Opera Omnia Luigi Einaudi

The Budget Speech

Tipologia: Paragrafo/Articolo – Data pubblicazione: 17/12/1921

The Budget Speech

«The Economist», 17 dicembre 1921, p. 1068




Turin, December 10



On December 8th, Signor De Nava, Minister of Finance, made his Budget speech in the Chamber of Deputies. By statute he was bound to review the past fiscal year 1920-21, the current year 1921-22, and the coming year. For the year ended June, 1921, it was estimated in December, 1920, that there would be a deficit of 12,141 million lire, the difference between 22,947 million lire expenditure and 10,806 revenue. In the final accounts, the figures were greatly changed; expenditure rose to 28,783 million lire and revenue to 18,071 millions, so that the deficit was reduced to 10,712 millions. For the present year there was an estimated deficit of 10,370 million lire. But in July the Treasury Minister was able to announce to Parliament that the estimated deficit was to be only 5,000 million lire, thanks mainly to the discontinuance of the bread subsidy. The results of the first quarter of the fiscal year, from July 1st to October 30th, confirm that the deficit will be about 5,000 million lire, in spite of a rise of 1,750 million lire in revenue, which should have reduced the deficit to 3,250 million lire. But the rise in expenditure is swallowing up all increase in the revenue.



In the next fiscal year, 1922-23, the expenditure is calculated at 18,525 million lire and the revenue at 15,763 millions, with an estimated deficit of about 3,000 million lire. The Minister might have safely estimated that the deficit will be wiped out next year, as there is no reason why the revenue should amount only to 15,763 million lire, having in the past year risen to 18,071 millions, while in the present one it will probably touch 19,000 million lire. The Minister evidently supposes that expenditure also will rise, and will absorb the surplus of effective revenue upon estimates. The situation is undoubtedly improving, as the deficit has diminished from 11 to 5 and to 3 billion lire in three successive fiscal years. A good feature, which is worth noting, is that the Treasury does not put on the revenue side any figure from war indemnities. If indemnities are paid, so much to the good. It is probable that the 11 billions deficit of 1920-21 was less than the true deficit, as various State administrations had a separate current account with the Treasury, and their deficit did not enter into the general Budget; while the Minister has assured the Chamber that the 5 and 3 billions deficit of the current and next financial years are the true net results of all public administrations, all separate accounts being from July 1, 1921, thrown, as of old into the general Budget.



The debt situation is as follows (in billion lire):




July 31,


June 30,


Oct. 31,


Oct. 31,


Perpetual and long-dated debts





Exchequer bills


15 0



3,5, and 7 year bonds




State and bank notes





Deposit and loans State Banks




Total internal debts





External debts




General total







The external debt, which was non-existent before the war, increases slowly as unpaid interest accumulates with the capital. The items are calculated at the par of exchanges; and if we estimate them at the current rate of exchanges, the figure should probably be put at about 90 billion lire, a sum equal to the internal debt, and an over-powering burden for the Italian tax payer. Public opinion has not lost the hope that the Economist’s thesis of the total cancellation of the inter-Allied debts will ultimately prevail; as, otherwise, all hopes of balancing budgets are lost and total confusion will prevail in our financial and monetary situation.



Notes (paper money) issued directly by the State or indirectly by the issue banks for the account of the State are less by 2.1 million, having fallen from 12,7 to 10.6 billion lire. The significance of this is, however, somewhat obscured by the rise of the so-called issues for the account of commerce, which rose from 8,230 million lire at September 30, 1920, to 9,775 million lire at September 30, 1921, a rise of 1,545 million lire. If we deduct this rise of the notes in circulation for the account of commerce from the decrease of 2,100 millions lire in the circulation for State account, we have a net decrease of 600 million lire. But the picture is marred by the great increase in the figure of outstanding. Exchequer bills, which have risen during the year from 10.7 billions to the utterly unmanageable sum of 23 billion lire. As the longest dated are one-year bills, and a large amount is maturing from day to day, the State is liable at a moment’s notice to convert them into cash; with the risk of a rise in the note circulation. The gist of the speech is that we are laboriously groping toward the light; that the revenue is coming on very well; but that a very great effort is to be made toward curtailing the growth of expenditure. If the Treasury should succeed in the task of checking this growth, the port of rest for our financial ship would be within easy reach.

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