Budget – Criticism by Parliamentary Committees – The Balance of Trade From our Correspondent

«The Economist», 13 luglio 1929, p. 70

Turin, June 30

Budgets for the financial year from July 1, 1929, to June 30, 1930, have been unanimously approved by the Corporative Chamber of Deputies and by an overwhelming majority of the Senate. Notwithstanding, Parliament has not spared criticism of increases of expenditure and methods of accounting. The reports by deputy Mazzini to the Chamber and by senator Mayer to the Senate, on behalf of their respective Budget committees, are very interesting and it cannot be said that the two committees are less outspoken in their criticism than in pre-war years. Estimates of expenditure have risen from a total of 17, 371, 791,144 lire in 1928-29 to 18,312,697,928 lire in 1929-30. Revenue estimates have risen too from 17,642,956,004 to 18,570,923,309 lire; so that an excess of revenue over expenditure of 271 million lire in 1928-29 and of 258 million in 1929-30 is estimated. Probably the surplus will be higher than the estimate in 1929-30, as it already can be said to be higher in the current financial year. Signor Mosconi, Minister of Finance, was indeed able to tell the Chamber that for the eleven months ending May 31 the surplus was 492 million lire. Budget Committees are glad to consider estimated and realised surpluses; but they wish that estimates were more fully supported by actual results. Frequently, they say, there is too wide a difference between estimated and realised expenditure. For instance, in the past three years the comparison of estimated and actual expenditure works out as follows (in millions of lire):

The Budget Committees express satisfaction that the difference is rapidly diminishing and ascribe the good result to past insistent remonstrances. But they demand the total disappearance of any excess, as they object to it on several grounds. First, because departments, by minimising estimates of a given expenditure, get the consent of the Cabinet as a whole and of Parliament to the principle of it; trusting that in the course of the year leave to exceed the estimates will be easily granted. Second, because separate supplementary grants prevent public expenditure from being viewed as a whole, with a just balance between more and less urgent items; attention is forced on single demands, all of which are made to appear necessary and useful. Third, it is not true that no harm results from systematic underestimates of expenditure, as the revenue is underestimated too. If the Budget were to be laid on the table of Parliament with full estimates, the burden on taxpayers would appear, as it is, crushing, and Parliament could put a stop to the increase of expenditure.

The stand taken by both Budget Committees on these sound principles has already born good fruits; as can be seen from the progressive decrease of excesses and from the fact that estimates for 1929-30 were increased by almost a milliard lire over those of 1928-29; the increase being justified by the Minister of Finance as an earnest effort to make estimates as fully representative of probable issues as possible.

Government, Parliament and public opinion being satisfied that the public budget balances, their major concern is to-day with what may be called the national budget, viz., the balance of credit and debts between Italy and foreign countries. Both rapporteurs to the Budget Committee devote thoughtful pages to the discussion of this problem. Newspapers are publishing articles on the increase of imports. It is true that during April, as I noted in a past letter, the excess of imports over exports decreased from 808 million lire in 1928 to 750 million lire in 1929; but in the first four months the excess was 3,100 million lire in 1929 against 2,482 in 1928. Nor is the excess due to increasing imports of raw materials. Signor Olivetti notes, for instance, in the Stampa that exports of cotton goods increased by 8,800 tons in 1928 against 1927; but raw cotton imports increased much more, by 23,600 tons. The Automobile Club is complaining that the number of motor cars imported increased from 1,539 in the first four months of 1928 to 2,425 in the same period of 1929, and has asked for the publication of the names of all buyers of foreign motor cars. The Government, apparently, took no notice. In the case of motor cars exports are increasing more than imports: from 7,463 to 9,047 in the first four months of 1928 and 1929. Increasing population has a good deal to do with the increase of imports. Owing to the excess of births over deaths and to the decrease, almost to the vanishing point, of net emigration (from 240,000 in 1923 to 24,000 in 1928) the population of Italy increased from 38,7 millions at December 31,1921, to 40.8 millions at the end of 1927 and to 41.2 at the end of 1928. Demand for foreign food is therefore increasing and also demand for foreign raw materials and machinery. Exports are slower to follow suit. The balance between debts and credits was, however, very well secured, thanks to invisible exports, until the end of 1927. From January 1, 1928, to the end of April, 1929, senator Mayer calculates the deficit at about 3,000 million lire, covered by the decrease of Bank of Italy gold bills reserves and other short foreign credits. Mazzini’s and Mayer’s utterances and the daily press articles seem, however, to be unduly pessimistic. They do not take enough account of the regenerative force of the decreasing circulation of the Bank of Italy, which oscillates at present about 16.1 milliard lire as against 17.8 at the beginning of 1928. In the long run this force will assert its supremacy. Internal prices will be forced down by it until the export point for a greater mass of goods is again reached and equilibrium will be reestablished.