No. 1499
[Enclosure]
Précis of Conversation Between Secretary of State
George C. Marshall, President of the Council of Ministers De
Gasperi, Foreign Minister Sforza, and Ambassador Dunn, October
18, 1948
Italian Economy
In reply to the Secretary’s inquiry regarding the present general
state of the Italian economy, the President of the Council of
Ministers stressed as foremost the need for an immediate solution of
the problem of Italian surplus population. He pointed out that
Italian industry (particularly the mechanical industry in the North)
had more workers on the pay rolls than was economically sound. This
resulted in a vicious circle which tended to vitiate the benefits of
the European Recovery Program. For instance, Americans supplied coal
to Italian industry, but due to the excessive number of workers on
the pay rolls and the resulting high production cost of the
products, Italian industry did not yield a sufficient return for
Italy to purchase itself the coal that was needed to restart the
cycle. He said that a solution of putting excess workers on relief
was politically most undesirable because the workers themselves felt
strongly that they wanted work and not relief. He pointed out that
public works took considerable time and heavy financing, both of
which Italy did not have. The only solution politically
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practicable was the export
of Italian labor to the other countries of Europe and South America.
He appealed to the Secretary for the good offices of the United
States in persuading other European and South American countries to
accept Italian immigration.
In answer to Secretary Marshall’s inquiry with regard to the
magnitude of unemployment in Italy, the Prime Minister pointed out
that it was over two million and that the annual population increase
was over 400 thousand a year. The Secretary of State mentioned that
he had had recent exploratory discussions on this problem with the
Foreign Minister of Brazil, and he inquired what effect the proposed
Italo-French Agreement would have in this regard. Both De Gasperi
and Sforza said that France could readily absorb almost immediately
a vast number of Italian workers which would have an immediately
beneficial effect on both French and Italian economy. Sforza pointed
out that Italy itself, through the proposed Agreement, was ready to
sacrifice some of its heavy industry in return for the French
sacrifice of some of its mechanical industry which employed a larger
proportional number of workers. Sforza gave one explanation for
delay on the part of the French in concluding the accord in that
there was a latent political concern on the part of the French that
Southern France might tend to be Italianized through too hasty
admission of Italian immigrants. He also pointed out a fundamental
French complex that France was a country of greater wealth and
political importance than Italy and consequently somewhat more
conservative in the adoption of such new ideas as the Customs Union.
Italy, which felt more keenly the dire pressure of necessity, was
more ready to take new steps. Secretary Marshall expressed the
keenest interest and understanding of the need for the early
conclusion of the Italo-French Customs Union. He also pointed out
its importance in connection with the January–February hearings in
Congress of the concrete results obtained so far through ERP. He said he would pursue this
matter further in Paris and with Mr. Harriman.
Aside from over-population De Gasperi stressed that another problem
facing Italian economy was the present industrial recession in
Northern Italy. He gave as his primary explanation the fear of war
which paralyzed the undertaking of new activity. Sforza added that
business people in Northern Italy believed that in the event of war
the first military line would be the Gothic Line and that Italian
industry in the North would immediately fall into the hands of the
Russians. In this connection he referred to the immediate memory of
what a formidable obstacle the Gothic Line had proved in the
campaign of the Allies against Germany. He then alluded to the
importance of a feeling of military and political security in the
solution of
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the economic
problems of Italian industry in the North. He referred to his recent
speech regarding Italy’s common interests with the Western
Democracies and mentioned his own belief that the OEEC nations could develop further
from an economic basis into a strong political and military front
against the Soviet menace if supported by the United States.
