Italy

«The Economist», 13 febbraio 1932, pp. 15-16

FOREIGN TRADE. – Imports and exports both contracted in 1931, but whereas, according to the statistics published by the General Confederation of Industry, prices went down to 50 and 49.7 per cent, of the 1925 basis, respectively, for the first nine months of the year, quantities decreased to 89.3 per cent, for imports and increased to 108.7 for exports. The index of export prices, according to Bachi, is only 274 on a 1913 basis, against 350 for import prices. As these indices do not relate to the same goods, we cannot infer from them that Italian goods are being dumped in foreign markets; but, especially after the slump in sterling, Italian manufacturers are keeping their hold on foreign markets only by selling without any profit at all. As the surplus of imports over exports did not exceed 1,600 million lire, and the other items of the balance of payments probably offset it, a different explanation must be sought for the decrease from 9,624.3 million lire at December 31, 1930, to 7,796.4 at December 31, 1931, of the gold and gold exchange reserves of the Bank of Italy.

CROPS. – Wheat had a fairly good year, whereas other crops were less bountiful. As the price of the wheat after the harvest sank as low as 700 lire per ton, duties were raised to 750 lire, and a wheat quota of 95 per cent, for national wheat was made compulsory for millers. The price rose to 1,000 per ton, and by the end of January, 1932, to 1,100. A National Rice Institute was created, which, by giving an export bounty now fixed at 310 per ton, kept the price at 700 lire, well above the international 450 lire level.

INDUSTRY. – The only industries which showed increased activity were rayon and aluminium; in all other fields there was a slowing down, which was in certain instances very pronounced. The building permits for 17 cities decreased from 187,355 rooms in 1929 to 149,740 in 1930, and 92,509 in 1931. Permits, moreover, now not infrequently remain on paper. In the country, rural building is at a standstill, offering a faithful index of the bad plight of farmers. There are many empty flats available and nobody to rent them, especially in old houses. Electric power consumption is well maintained, at the expense of coal imports, which were probably reduced by 2 million tons. Imports of oil and gasoline are also falling; and sales of automobiles ar6 still further reduced.

PRICES, WAGES, COST OF LIVING, AVERAGE. – Wholesale prices for the year are well under the stabilisation level: the average for 1931 was 341.6 (92.4 gold), the index for the end of December 326.9 (86.5 gold). The cost of living, which in 1929 was lower than the wholesale prices index level (445.6, against 480.7) was in 1931 higher (388.7, against 341.6). In the second half of the year the cost of living diminished slightly to 381.6; and to 340.2 at December 1st. Wages were maintained better with a reduction of about 13 per cent, under the 1929 level; but not unfrequently men are content with wages lower than the trade union rates. Unemployment, moreover, is rising: in 1931 the minimum was 573.593 at the end of June, against 322.291 at the same date in 1930; and the maximum was 982,321, against 642,169 in 1930 (December).

SAVINGS AND NEW CAPITAL ISSUES. – The great decrease of building permits is an index of decreased direct investments. Indirect investments through banks and bourses are practically nil. The only increasing item is deposits in postal saving banks; but here also the 1,025 million lire increase in the first 11 months of the year is less than the increase of postal certificates (+1,339 millions), which give a yield of from 5 to 6 per cent., and are part of postal saving banks deposits. Thus, almost the only important source of new savings is tapped by the public exchequer and used to keep a big State current account at the Bank of Italy, for the sake of keeping down circulation. Other increases in ordinary saving banks and other banks are small. Investment in joint stock companies is for the first time a negative quantity, owing to losses and winding-up of badly-managed or speculative companies.

Money and Stock Exchanges. – Stock Exchanges were practically non-existent for the whole year, with the public absent, and operators forced to squeeze a living out of a dwindling market. The official rate of discount increased from 5.50 to 7 per cent, on September 28th, after England went off the gold standard. First-class commercial paper could be discounted at from 5.25 to 5.75 in the first four months of the year; then there was a relaxation to 4.75-5.50; rising again to 6-7.25 after September. Prolongation rates kept very low for the whole year for State consols, from par to 5 per cent.; while on first-rate industrial securities money could be had from 4.75 to 7 per cent. Foreign exchanges did not depart, until May, from the higher gold point, hovering between 19.09 and 19.10 lire per dollar. Afterwards, the monthly average rates rose from 19.101 in June to 19.118 in August, 19.255 in September (occasionally touching 20-21 towards the end of the month) and 19.438 in December. Stringent regulations were enacted to prevent further rise. At the end of January, 1932, the lira, disregarding the stabilisation legal gold points, seems to be pegged to the 19.70 level.

PUBLIC FINANCE. – The financial year 1930-31 closed with a deficit of 895.9 million lire, but with an excess of cash payments over cash revenue of only 408.5 millions. The first semester of the current fiscal year, July to December, 1931, closes with a bigger deficit of 1,668.9 million lire. As usual, the cash situation is better, because cash revenue exceeds cash payments (on account of effective current revenue and expenditure) by 555.5 millions. Public internal debts, which rose from 88.102 million lire at June 30, 1930, to 91,442 millions at June 30, 1931, decreased to 91,418 at December 31.