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The Economist

Italy

«The Economist», 25 agosto 1934, pp. 355-356

 

 

 

HOME AND FOREIGN POLITICS. – Public opinion in Italy is centred wholly on the international situation. In consequence of the murder of the Austrian Chancellor Dollfuss, the outlook and attitude of the Italian Press became sharply critical of German policy. To the unanimous opposition voiced against the Anschluss, there is now added a less marked but significant criticism of Hitlerism in its bearing on the Saar question, the German labour problem and the handling of Germany’s economic crisis. A recent decree authorising expenditure for the fiscal years commencing in 1934-35 of the sum of 1,200 million lire for renovation of the air fleet and replenishment of stores, had been already announced in Signor Mussolini’s speech of May 26th, but it was published on August 7th, when the international situation had become more tense.

 

 

A sensation has been caused by the expulsion from the Fascist Party of Signor Arpinati, former Under-Secretary of State for Home Affairs under Signor Mussolini, and also of a score of his Bolognese friends. Later Signor Arpinati was condemned to five years of deportation to the Islands (confino).

 

 

NEW INDEX OF PRODUCTION. – For the first time the Corporations Department is able to publish a comprehensive index number of production, which can be compared with those published by the Economist for Great Britain, and with other indices in foreign countries. A special committee presided over by Professor Amoroso has recently approved the report written by Professor Cianci, in which are laid down criteria for compiling five special indices for textile, metallurgical and engineering, paper, building, and light and heat industries. On the basis of 1928, the general index works out as follows.

 

 

1928

100.00

1934 – January

72.20

1929

109.15

1934 – February

77.31

1930

100.31

1934 – March

84.45

1931

84.72

1934 – April

 86.92

1932

72.93

1934 – May

88.88

1933

80.49

   

 

 

The bottom seems to have been touched in 1932. A 10 per cent, increase from that date for the year 1934 may be deemed certain.

 

 

A comparison between unemployment totals in different industries in May, 1933, and May, 1934, gives the following results:

 

 

 

 

Decreases

 

Increases

 

May, 1933

May, 1934

 

May, 1933

May, 1934

Agriculture

207,039

157,949

Iron & steel, engineering

105,079

108,602

Mining

34,360

30,756

Gas and electricity

9,398

10,390

Food

27,442

19,632

Building and roads

274,839

309,607

Textiles and clothing

128,880

92,590

Furniture andwoodwork

48,160

52,959

Chemical and glass

 

28,440

22,119

Paper and printing

11,705

12,014

Hotels and other public establishments

34,679

24,978

Entertainments

11,136

18,423

Transport (private)

27,504

25,899

Commerce

51,467

55,339

 

 

The greatest reduction in unemployment has taken place in agriculture, food, textiles, hotels. Constructional industries, producing mainly goods for capital equipment, have not fared so well.

 

 

CONTROL OF NEW INDUSTRIES. – That recovery is in progress may also be deduced from the number of applications considered at the last session of the Ministerial Committee which is called to grant licences to start new industrial plants or to enlarge old ones. Out of a total of 102 applications, the Committee gave its assent to 68, negatived 25, and called for further information for 9. The official communique only gives the numbers in broad categories of industry. Since one of the postulates of planned economy aiming at the prevention of crises is Government control of new industries, it would be more helpful if fuller data on the interesting Italian experiment were forthcoming. Ex-Minister De Stefani has repeatedly hinted in the Corriere della Sera at unforeseen consequences of this “licence” system: for instance, the rise of a sort of market for concessions granted by the Committee. It appears that some people have asked for authorisations to start new plants, without any real intention of starting them, hoping instead that entrepreneurs already on the job would be willing to purchase those rights for the sake of avoiding competition. Signor De Stefani, with good reason, asks for publicity in the preliminary stages. Third parties should have the right to intervene. How, it may be asked, can consumers be protected against monopoly? According to Signor De Stefani the decision should be made by a truly judicial body. It is difficult, however, to imagine how a Court, juridically minded, can reach decisions on such things as inventions, better organisation, ability of untried men, etc. How are we to discover a Ford among hundreds of young applicants? Senator Agnelli, at present the big man in the motor-car industry, was, when quite a young man, a lieutenant in the army. What chance would he have had of being selected by a Court among the many would-be motor makers in the adventurous days when the automobile was deemed a crazy invention? Perhaps these and other doubts may be dispelled by the publication of the full reports laid down before the Committee on each application, and of the full technical and economic reasons for the decisions of the Committe.

 

 

FALL IN THE GOLD RESERVE AND CREDIT POLICY. – The continued fall of the gold reserve of the Bank of Italy has given rise to some misgiving. Between December 31st and July 31st the figures have changed as follows:

 

 

(Million Lire)

 

Dec. 31,

1932

July 31,

1933

+ or-

Dec. 31,

1933

July 31,

1934

+ or –

Gold and gold devisen res

7,144

7,337

+ 193

7,397

6,399

-998

Notes issued

13,672

13,329

-343

13,243

13,330

+ 87

Advances and discounts

6,539

5,001

– 1,538

4,693

4,389

-304

Official rate of discount (%)

5

4

– 1

372

3

– 1/2

 

 

The dates selected are arbitrary, as all selections are; but being the same in the two years the arbitrary factor is perhaps reduced to a minimum. Certainly the decrease by 998 million lire of the gold reserve in the first seven months of 1934, as against an increase of 193 millions in the corresponding period of last year, is remarkable; and the general public will compare it with the inverse movement in the notes issued: 87 millions more in 1934, instead of a 343 millions decrease in 1933. Perhaps, however, the most important variation relates to advances and discounts, on which the attention of the public is not focussed. There is usually a big de­crease in demand for advances and discounts between December 31st and July 31st. The decrease was 2,267 millions in 1930, 1,220 millions in 1931 and 1,538 millions in 1933. In the current year it was only 304 millions, a figure comparable with the even smaller decrease of 28 millions in 1932. Presumably the notes brought to the Bank of Italy, to obtain exchange for foreign payments, were re-issued to meet internal trade demand. Presumably also the internal demand was favoured by the low official rate of discount. The hardening of foreign exchanges and the export of gold, instead of provoking a stringency in the internal credit market, left it untouched.

 

 

If the above analysis be correct, the Bank of Italy will possibly be driven in self-defence to put up the official rate of discount and to make a more drastic selection of commercial paper offered for discount. This is apparently the only way of making effective the strict control now exercised on the foreign exchanges.

 

 

Turin, August 17.

 

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