Exchanges Improved – The Peace of Rapallo – Municipal Elections – The Bread Subsidy

«The Economist», 27 Novembre 1920, p. 944

Turin, November 19

The foreign exchanges, which had boomed to 100.50 for London, 175 for Paris, 450 for Switzerland, 30V4 for the American dollar, have undergone a favourable change, and close today respectively at 92.50 for London, 162 for Paris, 410 for Switzerland, and 26V4 for New York.

The signature of the Treaty of Rapallo has greatly cleared the political horizon. The Government has obtained an overwhelming vote of confidence from the House of Deputies. The last municipal elections have not gone so well for the Communist party as they anticipated. Their progress was great from the last pre-war elections, for, instead of 200 municipal and four provincial councils, they are the masters in 2,000 and 25 councils respectively. But their boasted note of capturing 5,000 municipal councils out of 8,500 was upset by the electorate. They hold the mandate for 27 per cent, of municipalities, which is a small but significant regression from the high-water mark of 30.7 per cent, seats conquered at the political elections of November, 1919. Specially notable was the fact that, of the great cities, only Milan and Bologna, which they possessed from 1914, fell to their lot. All the other great cities, Rome, Naples, Palermo, Venice, Florence, Genoa, were held by constitutional parties. Even Turin, the stronghold of Italian extreme Leninism, was saved from their domination.

The Government has at last introduced a Bill for the reduction of bread subsidy. According to Government declarations, the consumption of wheat and other cereals will in the agricultural year 1920-1921 be 40 million quintals – excluding the producing population, who feed themselves on their own products. Of these, 12 millions will be obtained at home by requisitions at a mean price of 110 lire per quintal, and a total expenditure of 1,320 million lire. The other 28 million quintals we shall be obliged to import from foreign countries at a total cost of 7.980 million lire, assuming a price of 10.80 dollars per quintal at origin and a dollar exchange of 28 lire. The total cost to the Government will thus be 9,300 million lire. The selling price of wheat has hitherto been 62 lire per quintal, involving a total sum amounting only to 2,480 million lire, so that a net loss to the Exchequer of 6,820 million lire is in prospect. The Government do not propose to wipe off at a single stroke this stupendous loss. They content themselves with raising the selling price to the level of the requisition price. The Government will sell the wheat at the same price at which they take it compulsorily from Italian cereal producers.

The following table describes the change:

They hope to be able to sell bread, on this basis, in the first part of 1921 at a price varying from 1.30 to 1.40 lire per kilogram, instead of the present average price of 1 lira. The rise in the selling price will yield 2,726 million lire, and so reduce the loss from 6,820 to 4,096 million lire. The problem is only touched – not solved, and the expediency of exasperating – in words and in propaganda – the Socialist for a one-third solution is doubtful. The Government pretend, it is true, to cover another 1,920 million lire of the bread loss by means of several new and increased taxes. But the pretence is not to the point, as all the yield of new taxes will be necessary to cover the ordinary deficit in the Budget. Even if the bread did not cost a farthing to the Exchequer, the ordinary revenue is not at a level with ordinary expenditure. Some of the new taxes are very bad and unequally distributed. However, the step taken by Government is in a right direction and we can still hope that Parliament will better the Government plan.