Duce’s Economy Proposals – Treasury Accounts – Stock Exchange Failures

«The Economist», 15 febbraio 1930, pp. 358-359

Turin, February 6

A very significant speech was made by Signor Mussolini at a meeting of the 92 mayors (podestà) of the municipalities which are the seat of provincial administrations. The speech was focussed on the high tax pressure and the necessity of economies in the State and local finances. At any cost, he said, the tax burden must be diminished. The first tax to go is the octroi, or Customs duty levied on goods entering cities. Italy, said Signor Mussolini, shared with Paris and Greece the unwelcome privilege of these mediaeval relics of the barriers which divided boroughs and counties. To achieve reduction of the tax burden we must reduce expenditure. After the large public capital investments of the years 1922 to 1929 we must begin in 1930 to slow down the pace of progress. All public works not absolutely necessary must be suspended. All expenditure for pure embellishment of cities must cease. That the burden of taxation is high in Italy is only too true. Calculations by Professor Mortara in the new (1930) issue of Prospettive Economiche (the best private Italian annual survey of economic conditions) confirm the Prime Minister’s utterance. Mortara’s estimate of the proportion of public State and local revenue to national income is 25 per cent, for Italy, 23 per cent, for Great Britain, 20 per cent, for Germany, 20 per cent, for France. But his calculations of the national income lead to the conclusion that the average annual income per head amount to about £ 24 for Italy, £ 86 for Great Britain, £ 50 for Germany, and £ 45 for France. Clearly, it is not the same thing for a man with an income of £ 24 to pay a fourth part of it to public bodies as it is for one whose income is £ 86.

That Signor Mussolini’s warning in favour of economies is timely is evidenced by the results of the first half of the current fiscal year (July 1st to December 31, 1929), which closes with a deficit of 217.9 million lire, against a surplus of 22 million in the same period of 1928. This figure is not necessarily serious, as the deficit was mainly due to the falling of the wheat duty, owing to the good 1929 harvest. But the most careful scrutiny is required of the Treasury account, which, for the said half-year, can be summarised as follows (in million lire):

Thus it appears that the cash was maintained at the old level only by the generous deposits of various public administrations, such as the Postal Savings Banks, Social Insurance Funds, State railways, etc., which happened to have superabundant money lying at their credit in the usual Treasury current account. These temporary deposits are not permanent debts, as they appear to have taken the place of Treasury Bills, of which no more have been issued since the compulsory funding of November, 1926; and it must be noted that the first half of the year is always remarkable for big borrowings on account of the arrears of previous years. But all the same, the Prime Minister’s warnings about the necessity of slowing the pace of expenditure were hailed with relief by taxpayers.

If Stock Exchange quotations could be regarded as a true mirror of the economic situation, we should say that we are entering into an era of optimism. A certain number of securities have risen substantially, so that the New York slump of last October seems already forgotten. A good impression was made by the announcement that the Fiat workshops are operating again at capacity as from February 3. In those industrial fields for which we have figures of production the indices show an increase. Production of rolled iron and steel has increased from a monthly average of 151,859 tons for 1928 to 165,884 tons in the first eleven months of 1929. That of artificial silk rose from 2.9 million tons in the first eleven months of 1928 to 2.9 in the same period of 1929. Failures, however, continue to be numerous; in the second half of 1929 they rose from a minimum of 864 in August to 1,084 in December, exclusive of 146 small failures.