Growth of Corporative System – Railways and Roads – Gas – Sip

«The Economist», 16 luglio 1932, p. 123

Turin, July 4

At a Ferrara corporative congress recently a few voices were heard advocating the vesting of all capital ownership in a body on which savers, capitalists, employers, technicians and workers should be represented. These prophets were howled down as Bolshevists, and the overwhelming majority reiterated a profession of faith in the Labour Charter, which recognises individual initiative under State control. Intervention by the State is increasing daily, and is signalised by a systematic recourse to intermediate agencies between State and individuals. Workmen’s insurance against accidents will be administered through a unified body, acting through existing or new organisations or syndicates. A new silk corporation is to be created, according to Signor Bottai. Its character is not yet very clear; separate syndicates for employers and employees will continue to exist, and the corporation will be a body representative of both, with functions of education and control which are now exercised by Government departments. Syndicates will pay the recently instituted premium of 1 lira per kg. of cocoons produced, a premium which will cost the Treasury some 30 million lire. The crisis is acute in the silk industry, and at the present cocoons price of 4 lire per kg. many spinners dare not buy.

There is some resistance to this gradual dispossession of public departments from their time-honoured functions, especially as frequently there is the risk that the control of expenditure of public money will be weakened by such a procedure. Anxiety is sometimes visible in parliamentary reports about the consequences of the growth of numerous intermediate bodies, such as syndicates, semipublic institutions, joint-stock companies whose sole shareholder is the State, and whose accounts are not subject to the same degree of revision as the usual State accounts. In a recent report (Senate, 1176-A), Senator Mayer said that the probable losses of the Liquidations Institute could be estimated at 5,429 million lire, to be paid by taxpayers before 1940.

The crisis and the competition of motor cars are playing havoc with the revenue of the State railways, and a sum of 200 million lire is to be paid from the Treasury to the railways, in order to balance the 1931-32 accounts. The State railways appear to be active in devising remedies. As motor-car competition extends from short to long distances, drastic reductions for goods are granted, up to 70 per cent, for shorter hauls. To single firms reductions are granted provided that at least 400 tons per semester are loaded. Terminal charges are also being drastically reduced.

Senator Frassati convened on June 30th the shareholders of the Italgas Company, the biggest gas-holding company of Italy, whose lamentable story is already known, to hear the results of this liquidation. The gist of the matter is that 383.2 million lire must be deemed lost in consequence of the speculative adventures of past administrations. After charging 149.2 millions of it to the various reserve funds, the remaining 234 millions loss must be debited to capital, which is thus reduced from 260 to 26 millions (i.e., from 100 to 10 lire per share, a remarkable fall from the 800 lire quotations of halcyon days). The capital will again be increased to 260 millions, by a share issue already guaranteed, to be offered at par to old shareholders. At the meeting of SIP, a big electric and telephone company, it was stated that the company owns plants with a yearly output capacity of 1,850 million kwh. of continuous energy and of 339 million kwh. of seasonal energy. During 1931, the production was limited to 1,245 and 47 million kwh. respectively, with a probable loss of some 100 million lire net revenue. The telephone plants were similarly used up to only 70 per cent, of their capacity, against a normal 90 per cent., thus entailing another loss of 50 million lire net revenue. The broadcasting monopoly, which is also vested in SIP, is as yet far from giving good results; subscribers represent only 0.5 per hundred population, against 2 in Switzerland, 4.50 in Germany, and 6.70 in England. The accounts close with a net profit, but with practically no provision for depreciation, only 8.2 million lire being set aside on a 847 million lire capital and 138 millions reserves, and with heavily overdrawn banking accounts of about 400 million lire. Directors state that a settlement is sought to fund this enormous floating debt, thus paving the way to resume the payment of dividends to shareholders as soon as the worst of the crisis is over.