Foreign Relations of the United States, 1955–1957, Western Europe and Canada, Volume XXVII

68. Letter From the Ambassador in Italy (Luce) to the Assistant Secretary of State for European Affairs (Merchant)¹

Rome, March 14, 1955.

Dear Livie: Assuming that Scelba’s government does not fall meanwhile, the Prime Minister will arrive in Washington on March 26. As I will not be there, myself, until the time of his arrival, I would like to pass on a few perhaps not too original personal observations of my own on the subject of the Vanoni Plan,² and the wisdom of publicly offering U.S. support to it at the time of Scelba’s visit.

1. The Vanoni Plan is not a plan. It is an academic projection, an exploratory study, at best a frame of economic reference. Its actual policy has yet to be formulated. It lays down no concrete steps for government action. The 64 dollar question, “Where will the money come from?” remains unanswered in the plan.

2. Nevertheless, what is plain about the plan is that it is (a) an austerity plan, (b) a plan for a vigorously “managed economy”. Its basic assumption is that the major part of the prospective growth of the national income will go into investment and not into consumption. This may be sound economics. My competence in this field of judgment is not great but what I am competent to judge is its political soundness. In a country where there are millions of unemployed and underemployed, where one-third of the parliament is pro-Cominform and therefore constantly agitating for higher wages, more public works, and all manner of consumer benefits and popular handouts an austerty program (once it is recognized as such by the public) is not politically feasible. How can a weak government which believes it will certainly have to face elections next year, hope to put through such a plan of action? An austerity program in a free economy requires on the one hand a disciplined, [less than 1 line of source text not declassified] unified citizenry and on the other, an equally disciplined, [less than 1 line of source text not declassified] group of political and industrial leaders. An austerity program can, of course, be put through by a dictatorship. Neither condition exists here.

3. The background against which the workability of the Vanoni Plan must be considered is (a) Italy’s essentially inferior and weak economic position—which would require—if the Vanoni Plan were to work—substantial external and internal financing on a continuing basis; (b) Italy’s weak, incompetent, strife-ridden, immobilized, [less than 1 line of source text not declassified] government, which has not yet solved its current economic headaches such as IRI, taxation, foreign investment, agrarian pacts, etc.; (c) Public opinion in the USA (as I see it) is unwilling to pour forth large sums of aid even over a short period—no less a ten-year period to “Foreign Paradise Planners.”

4. The publicity and encouragement given up to now to this vague Vanoni projection both in the USA and in Italy may have been useful and may even continue to be useful in arousing hopes and expectations in the Italian people that Italian democracy intends to solve problems which today only the Communists are promising to solve. But its usefulness must constantly diminish and in the end become counter-productive unless: (a) within a short time the plan is vigorously hammered into a plan for action; (b) is soon vigorously supported by substantial USA aid (the channel through which that aid flows is a secondary consideration), and (c) is thereafter vigorously implemented by a strong Italian Government.

Failing a, b, c, the hopes and expectations of the Italian people will be deceived and the plan will boomerang against the USA and the present government. The poet says, “Hope deferred maketh the heart sick”. Hope deferred also maketh plenty of Communists. …³

5. There is reason to doubt that the Italians are very serious themselves about the workability of the plan (certainly Mr. Scelba is not). It is interesting to note that even while the “Italian experts” are presumably working hard to scheme out a four-year slice of the Vanoni Plan for submission to OEEC in March, the Italian budgetary proposals for 1955–56 show rather clearly which way the prevailing economic and political winds are still blowing in Italy. In line with the Vanoni Plan, one should have expected the budgetary proposals would reduce non-productive expenditures and expand public investments. Actually, the Budget provides for an aggregate increase of 355 billion lira—of which only 25 billion are investment expenditures, and the rest is “unproductive.”

The editors of 24 ORE (the foremost economic journal of Italy) wrote on February 19, “Little as we believe in the plan as such, the Minister of the Budget, the On. Vanoni himself, appears to believe in it even less than we do.”

In short, I view our hearty public expressions of support by administration members of the Vanoni Plan in its present stage and in the Italians’ present situation as being economically unrealistic and fraught with the very real possibility of counter-productive political repercussions in both Italy and the U.S.A in the next year or so.

Sincerely yours,

Clare Boothe Luce⁴

1. Source: Department of State, Central Files, 033.6511/3–1555. Secret; Official–Informal. Merchant transmitted this letter to Under Secretary Hoover on March 18, with a covering note that reads in part as follows: “While I have reservations with regard to some of the arguments advanced by Mrs. Luce in condemning the Plan, I am in full agreement with her recommendation to avoid at present ‘any hearty public expression of support by Administration members of the Vanoni Plan in its present stage and in the Italians’ present situation.’” Merchant also sent copies of the letter to Stassen and Waugh. (Ibid.)
2. See footnote 3, Document 63.
3. Ellipsis in the source text.
4. Printed from a copy that bears this typed signature.