The Italian treasury bond issue

«The Economist», 31 gennaio 1914, pp. 228-229

A Turin correspondent informs us that the recent issue by the Italian Government of 200 million lire of Treasury bonds has been a great success. The denominations of the bills were 2,000, 5,000, 10,000, 20,000, and 50,000 lire, payments to be made in four instalments, of 25 per cent, each, on January 31^st, April 1^st, May 30^th, and July 1^st. The issue was undertaken by a syndicate of the foremost banks of Italy, and the subscriptions were to be open to the public up to January 25^th. But on January 21st the stock offered was completely exhausted, and the register had to be closed. The issue price to the public was at par, the interest offered 4 per cent., and the bonds are redeemable in five years.

The price paid by the underwriters appears to have been, like that paid on preceding issues, between 97 and 98. This is the third issue of five-year 4 per cent. Treasury bonds in Italy. The first, of 330 million lire, was made in 1912, the second of 400 millions in 1913; adding the present issue of 290 millions, the total of 1,020 million lire is reached. As there are, in addition, outstanding between 250 and 300 million lire of ordinary exchequer bills at three months up to twelve months date for the current needs of the Treasury, the total of five-year bonds and ordinary bills may be taken at 1,300 million lire (52 million pounds circa). About a fourth part of the 1,020 million lire five-year bonds have been issued to finance the Libyan war; the rest was required, first, for the State railways, and, second, for other public works and extraordinary expenditure. The success of the present issue was mainly due, as Professor Pantaleoni pointed out in the Economista di Firenze, to the savings of the southern portion of Italy. Southern Italy is almost a purely agricultural country, and in the last two years has enjoyed good crops and good prices. To the emigrants who formerly deposited their savings in the banks at 2.64 per cent, interest, the offers of State bonds at 4 per cent, proved attractive. In the North of Italy the fall in prices of shares, even those of the old Mediterranean Railway, has frightened capitalists, large and small, out of the share market. The fall of Mediterranean shares, due to various internal and technical causes, has also affected shares of very sound companies. The Northern Italian capitalist of today is determined to buy only bonds and rentes at fixed interest. According to the annual review of the Genoese bank of Deslex frères, in the past year upward of 100 million lire have been invested by Italian capitalists in Austro-Hungarian, Russian, Chinese, and South-American bonds.