Commercial Treaty with France – Postal and Other Savings Banks – The State Bank

«The Economist», 19 novembre 1921, pp. 896-897

Turin, November 13

The notice that the treaty of commerce between Italy and France, dated November 11, 1898, and renewed in 1907, was renounced by our neighbour, took the Italian public by surprise. Some see in this act a symptom of bad political feelings between the two allies, but the Government explained that the end of the treaty was a matter of course; that the duties of 1898, based on the older tariff of 1887, were out of date, so that it was in the interest of both parties that a new treaty should be negotiated; that France had declared itself anxious to begin at once negotiations for such a new treaty. But it is rather unfortunate that the new treaty is to be negotiated at a time when Protectionist feelings run high in both countries. French and Italian Protectionists have been successful in constructing devices of high efficiency in making war on foreign imports, so that a very difficult task will be put before negotiators.

The place of France in our international trade may be seen from the following table (in millions of lire):

The great increase in the figures from 1920 to 1921 is only an apparent one, as the values for 1920 are calculated on the prices of 1919, while those for 1921 were calculated on the prices of 1920, when the price-level reached a maximum. From France we took 8.4 per cent, of our imports in 1920, and 6 per cent, in the first six months of 1921, and respectively 14 per cent, and 10.3 per cent, of our exports. In 1920 of a total export to France of 1,095 millions lire 316.7 millions were silk and silk manufactures; and it is probable that silk will be a bone of contention between the negotiators.

The economic crisis has made itself felt in banking figures in Italy, only in the shape of a decline in the rate of increase in deposits of savings banks. The two years of greatest monetary inflation, 1919 and 1920, were also the years of greatest increases in the deposits of the savings banks. Unemployment and reductions of wages began to have an effect in 1921, and if it were possible to separate urban and country deposits it would be found that the urban deposits have positively decreased, while country deposits have continued in their expansion, owing to very good agricultural prices.

Postal saving deposits go to swell the budget of our greatest bank – a bank not known to the outside world, and somewhat akin to the Prussian Seehandlung, but without the connections which the Seehandlung has with other banks, and with Exchange activities. Our Cassa Depositi e Prestiti – Public Bank for deposits and loans is a State Bank, which receives deposits mainly from Postal Saving Banks, public insurance institutions, individual accounts, and so on.

The principal items of the liabilities side of the last two balance-sheets for the year ended December 31st are compared below:

An interesting feature of these figures is the increase in the reserve of the bank, a useful item in these times of depreciation of securities. The bank specialises in loans to State, State institutions, provinces and municipalities. We in Italy have not a market for municipal securities, and only a very few of them are quoted in the public exchanges. Municipalities do not come on the market for supplying themselves with capital, as they can claim the aid of the Cassa Depositi e Prestiti.

The following are the principal assets of the State Bank:

The loans (by purchase of securities and direct loans) to State and municipalities reached in 1920 the huge total of 2,464.3 millions lire. It is a safe conclusion that if the deficit of State and local budget could be compressed within the limit of not over 2,000 millions lire yearly, it would no more be necessary to come on the market with new Exchequer bills or other State securities.