Finance – Corporative Council – Grain Quota

«The Economist», 25 giugno 1932, pp. 1409-1410

Turin, June 13

Financial interest is still mainly centred in the Budget situation. The speech of the Finance Minister, Signor Mosconi, was not encouraging. Coming after Senators Federico Ricci, Ancona and others had insisted on the necessity of economies or new taxation – free conversion of consols, further reduction of salaries of public employees, taxation of all bearer securities were among the devices suggested – the Finance Minister stated emphatically that no tax on State securities was contemplated and that dividends on them will be punctually paid. That was satisfactory; on the other hand, after the general reduction of 12 per cent, in salaries of public servants, a further all-round reduction of them would probably not be well received. Nor is it easy to discover new sources of revenue, recent experience going far to prove that taxation has reached its yield limit. The Minister’s policy was in some ways disquieting. The Budget for 1932-33 was recommended by him as a “wait-and-see” Budget (bilancio di attesa). No doubt the end of the world crisis will put many things right; but the crisis must be aided to approach its end, and the only way in which States and individuals can promote the end of the crisis is by putting their houses in order. To have recourse to a loan instead of to the printing press was certainly sound, but even the loan, however successful, bristles with temporary difficulties. On May 15th the banks completed the payment of the 4,000 million lire proceeds of the 5 per cent, nine-year Treasury bonds into the Exchequer. Private bank deposits being reduced by such a big amount, banks rediscounted bills at the Bank of Italy, and the discounts and advances figure of the Bank jumped up from 5,844.6 on April 30th to 6,819.1 million lire on May 30. As, in the meantime, partly in consequence of payments on bonds subscribed, notes issued decreased from 13,375 to 13,136.8, and current private deposits from 992.5 to 913 million lire, the State Exchequer was forced to come to the rescue and pay into the Bank of Italy part of the proceeds of the loan. Treasury deposits, which had already increased from 1,514.3 million lire on March 31^st to 2,350.9 on April 30th, increased further to 4,098.6 millions on May 20^th, a record figure for several years. This financial incident shows that the theory widely held of vast cash sums hoarded somewhere, which the State and other borrowers could tempt forth by good investments, is not valid. At the present moment there are in this country no unused hoards ready to accept good offers. The limit to loans for public and private investments is the surplus saved from day to day from current national income.

There have been some very interesting debates at the National Corporative Council, which is tending to become the effective, though only preparatory, legislative body in our country. Under the chairmanship of Signor Mussolini two Bills were formulated, the first accepting the principle of preliminary examination of the priority of industrial inventions, the second on workmen’s compensation, which will be in future administered by a public body, exclusive of surviving mutual insurance associations.

The coming harvest is already depressing future wheat and corn prices. While spot prices for wheat are 1,100-1,200 lire per ton, July futures are quoted at only 950 lire; and the corresponding spot and future prices for corn are 800 and 620 lire per ton. Rumours were recently current that the quota policy would be discontinued next year; but a Decree of June 10th, issued by the Minister for Agriculture, re-enacts the quota system. Soft foreign wheat will be milled only up to a maximum of 5 per cent, of total wheat milled from June 27th in Sardinia, from July 7th in Southern Continental Italy and Latium, and from July 15th in Central and Northern Italy. The percentage is increased to 30 per cent., as from June 27th, for Sicily. Hard foreign wheat will be admitted up to 5 per cent, as from July 7th in insular and Southern Italy and Latium, and up to 30 per cent, as from July 15th in the other parts of the country. The system, which was kept very flexible by continuous regional changes in percentages, worked very well in the interest of the farming class throughout the current year.