Budget Deficit – Public Servants’ Salaries -Press Cost-of-Living Campaign – Wage Reductions -Unemployment – Traffic – Foreign Trade

«The Economist», 13 dicembre 1930, pp. 1115-1116

Turin, December 1

The Budget situation, which had been slowly deteriorating for some months, revealed disquieting symptoms at the end of October, since the effective expenditure rose for the first four months of the present financial year to 7,081.6 million lire, against a revenue of 6,394.7 million lire. With the exception only of the net revenue of the railways, postal, telegraph and telephone services (+ 19.7), lotteries (+ 5.6) and wheat duty (+ 161.1), all other heads of public revenue showed signs of slackening: income tax declined by 136.1 million lire; stamp and registration duties by 276.4 million lire; excise by 86.6 million; customs by 42.4 million; salt and tobacco by 128.3 million.

The Government took immediate steps to face the situation. Salaries of public servants had been increased in the spring of 1929 by about 25 to 30 per cent., according to class, half of the increase being payable as from July 1, 1929, and half as from July 1, 1930. A royal decree of November 20, 1930, published in the Official Gazette for November 26th, reduced them again uniformly by 12 per cent. The exchequer will thus save 400 million lire for the present fiscal year and 700 million in a full year. The 12 per cent, decrease in wages and salaries was made compulsory also for all employees of provinces, municipalities, and other public bodies, employers’ and employees’ syndicates depending upon the State, provinces or municipalities, or maintained, wholly or partly, out of public revenue. Salaries of such employees, between 40,000 and 60,000 lire, will be reduced by 25 per cent, and those above 60,000 lire by 35 per cent.

This reduction of the salaries of public employees was the signal for a Press campaign for a thorough-going reduction in the cost of living. Campaigns of such remarkable vehemence are, perhaps, a peculiar feature of Italy. The main subjects of the inflammatory exhortations were bread, meat and other necessities of life. Willingly or not, retailers were invited by their associations to reduce prices by 10 or more per cent. The corporative system was called in aid. For instance, house-owners had been on July 1th restored to complete freedom in fixation of rents. The transition from a regulatory system to complete freedom of bargaining was easy and did not give rise to friction. To-day, however, house-owners are asked by their association to contribute to the general reduction in the cost of living by a reduction of rents. The reduction is not legally enforceable; but the house-owner is reminded that he is liable to exclusion from membership of the association as an unworthy citizen. To be so labelled is not a pleasing prospect. The general cry in the Press is: “Back to four times the pre-war prices”. The co-efficient four is the result of the 3.67 multiplier adopted for the stabilisation of the lira, with a small addition to take account of the depreciation of gold. In a few cases, producers have endeavoured to prove that their case is exceptional. For instance, sellers of electricity assert that the price of electric light has only tripled since 1914 and that the big increase in the price paid by the consumer is mainly due to the increase in state and municipal taxation of electricity for illumination. Taxation in general, increased from seven to eight times the pre-war level, is, indeed, the most difficult item of cost to diminish. In his speech in the House of Deputies on November 27th, the Finance Minister, signor Mosconi, offered no hope of reduction in taxation in the near future. The reduction in public employees’ salaries was prompted by the urgent need for avoiding a deficit and maintaining the state credit. He disclaimed vehemently any Government intention of also reducing the interest paid on Consols and other State Loans.

One after another the great corporations and public bodies are following the lead given by the Government. The Chamber of Deputies has reduced the members’ salaries by 12 per cent., notwithstanding the fact that they were just four times the pre-war rate. Their example will undoubtedly be followed by the Senate and the Academy of Italy. The Bankers’ and Banking Employees’ Confederations have agreed to reduce the salaries of the employees by 12 per cent, and the fees and other perquisites of directors by 25 per cent. Fees of joint-stock companies’ directors are to be reduced also by 25 per cent. Industrial wages will be reduced by 8 per cent., except where they are below 12 lire per day in cities of over 200,000 inhabitants and 8 lire in other cities. Wages of men working only three days per week are not to be reduced. Monthly salaries of industrial employees between 300 and 1,000 lire will be reduced by 8 per cent.; over 1,000 lire by 10 per cent., always provided that a minimum salary of 300 lire is paid.

Time will show whether these reductions will be sufficient to reabsorb the unemployed, whose number rose from 322,291 at the end of June to 446,496 at the end of October. In 1929 the corresponding rise was from 193,325 to 297.382. Taking the number of men employed in a certain number of factories in September, 1926, as 100, the corresponding number was 94.2 in January, 1929, 97.0 in July, 1929, 93.6 in January, 1930, 87.9 in July, 1930, and 87 in September, 1930. At the latter date, cotton (75.2), linen and hemp (73), motor cars (73.9), railway materials (76.3) were well below the average; while artificial silk (111.8), jute (100.7) and electric machinery (105.5) employed more men than in September, 1926.

After a discussion lasting twenty-seven days, the federations of sugar-beet growers and sugar makers reached on November 27th an agreement in virtue of which 413,000 acres of land will be devoted to beet-growing and work will be assured to raise all the sugar necessary for internal consumption. To that end a royal decree of the same day increased the duty on foreign sugar from 360 to 450 gold lire per ton until October 31, 1931. This will exclude foreign and especially Czechoslovakian sugar from Italy; but sugar makers have pledged themselves not to increase its price in the meantime.

The figures of goods carried on the railways, a sensitive index of the economic situation, show widespread reductions. Goods loaded on railway cars in the first nine months of the year for trade account amounted to 40.1 million tons in 1930, as against 45.1 in 1929; goods loaded in the ports to 9.4, as against 10.8; goods entered by land from foreign countries 4.5, as against 5.1; goods exported by land to 2.0, as against 2.3. A decrease of the tariffs for carriage of goods on State railways is contemplated, and a committee has been appointed to work out the details in the briefest possible time.

The value of imports in the first ten months of the year decreased from 18,008.9 million lire in 1929 to 14,417.1 in 1930, or 20 per cent.; exports from 12.468.9 to 10,110.1 million lire, or about 19 per cent. As the weight of the goods imported decreased in the first nine months only from 20.7 million tons to 18.9, or 8.6 per cent., and of goods exported from 3.5 to 3.3 million tons, or 8.5 per cent., it appears that the main cause of the foreign trade contraction is the fall in prices.