Italy

«The Economist», 2 febbraio 1935, pp. 247-248

CHANGING THE GUARD. – The changes in the Ministry, which took place on January 24^th, have no clear-cut political or economic significance.

Signor Jung’s departure from the Finance Ministry must not be taken as connected with the position of the lira, as the Ministers of Agriculture, Public Works, Railways and Corporations have also moved round. If any significance can be found in the changes, it should be sought in the appointments of Signor Rossoni and Signor Razza, both drawn from the Old Guard of syndicalist organisers on the Labour side. Employers, however, will be gratified at the appointment of Signor Thaon di Revel, a nobleman and landowner, and Signor Benni, head of the great firm of Marelli.

The new foreign exchange restrictions have not yet had any decisive influence on the balance sheet of the Bank of Italy. From December 10, 1934, to January 10, 1935, the gold reserve increased from 5,769.5 to 5,818.2 million lire, and the gold exchange reserve from 27.1 to 81 million lire. The total increase thus amounts to only 102.7 million lire. In addition, the Foreign Exchanges Institute probably has a secret balance sheet, like the British and American Equalisation Funds, of which it is a counterpart. Finally, not all the foreign exchange in the possession of individuals, firms and banks may have been called for; and holders have certainly not been invited to sell to the Institute or to the Bank of Italy their foreign securities. It appears, therefore, that important further reserves exist. From December 10th to January 10th the note circulation decreased by 97.2 million lire. Gold and gold exchange purchases were thus financed from other resources.

The credits and liabilites of Italian exporters and importers passing through the various clearing organisations existing at present (end of third week of January) are as follows:

FOREIGN TRADE AND HOME PRODUCTION. – Italian foreign trade for the first eleven months of 1934 was as follows:

The general index of industrial production (1928=100), after dropping to 62.72 in June, 1932, rose to 85.71 in June, 1934, 91.66 in July, 87.03 in August, 93.50 in September, 95.07 in October and 94.68 in November. The group with the maximum increase is the building industry, where the index in November, 1934, touched 139.24. The cause is the feverish effort which is now being made all over Italy by builders to get new houses finished before December 31, 1935, when the 25-years’ tax exemption will end. Next to the building industry, come the electricity and power industry, with an index of 126.40 for November, and the paper industry with 125.98. Iron and steel and engineering remain at a low ebb (80.79), as well as the textile industry (85.30). The worst obstacle to economic recovery in Italy is the remaining swarm of quotas and other foreign trade restrictions.

Unemployment is decreasing, as the following figures show:

In what proportion the decrease can be credited to general industrial recovery and to the compulsory introduction of the 40-hours week is difficult to say. The decrease had begun in October before the introduction of the 40-hours week. Probably about half the reduction in unemployment is due to one cause and half due to the other.

Turin, January 27.