Gold Reserves – Unemployment – Budget Figures

«The Economist», 17 ottobre 1931, p. 712

Turin, October 11

“Happy the peoples who have no history” – this may be the motto of the week. There is no development in the situation of the lira. The gold reserve of the Bank of Italy increased from 5,373 million lire at the end of August to 5,445 millions at the end of September, while the gold exchange reserves decreased, between the same dates, from 3,465 to 2,938 millions. The total reserves thus decreased from 8,838 to 8,383 million lire, a decrease of 455 millions. This is the price paid for the defence of the lira, not a formidable loss during such a critical period, and one partly counterbalanced by a decrease from 14,645 to 14,474 million lire in the total notes circulation.

Apparently the first shock of the British gold suspension has spent its force here, but the newspapers give vent to some anxiety about the next one, possibly coming from a German collapse. It may be, however, that Italian economy is too secluded, too small-agriculturist, to be much concerned with international monetary portents. Even the higher figures of unemployment (about 650,000 at the beginning of the autumn, against 400,000 last year) do not arouse as much concern as they would in a purely industrial country, because the unemployed here receive aid from relatives on the land, thus rendering sufficient the present unemployment subsidy of 7.75 lire per day, payable for a maximum of 120 days.

The State Budget has not been obliged as yet to subsidise the Unemployment Fund, save indirectly by way of public works. Extraordinary appropriations to the Public Works Department have increased by 655.3 million lire to 1,316.5 millions since the beginning of the financial year; and this has been officially announced to be 520.9 million lire at the end of the second (August) month of the financial year. Should the deficit go on increasing at this rate it may well become heavy at the end of the year.

It should, however, always be remembered that these Budget deficits are paper deficits. It may be that in some future time the Exchequer will be obliged to pay, on account of the July-August, 1921, Budget, 520.9 millions more than the taxes received. In the meantime, so far as hard cash goes, the Exchequer has in these same two months received 2,631 millions and disbursed 2,172.7 million lire, so that the cash in the till has been increased by 458.3 millions. In fact, as Signor Mazzucchelli has pointed out in his monthly review in the Rivista Bancaria, the cash position of the Italian Exchequer is strong. Things may change, but for the moment there is plenty of cash funds to bear the brunt of the present monetary turmoil.