Foreign Exchanges and Foreign Trade

«The Economist», 16 Ottobre 1920, pp. 590-591

Turin, October 8

At the time of writing foreign exchanges are soaring up, so that they have already reached the highest monthly average hitherto touched. I give below, for the sake of comparison, a statement of the said monthly averages, as calculated in the preface to a new French edition of the well-known study by Mr. Stringher, director-general of the Bank of Italy, on “Note Issues and Money Market in Italy”:

As the highest level was touched in April, 1920, it is easily seen that October threatens to break all records. Speculations are rife as to the causes of the great rise; and in banking and trade circles it is said that the political occurrences, mainly the fear that the last dispute in the iron and steel industry, with the forced surrender of employers, will be only the first of a series of bitter disputes, which may end in the overthrow of the present industrial system. It is also said that foreign banks and trading firms are reducing or closing credits opened to Italian customers; so that it is increasingly difficult for our industry to pay debts which are falling due, and it will be increasingly difficult to obtain new credits for purchasing coal, wool, cotton, iron, and other raw materials of industry.

Time alone will show if these fears are justified, or if the good sense of the Italian people will not prevail. The latest available figures of foreign trade are those for the first six months, of 1920, and they compare favourably with previous periods:

The figures are not exactly comparable, as those for 1918 and 1919 are at 1918 values, while those for 1920 are at 1919 values; but it is clear that imports are stationary, while exports are increasing. If we examine details of imports we see that the greatest decreases in the first half of 1920 against the same period in 1919 are in animals and animal products, from 1,329.1 to 554.3 millions lire (-774.8), and minerals, metals, and metal products, from 1,335.5 to 1,015.9 millions lire (-319.6). The first fact is reassuring, as it may be explained by the gradual increase of domestic animal stock, which during the war was greatly depleted. The second fact is perhaps attributable to decreased activity of war industries. Against these principal decreases we may note increases from 333.2 to 498.2 (+165.0) in olive and other edible oils and alcohols, from 352.5 to 593.4 (-1-240.9) in wool and woollens, from 51.4 to 168.8 (4-117.4) in timber, from 153.2 to 249.3 (-1-96.1) in silk, from 713.7 to 785.6 (4-71.9) in coal, earthenware, &c, from 461.0 to 521.2 (+60.2) in hides, from 44.8 to 101.9 (+57.1) in dyes and colouring and tanning materials, from 70.6 to 108.0 (+37.4) in hemp, flax, jute, from 44.1 to 107.7 (+63.6) in cars, motorcars, &c. Among the exports there are no decreases worthy of notice. The principal increases are as follows: from 369.2 to 828.5 (+ 459.3) in silk; from 158.8 to 428.8 (+ 270) in hemp, flax, jute, and their worked products; from 324.7 to 503.0 (+ 178.3) in macaroni, vegetables, &c; from 413.9 to 581.9 (+ 168) in cotton goods; from 85.4 to 227.9 (+ 142.5) in chemical products; from 12.7 to 141.0 (+ 128.3) in motorcars and other vehicles; from 58.9 to 164.2 (+ 105.2) in metals and metal products. The increases in exports are general, and in some cases remarkable. If only we could have a year of continuous work, the balance of international commerce might return to a normal condition, and, so far as the depreciation, or, rather, the unstable value, of the lira depends on excess of imports over exports, the foreign exchanges would be stabilised.