Political Crisis -Financial Situation: Exchange Falling and Consols Rising – Levy on Capital

«The Economist», 4 marzo 1922, pp. 454-455

Turin, February 25

The debate in the House of Deputies ended in an over-whelming vote against Signor Bonomi’s Cabinet, but the renewed efforts of Signori Giolitti, De Nicola and Orlando to form a new Cabinet were fruitless. Signor Giolitti encountered the veto of the popular (Catholic) party, and De Nicola and Orlando refused to give their support to Giolitti in the building up of a strong coalition. At the bottom the struggle is against Signor Giolitti, the old man, who for a long time was supreme in the Government of Italy, and without whose consent no one ever dared to form a Cabinet, and against whom no one revolted, save Signor Salandra on the memorable event of the declaration of war against Austria. But for this very reason Signor Salandra was ostracised. The man who has set his face against Giolitti and vetos his return to power is a Sicilian priest, Don Sturzo, the organiser of the popular party. A little, nervous, indefatigable man in his forties, Don Sturzo is the soul and inspiration of the Catholic party, and keeps his party under an iron hand.

In the meantime, Signor Bonomi, who remains in charge until the appointment of his successor, was obliged to postpone for a few days or weeks the Genoa Conference perhaps interpreting the secret wishes of the Premiers of Great Britain and France.

The absence of a Government and the Banca di Sconto’s crisis have not been obstacles to a marked betterment in the Bourse situation. A beginning was made by the reduction from 6 to 5V2 per cent, in the rate of interest on nine-twelve months’ Exchequer bills. The rates on three-five and six-seven months’ bills were reduced respectively to 4.75 and 5.25 per cent. This move of the Treasury was the consequence of the improved situation of the public Exchequer, whose liquid funds passed, as may be seen in the last accounts, published February 17th, from 2,173 million lire at September 30, 1921 to 2,932 millions at October 31, 1921.

However much we may regret the delay in publication, these figures are a testimony to an improving situation. The difference between the public income and public expenditure, which in July, 1921, was 145.5 million lire, in August 195.2 and in September 521.2 on the wrong side, was in October 17.1 millions on the right side. The average monthly deficit, from July to October, was 212 million lire, or at the rate of about 2,500 million lire for the whole year. The Bourses at once instinctively felt the beginning of the improvement, and the hope that an end will at last be put to the usual huge increase of public debt sufficed to give new life to prices. Senator Wollemborg has recently calculated that public debt of all classes reached at December 31, 1921, the sum of about 120 billion lire, including 21 billions of external debt, taken at the par of exchanges. If the increase had continued at the rate of 12 billions a year there would have been little hope of salvation, but the efforts to put new burdens on the shoulders of taxpayers are bearing well-won fruits: 5 per cent. Consols rose in a few days from 75 to 78-79, and 3V2 per cent, from 72 to 74. Foreign exchanges are falling: pounds sterling from 95-96 to 87-88, dollars from 24 to 20, Swiss francs from 450 to 390, and the tendency is towards lower quotations.

A new Royal legislative decree was published in the Gazzetta Ufficiale of February 15′ modifying the extraordinary levy on capital. No changes are made in the sections relating to foreigners having possessions in Italy. They remain subject to the levy. A new term is fixed for compulsory declaration of assets for all taxpayers, who have not as yet sent their declaration or who had sent an incomplete or inexact one: June 30th for residents in Italy, July 31st for residents in Europe, and August 31st for non-European residents. The declarations in foreign countries may be sent to Italian Consulates. As the decree contains many new regulations about valuations of land, houses, and securities, and gives reductions for immediate lump payment of the tax, I think that foreigners, who are taxpayers in Italy, should carefully read this legislative decree, which is dated February 5, 1922, and bears the number 78 of the official series of laws and decrees of 1922.