Opera Omnia Luigi Einaudi

Italy’s economic position

Tipologia: Paragrafo/Articolo – Data pubblicazione: 29/11/1924

Italy’s economic position

«The Economist», 29 novembre 1924, pp. 38-39




The financial year 1923-24 closed with a deficit of 623 million lire, against an estimate of 2,616 million lire. In the first three months of the current year the yield of taxation has continued to expand. This increasing ability of taxpayers to pay has made the condition of the exchequer almost affluent, the effective income in the three months in question (July to September, 1924) being 3,894.6 million lire, against an effective expenditure of 3,622.7 million lire. These figures do not infer that the State budget has reached equilibrium, as certain disbursements may have merely been postponed. But they have an important meaning for the money market, for while the public exchequer, with its issues of bonds and exchequer bills, absorbed, in the financial year 1921-1922, 7,040 million lire from the private savings, and in 1922-23, 3,237 millions, in the financial year 1923-24 bills and bonds up to 1,087 million lire were repaid, and in the three months from July 1st to September 30th the internal debt diminished further by 567 million lire.



This is, perhaps, the dominating factor in the present economic situation of Italy: the State is no more the greatest, and almost the only, consumer of current savings; it is refunding to the money market part of the sums previously received. Private savings, which found, in the war and after war years, an easy harbour in the continuous State issues, are obliged to find employment in agriculture, industry, and trade. The impetus which industry received during the war from State war demands was spent in 1920; after two years of uncertainty and social commotion, 1923 saw a return of abundant money due to the new factor in the capital situation.



Another potent element in economic progress is the increasing stabilisation of the lira. The increasing fixity of the gold value of the national currency, and the decreasing importance (owing to death or passage to productive occupations) of classes interested in the appreciation of the lira have induced many people to take heart of grace. The fear of Bolshevism, meanwhile, has vanished; the values of land, houses, and shares in joint-stock companies have risen in proportion. The average price of joint-stock company shares rose from 100 in April, 1922 – perhaps the worst of all months on the Italian bourses owing to the prevalent Bolshevist fever -to 213.6 in October, 1924. This movement of capital prices put millions in the pockets of investors and speculators.



Savings deposits, which amounted to 28,126 million lire at June 30, 1922, increased to 32,333 millions at June 30, 1923, and to 35,000 in June, 1924. Net investments in joint-stock companies, which were 955 million lire in the year 1922, rose to 2,088 millions in 1923, and touched 2,300 millions in the first six months of 1924. Failures unfortunately increased, also, from a monthly average of 47 in 1918 to 49 in 1919, 53 in 1920, 149 in 1921, 305 in 1922, 474 in 1923, and 612 in the first nine months of 1924. In order to appreciate this movement, one should remember that in the war years failures wee almost non-existent, and that the present figures are a return to the old monthly average of 616 for 1913, and represent, probably, a more true index of the necessary elimination of the unfit in the economic struggle.



As an instance of the effects of the growing influx of new savings in the industry, we may quote a few figures relating to the electrical industry. In the year 1898, the acting KW. were 87,000; in 1908, KW. 426,000; in 1918, KW. 1,240,000. At present there are in progress such a number of new installations, that the KW. acting in 1928 may be estimated, even ex eluding future additions, at 2,341,000. The consumption, from KW. 180,000,000 in the year 1898, rose to 1,000,000,000 in 1908, to 2,300,000,000 in 1915, to 4,120,000,000 in 1917-18, decreased to 3,830,000,000 in 1919-20 owing to social unrest, and may be estimated at 5,500,000,000 in the present year. The capital invested from 200 million lire in 1898, rose to 3,000 millions in 1924.



