
- This figure was however calculated when the decision of the British Government on the nonconvertibility of the pounds sterling had not been taken. Such figure therefore must be considerably increased, as approximately 15 million sterling pounds of receipts corresponding to net trade balances are not usable for the time being.
- What is very clear is that the deficit in the balance of payment for 1947 is such that Italy without additional assistance can not meet the irreducible minimum requirements of more than 47 million per month, as set forth in paragraph a) above.
- c)
- Table n. 3 shows the estimated projection of Italian balance of payments in the year 1948 as submitted to the Paris Economic Conference of the 16 European countries. It indicates a total deficit of 852 million dollars, i.e. a monthly deficit of approximate 70 million dollars. In the calculations of such balance of payments no consideration [Page 972] was at the time given to the possibility that the pounds sterling accruing for Italian export into the sterling area might not be convertible. In this respect it may be useful to recall that the Italian Government estimates that Italian export in the sterling area will exceed imports to that area for an amount of 1,5 million pounds sterling per month. Therefore should the nonconvertibility be maintained, the actual deficit within the dollar area would considerably increase.
With respect to the above, I wish to stress the absolute necessity in which the Italian Government finds itself to obtain the necessary funds to finance the undeferrable essential purchases in the U.S. market, in the present moment. I venture to suggest that an immediate increase of the grant-in-aid program for Italy would be a practical solution to meet the present emergency.
I hope that you will give all your kind and careful consideration to the data submitted herewith and I thank you very much for the attention which you will give to the matter.
Yours sincerely,