New Finance and Corporation Ministers – Regulation of Cartels -Sicilian Sulphur Consortium

«The Economist», 13 agosto 1932, p. 311

Turin, August 1

The appointment of Signor Jung as Minister of Finance in the place of Signor Mosconi passed without comment in the daily Press. The Budget situation, owing to the last issue of Treasury bonds, is strong from the point of view of cash in the Exchequer; but from the liability point of view, Signor Jung must solve a difficult problem. The current deficit for the fiscal year closed on June 30th amounted to 4,274 million lire. Other losses will have to be incurrent by the State, before a final settlement of the frozen assets of the Banca Commerciale is reached. These assets have been passed on to the Società Finanziaria Industriale (SOFINDIT), which in its turn ought to pay their price by pledging them to the Istituto Mobiliare Italiano (IMI), presided over by Senator Mayer. Very reasonably, Senator Mayer intends to advance money only to sound industrial concerns, because he can obtain the necessary money only by selling bonds to the market, and to this end savers must be persuaded that bonds are guaranteed on conservatively valued and profitably run industrial concerns. The first experiment on how the market will absorb the IMI bonds will be made by a 150 million lire loan to the Società Italiana Gaz, the great holding company reconstructed by Senator Frassati. After scaling down the capital from 260 to 26 million lire, the IMI should complete the reconstruction by converting the overdrawn banking account into a 150 million lire funded loan. Electrical, shipping and chemical industries also need long-term loans to ease their banking accounts and, therefore, the task of the IMI, to be completed, requires appeals to the market to the tune of billions of lire. The task of the new Finance Minister should be to eliminate competition between the needs of the Exchequer and of the IMI, with a view to the country’s limited saving capacity. Signor Jung, who was by profession a banker and, until yesterday, President of the Export Institute and of the SOFINDIT, was probably selected for his qualifications as a man capable of finding a solution to the problem.

Speculations as to the causes of the resumption by Signor Mussolini of the Corporations Department are more uncertain. The names of the new Under Secretaries, Signori Asquini, a professor of commercial law, and Biagi, a labour organiser, are not so conspicuous as to afford a clue to the motives which led to the resignation of Signor Bottai. On the employers’ side, there was a certain discontent against Bottai, due to utterances which could be interpreted as too collectivist.

The Government’s powers to create compulsory cartels in the iron and steel industries were extended to February 28, 1933, and a committee was appointed to advise before the end of the year as to the best methods of organising the industry. On the other hand, two old compulsory cartels were subjected to severe criticisms. The old “Camera Agrumaria”, created at Messina to unify the sale of calcium citrate, had accumulated a stock of 8,500 tons, valued, at current prices, at 20 million lire. The board of directors was accused of maintaining a policy of too high prices and thus stimulating the imports of foreign synthetic citric acid. The board was therefore dissolved, and a new board charged with the invidious task of finding remedies. More complex was the problem of the Consorzio Solfifero Siciliano, a thirty-year-old compulsory cartel for the sale of Sicilian sulphur. The 1923 agreement between Sicilian and American producers for the division of the world’s markets did not prevent the gradual decrease of Sicilian sales and the increase of unsold stocks from 5,000 tons in 1928 to 200,000 tons at the present time. The Consorzio, which had advanced the price to producers, was thus saddled with a debt of about 60 million lire, and the industry with a threat of ruinous prices in the event of big stocks being put on the market. The situation could be solved either by the extension of the cartel to those non-Sicilian producers who had in the meantime entered the field, or by a return to free competition. Contrary to the new cartellisation policy, the latter was the preferred solution. The Consorzio was dissolved, producers being free to sell at market prices as from August 1, 1932. To prevent a slump in prices, the present stock will be purchased by the Liquidating Consortium, with the financial aid of the Bank of Sicily and of the Palermo Saving Bank, at the average price of 300 lire per ton. As the sale price cannot possibly cover the purchase price with interest and other costs, the loss will be borne by the State Exchequer, and for this purpose a yearly sum of six million lire has been inscribed in the Corporation Budget. This is the end of the most important experiment made in compulsory cartellisation of industry.

The reorganisation, by a decree of June 30th, of the stock exchanges puts brokers under a stricter Government supervision, and presidents and members of the boards are in future to be appointed by the Finance Minister. Their activity will be rigidly limited to brokerage, to the exclusion of all jobbing transactions. The right of buyers to claim immediate delivery of securities purchased for end of the month settlement is abolished. The Finance Minister, however, can, in exceptional circumstances and for given securities, grant such a right (the so-called diritto di sconto).