"Too Damn Cautious"

Italy is an ally of the U.S. in the Atlantic Pact. How effective an ally was a question raised sharply in Rome last week. ECA officials, who under their breath had long been criticizing the Italian government's economic policies, finally said out loud what it was that bothered them.

Too Much Medicine? To combat disastrous postwar inflation, Premier Alcide de Gasperi's government three years ago had launched Italy on a course of courageous fiscal austerity. The government tried to spend as little as possible on public works, clamped severe restrictions on bank credit. These measures worked to stop inflation, stiffened the spine of the lira. But Italy, the ECA men say, has had an overdose of its fiscal medicine.

In their opinion, the Italian government is too preoccupied with keeping the lira stable, is not doing enough for a vigorous expansion of industries. Businessmen find it hard, if not impossible, to get capital for expansion; the credit shortage is part of the reason why Italian industry, despite great progress, is still not producing enough (the mechanical industries now operate only at 60% of capacity). ECA officials were worried about Italy's 1,800,000 unemployed. Above all, they were afraid that Italian industry in its present condition would not be able to do an adequate job of defense production necessary under the Atlantic Pact rearmament program.

ECA, which usually sternly preaches that countries must live within their means, kept telling the Italian government that it was not living up to its means. ECA officials advised the government to relax credit to give industry a badly needed impetus, expend more ECA counterpart funds on public works to reduce unemployment. The government for the most part ignored these suggestions. Last week, New York Times Correspondent Arnaldo Cortesi summed up ECA's complaints in a dispatch to his newspaper. When the Italian press picked up the story, Italy's able ECA Chief Leon Dayton, former president of a Portland, Ore. super market, held a press conference in which he called the Italian government policy "too damn cautious."

Seduction? At this point, Premier de Gasped hit the ceiling. "Not only Mr. Dayton but ECA is persona non grata," he cried. Italy's Minister of the Treasury Giuseppe Pella. a former economics professor, stood indignantly on the seemingly solid ground of fiscal rectitude, creating the unusual impression that the U.S. was trying to seduce a thrifty government into leading a dissolute economic life.

After U.S. Ambassador James Dunn managed to soothe De Gasperi, Dayton published a conciliatory letter which patted the government on the back, but added: "More could have been done, more can be done, and more will be done . . ."

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