Abolition of Flour Milling Regulations – Public Works – Increase of Taxation – Reclamation of Land – Railway Traffic

«The Economist» 3 novembre 1928, pp. 798-799

Turin, October 22

In my last letter I quoted criticisms of public economic bodies against the milling regulations, which provide that the flour extracted from a given weight of wheat shall not be less than 82 per cent. A few days afterwards a royal decree, recognising the value of such criticisms, abolished all these regulations, so that white bread has made its reappearance on Italian tables, and agriculturists are again able to utilise rationally the by-products of wheat milling. The abolition of the milling regulations is a sequel to the good wheat production of the current year -62 million tons, against 53 million tons in 1927. It is hoped that imports of wheat can be substantially reduced. Much will depend, however, on the level of future prices.

This is by no means the only important step recently taken by the Government in the economic sphere. A plan of extraordinary public works for next winter was approved by the Cabinet to a cost of 235 million lire.

Another 315 million lire are to be spent on the opening of a road on the beautiful coast of the Garda-see, so as to make a continuous connection between Brescia and Riva. The works included in the general plan are, in addition to the normal works already provided for in the current Budget, railway extensions and electrifications, reclamation of submerged land, public roads, post-office buildings, water supply, canals, port improvements, &c. The plan aims at limiting and possibly counteracting the usual tendency to an increase in unemployment during the winter months. As reported in my last letter, unemployment fell until July, when it reached a minimum of 234,210. At the end of August the figure was somewhat higher at 248,100, but less than the 291,821 figure of August, 1927. Financing of the emergency plan of public works is to be effected by taxation. Here is a list of the increased taxes: –

1. The special tax on bachelors is doubled as from January 1, 1929. Bachelors will pay as the base tax 70 lire between 25 and 35 years, 100 lire if between 35 and 50 years, 50 lire if between 50 and 65 years. Further, if they are assessed by the tax on total income, they will pay, in addition to the ordinary tax, a sur-tax of 50 per cent, instead of 25 per cent, of the said tax. For a taxpayer with an income of 1,000 lire (£ 1,080 sterling) the special sur-tax will amount to 2,000 lire (about £ 21 12s); for a bachelor with an income of 1,000,000 lire (£ 10,800 sterling) the sur-tax paid will be 50,000 lire (£ 540).

1. The price of common salt (a State monopoly) is raised from 0.50 lire per kilogram to 1.50 lire. The prewar price (when there was no monopoly) was 0.40 gold lire, and left a good margin for profit or taxation, the cost of production being then about 0.10. Today the price of 0.50 paper lire leaves no margin at all. However, having become a State monopoly, common salt production and sale was no more subject to taxation. The raising of the price to 1.50 lire restores salt to its traditional position.

1. The tax on wine, beer and other alcoholic beverages is increased by 0.10 lire per litre.

1. The excise on alcohol is increased by 300 lire per hectolitre.

1. The licence duties on saloons are to be paid yearly, instead of at longer intervals, and are substantially increased. There are in Italy more saloons open than is desirable; the number of wine sales shops was 163,000 and of liquor saloons 71,000 at October 15, 1928. The existence of four wine and two liquor saloons per thousand inhabitants is surely excessive.

The Bill for a plan of redemption of unreclaimed land, afforestation, reservoir building was laid on the table of the Chamber at the beginning of October. A sum of about 7 million lire is to be spent on this plan under the supervision of the Institute for Land Reclamation presided over by ex-Minister De Stefani. As a sequel to the Bill, the Premier has sent a letter to the Prefects of the provinces, urging them to prepare plans for carrying on the reclamation works. In short, State will pay about 75 per cent, of the expenditure and land. The proprietors are expected to pay the remaining part of the whole cost. If the proprietors are not forthcoming, the Prefects are authorised to act on their behalf, so that the reclamation shall not be unduly retarded.

Thus the State assumes more and more the supreme direction of the economic life of the country.

No noticeable variations in the economic indices quoted in my last letter are to be recorded. Railway traffics show signs of improvement. The daily average number of cars loaded, which was 18,622 in January, 1928, against 20,329 in January, 1927, kept on increasing uninterruptedly to 22,514 in August, 1928, against 21,645 in August, 1927. The average number of circulating cars, which in 1927 decreased from 133,506 in January to 127,292 in August, increased in 1928 between the same months from 115,494 to 130,748. In the same period the tonnage loaded on private account at the Italian ports on railway cars decreased in 1927 from 1,078,135 to 894,989 tons, and increased in 1928 from 916,534 to 1,097,102 tons. These figures seem to point to a gradual revival of the traffic after the revaluation and stabilisation crisis.