Banca di Sconto – State Railway Material – Circulation – Clearings – Bank of Italy – Security and Commodity Prices

Tratto da:

The Economist

Data di pubblicazione: 13/05/1922

Banca di Sconto – State Railway Material – Circulation – Clearings – Bank of Italy – Security and Commodity Prices

«The Economist», 13 maggio 1922, pp. 905-906

 

 

 

Turin, April 30

 

 

The affairs of the Banca Italiana di Sconto are nearing the end. A decree of the Rome Civil Tribunal has given consent to a plan, which gives creditors 58 and 65 per cent, of their credits at various stated dates before December 31, 1923. On the ashes of the “Sconto” will arise a new Banca Nazionale di Credito, which will be, however, primarily a concern charged with the winding-up of the parent.

 

 

The Government has laid on the table of the Chamber a Bill authorising State railways to order 1,750 millions lire worth of railway materials in the next five years. No objection can be raised against the principle of pre­paring a plan of railway reconstruction. But rumour is current that the 1,750 millions lire order will be exclusively given to the Ilva concern, where work is scarce and there are fears of increasing unemployment. It is also stated that the Government will renounce several hundred millions of excess profits tax due from “Ansaldo”, for the same purpose of preventing the closing up of their shops. The peril is that, if these rumours prove true, there will be a scramble on the part of manufacturers and traders to obtain similar favours.

 

 

The most important event of the month, from the point of view of eco­nomic students, has been the issue of the annual report of Signor Stringher to the shareholders of the Banca d’ltalia. He gives the following figures of circulation of the three banks of issue and of the State. (See table at p. 245).

 

 

The figures testify to a laudable effort to keep constant the amount of total issues. The increase at December 31, 1921, was obviously due to fears of panic consequent on the closing up of Banca Italiana di Sconto, but as nothing happened notes have come back to the issuing banks. With the

 

 

 

(In Millions of Lire)

 

 

Banking Issues

 

 

 

 

Commercial

For State Account

Total

State Notes

Total

December  31, 1918

4,584 7

7,165-6

11,750-3

2,124-1

13,874-4

    »            »    1919

5,651-6

10,629-7

16,281-3

2,271-3

18,552-6

June          30, 1920

7,483-9

10,333-1

17,817 0

2,270-3

20,087-3

December 31,   »

8,988-9

10,742-

19,731-7

2,269-3

22,001-0

June          30, 1921

9,436-6

8,722-2

18,158-9

2,268-4

20,427-3

December  31,   »

10,704-1

8,504-8

19,208-9

2,268-3

21,477-2

February    20, 1922

9,507-9

8,643-7

18,156-6

2,268-3

20,419-9

 

 

progressive liquidation of State wheat, coffee, meat, and other enterprises the issues for account of the State are diminishing, with a corresponding increase in the commercial circulation. Clearings have continued to increase in 1921 as against preceding years:

(In Millions of Lire)

 

 

Sums Cleared

 

1913

53,711-3

1916

59,307-2

1917

159,695-2

1918

182,193-4

1919

259,319-9

1920

519,916-6

1921

649,481-8

 

 

The statistics relate to the Clearing Houses of Genoa, Milan, Rome, and Florence. For 1921 the figures for Trieste are added. However, the total Trieste figure is only 9,861.8 millions.

 

 

The operations of the Bank of Italy are also increasing, as will be seen below:

 

 

(In Millions of Lire)

 

 

Bill Discounted

Advances on Securites

1913

429-1

92-8

1916

466-6

245-3

1917

600-4

399-0

1918

768-3

626-0

1919

862-5

782-0

1920

2,423-6

2,079-4

1921

3,189-3

2,401-1

 

 

As paper inflation has not increased since June 30, 1920, the extraordinary increases of discounts and advances in the last two years are startling. No increase in the effective activities of the banks can justify the sudden jump. The process is evidently not one of healthy growth, but of a transference to the shoulders of the Bank of Italy of the task of financing industrial concerns. Banks of issue, instead of being bankers’ bankers, are transformed into ordinary bankers, in direct touch with traders and manufacturers. This position, although it cannot be called perilous, claims the closest attention.

