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The Economist


«The Economist», 27 febbraio 1937, pp. 465-466




STATE TRADING AND DEVALUATION. – Turin, February 9. – In a speech to the annual meeting of the Joint-Stock Companies Associations the Minister of Finance described something of the background of the devaluation, or alignment, of the lira. Autarky, he said, unavoidably produces an increase in the price of those imports which it is no longer desired to buy from foreign countries. Duties were raised in past years against many foreign goods; for not a few of them trade was practically monopolised by the State. Wheat, for instance, was made liable to a duty of 750 lire per ton; and wheat growers were obliged to sell all their products to a public agency at a fixed price of 1,180 lire per ton. Devaluation took place when the gold price of primary products was rising; consequently the price of foreign wheat at Genoa was enhanced by two factors: world prices were rising and an increased number of lire had to be paid against dollars or pounds. It rose to 900 lire per ton. If the old duty of 750 lire were to be paid, the wheat agency could only import foreign wheat at a total cost of 1,650 lire per ton. The Exchequer could compensate the loss sustained by the agency in selling the foreign wheat at 1,180 to millers; but it was simpler to reduce the duty from 750, first to 470, and then to 180 lire per ton. Thus the duty on wheat is today lower than it has ever been during the last half-century.



The Attempt to Control Prices. – The Government has tried since devaluation to prevent any rise in prices in paper lire. Undoubtedly the policy has been so far very successful. The policy was easy enough to enforce in certain cases: for instance, house and agricultural land rents were pegged for two years. The price of public utilities such as water, gas, electricity and transports, cannot be raised for the same period; an increase can, however, be authorised in consequence, for instance, of rising foreign coal prices. The cost of board and lodging in hotels and boarding houses was similarly fixed.



It was much more difficult to regulate the price of other goods. The general principle was to peg prices at the level of September, 1936; but as this was in most cases clearly impracticable, central and provincial com­mittees were created to supervise prices. The Central Committee was pre­sided over by the Secretary of the Fascist Party and included representatives of several public Departments and of Employers’ and Employees’ Confederations; the Provincial Committees were presided over by the provincial Fascist Party Secretary and included representatives of the interested Syndicates. Supervision was eventually concentrated on the price of those goods which enter into the cost of living of the working classes. The system is flexible; and prices are readily adjusted to the state of supply, as recently in the cases of cheese and olive oil.



These price regulations have an important bearing on the interpretation of the price statistics and indices which are being published again (from January, 1937) by the Central Statistical Office. Before the suspension of pubblication in October, 1935, price statistics registered average market quotations in a number of places. Now they register the prices fixed by the Central and Provincial Committees for all regulated goods, and the market prices of unregulated goods.



THE GROWING DUTIES OF THE CORPORATIONS. – Perhaps the most important recent piece of economic legislation was a Decree approved on January 9th by the Cabinet, which transferred from a special Departmental Committee to the Corporations’ Council the duty of authorising new industrial undertakings or the enlargement of old factories. Hitherto authorisations have been given by a body in which civil servants predominated; now they will be given by a body which mainly consists of representatives of the employers and employees of the already existing factories. It will be interesting to follow the result of this change. The old Committee had perhaps a bias in favour of old factories; and the number of requests for starting new factories which were refused in the first six months of 1936 was relatively higher than the number of requests for extensions which were turned down. The bias against newcomers may change with the transfer of decisions to the Corporations’ Council.



Senator Bocciardo, who is the head of a great semi-public armament firm, has drawn the attention of his colleagues to one result of the obstacles to imports and the limitation of new industrial plants; there is a tendency for the few domestic producers to form cartels or trusts (Consorzi) to fix prices on a monopolistic basis. To prevent this he asked that key industries for war purposes should be made compulsorily totalitarian; that the distribution of work between members of such “consortiums” should be made according to their respective productive capacity; and that maximum prices should be fixed by Corporations for the products of trustified indus­tries. Maximum prices should be fixed on the basis of the cost of production in new and up-to-date plants.



This is truly an ingenious way of solving the thorny problem of arma­ment firms, without making armament production an exclusively State affair. The duties of the Corporations are, however, already becoming more and more exacting. It is true that the Government has the last word, through its delegates, in all Corporation decisions; but the Corporations are mainly professional and sectional bodies. If and when the Corporations’ Council is transformed into the new Corporative and Fascist Chamber, some means will have to be devised to ensure that general will prevail over sectional interests. While sectional interests are rigid, the general interest is flexible. Flexibility has hitherto been the main virtue of Fascist economic policy, and has provided the best safeguard against the dangers of over-regulation in the economic field.


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