Italy. Fascism and the League. The corporative state. Production in 1932

«The Economist», 16 dicembre 1933, pp. 1176-1177

Turin, December 9

Comments on the international situation in the Press are unanimous. The interruption of the Disarmament Conference having been taken as unavoidable as soon as Germany seceded, the event did not excite any surprise. The Fascist Grand Council has already deliberated on the position of Italy in the League of Nations. References to the possibility of Italy seceding from the League are not wanting; but as yet a waiting attitude seems more probable. Foreign Press hunts of conferences or meetings of the principal Powers in Rome to discuss a way of exit from the present tangle are sympathetically recorded.

Internal politics turn on the consequences of the Constitutional changes foreshadowed in the Duce’s speech at the Corporative Council. In the opinion of your correspondent the Economist’s comment on the Italian Corporative State in your issue of November 18th was coloured by what might be called a world-wide point of view. What Signor Mussolini meant, when he said that Italy was not a capitalist country, was mainly that the world crisis, unemployment, banking difficulties, etc., have not played havoc in Italy partly because of the small and medium sized character of the millions of agricultural, industrial and commercial enterprise units. On April 21, 1931, against 2,943,000 cultivating landowners, 858,000 farmers, 1,631,000 metayers and other participating cultivators, the 2,475,000 agricultural wage-earners are in a minority. In the industrial and commercial field the number of wage-earners is 4,283,000; but 523,000 industrial employers, 841,000 merchants and 724,000 artisans are by no means a small minority. The Corporative State will thus be called to organise a society in which there is still much movement between the employing and the employed classes. As far as can be said on the basis of the Duce’s last speech, guilds will be the channel through which these many-sided social groups will voice their needs. Guilds (corporations) will not change the social structure. Their purpose is only to organise or associate them.

The big men, cartels, syndicates and trusts are, in the main, a recent outgrowth, to be strictly controlled. It would be a mistake, however, to suppose that Signor Mussolini is in favour of nationalisation of big concerns or even of a uniform policy toward them. Two recent instances will illuminate what is happening. These letters have already referred to the reorganisation of the biggest Italian gas concern – the Società Italiana Gas. Under the chairmanship of Senator Frassati, the Italgas was rescued from its troubles and put on a sound basis. Nearly 231 million lire of its total 260 million lire share capital remained the property of the Sofindit, which in its turn is the property of the I.R.I. (Institute for Industrial Reconstruction), a public institution owned by the State and State bodies. Italgas was thus in fact controlled in the last instance by the Finance Minister. Now, a few days ago, Senator Frassati was able, as the head of a group of friends and strong private interests, to buy back from the Sofindit and to pay in cash all their 231 million lire shares block. The Italgas is now once more an ordinary private joint-stock company. The fact proves that the State need not fear to be encumbered with the property of all big Italian concerns. Good propositions will always find willing buyers. The task of Sofindit and I.R.I. is to rescue overgrown frozen companies and set them going again.

The second instance is that of the Electricity Sip group, one of the two largest electricity combinations in Italy (the other one is the Edison group, a soundly managed concern, which never needed State aid). The Sip group, encumbered by a gigantic capital of 1,787,000,000 lire, unmanageable and frozen, fell under the management of the Sofindit – I.R.I. – Finance Minister. Now the first stage of reorganisation has been concluded. The capital of the group was reduced to about 924,000,000 lire. The Sip group proper was confined to electricity producing and distributing functions, under the competent chairmanship of Professor Vallauri, an electrician of European reputation and president of the Turin School of Engineering. The telephone business was severed from the Sip; and to reimburse the Sip for the sum invested in the telephone system an issue is now being made of 400,000,000 lire 4 per cent. 20 years’ debentures, State guaranteed, participating progressively in the net profits of the S.T.E.T., a new company, which is to take over the telephones from the Sip. As the whole share capital of the S.T.E.T. is subscribed by the I.R.I., the upshot of the matter is that telephones, which a few years ago were sold by the State to the Sip, come back, through the instrumentality of the S.T.E.T. and the I.R.I., to the State. This, however, may be only a passing stage, because the subscribers to the present 400,000,000 lire S.T.E.T. debentures have the option of converting them into shares. The option will certainly materialise if and when the S.T.E.T., by good results, persuades the debenture-holders to exchange their State guaranteed debentures into variable dividend shares.

At the session of the Permanent Wheat Committee on November 22 the Duce communicated the results of the Wheat Campaign:

As the acreage was not increased the increment was wholly due to better cultivation. The 1933 crop is enough for internal consumption, since other crops, mainly maize and potatoes, were mediocre. As, however, prices are weak, Agricultural Credit and Saving Banks made advances on 500,000 tons on the basis of 900 lire per ton, and new advances will be made on the basis of 800 lire up to 300,000 tons. Advances should enable agriculturists to wait for better prices in the spring. As the price of raw rice has been falling even below 400 lire per ton. the Rice Institute states to-day that a 4.5 per cent. loan of 500 lire per ton will be granted, and that all unsold stocks be bought by the Institute after June, 1934, on the basis of 600 lire per ton.

At the last session (November 23) of the Cabinet the Finance Minister announced that the deficit in the State Budget for 1932-33, which was provisionally estimated at 3,938,000,000 lire, was finally calculated at only 3,549,000,000 lire.

For the first ten months of the year the following economic changes are recorded:

Production of electrical energy is increasing (first nine months and millions of kw.h.):

The numbers of totally unemployed are as follows:

Statistical methods were changed, however, as from April and again from July, 1933, and partially unemployed are not taken into account since August. Comparisons between 1932 and 1933 are therefore approximate.