The cost of the war in Italy

«The Economist», 27 Novembre 1915, pp. 892-893

Turin, November 20

As far as can be argued from the Treasury returns, the latest of which, up to September 30th, was published some days ago, war expenditure in Italy may be summarised as follows (in lire)

War expenditure in the strict sense, that is to say, the excess of the expenditure in the war months of 1915 over the corresponding months of the last complete year of peace, may be estimated at about 420 million lire monthly. The daily figure works out at 1 1/2 million lire, or £ 560,000 sterling (at 25 lire to the £). It must, however, be added that this is the current daily expenditure from June 1st up to September 30th only. In the last two months, October and November, these figures may have been exceeded. Other items of war expenditure are charged to various other departments, such as the Home Office and the Colonial Office, and a great sum was spent previous to the declaration of war against Austria.

The sum total of the Budget expenditure in the financial year from July 1, 1914, to June 30, 1915, and of the months of July, August, and September, 1915, was as follows:

Of this total increase of 3,664 million lire, one may say that some 3,500 million lire are the effect of the war, under the head either of war preparations from August, 1914, to May, 1915 (about 2,000 million lire), or of the conduct of the war from June to September, 1915. This is, indeed, a truly stupendous figure for our country. If we add to this total increase other ordinary and extraordinary expenditure, civil and military, including also expenditure on capital account, such as railway building or reimbursements to post-office banks depositors and various other items, we get a total issue from the Exchequer in the 15 months between July 1, 1914, and September 30, 1915, of 7,587 million lire; that is, about 300 millions sterling (not allowing for the present rate of exchange). This is the heaviest financial charge borne in Italian history. How it is being met may be judged from the following table:

The only dubious item in this table is the figure of the new note issue. I must add that in the first period of the war it would have been impossible to meet the growing expenses without recurring to note issues. But whereas in the 12 months from July 1, 1914, to June 30, 1915, the monthly average of the note issue was 129 million lire, the average for the three last months from July 1 to September 30, 1915, decreased to 118 million lire. But for the highly praiseworthy resistance of the Treasury Minister, Signor Carcano, and of the Director-General of the Bank of Italy, Signor Stringher, the note issue would have been increased well above the present level, and the foreign exchanges, which are already high, would have jumped still higher.

The financial policy of Italy at the present moment may be said to turn upon the necessity of new loans, economy, and new taxes. The Government is alive to the urgent character of these problems. As to new loans, I think that the time will soon come when an appeal will be made for a new national loan; and when such appeal is made subscribers will come in even larger numbers than in July last; for they know:

1. That the Government is bent on the utmost economy. A Decree of November 18^th has suspended all new appointments of public servants, has ordained that the number of non-commissioned or extraordinay public servants is to be reduced by one-fifth from July 1, 1916, by another fifth part from July 1, 1917; has reduced from 10 to 20 per cent, office expenditure (stationery, lighting, &c), fees, and other extra remuneration of public employees.

2. That the Government is devoting the proceeds of new taxes as they are levied to the interest and amortisation service of new debts. I think that the various new taxes imposed after January 1, 1915, will yield about 120 million lire per annum, and new taxes are in store which will increase, before the end of the year, the said 120 millions to about 300 million lire. This is an honest and straightforward programme, which is reassuring to the State creditors. And the Italian people pay the new taxes without murmuring, as they know that the burden is necessary to out unity.