Opera Omnia Luigi Einaudi


Tipologia: Paragrafo/Articolo – Data pubblicazione: 15/12/1934


«The Economist», 15 dicembre 1934, pp. 1147-1148




DEFLATION AND THE LIRA. – Subscriptions for the 2,000 million lire 9-year 4 per cent. Treasury loan at par were opened on November 21st. Subscriptions amounted to 3,935 million lire by 563,004 subscribers. Small subscriptions will be accepted in full, reductions being made progressively. The purpose of the loan has not been fully explained. As the Budget deficit for the first four months of the current financial year is 730 million lire, against 1,527 millions for the corresponding period in 1933, and will amount possibly to 2,000 million lire for the whole year, a loan was not needed. The Loan and Deposit Bank (Cassa Depositi e Prestiti) and other public institutions are well able to aid the Treasury, and, in fact, had lent them in the same period 660 million lire.



Signor De Stefani, in the Corriere della Sera, has repeatedly hinted that the best use of the proceeds of the loan would be the reduction of the note circulation of the Bank of Italy. The monetary situation is undoubtedly the core of the general economic situation:





(000,000 lire)

Notes in


Total Gold  Discounts and Advances

Reserve    (including Advances to the I.R.I.)

December 31, 1933




October 31, 1934






In November the gold reserve fell to below the 6,000 million lire level, which to many observers looks very disconcerting. To counteract the fall of the reserve most people are asking for new restrictions on international trade. The Government most wisely has decided instead to issue the 2,000-million loan, and (on November 24th) raised the official rate of discount from 3 to 4 per cent, and the rate of interest on advances from 3 1/2 to 4 1/2. If the proceeds of the loan are utilised to reimburse the Bank of Italy the sums advanced to the I.R.I. and other frozen advances – which are already a charge on the Treasury – the circulation will be restricted to about 11,000 million lire; and a deflationary pressure will be exerted on the price level more effective and better distributed than that exercised by a general indiscriminate drive for a 5 or 10 per cent, all-round reduction of prices. The rise of the rate of discount should also contribute to this end and should counteract the tendency to a flight of capital which has recently been visible.



Turin, December 6.



NEW EMERGENCY DECREES (BY AIR MAIL) – A further fall of the total gold reserve was announced on December 7th.





Total Gold Reserve: Italy


(Million Lire)


December 31, 1933


March 31, 1934


June 30, 1934


October 31, 1934


December 7, 1934




On Saturday, December 8th , a decree was issued by the Cabinet Council for the enforcement of a full-dress control of foreign exchange transactions.



A distinction is drawn between two kinds of foreign assets on the one hand; a) Credits, i.e. money in current or deposit account or otherwise held, and sums due for goods sold, etc., and b) Securities, foreign or Italian, if issued in foreign countries, whether held in Italy or otherwise; and, on the other hand, between two kinds of holders: 1) firms, banks, bankers, companies and bodies, and 2) private citizens.



As to the a) credits possessed by class 1), they must be offered to the “National Institute for Foreign Exchanges”. If requested, the possessor must sell at the current rate all immediately realisable credits, and, at a price to be settled, the non-liquid credits. Forms must be sent to the Bank of Italy containing all necessary data within 10 days from December 8th; and all credits arising thereafter must be reported to the same bank, within 10 days of their origin. The same firms, companies or bodies must also send, within 10 days, a report to the Bank of Italy on their obligations in the shape of payments due to foreign creditors.



Class 2) holders of credits abroad are only obliged to send to the Bank of Italy by December 31, 1934, and thereafter within 15 days from their origin, a report on all their Class a) credit claims on parties resident in foreign countries.



Both firms and private citizens (Classes 1 and 2) are obliged to send by December 31st, 1934, and afterwards within 15 days of any alterations, a report on their Class b) security holdings and subsequent variations.



Insurance and transport companies or agencies are authorised to keep foreign exchange accounts; but at the end of each quarter must send to the Bank of Italy a report on their transactions and on the state of their funds of foreign exchange.



Very detailed regulations about exports are issued, the gist of which is that no export is permissible without a previous report to the Bank of Italy and the latter’s authorisation. All credits arising from exports must be sold to the National Institute for Foreign Exchanges. In each province a Committee will revise prices reported for goods sold.



Offenders are liable to heavy penalties up to one year’s imprisonment or a sum equal to the non-reported amounts, and possibly confinement (confino) in the islands. The Bank of Italy’s directors and employees must keep secret all foreign exchange transactions. The purpose of the decrees is to give the Treasury and the Bank of Italy actual disposal of all credits abroad, whether they arise from present foreign assets or from future exports. Later on, if need be, arrangements may be made for the sale of the securities, which must meanwhile be reported.



REACTIONS TO THE DECREES. – Newspaper comments on the new State monopoly of foreign exchange can be summarised thus: The lira is unchanged, unchangeable and independent. Perhaps a more matter-of-fact explanation of the events which culminated in the recent decree may be found in an illuminating monthly review of the Treasury and Budget accounts by Signor Mazzucchelli in Rivista Bancaria for May of this year. Total gold reserves of the Bank of Italy, including gold exchange, increased during 1926 and 1927, reaching the maximum of 12,518.8 million lire on April 30, 1928, mainly owing to loans issued in foreign countries (mostly U.S.A.) by the State and other public and private bodies and concerns. Signor Mazzucchelli calculates the amount of these gold-producing loans at 8,000 million lire, the greater part of the gold proceeds going to the Bank of Italy. As happened before in the ‘eighties after the 640 million gold lire loan for Italy’s adherence to gold, an opposite movement began in April, 1928. Partly in consequence of the interest and amortisation payments abroad, but mostly of the repurchase by Italians of Italian securities issued in foreign countries, gold was bound to return abroad; and Italy was left with a gold reserve roughly corresponding to the reserve held before the ill-fated 1926-27 loans. But though these decreases in gold holdings were, in a way, a favourable index of the capacity of Italian new savings to repatriate Italian securities, further decreases below the 7,000 million lire were deemed disquieting. The decrease of about 1,500 million lire in the first 11 months of 1934 cannot be said to originate in the current income deficit of the international balance of payments.



Signor Mussolini, in his speech of May 26, 1934, in the Chamber of Deputies, estimated the proportion due to capital flight at one-third of the whole decrease. The State monopoly of foreign exchange ought, in the first place, to compel exporters to reimport all their balances held abroad. Then, if need be, the State may also requisition foreign and Italian foreign-issued securities. It should be observed that Italian foreign-issued securities which have already been repatriated cannot exercise any pressure on the foreign exchanges. Last June, all foreign and foreign-issued securities were stamped, thus enabling the Treasury to estimate their exact amount. No estimate has yet been published. As to bank and other balances held by Italians in foreign countries, a figure of 8,000 million lire was widely accepted in 1923, among others by Professor Pantaleoni. Now the amount would be vastly reduced. The crisis has reduced these credits and has obliged many holders to cash what was left. The recent increase in the rate of discount of the Bank of Italy should have worked, if not to invite foreign capital, at least to induce exporters to draw on their foreign balances.



Turin, December 12.


Torna su