Opera Omnia Luigi Einaudi

Banca di Sconto’s Moratorium – Features of the Crisis

Tipologia: Paragrafo/Articolo – Data pubblicazione: 14/01/1922

Banca di Sconto’s Moratorium – Features of the Crisis

«The Economist», 14 gennaio 1922, pp. 51-52




Turin, January 7



After my last letter of December 24th, the story of the Banca Italiana di Sconto has filled the columns of all Italian newspapers, and may be chronicled thus: – On December 26, 1921, the Minister of Industry signed a decree limiting Stock Exchange transactions to cash dealings. While the general public were puzzled, those with inside knowledge said that Banca Italiana di Sconto’s shares were pouring into the market, and a precipitate fall was threatening. The Government were clearly of opinion that speculative sales, with the consequent breakdown of prices, threatened a panic among the depositors, and accordingly stopped them. On December 27th, the newspapers reported meetings at Rome between representatives of the Government and the banks. It appeared that the figure of 600 million lire fixed as the capital of the banking consortium for the demobilisation of the Banca Italiana di Sconto was insufficient. Foreign depositors, and also some big Italian depositors, took alarm, and began hasty withdrawals. Several million lire were employed in supporting the market for the Banca’s shares. On the same day an authoritative statement by Signor Parodi, counsel to the Banca Italiana di Sconto, explained that an agreement was finally reached that the sum necessary to put the Banca on its legs could only be furnished by the State or by the banks of issue acting on behalf of the Treasury. On December 28th, Cabinet Ministers discussed the position, and decided to come to the rescue; the Government could have authorised the Bank of Italy to give to the Banca Italiana di Sconto sufficient advances to face the inevitable run; but they came, as they were bound to come in the public interest, to the sound conclusion that direct assistance from the Bank of Italy would be unjustifiable. It would only mean that taxpayers would have to pay for private faults or misfortunes. On December 29′ , the Gazette published a Royal decree authorising the concession of a special “moratorium” to all joint-stock companies and cooperative credit societies with a capital of not less than 5 million lire which could prove inability to pay creditors owing to extraordinary and unforeseen events, or in cases where a moratorium might be in the creditors’ interest.



As soon as the Royal decree was published, Signor Pogliani, general-manager of the Banca Italiana di Sconto, tendered to the Civil Tribunal of Rome a request for the concession of the moratorium, urging that the bank had assets largely in excess of liabilities. The tribunal, in the night, after a long discussion, accepted the request, and granted a moratorium up to December 30, 1922. On December 30th, another decree of the Minister of Industry postponed to January 4, 1922, the monthly Stock Exchange settlement which should have taken place on December 31, 1921. It appeared that some 60,000 shares or more of the Banca Italiana di Sconto had been sold for December and January settlement; but it was feared that buyers would not pay for them when duly tendered by sellers. The principal buyer is, it is said, the Banca Italiana di Sconto; not, indeed, directly, as the Italian law forbids joint-stock companies to acquire their own shares, but indirectly, through the agency of the Banca Italo-Caucasica, whose capital was wholly subscribed by the former. On January 3 rd the Tribunal of Rome expressly forbade the Banca di Sconto from paying the sum needed to setde the Stock Exchange purchases of its own shares either directly or indirectly. Up to the moment of writing, the settlement, already postponed to January 4th, is not completely effected. A great many brokers in all the Italian bourses have been parties to sales of Banca di Sconto’s shares, and are unable, owing to the default of the buyer, to fulfill their obligations toward their seller. It is a matter of 30 millions, and it is hoped that a voluntary consortium may be formed to carry over this unfortunate deal. The Government has very wisely declined to accept liabilities in a matter which only interests a number of professional Exchange men. Another decree, of the same day, changed from the permissive to the compulsory the substitution of the former directors by Judical Commissioners when a moratorium is requested. The directors of the Banca Italiana di Sconto are therefore obliged to abandon the bank, and their assets are, moreover, put under seizure. The Tribunal of Rome used strong expressions to describe the directors’ conduct: – “Serious and systematic mistakes”, “risky financing methods”, “favouring industrial concerns not worth financing”, “mistaken interest taken in enterprises apt to produce great losses”, “disastrous situation of the bank”. On January 5th, the Mediterranean Lloyd Navigation Company preferred a request for a moratorium to the Civil Tribunal of Rome. This company is a creature of the Banca Italiana di Sconto.



Perhaps the time is not yet ripe for a careful and reasoned judgment of the crisis. But three observations may be made. The first is, that in Italy economic education has advanced not a little, as will be realised by those who remember the great outburst of public opinion in the old days of Tiberina, Esquilino, Credito Mobiliare, in the early nineties. The public opinion and Government were unanimously in favour of stopping the crisis with generous use of public money. The liberal advances to private concerns and banks were the first and foremost cause of the subsequent crisis in the public banks of issue. Nothing of the sort has happened today. The Government encouraged in an early stage, when they hoped the crisis might be averted, the formation of the 600 million lire consortium, whose advances were, I am informed, covered by adequate assets. But when the position appeared untenable, further assistance, at the expense of the taxpayer, was refused; and Ministers will certainly stand by their decision. Secondly, it may be doubted whether the resurrection of the moratorium was a happy one. Professor Sraffa, in a letter to Professor Cabiati, says that at most the moratorium should have been confined to the Banca Italiana di Sconto, and not extended generally to all embarrassed companies. Thirdly, the public has accepted the disagreeable notice of doors closed by one of the four big banks with great calm. Throngs at other banks were not noticeable, and if a little stream of depositors was seen requesting reimbursement during the two or three days following the announcement of the moratorium, it had ceased wholly by January 3rd or 4th . In the great savings banks the paying in of deposits continued. As I explained in my last letter, out of a total of 26.6 billion lire of deposits at June 30, 1921, only 6.6 billions are entrusted to ordinary banks, and upwards of 20 billions to co-operative and public or quasi-public savings banks. Given our social and economic conditions, this distribution of deposits is perhaps the greatest asset of our credit fabric.

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