Italy

«The Economist», 11 febbraio 1928, pp. 16-17

FOREIGN TRADE. – Excluding precious metals and Reparation deliveries, and adopting the corrected figures of the Central Institute of Statistics, the figures of 1927 and previous years were as follows, those for November and December, 1927, being provisional:

The shrinkage in the total foreign trade from 1926 to 1927 comes to about 22 per cent., which is somewhat less than the decrease of 23.5 per cent, in the paper price of gold. Exports decreased by 26.7 per cent., and imports by 21.5 per cent., or by rather less. Consequently the adverse commercial balance for 1927 is slightly higher in paper lire than in the preceding year, and remarkably more so when calculated in gold lire.

CROPS. – Owing to unfavourable weather conditions, crops were generally lower than in the preceding year, though comparing well with prewar results:

The decrease in prices of agricultural products has restricted the consumption of fertilising manures, especially in the North of Italy, where agriculturists feel that past improvements can be made to last for a time, without new investment of money in the land.

INDUSTRY. – Imports of coal increased from 7,894,590 tons in the first ten months of 1926 to 9,490,430 tons in the corresponding period of 1927; but this is not a good index of industrial activity, as the 1926 imports were decreased and those for 1927 swollen by the influence of the British stop-age. The increase in imports of oil and derivatives may have been influenced by the same cause and by the growth in and use of motor-cars and lorries. Imports of raw materials point in general to a slackening of industrial activity. For the first ten months of each year cotton imports fell from 202,685 tons for 1926 to 173,411 tons for 1927. Those of natural wool fell from 37,319 to 20,883 tons; and washed wool fell from 4,633 to 3,607 tons. Dried cocoons declined from 1,444 to 1,042 tons. Broken iron and steel from 641,471 to 599,181 tons, and pig-iron from 157,424 to 109,880 tons. Copper fell from 58,071 to 48,947 tons, lead from 18,118 to 12,701 tons, tin from 3,663 to 3,602 tons, and spelter from 8,971 to 8,190 tons. Timber imports shrunk from 1,539,605 to 1,460,966 tons, hides (raw) from 34,463 to 25,545 tons, and cellulose from 117,221 to 94,075 tons. Jute imports rose from 35,326 to 42,114 tons. A small decrease was registered in the goods carried by the State railways, the returns being 37-5 million tons for the first seven months of 1927, and 38.3 millions for the corresponding period of 1926. New tonnage launched was 57,777 gross tons in the first nine months of 1927, against 250,289 gross tons for the whole of 1926. Monthly average failures, which were 617 in 1913 and 654 in 1926, rose to 879 in the first eleven months of 1927. The total of unemployed, which in 1926 varied between 79,678 (July) and 181,493 (December), was for January, 1927, 225,346, decreasing to a minimum of 214,603 in June, and then rising regularly to 332,240 in October. In addition, the number of partially unemployed, which in 1926 did not exceed the maximum of 26,756, was for January, 1927, 63,716, rising to 134,251 in August and 130,930 in October. The number of subsidy days, which averaged 527,555 in 1926, rose uninterruptedly from 866,681 in January, 1927, to 2,011,583 in October.

THE REVALUATION CRISIS. – All data seem therefore to point out that the year was influenced by the revaluation process, whose intensity was of a magnitude perhaps not inferior to any similar foreign process. This accounts for the present industrial crisis in Italy, which, even so, is only of moderate dimensions.

PRICES AND WAGES. – Various Index numbers are given below:

At the end of December the wholesale gold price level was lower than in Great Britain, United States, Switzerland, and Germany. The cost of living index was 535 expressed in paper lire, and 145 in gold. This is also lower than in countries mentioned above. If, in spite of these figures, exports are difficult, this may be due to the relative height of production costs in the various countries, regarding which reliable data – especially as to wages – are lacking. Probably wages are back to the 1925 level; but as various industries are not working full-time, overhead charges are telling against readjustment.

SAVINGS. – The stabilisation decree, by reassuring the public, seems to have had beneficent results on new savings, which were restricted during 1927 by decreasing money incomes and unemployment. Investments in joint-stock companies’ shares, which amounted to 3,838 million lire in 1926, decreased to 1,698 million lire in the first eleven months of 1927.

MONEY AND STOCKS. – Despite repeated demands for its reduction, the official rate discount remained fixed at 7 per cent. The open market rate of discount eased progressively, until at the end of the year banks, prompted by abundant money, discounted first-rate commercial bills at 5 1/4 to 5 1/2 per cent. Carry-over rates for Consols were reduced from 7-8 per cent, to 4-7 per cent., and for shares from 8-9 per cent, to 6.50-7.50 per cent. Except for a short-lived spurt in February, markets were bad until the end of the year, when stabilisation brought with it a remarkable improvement.

PUBLIC FINANCE. – The last three complete financial years (1924-25, 1925-26, 1926-27) closed with surplus of 417, 468, and 405 million lire respectively. Revaluation and stabilisation have not so far affected the stability of the Budget, and a surplus of 10 million lire is reported for the period July to November, 1927. In the meantime, thanks to the cancellation of the Treasury debt to the Bank of Italy as a consequence of the revaluation of the bank’s gold reserves, State internal debt, which had reached a maximum of 96,163 million lire on June 30, 1924, and was 90,361 millions on June 30, 1927, has fallen 86,000 million lire for December 31, 1927. To this must be added the present value of the annuities due to Great Britain and the United States, and the 100 million dollars of the Morgan Loan.