General Election Results – Protectionist Threats -The Dye Industry

«The Economist», 28 maggio 1921, pp. 1179-1180

Turin, May 23

The General Elections have taken place, and no party can claim complete victory:

Southern Tyrol has sent four Germans, and the province of Gorizia four Slav representatives. This was expected as a result of the annexation of German and Slovene speaking minorities; but as the annexation was a national necessity, and the Italian Government is resolved to give to these minorities the largest autonomy compatible with national sovereignty, it is hoped that German and Slav members will do useful work in Parliament.

The real crux of the problem is the relative position of Constitutional, Catholic, Socialist, and Communist parties. Republicans are a vanishing and hopeless minority. Communists, who are the representatives of the Russian Soviets in Italy, boasted to be sure of increasing from 18 to 30 at the expense mainly of the Socialists. This prophecy was falsified by the electorate. Communists were beaten, and they are a negligible quantity in the new House. The Catholics and Socialists remain the greatest and most compact groups, as they were in the past Legislature. The Constitutionals are greater in number, but not in unity. Among them there are 35 “Fascists”, who are neither monarchial nor republican, are opposed to Giolitti and Nitti, and only resolved to favour an anti-Socialist Government. But the polls have not given an unmistakable anti-Socialist verdict.

As in Italy no Government, from the days of Cavour, has ever been able to remain in power with a thin majority, and as the Constitutional majority is divided by internal differences, it is an easy prophecy that no Government will be able to last without the support of the Popular (Catholic) or of the Socialist party. We are doomed to a Coalition Government; and from this point of view the polls went contrary to the hopes of Signor Giolitti and of most Liberal leaders. As, however, the extremist men were not re-elected in the Socialist party, there is much talk of co-operation between Constitutionals and Socialists, which talk would have been an unheard of thing in the past Chamber.

One of the gravest questions facing the new House is the fiscal problem. It appears that the Government have not yet made up their mind as to Protection or Free-trade; provisional solutions are preferred. In November last a high scale of duties was decreed against the import of motorcars, as much as 20,000 lire duty being imposed upon a single high-speed motorcar. These very high duties aimed at inducing France, United Kingdom, and United States to reduce their very high duties against the import of Italian motorcars; but the hope was not fulfilled.

The next provisional Protectionist measure was announced by Signor Alessio, Minister of Trade, in his electoral speech in favour of the dye industry. What the measure will be it is as yet not known; some say a high import duty, while others prefer a limitation of imports, subject to Governmental permit. The case for Prohibition or Protection is twofold. Firstly, there is the direct interest of the Government. It appears that, in virtue of the Treaty of Versailles clauses, Italy had the right to have from Germany at stated prices 3,500,000 kg of dyes up to December 31, 1920, and 200,000 kg monthly afterwards. Up to summers, but the results, which were highly satisfactory in 1919, are today very disappointing. German producers are successfully competing against German Treaty dyes sold by our Government. The price of the black sulphur dyes from 1.50-2 lire per kg went up to 14-15 lire in the second half of 1919, but is today, owing to the crisis in the cotton industry, only 6-6.50 lire per kg. At this price the newly-established Italian producers clamour that they cannot produce without loss. They say that their industry has invested 400 million lire, and that it employs upward of fifty thousand workers. In actual fact, the workers employed, if we deduct those which are employed in chemical, matches, medicine, and explosive industries, do not exceed a thousand men, and the capital employed should have been amortised during the war, when high profits were reaped in the making of explosive and of dyes.

Against these paltry figures the industries consuming dyes are employing upward of 600,000 men, and are depending for their life upon exports. The silk industry provides 25 per cent, of the total Italian exports; cotton and wool exported before the war formed 11 per cent, of the total exports. Cotton goods (yarn and textiles) exported were in 1913-14 654,000 kg out of a total production of 1,897,000; in 1919-20 207,000 kg out of a total of 1,539,000, the proportional figures being 34 and 35 per cent. The cost of dyes bore the following proportion upon the price per kg of cotton spun goods:

The cost of dyes is a by no means unimportant item in the cost of production. While the price of cotton goods increased 4.9 fold, the cost of dyes increased 9.85 fold. An additional increase of the cost of dyes owing to a high import duty or to a vexatious Governmental permits system would have a serious effect upon silk, cotton, and wool exports. Dye producers ask for a duty of 3 gold lire per kg. At the present rate of exchange this would amount to 9-10 paper lire per kg, while the price (internal) of black sulphur dyes is of 6-6.50 paper lire per kg. The proposed duty would amount to an increase of 150 per cent, in the price of dyes, and would make exports of textiles from Italy very difficult indeed.