 

 

In the meantime, profits of the issue banks are increasing. With a paid capital of 180 millions lire and a reserve of 60 millions, the gross profits of the Bank of Italy reached in 1921 the huge sum of 500.4 millions lire, against 394.9 in 1920. Of this sum 15 millions were paid in “ordinary” taxes, 55 millions to funds for risks and amortisations, and 106.2 millions to various administrative and other expenses. The distribution of the net profits in recent years is explained in the following table:

 

 

(In Millions of Lire)

 

 

 

Year

Shareholders

 

State

 

Dividend

 

To Reserve

 

Total

State Part of the    Net Profits

Tax on Issue of       Notes

 

Total

1913

14.4

14.4

4.8

1.4

6.2

1916

14.4

10.6

25.0

15.7

2.5

18.2

1917

14.4

15.9

30.3

21.0

16.2

37.2

1918

14.4

18.1

32.5

23.0

56.6

79.7

1919

16.5

10.9

27.4

18.1

91.4

100.5

1920

18.0

12.8

30.8

21.5

197.0

218.5

1921

18.0

8.2

26.2

16.9

281.1

298.0

Total

191.1

82.0

273.1

150.4

656.9

897.3

 

 

Most of the money paid to the State Exchequer is a windfall of which it would be unwise to prophesy the repetition. Moreover, banks of issue are highly complaining that the State is absorbing all the gross profits of the huge increase of discounts, whereas the unexpired risks pertaining to the same discounts are left on the shoulders of the shareholders, whose dividends have risen only slightly notwithstanding the great depreciation of the paper money in which dividends are paid. In a different degree, the same complaint is heard from all joint stock companies in Italy. Dividends have risen little or nothing since 1914, and almost the whole increase of profits is going into the State Exchequer. This goes a long way to explain why in Italy there are no traces of the booms in shares which are charac­teristic of periods of paper depreciation in Germany. A general index number for securities which compares present with pre-war prices is not avail able. But Professor Bachi publishes monthly a number index for share prices, where 100 is the price for December, 1918:

 

 

December, 1921

March, 1922

 

Banks

94-19

90-47

Railways

50-84

50-09

Land transportation

58-45

61-46

Navigation

53-97

47-56

Cotton

125 08

115-75

Jute

102-15

108-27

Wool

118-41

118-35

Hemp and flax

155-41

124-64

Silk

153-85

128-62

Mines

53-23

50-14

Iron and steel

17-77

13-95

Engineering

32-81

18-12

Motor cars

56-29

47-55

Electricity

67-95

68-36

Chemicals

58-98

54-66

Sugar

101-54

96-92

Food

107-33

98-80

Water supply

90-35

87-06

Building & land

100-64

93-23

Miscellaneous

112-26

103-62

General index

63-84

56-70

 

 

In Italy the present level of security prices is lower than in 1914, notwithstanding the depreciation of paper money. The slump is the most sen­sible in iron and steel (a decrease of 86.05 per cent, on the December, 1918, level), engineering, navigation, motor-cars, railways.

 

 

The motor-car industry is greatly hampered by the dwindling of the demand for high-priced motor-cars in the United States and by high duties in most foreign States. Bachi’s commodity index number (based upon the average price for 1920=100) shows that the decrease of prices has been continuous for the last six months:

 

 

 

Number of Commodities

 

 

Oct.

 

Nov.

 

Dec.

 

Jan.

 

Feb.

 

March

Vegetable foods

25

116-4

115-3

113-7

111-6

108-8

106-7

Animal foods

25

116-4

115-3

113-7

111-6

108-8

106-7

Chemicals

11

75 0

76-0

74-0

73-0

73 0

71-8

Textiles

12

73-2

74-5

77-0

72-4

67-9

64-9

Minerals and metals

16

63 0

63-9

64-1

63-9

61-6

59-2

Building materials

6

90-3

88-4

87-9

91-6

90-9

84 1

Vegetables

5

116-0

113-4

112-4

112-4

110-8

102-8

Miscellaneous

12

94-7

93-9

93-9

94-3

92-2

87-2

General index (basis 1920)

100

95 0

94-8

93-9

92-4

90 1

85-4

General index (basis 1901-1905)

100

747-2

745-7

739 1

727-3

708-7

672-1

 

 

Whereas the class index numbers are given on the basis 1920, the general index number is given also on the basis of 1901-5. There is a 10 per cent, decline in the half-year, but we are yet on a level six to sevenfold high­er than in 1901-5.

Torna su