Mr. Manion's review, prepared at the request of the Department of Trade and Commerce, is an exhaustive one of sixty-four pages. It covers the problem in considerable detail and even suggests that the amount of such a credit to he granted in 1947 might be $15,000,000. repayable over a period of 20-30 years and bearing interest at the rate of 31/2%.

2. Mr. Manion considers firstly the political considerations and reaches conclusions as follows:

(a) Unless Italy can he assured of sufficient wheat, coal and raw materials and unless there is a complete overhaul of her internal financial situation (which he finds dependent on foreign assistance), "dissatisfaction and hopelessness of outlook" among her people might bring into power an authoritarian government which would fall under Soviet domination. "If," he says, "Italy is absorbed strategically (in the Eastern orbit) there would he little sense in trying to trade at all with Italy until the end of the third world war."

(h) Any risk involved in giving assistance to Italy should he regarded from the "politico-economic" aspect rather than from that of financial security.

(c) He points out that the Italians are somewhat disturbed to find that all assistance they are receiving from the West is coming from the United States. He feels that assistance from Canada, a country known to have no strategic or "imperialistic" ambitions, will do much to increase confidence in the disinterestedness of the western nations as a whole.

(d) If the support of the western nations is sufficient to stem the tide of Eastern ideologies, Italy will be an assured market for many years to come.

Turning to purely economic considerations he finds the weakest spot in the Italian economic armour is undoubtedly her public finances. He considers the internal efforts of the Italian Government and people will be of no avail if they are not backed by substantial foreign credits which by squaring the balance of payments will check the gradual deterioration of the external value of the lira.

He finds there are excellent opportunities for a continuing trade between Canada and Italy. Three items of fuel (coal and mineral oils) cotton and cereals account for 58.5% of all Italian imports, but nevertheless there is a considerable diversity of essential imports which Italy requires — dairy products, wood pulps, fish products, rubber goods, potatoes, paper, machines and machine tools, copper products and lumber. These goods, he states, are being obtained by Italy at the present time from other countries under barter or compensation agreements.

With the cessation of UNRRA supplies to Italy it is estimated that the deficit in Italy's balance of payments for 1947 will be $600,000,000. This balance may he reduced to something less than $400,000,000. by assistance received in one form or another from the United States. The situation is not so clear for 1948, and the consensus of opinion, Mr. Manion states, is that Italy's real foreign exchange crisis will occur in that year. He considers however that the more credits Italy can get this year the better the chance Italian industry will have to get back to full production in 1948.

He considers the problem arising from the fact that Italy's most essential imports cannot at this time he obtained from Canada and conies to the conclusion that Italy will require some $350,000,000. of foreign assistance before Canada can participate in Italy's trade in any commodity other than wheat. He considers however that this amount of foreign assistance is already assured to Italy from the United States. If this assumption is correct, he feels Canada as well as Italy would benefit from a Canadian credit to Italy since the goods required by Italy next in priority to her essential imports are nearly all the produce of Canada.

Mr. Manion sees no fundamental reason why Canada can not obtain one-fifth of Italy's trade in the products which Canada produces for export. He estimates this at about $50,000,000. per year. He appreciates however that since Italy will always suffer from a trade deficit perhaps the best that can be hoped for is a balancing trade in commodities other than wheat amounting to approximately $15,000,000. per year and a trade in wheat depending on the supply situation in Canada and other exigencies of the moment.

He suggests that a credit to Italy should he divided into two parts, one dealing with wheat and one dealing with other commodities. His conception of a separate credit for wheat is somewhat obscure, I think. He suggests "a year's credit could he linked to a long term contract somewhat similar to the U.K. agreement or the credit could be an open-ended credit providing for purchase over a period to he determined by the Italian Government or a proportion of wheat flour could be specified in the terms of the credit."