Italy

«The Economist», 26 giugno 1937, pp. 732-733

Prices and wages – Turin, June 9. – The new monthly bulletins of the Central Statistical Bureau provide some valuable information, although, unlike the previous series which ended in October, 1935, the new one for May, 1937, includes no figures for banks of issue or about public finance. In general the indices point to rising activity. The index of raw material imports, which fell as low as 33 in 1936 (1928=100), stood in May at 67.3. The index of manufactured exports, which declined to 30.6 in 1936 (1928=100), stood in May at 60.2. There has, of course, been a considerable rise in wholesale prices which must be taken into account.

Prices had already risen above the lowest point reached in 1934 before the alignment of the lira in September 1936. The rise was absolutely and relatively more marked in the price index for production goods (from 79.7 in 1934 to 114.2 in April 1937, or 43 per cent.) than in the index for consumption goods (from 60.4 to 82.6, or 36 per cent.).

A comparison between the cost of living, according to the general national index, and industrial and agricultural wages is as follows:

The index of wages does not yet include the eight to ten per cent. rise given in April. Moreover the increase in the number employed should counterbalance the rise in the cost of living, so far as family budgets are concerned.

HEAVY IMPORT SURPLUS: While the index of import values has risen from 38.9 to 61.2 (1925=100), the index of export values has only risen from 33.2 to 45.4. The import surplus in the first four months of 1937 was valued at 910.6 million lire against 659.2 million in the same period of 1936. The 1936 harvest was poor, and wheat imports in the first four months of this year were 779,868 tons, against 104,598 in the same months of 1936. The value rose from 45.4 million lire to 620.2 million lire.

Under the present conditions of compensated exchanges, quotas, clearings, etc., foreign trade is governed by peculiar rules. It may be useful to give a few representative figures of Italy’s trade with different countries:

Except for France, Great Britain, Greece, Jugoslavia and Switzerland, there was a surplus of imports from all the principal countries in the first four months of 1937. As the gold reserve of the Bank of Italy increased in the same period by 1.2 million lire, we must conclude that the tourist expenditure and shipping revenue were sufficient to counterbalance the surplus. Indeed it was officially stated in the Senate that it was even possible to liquidate past commercial debts, such as, for instance, the 150 million lire due to Great Britain.

FINANCING WAR: The report of the Governor of the Bank of Italy and the speeches of the Finance Minister have gone far, in spite of the non-publication of the usual figures, to explain how the Treasury managed to surmount the financial problem of the Ethiopian war, and of other exceptional expenditure. Extraordinary revenue, floating debts and other Exchequer means yielded during the thirty-four months from July 1, 1934 to April 30, 1937 a total of 25,288 million lire, which sufficed to meet the excess of total expenditure over ordinary revenue.

The principal items included in the total were:

The difference between the sum of these items and the gross total of 25,288 millions has probably been made up by the sale of foreign securities held by Italians living in Italy and transferred to the Treasury, and by the transfer to the Exchequer to the difference, between the old and the new value of the gold reserve, which probably amounted to a round figure of from 1,500 to 1,600 millions.