Banking Deposits and Inflation

«The Economist», 24 gennaio 1920, pp. 144-145

Turin, January 6

The statistical appendices to the last Budget speech of the Finance Minister, lately published, contain some interesting figures on the economic condition of Italy. Banking deposits have risen continuously during the war, as is shown in the following table (in 100,000’s of lire, 00,000 omitted):

Public pawning houses (Monti di Pietà) are included, because they have separate departments, which accept deposits, and are in all respects true savings banks. After a decrease in 1915, in the first year of the war, and having remained stationary during 1916 and 1917, the deposits began to increase, with an accelerated pace as time went on. After June 1919, the rise continued, for it is highly probable that a December 1919, the deposits will not be far short of 20,000 million lire. In the first year of the war the decrease was almost general, only the Monti di Pietà and the banks of issue escaping the general fate; the first because of their public character, the last because they were exempted from the moratorium, and so people began to patronise them, notwithstanding the very low rate of interest allowed. The figures show the great hold public (saving banks, Postal Savings Office, and Monti di Pietà) and cooperative (popular, cooperative and rural) institutions have on the depositing Italian public; less than a fourth part of the deposits are in the hands of ordinary banks and banks of issue. Today, however, popular, cooperative, savings and rural banks are true banks in the ordinary sense; they discount bills and transact all sorts of ordinary banking operations, principally in a small way, for the benefit of small traders and agriculturists.

Increases in the capital of joint-stock companies are traced in the following table (in 100,000 of lire, 00,000 omitted). (See table to p. 145).

Monetary inflation has much to do with the extraordinary increases of the share capital of joint-stock companies. The same capital will not today do the same work as in old times, but a residue of genuine increase is evident. Old private firms and companies are busy transforming themselves into joint-stock companies.