Only for agriculture we have up-to-date statistics of production. The year 1924 was unfortunate; 4.64 millions tons of wheat were produced, against 6.12 in 1923, and 7 millions of vine grapes, against 8.3. A partial compensation can be sought in the increase from 1.34 to 1.63 million tons in the yield of mulberry leaves (cocoons 42,500 to 49,500 tons), from 0.52 to 0.56 in rice, and from 2.26 to 2.6 in maize production. Higher prices have largely compensated the agriculturist for the smaller production, which, compared with the pre-war average of 1909-1914, is not so unsatisfactory as may be judged by comparison with 1923, which was an exceptionally bountiful year; the percentage of 1924 production on the 1909-1914 average being 94 per cent, for wheat, 98 per cent, for vine grapes, 150 per cent, for mulberry leaves (118 per cent, for cocoons), 114 per cent, for rice, and 101 per cent, for maize.



Current figures of industrial production may be had only for goods subject to excise, beer production rising from 1,187,508 hectolitres in the financial year 1922-1923 to 1,466,507 in 1923-1924; coffee substitutes from 7,804.4 to 8,351.8 tons; sugar from 270,279.4 to 318,987.3 tons; illuminating gas from 259.1 to 292.6 million cubic metres: electrical power consumed from 4,721.4 to 5,390.5 kilowatt-hours. Figures for metallurgical production are more belated; coke pig-iron produced in 1923 amounted to 218,039 tons, as against 140,211 in 1922; electrical-made coke to 15,704 tons, against 14,401; homogeneous iron and steel to 1,141,761 tons, against 981,419; lead to 17,131 tons, against 10,709; zinc to 3,684 tons, against 3,082.



The foreign trade figures show that Italy is gaining ground in outside markets as regards agricultural products and the output of the textile, rubber and motor-car industries. These are the most progressive industries in our country. I doubt very much, however, whether the voice of these industries, which should be mostly a Free Trade voice, will be able to make itself heard, against the potent Protectionist interests of the heavy iron and steel industries, in the negotiations for the conclusion of a Treaty of commerce with Germany, a Treaty which will fix the character of other most important commercial treaties to follow.



It is impossible to make an exact estimate of the real condition of the working classes. Statistics of wages are too old to be of much use. According to Mortara’s index, wages increased from 100 in 1913-1914 to 480 in 1923, keeping approximately in touch with the lessening purchasing power of the lira. If we take 100 as the cost of living for a working family of 5 (2 adults and 3 children) in Turin in the first six months of 1914, we have the following minima and maxima after July 1, 1920:








July 384-4

December 465-6


»  404-7

March 472-2


April 424-5

January 465-6


March 435-8

December 466-7


June 462-1

October 492-9



The maximum in the cost of living after August 1, 1924, was reached in October, 1924. This ominous feature is counteracted by conditions of more continuous employment. The number of unemployed, which had reached its maximum of 606,819 in January, 1922, and oscillated in 1923 between a maximum of 391,974 in January, and a minimum of 178,912 in August, was reduced in 1924 to a maximum of 280,775 in January, and to a minimum of 117,963 in July (in Augustus, 118,955). Emigration is increasing, in spite of American restrictions, the excess of emigrants over returned men being 165,172 in 1921, 188,102 in 1922, 284,475 in 1923, and 163,322 in the first seven months of 1924.



On the whole, it seems that more continuous employment, and probably the larger number of members of the family which find employment, permits a higher level of living to the majority of workers and their dependants. The per capita consumption of wine, in a number of the most populous cities, increased from 40 litres in 1913 to 50 in 1923; of beer from 2.19 to 3.19 litres; of edible oils from 19 to 29 kilograms; of fresh meat from 14 to 21 kilograms; of salted meat from 4 to 19 kilograms; of sugar from 5.31 to 7.72 kilograms; of coffee from 0.615 to 1.263 kilograms; of tobacco from 0.615 to 0.709 kilograms; while the number of lamps from electrical illumination increased from 0.27 to 0.48. These indices of increasing well-being go far to justify the assumption that, in spite of political uncertainties, and the arduous struggle for a return to a normal condition of public and social life, the foundations of Italian economics are strong, and the outlook for the future is promising.

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