Endnotes for Chapter XIII

1 The rehabilitation supplies allowed under the disease-and-unrest formula were difficult to define. Whereas relief supplies consisted of commodities needed directly to prevent distress, rehabilitation supplies were regarded, in general, as commodities which would not, like flour and medical supplies, provide relief directly and immediately. It was considered, however, that rehabilitation supplies could be brought within the disease and-unrest formula where they would directly and rather promptly result in the production of supplies needed for relief. Of such a character would be the seed referred to by McCloy. Perhaps farm tractors under certain conditions could also have been regarded as essential in preventing disease and unrest. But the difficulty here was not only that procurement for the Army Supply program had not been directed toward acquisition of agricultural machinery but also that such machinery was needed for farm production in the United States. In fact, when OFRRO suggested a tractor-program General Clay pointed out that it would deflect American productive facilities from essential military equipment (ASF, ID, Hist of Civ Sup, DS-80)

2 The target date, however, was later to be pushed forward again.

3 This plan was carried out in Sicily by Administrative Instruction No. 9, issued in connection with the new ration cards, which was to go into effect on 1 November 1943. Through these cards, rationing was continued for bread, pasta, olive oil and sugar, but for no other items for human consumption. Similarly the ammasso laws were continued for wheat, olive oil, and olive oil residues. All other commodities produced in Sicily could henceforth be sold to the public free of any obligation to deliver to ammassi, i.e., government-controlled warehouses. ACC files, 10000/100/951.

4 The increase had been offered by the Finance Subcommission even though there was fear it would further the inflationary spiral. Once granted in Sicily, the same type of increase had to be given shortly afterward on the mainland.

5 The Allied Anti-Inflation Committee, which was appointed by the Chief Comissioner of ACC in early 1944, included representatives of the U.S. and U.K. Treasuries as well as financial experts in the theater. This lengthy study points out various causes of inflation and makes varied recommendations; excerpts from the report are included here in different contexts.

6 Subsidizing exported goods was seen as anti-inflationary in encouraging Italian production. The policies adopted were approved by the CCS and were formally promulgated by AFHQ on 12 May.

7 Not until 1946 was the Italian Government in a position to provide the lire currency.

8 Paragraph 17 of the Monetary and Fiscal Guides of the CCS directive (Chapter VII, Section 6) had prohibited the use of revenues for payment of principal or interest on national government obligations.

9 The Banca d'Italia had its main office in Rome, and consequently, when it became separated from liberated Italy the banks were cut off from their source of currency reserve and their means of co-ordination. ACC's first task was to re-establish a central banking system by setting up a head office of the Banca d'Italia in Naples.

10 Badoglio's letter of 24 February 1944 to the ACC Chief Commissioner requested a change in the dollar value of the lira (ACC files, 10000/143/453). This request led to a study of the question by the Finance Subcommission.

11 On the other hand, the Vice President of the Economic Section of ACC, Grady, stated in his report to the Secretary of State, 21 March 1944, that the lira had been given an unduly low valuation which did aggravate Italian inflation. ACC files, 10000/109/1547.

12 The above is an excerpt from the introduction to a highly technical report on reform of the Italian revenue system-a reform which went far beyond the measures suggested in the main body of the Anti-Inflation Committee's section on revenue changes essential to the control of inflation.

13 This issue for various reasons dragged on for months until, finally, G-5 dropped it.

14 During the spring of 1944 a campaign, under the supervision of ACC, was waged to take away ration cards from persons not entitled to them because they had producers' allowances or because they had duplicate cards. More than 700,000 improperly held cards were found on the mainland alone. Econ Sec, ACC, Rpt, 1 Sep 44.

15 The criticism by the Allied Anti-Inflation Committee (Italy) of allocation of Italian resources to military needs will be found on pages 27-28 of its report of 19 June 1944, in ACC files, 10000/136/429. In consequence, a number of measures to increase the availability of local resources for civilian production were, in the course of the next six months, actually taken. First, the Allied Forces Local Resources Board (AFLRS) was so reorganized as to increase the representation of ACC as against the military element. Second, there was created an Industrial Co-ordination Committee of AFLRS-a committee which included among its functions the consideration of applications to requisition such industrial plants as were being unnecessarily retained by the military forces.

Third, through AFHQ Administrative Memorandum 42, 21 September 1944, it was laid down in principle that locally produced foods which were readily stored or transportable would not be available for allocation to the armed forces after 1 October 1944. Finally, AFHQ issued, as (lid also the commanding generals of the Allied forces, directives to the armies to requisition civilian resources only out of necessity and to take care that, in any case, they did not injure the potentialities for later civilian production. (For example, AFHQ Administrative Memorandum 13, 17 March 1945.)

16 The fact that the amassment in Sicily fell short is the more striking in that the crop had been good.

17 Because of the shortage of shipping and supplies.

18 Although this report was not presented formally until 19 June, there is no doubt that its conclusions were made known in ACC and AFHQ earlier and were among the influences which prompted authorities to decide both in May and early June to try to bring more imported supplies into Italy. For example, SACMED in his message of 8 June to CCS (see below) cites the conclusions of the ACC Allied Anti-Inflation Committee as justifying his increase of the bread ration. Therefore the report is quoted earlier, from the standpoint of chronological sequence of documents, than the actual date of the document warrants. Increase of supplies, in part through imports, was only one of the many recommendations, but it was the recommendation which was given greatest stress as promising quick results. The requisitions for imports of clothing, footwear, etc., alluded to in the document, had in fact already been made in pursuance of the recommendations of the Combined Supply Group. In addition to a desire to use the imports to influence producers of grain, AC was prompted by the hope of countering inflationary tendencies by increasing supply and by awareness that "without adequate wearing apparel vitally essential services will inevitably be diminished." ACC Rpt, Industry and Commerce Subcommission Contribution to Anti-Inflation Measures, 24 May 44, ACC files, 10000/154/977.

19 The ration increase was put into effect nonetheless in Southern Italy because it had already become known to the Italian Government that SACMED had proposed it. To have withheld it under the circumstances would have been injurious to Allied-Italian relations, to say nothing of the inherent need for the increase and the fact that its announcement had already proved beneficial (see following document).

20 A British-American civilian agency which was responsible for civilian supply in the postmilitary period and for such additional supplies in the military period as could not be justified for inclusion in the army supply program.

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Last updated 18 February 2004