Banking Situation – Closing of Shipyards at Trieste

«The Economist», 22 ottobre 1921, p. 624

Turin, October 10

The following figures of the four big ordinary banks reveal interesting movements in the first half of 1921. (See table at p. 222).

As not all the items of the balance-sheets are comprised in the above statements, the totals do not balance. But the main trend is clear enough. Deposits have continued to increase. The circular cheques are diminishing, though this sort of cheque – i.e., those accepted by the banks at the moments of issue – is the most popular and practically the only sort of cheques freely accepted in Italy. The ordinary cheque is regarded with suspicion.

On the assets side, cash, secured loans, and debtors’ accounts are diminishing, to the advantage of discounts and investments. This means a lessening of liquidity, but was perhaps inevitable owing to the prolonged economic crisis and difficulties of sales by merchants and producers.

The unfortunate policy of subsidies to shipbuilding, of which I wrote recently, has had a new development. When Ministers used to pledge the Government responsibility with royal decrees, Signor Alessio, Minister

of Industry, wrote, as it seems, a letter to the Free Shipping Company of Trieste (Navigazione Libera Triestina), amounting to a promise to pay 267 millions lire as a subsidy to the construction of 18 steamships. The basis of subsidy was the hypothesis that ships cost 1,600 lire per d.w. ton to build. The company says that a year ago, when the binding letters were sent, the 1,600 lire basis was very favourable to the State, as prices quoted by other shipbuilders were higher. Signor Belotti, the present Minister of Industry, observed that the letters of his predecessor were not binding for the State, as they were unconstitutional, and offered to revise the stipulation, so that the State should pay a subsidy proportional to the actual cost of construction, not to the theoretical basis of 1,600 lire. After prolonged discussions the company closed its works, and the workers struck against the company in a so-called protest against reduction of wages. The company plead the impossibility of building ships under the new situation of costs and prices. Public opinion was persuaded, however, that the company resorted to the closing device so as to force the Government to maintain the promised subsidies; and many think that the workers’ strike was a sympathetic move to the same end. The strike was accompanied by the usual skirmishes between Communists and fascisti, which are especially bitter at Trieste. After a keen struggle, Government and company found a compromise, in virtue of which the subsidy will be paid according to the effective cost of building, to be ascertained by inspection of books and a panel of experts, provided that the said cost does not exceed the maximum sum of 1,455 lire per d.w. ton. The compromise saves to the Exchequer a minimum of 58 millions lire. From this incident the opposition to legislation by decrees and by letters has gained new ground. If the contract between the State and Free Shipping Trieste Company had to be brought before the Parliament, as was the custom in pre-war days, its defects would have probably been noticed by some member. A discussion would have followed, and the loss to the Exchequer would have been less great.