The Representative of Italy in Canada has recently raised with the Department the question of the release of Italian assets under the Custodian's control and Article 79 of the Treaty of Peace with Italy.

It is the view of this Department that the Canadian Government may, if it so desires, decide before the Treaty of Peace is ratified whether or not it will release Italian assets and whether or not it will exercise the rights granted by Article 79 of the Peace Treaty.

I feel that the question of releasing Italian assets will be dependent on the total value of private Canadian claims against Italy and Italian nationals, including debts. If the total value of such claims is in excess of the value of the Italian assets, it would seem to me unlikely that the Government would agree to releasing any of the assets for by so doing they would prejudice the position of individual Canadian claimants. On the other hand, if the total value of the claims is less than that of the assets, I think it would be open to the Government to release Italian assets in excess of the value of the claims.

You will, of course, appreciate that it is desirable for Canada to give whatever measure of assistance is possible in this matter to the Italian Government in view of the very pressing foreign exchange difficulties Italy is experiencing at the present time. I would accordingly recommend that action be taken now to ascertain the value of the Canadian claims against Italy by calling through public advertisement for registration of all such claims with your office. When this registration has been completed, the Government would then be in a position to consider releasing the excess Italian assets if any are found to exist. Such a release might be made subject to the condition that the Italian Government guarantees the payment of any private Canadian claims which for some bona fide reason are not registered with your office and as a result do not enter into the calculation of the total value of Canadian claims.

You may be aware that the United Kingdom Government has recently agreed to release Italian assets under their control subject to the condition that the Italian Government undertakes to liquidate outstanding United Kingdom claims against Italy and Italian nationals. The United States Government, I understand, is prepared to release all Italian assets in excess of the value of claims of United States nationals against Italy.

I should appreciate your comments on the proposal made in this letter and your advice as to whether or not we can proceed in the manner I have suggested. I feel that we shall at some time have to consider this problem of the disposal of Italian assets and that it is advisable to proceed with it now rather than leave it to some later date.

H.O. MORAN
for Under-Secretary of State
for External Affairs