865.51/10–2047
The Italian Embassy to the Department of State
Memorandum
In the course of the last few months, the Italian Government have several times called the attention of the United States Government to the rapid deterioration which was and is taking place in the Italian situation with regard to dollar exchange and to vital supplies.
The Italian Government have participated wholeheartedly in the Conference for European Economic Co-operation which has met in Paris this summer, and which following the lead given by the Secretary of State of the United States in his Harvard speech in June last, has made every effort to elaborate a constructive plan for global European recovery over the next four years. Equally an Italian Delegation is now taking part in the Washington conversations on the same matter. The Italian Government and people fully recognize that the [Page 995] United States can extend their support to each European country on the scale and for the time which will be necessary only if such support is part of a series of constructive measures, beginning with national and intra-European self-help. Also Italy is vitally interested in the re-establishment of the economic health of her European neighbours, which for deep-seated reasons of economic history and structure have been in the past and must be in the future amongst her principal customers and suppliers.
The Italian Government and people, which through great efforts had already achieved some measure of success in the work of economic and financial reconstruction, had hoped that the generous aid already extended to Italy by the U.S. in 1947 would have been sufficient to meet the essential requirements of the Italian economy until such time as the new plan of American aid to European reconstruction would come into force.
An accurate survey which has been again made by the Italian Government clearly shows that even with the mobilization of all possible dollar credits standing in favor of Italy, like balance of suspense account, redemption of P.O.W. scrips, a very serious gap is developing at present in relation to dollar availabilities of the Italian Government. In fact for reasons which are well known to the United States Government and in spite of the severe measures already taken by the Italian Government for reducing its purchases abroad, Italy’s meager resources in dollar exchange and in basic imported commodities are now exhausted to all practical effects.
According to the last data (October 8th) the Italian Exchange Office had in hand and with “agent banks” less than $9,000,000 corresponding roughly to a few days of the country’s imports to be paid for in dollars.
It is therefore imperative for the Italian Government to find ways and means in order to face its dollar requirements in the period between now and the coming into force of the Marshall plan.
The requirements, and the receipts in the period between October 1st, 1947 and March 31st, 1948 are stated in a letter of the Italian Technical Delegation (copy attached under #11), which has been handed to the Chief of the Economic Development Division of the Department of State, entrusted with the study of this matter.
As shown in said document, the difference between requirements and receipts for the period mentioned is in the order of U.S. $334,000,000. This figure has been arrived at, after taking into full consideration the necessity of reducing the import requirements to the minimum possible extent.
[Page 996]In effect the figure is based upon estimates of grain requirements which do not take into account the fact that after March 1948, the remaining requirements would represent almost 100% of the rations; this would exceed by far practical possibilities. Also the above figure does not include U.S. $41,000,000 of general commodities which would be in themselves extremely useful for the working of the Italian economic machinery on the present low level. Neither does it include the re-establishment of a minimum operating reserve of U.S. $50,000,000, which appears necessary in view of the exhaustion of the Italian Government’s exchange reserves, which have been absorbed in part by the lack of external financing during the first weeks of October.
If the President of the United States convenes Congress to a special session for the examination of this problem, the Italian Government will be anxious to submit all the additional data which may be required. However, as the procedure involved for such examination would certainly take some time, and the above said needs are indeferrable, the Italian Government consider it their duty to stress the necessity of obtaining the immediate availability of some funds in order to avoid a breaking down of the economic and social structure in Italy.
A break-down of the global figure per months as shown in Table 5 of Attachment 1, shows that the indeferrable needs between now and the end of December 1947 amount to $182,000,000. This is due to the fact that in these months the Italian Government must not only provide the funds to meet engagements already incurred into and make the purchases which are immediately necessary, but must also place the orders and open the credits for the arrival in the first months of 1948. If this is not done in time, it may be impossible to obtain the necessary goods or a much higher price will have to be paid for them.
The Italian Government venture to ask the American Government if they consider practicable that the appropriate Italian Authorities should apply to the following United States Agencies, who may already have funds at their disposal:
- a)
- The purchase of coal, POL and a part of industrial materials could perhaps be financed by the Import-Export Bank over and above the credits to Italian industries now being perfected. As such purchases would be made to maintain the level of industrial production and therefore of exports from Italy, it would appear that a request from the Italian Government for such a credit would fall within the Bank’s field of operations.
- b)
- The Italian Government could perhaps also apply to the Commodity Credit Corporation for obtaining funds for the purchase of grains and other agricultural products in the United States of America. As such operations would fall within the sphere of action of the Corporation, no legal obstacles seem to stand in the way.
- c)
- There remains a third category of expenses, i.e. purchases of grains in other countries than the United States, as well as the payment of freight on some purchases in the United States. For this third category of expenses, the Italian Government strongly appeals to the United States Government for reconsideration of the problem of the granting to Italy of the dollars corresponding to the requisitions effected by the United States Army in Italy. Should this not appear as a sufficient or workable solution, the Italian Government venture to suggest that recourse be made to the Stabilization Fund of the United States Treasury.
- A part of the funds needed could also be obtained if ways and means were found to mobilize, in agreement with the British Government, the sterling balances owned by and gradually accruing to the Italian Government.
- Not found in Department of State files.↩