Banking Figures – Treasury Bill new Issues -State Coffee Monopoly Ended

«The Economist», 30 aprile 1921, pp. 872-873

Turin, April 23

The following interesting figures have been compiled, illustrating the position of the four big Italian banks – Banca Commerciale Italiana, Banca Italiana di Sconto, Credito Italiano, and Banco di Roma (millions of lire):

The advances on securities, i.e., advances to Stock Exchange operators, were somewhat restricted, and so were credits opened to correspondents; while there was a remarkable increase in the discount of Italian bills and in cash. It is probable that the increase in the bills item was mainly due to large subscriptions to Treasury bills, of which the amount discounted in the last months of 1920 was very largely increased. The means for increasing discounts and cash were found, apart from the decrease in “debtors” item, in the abundant “deposits”.

The industrial unrest of September, 1920, has not been traceable in the banking figures of deposits, but its influence was visible in the figures of the Treasury bills issue. The last Treasury account (published April 5^th, but relating to the Treasury situation of November 30, 1920) gives the following figures (in millions of lire) of three to 12 months’ ordinary Treasury bills:

In September, when the labour disturbances were at their height, and Soviet régime seemed to be impending in Italy, the new net subscriptions to Treasury bills fell badly to a paltry 124.9 millions lire; but when the revulsion of public opinion commenced, the public returned to Treasury bills, and the subscriptions went up to the high-water mark of over 1 billion lire in the month of December, and it appears, notwithstanding the absence of subsequent figures, that subscriptions have been maintained at a high level. The willingness of the public to subscribe to Treasury bills is increased by the fact that these bills are the only security which is excepted from the impending compulsory inscription of all bearer securities for the purposes of income-tax. This is the reason why the Government has not dared to issue a new full-dress loan of 4 billions lire. The public would have feared the compulsory inscription, and would have continued to prefer the usual bearer Treasury bills. And so the first instalment of the loan of 1 billion lire was issued under the style of “seven-years Treasury bills”, this name being used for reassuring the saving public. The conditions were favourable to the ordinary investor: 5 per cent, interest, issue price at 94 per cent., first half-year dividend payable at once, instead of at August 15, 1921. An additional interest of 0.25 per cent, is to be given to subscribers who will inscribe the bonds. Every half-year, on February 15th and August 15th, there will be drawings for 600 lots or premiums. At February 15th the first premium will be one of 100,000 lire, with a second of 50,000, a third of 10,000, four others of 5,000 lire each, and 593 of 1,000 lire. At August 15th there will be added to the paid premiums a first big lot of 1,000,000 lire. The whole issue of 1 billion lire was subscribed in a few days.

An event of considerable financial importance was the abandonment of the coffee monopoly, which was started in 1919 with hopes of great gains for the state exchequer. As a matter of fact, the gains were not forthcoming, or were extremely doubtful; the public was complaining of the bad quality of the State coffee, and Trieste was threatened with ruin to her big trade in coffee. Out of a total of 18 million bags of coffee consumed in the world, Trieste absorbed 1,250,000 bags, and upwards of 20,000 workers lived on the transit trade.

The greatest obstacle to the abolition of the coffee monopoly was the fact that the State had bought, and still possessed at the date of April 1st, a stock of perhaps 200,000 metric quintals, sufficient for 10 months’ Italian consumption. The stock was bought at an average price which is understood to be not less than 740 lire per metric quintal, and perhaps more, while the current price of superior Santos is at Trieste only about 500 lire. The Exchequer was unwilling to lose the difference; and no private merchant would have dared to commit himself to help the State out of this huge loss if the market had been opened to foreign coffee. The convention signed some days ago between the Government and a consortium of coffee merchants stipulates that the consortium will buy from the State all its coffee stock at the price of 740 lire per metric quintal; but the Government will prohibit all import of coffee in Italy for a period of 10 months.