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865.51/446 Mr. Thomas W. Lamont of J. P. Morgan & Co. to the Secretary of


NEW YORK, May 26, 1925.

[Received May 27.] DEAR MR. SECRETARY: As I explained to you over the telephone this noon I found when I returned to my desk this morning that a cable had just arrived from Rome transmitting a request from our correspondents there, the Bank of Italy, that we should kindly arrange for them the banking credit of $50,000,000 which I discussed tentatively when I was in Rome early last month.

For your exceedingly confidential information, the Bank of Italy, together with the Bank of Naples and the Bank of Sicily, (being the other two leading banks in Italy) are joining in arranging this credit with their friendly banking correspondents in America. The term of the credit will be for six months, with an option of renewal for a further period of six months. These banks together will engage in case the credit is not otherwise discharged at maturity, to ship gold to discharge the credit. The Government undertakes to grant authorization for such shipment of gold, if it should prove necessary, and, as a matter of good faith, will undertake to guarantee the credit.

The Bank of Italy explains that with the tendency of Italian exchange rather weak it deems it prudent to arrange this banking reserve looking forward to legitimate stabilization of the lira, although it is opposed to the policy of the Bank to attempt any appreciation of the lira through artificial means.

While, as explained to you, Mr. Mellon and Mr. Hoover, we regard this as a banking matter and so very different from any foreign government loan issued in this market; nevertheless, we are happy as we wrote you some time ago to keep you informed as to any considerable banking transaction of this kind. We plan to proceed with our ar

For correspondence concerning the refunding of Italian indebtedness to the United States, see vol. 1, pp. 162 ff.

rangements in the matter promptly, and I shall take the liberty of telephoning you some time tomorrow to ascertain whether the information above recited is sufficient for your purposes. With great respect [etc.]



The Secretary of State to Mr. Thomas W. Lamont of J. P. Morgan

& Co.

WASHINGTON, May 29, 1925. MY DEAR MR. LAMONT: I beg to acknowledge the receipt of your

letter of May 26, 1925, in which you were good enough to inform me, in confirmation of telephone advices, in regard to the proposed banking credit of $50,000,000 to Italian banks for a term of six months, with an option of renewal for a further like period. I note that it is expected that the Italian Government would undertake to guarantee the credit, and I note further your observations to the effect that this is a banking credit rather than a public flotation of a Government loan.

In the circumstances I desire to say that while this Department expresses no opinion concerning the transaction in question, it could not withhold objection to a public flotation of Italian bonds or an extension of credit to the Italian Government to take up the credit in question or for other purposes, unless, in the meantime, the Italian Government had taken suitable steps looking toward the settlement or refunding of its indebtedness to the Government of the United States. Very sincerely yours,


865.51/448: Telegram

The Ambassador in Italy (Fletcher) to the Secretary of State


ROME, June 2, 1925—11 a. m.

[Received June 2–7:56 a. m.] 85. Banking credit contract for 50 million dollars referred to in Department's telegram No. 63 of May 29, 7 p. m.,.* was signed last

la night, and the transaction will be publicly announced to the Parliament by the Minister of Finance this afternoon.


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Not printed.

800.51 W 89 Italy/41: Telegram

The Secretary of State to the Ambassador in Italy (Fletcher)



WASHINGTON, August 19, 1925—2 p. m. 101. (1) On August 4 the Italian Ambassador spoke with me regarding a note verbale which he had handed to me a short time ago and which detailed at considerable length Italian financial difficulties. He gave me at the same time the substance of messages received from Mussolini expressing a desire to borrow money in this country for industrial development and stabilization of the Italian exchange. Answering his inquiry about the attitude of the United States Government toward such loans, I stated that the position of this Government had not changed; that the informal Italian proposal of which an outline was supplied in the Department's telegram No. 81, July 1, did not contain a basis for negotiations, as I had already told him; and that we could not view financing of this sort with favor until the Italian Government made a suitable debt-funding proposal. The Ambassador intimated also that when he returned from Italy, possibly in September, an Italian commission would be able to undertake negotiations.

(2) The Department of State has been consulted about projected loans to the Italian State Railways and to the cities of Naples and Rome, and the reply has been that this financing could not be regarded favorably while the Government of Italy had not taken suitable steps toward a debt settlement.

