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

74. Memorandum of a Conversation, Secretary of State Dulles’ Office, Department of State, Washington, March 30, 1955, 10:15 a.m.¹

SV MC–6

Washington, March 30, 1955, 10:15 a.m.

PARTICIPANTS

• United States
  • The Secretary
  • Ambassador Luce
  • Mr. Jones (WE)
  • Lt. Col. Walters (Interpreter)
• Italy
  • Prime Minister Scelba
  • Foreign Minister Martino
  • Ambassador Brosio
  • Minister Canali (Interpreter)

[Here follows a brief table of contents.]

[Heading and 2 paragraphs (½ page of source text) not declassified]

Fiat Elections

The Secretary thanked the Prime Minister for his remarks and said that he would like to express the gratification which we all felt over the shop steward elections at Fiat where he believed the Communist percentage had declined from 62% to 39%.² This was the type of development which was encouraging and might open possibilities for improvement in the offshore procurement situation. The Prime Minister said he felt that this development confirmed their opinion that the Communist problem in Italy is directly related to the economic situation. The U.S. had had a great part in the Fiat victory by helping to provide permanent employment through the offshore procurement program and when it could be made clear to the working people that democracy could provide stable employment, they would choose democracy over Communism every time. He felt that the recent Fiat development might well be the beginning of a complete change in the Italian situation. In the struggle against Communism, tangible evidence could be given that work could be provided in other factories and this would have a favorable effect on the whole situation. They felt this confirmed their opinion that Communism in Italy is rather a problem of economic need than of ideology. He hoped the Secretary would forgive his constant emphasis on the fact that the Italian economic problem was not perhaps completely understood and that the possibility existed of consolidating democracy in Italy if the Government were able to carry out its plans. Political action against the Communists was easier to take when it was accompanied by measures of social improvement.

[1 paragraph (15½ lines of source text) not declassified]

Private Investment

The Secretary said there was one point he would like to bring up in connection with what the Prime Minister had said and that was that he felt that it was always a mistake to consider that in this country important economic developments could only be handled through governmental action. There existed in this country a vast reservoir of capital available, of a private rather than a governmental nature. We did not believe in loaning money for commercial purposes and did not feel that this was a proper function of government. While we had done so in the past it was only in matters where an emergency existed. This vast reservoir of private capital was ready and able to flow to places where a climate existed which encouraged private investment. He cited the case of Venezuela where more than $2 billion had been invested in the last few years, and said that many billions had also been invested in Canada. He said this capital would flow quite easily and could be used where the climate favored it. He noted with satisfaction that a new law to encourage private investments had been introduced in Italy and although he was not familiar with the details, he wished to emphasize to the Prime Minister how important this was as a source of funds in the economic field. He felt that it might be useful if a brief phrase could be inserted in the communiqué which would serve to bring this to the attention of his colleagues in the Italian Parliament and also to remind U.S. capital of the opportunities in this field. He wondered if the Prime Minister did not feel that such a phrase in the communiqué would be useful. The Prime Minister said he shared the Secretary’s opinion and was cognizant of the importance of private investment. A week ago, a new law concerning private foreign investments had been introduced in the Italian Parliament.³ The experts who had worked on this law felt that it was a great deal more liberal than anything that had preceded it and that if the Parliament approved this law it could well serve as a basis for increased private investment but once again in the political field we faced a vicious circle due to the fact that economic developments influenced political events and therefore the two should be attacked simultaneously. The Prime Minister added that the introduction of the phrase into the communiqué was purely a question of wording. They agreed with the substance but as there had been a considerable controversy on this subject in Italy they did not want to say anything that would further exacerbate this problem. The controversy arose purely from the ill-will of those who were opposed to the government but that he had no objection to the introduction of this idea into the communiqué.

The Secretary then asked if there were any other subjects that the Prime Minister wished to develop during this restricted meeting. Mr. Scelba said he might like to discuss the question of the Secretary’s recent trip to the Far East and the situation there. The Secretary wondered whether this might not be discussed at the larger meeting which was about to take place and the Prime Minister fully concurred and said that he had no other subjects for discussion at the restricted meeting. The meeting then concluded.

1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199. Secret. Prepared on April 1; the drafting officer is not indicated.
2. The results of the shop steward elections held at Fiat on March 29 were sent to the Department in telegram 15 from Turin, March 30. (Ibid., Central Files, 865.062/3–3055)
3. See footnote 2, supra.