The Secretary traced the development of American public opinion with
regard to support of the Western Democracies from the initial
attitude of Congress following the war in slashing military
appropriations to the present strong support of a firm United States
foreign policy. He stressed the tremendous importance of the
Vandenberg Resolution and that American public opinion since that
date had progressed much further in favor of the firmest sort of
stand (against Soviet aggression. He felt confident that in the
forthcoming Congress it would be possible to obtain a more liberal
policy with regard to military help for the Western Democracies and
that appropriations would be passed. Moreover, the surplus materiel
which had been scattered about and to a great extent disposed of at
the end of the war was now being reorganized to a point where the
time lag between shipments and an authorization from Congress would
be considerably cut down from what would have been possible last
June. He pointed out that the United States had to go slowly in this
whole matter because it was our great preoccupation not to make any
declarations that we could not fully back up with action.
World Situation
With reference to the concern of both the Prime Minister and Sforza
over the tenseness resulting from the Berlin situation, the
Secretary reviewed the developments leading to that situation and
his own personal experiences in dealing with Stalin and
Molotov.2 He related step by step the great personal effort
he had made to convince them of his utter sincerity and he outlined
some of the evasions and falsehoods with which he had been
confronted. At the same time he pointed out that the Russians had
lived up to their commitments during the war.
He explained in detail the developments surrounding recent reports
with regard to the proposed sending of Judge Vinson to make an
appeal to Stalin, including the fact that the proposal had been
abandoned by the President immediately on the Secretary’s
recommendation, and, prior to the Secretary’s recent departure from
Paris to the United States for consultation with the President. He
referred to the President’s unique position of responsibility in
being the only man in
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the
world who would be faced with making the decision as to the use of
the atom bomb, and that already twice in the war the President had
had to bear the terrific responsibility of making that decision. He
said the President realized this most keenly and with grave
preoccupation. He mentioned the President’s great concern that no
possible step should be left untaken towards convincing the Soviet
Government that no one desired peace more than President Truman, but
that if forced the point could be reached where the bomb would have
to be used. Public opinion in America, due to intense Soviet
provocation, had now reached the stage where it would fully support
and demand the use of the bomb, and the Soviet Government knew
this.
In describing the world situation the Secretary made an analogy of
his recent trip to Greece where he found that everyone was
concentrating on one mountain rather than on the general situation;
he said that the countries of Europe seemed to be rather like a
general who in an engagement of five divisions was devoting all his
time to the action of one regiment; he was speaking of the Berlin
situation. When he looked over the developments in Europe and the
world as a whole he could not but be impressed by the great strides
that had been made in the past two years towards a general
improvement of both economic and political conditions and a
resulting general setback of aggressive Communist expansion. He
pointed to production figures in many countries that had already
exceeded the estimates of their and our experts and to continuing
favorable political developments such as the Italian and other
elections. He thought that the Soviets had adopted their Berlin
policy in a desperate effort to re-assert themselves against the
tide of world resistance to their expansion. He gave statistics with
regard to the extraordinary successes of the air-lift which now had
established the ability of our occupation forces in Germany to
continue indefinitely the provisioning of the non-Soviet zones in
that city. For instance, in one day when 80 per cent of the
transport planes had to be landed by instruments 7,000 tons of coal
had been brought in as against the estimated requirement of 4,500
tons. Taking into consideration the tremendous factor of the atom
bomb, the united American public opinion, the favorable political
and economic developments already taking place in Western Europe, he
did not believe that the Russians would force the international
situation into war. The principal danger lay in the possibility that
they might undertake an incident which could lead to war, since the
American people, not subject to dictatorship control, could not
safely be experimented with in incidents.
ERP
The Secretary outlined the historical development of legislation
governing the appropriation of monies by the Congress, and he
explained
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in that
connection the importance of the ERP
hearings next January–February before the Appropriations Committees
and not before the Senate Foreign Relations Committee, which was far
less subject to isolationist control and broader in perspective. He
referred again to the importance of the Italo-French Customs Union
as a concrete proof of the efforts these two countries were making
to work together under the over-all European Recovery Program and he
stressed the tremendous importance of each of the ERP countries being in a position to
put forth evidence of the progress it was making towards full
recovery.3