(3) This material is strictly confidential and for your personal information only. It is not desired that you take any action in this regard at the present time.



The Secretary of State to the Ambassador in Italy (Fletcher)

No. 352

WASHINGTON, August 21, 1925. Sir: On July 31 Mr. Thomas W. Lamont, of J. P. Morgan and Company, telephoned to me saying that he understood that Blair and Company were negotiating to loan twenty-five million dollars to the Italian State Railways and that he would like to know, for his own information, what would be the attitude of this Government. I told him confidentially that the Italian Ambassador had called on me and left a Memorandum 3 which stated in substance that his government would like to know what would be the attitude of the State Department if the Italian Government should seek to make further loans in New York. He stated that they contemplated making a loan with Morgan and Company and the Chase National Bank. I informed Mr. Lamont that I had told the Italian Ambassador that I did not think the Government could look with favor on such loans so long as the Italian Government had only made an offer which, as it was perfectly aware, we could not even consider as a basis of discussion for a settlement. Mr. Lamont stated that his firm was not negotiating a loan with the government and that their attitude was that until Italy had done more than she had at present, they would not consider the subject of a loan and that he had so informed the Italian Ambassador. He said the Italian Ambassador replied he was aware that the offer they made would not be acceptable to the United States. I told Mr. Lamont that they should not then have made such an offer. Furthermore, I said that so far as Blair and Company negotiations were concerned, we would consider the loan to the Italian State Railways in exactly the same position as a loan to the government and that I had told the Italian Ambassador I would see Mr. Mellon on Monday and answer his note, but that my attitude was as I have expressed it. I am [etc.]

16 Note verbale dated July 27; not printed. * Not printed.


800.51 W 89 Italy/48 : Telegram

The Ambassador in Italy (Fletcher) to the Secretary of State


ROME, August 31, 1925-4 p.m.

[Received 5:15 p. m.] 132. Referring to Department's telegram 101, August 19, 2 p. m. Representative of banking firm of Blair & Co. is here carrying on negotiations for the floating in New York of at least 10 million dollar bond issue to finance hydroelectric and industrial enterprises in Italy. He seems to have the impression that the State Department will not object to floating the loan at this time, and I have therefore suggested that the firm consult the Department before proceeding further. It is probable that they will do so in the next few days.


• Probably refers to note verbale of July 27; not printed.


800.51 W 89 Italy/48
The Acting Secretary of State to Blair & Co., Incorporated

WASHINGTON, September 1, 1925. SIR: In confirmation of Mr. Young's statement to Mr. Sheldon 5 on August 31, in response to Mr. Sheldon's inquiry concerning the attitude of the Department of State in regard to the flotation of Italian industrial securities in the United States, I beg to say that this Department would not view such financing with favor at the present time. I am [etc.]


800.51 W 89 Italy/48 : Telegram The Acting Secretary of State to the Ambassador in Italy (Fletcher)


WASHINGTON, September 1, 1925—4 p. m. 106. Your telegram 132, August 31, 4 p. m. The State Department has informed the bankers that it would not view this financing favorably at the present time.



J. P. Morgan & Co. to the Secretary of State

NEW YORK, November 18, 1925.

[Received November 20.] SIR: This is to confirm the information conveyed to you over the telephone by Mr. Lamont on the 17th instant, to the effect that we have been carrying on discussions with Count Volpi, the Italian Minister of Finance, in regard to the issuance in the near future of a loan of $100,000,000. for his government; the proceeds of such loan to be used for stabilization purposes. The contract covering this operation was executed to-day, the 18th, and while we are aware, as the Secretary stated, that the Department of State interposes no objection to this operation, we desire to file this letter with you for the record, and if you please, to receive in due course your acknowledgment of same. Very truly yours,

J. P. MORGAN & Co.

* Arthur N. Young, Economic Adviser, Department of State. • Representative of Blair & Co.

The agreement for settlement of the Italian debt was reached at Washington, Nov. 14, 1925. For negotiations and text of the agreement, see Combined Annual Reports of the World War Foreign Debt Commission, 1922–1926 (Washington, Government Printing Office, 1927), pp. 217–241.

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