Italy

«The Economist», 28 gennaio 1939, pp. 178-179

SAVINGS. – Turin, January 16. – Statistics of savings are published by different offices and arrived at by different methods, so it is not easy to get a homogeneous picture of the whole of them. The following table, issued by the Inspectorate of the Institute for the Protection of Savings, embraces all the most important banks (or those whose deposits exceed 5 million lire):

The public banks (Istituti di credito di diritto pubblico) consist of six non-shareholding corporations: the Bank of Naples, Bank of Sicily, Labour National Bank, the St. Paul Institute at Turin, and the Monte dei Paschi at Siena. The big increase in 1938 is partly (about 1,100 millions) due to a shifting of figures from the savings banks, whose deposits appear, therefore, to be declining. The national banks (Banche di interesse nazionale) include the three biggest ordinary banks: Banca Commerciale Italiana, Credito Italiano and Banco di Roma; but since they are controlled by the I.R.I. – which is a State-owned corporation, they also may be classed as non-private banks. The savings banks (which include the Monti di Pieta, or “pawn” banks) are likewise non-shareholding corporations; and, of course, the postal savings banks are State-owned.

Out of 82,799 million lire, 83.8 per cent. (69.318 millions) are deposited with public banks and only 16.2 per cent. (13,481 millions) with private banks; and if one takes the end of 1936 as the practical dividing line between the lira of December 21, 1927 (0.0792 grammes of fine gold) and the lira of October 5, 1936 (0.04677 grammes), deposits are seen to have increased by 7,338 rnillions during 1936 and by 8,172 millions during the following 20 months. It appears that the alignment or devaluation of the lira has not been followed as yet by a corresponding increase in the monetary national income, and that therefore the margin for savings has proportionately decreased.

BANK INVESTMENTS. – The movement of deposits in banks of various kinds is depicted in the following table.

Public banks and savings banks increased, and ordinary banks decreased, their cash and bank balances. The figures for discounts, advances and correspondents usually reflect trends in industry and commerce; but the big increase in discounts and correspondents by public banks probably refers to money lent to new public bodies (such as those which monopolise the trade in silk cocoons, wheat, hemp, rice, coal, various minerals, etc.), or to industrial concerns controlled to the I.R.I.

Stock Exchange financing, which in our country takes the form of contangoes (riporti) from end to end of monthly settlements is being progressively reduced; and speculative activity on the Stock Exchanges came, indeed, to a standstill during 1938, the most marked increase in business being in State securities.

CREDIT MACHINERY. – Mortgage loans by savings banks to landowners and householders are decreasing, as are also loans by the Land and Real Estate Credit Institutes (Istituti di credito fondiario). The total of land bonds issued against mortgages decreased from 1,333 million lire in 1934 to 314 in 1935, 194 in 1936, 214 in 1937, and 184 in the first ten months of 1938.

Nor can a noticeable expansion be registered in loans granted by the Agricultural Credit Institutes towards permanent land improvements (rural house building, irrigation, roads, etc.); and these fell from 152 millions in 1934 to 136 in 1935, 82 in 1937 and 133 in the first nine months of 1938. By contrast, loans to agriculturists for current farming operations have undergone a great expansion: 668 million lire in 1934, 818 in 1935, 1,744 in 1936, 3,369 in 1937, and 3,455.3 millions in the first nine months of 1938. The expansion seems to be due to advances granted by the Agricultural Credit Institutes to finance larger cash purchases of wheat, silk cocoons, hemp, rice, etc., by public bodies. In cases of this kind, discounts and advances to merchants by ordinary banks are replaced by loans to public bodies which trade in agricultural products.

The Agricultural Credit Institutes in their turn go to the Bank of Italy for finance; and discounts and advances by the issue bank are therefore bound to rise.

This increase in the number of bills discounted and advances made need not have a durable influence on the number of notes issued. Agriculturists, who were wont to sell their products as and when the market called for them, now sell their wheat or hemp, etc., immediately after the harvest. Notes issued thus return almost at once to the banks and are depleted gradually during the year. It may be said that the increasing control of economic activity by State organisations makes the financial market more and more dependent upon those same organisations.

NEW INVESTMENT. – Private demand for new capital is moderate. After the slump, joint stock companies, which reduced their capital from 52,281 million lire at the end of 1930 to 44,095 millions in 1935, increased it again to 44,805 millions in 1936, to 47,695 millions in 1937, and to 52,760 millions by October, 1938. In the increase of 5,065 millions for the first ten months of 1938, winding-up accounted for about 1,297 millions, the formation of new companies for 298 millions, and new issues by old companies for the remainder. Fresh money required was, however, much less than 5,065 millions, new issues by old companies being in part paper transactions, such as transfers from reserve to capital account. The 1938 10 per cent, levy on joint stock company capital gave the statutory opportunity for these transfers.

As new savings are thus going mostly into State concerns, changes in the rates of discount and interest have lost much of their significance, and variations are few. During 1938 the official rate remained unchanged at 4 1/2 per cent.; the private rate for commercial paper hovered between 5 and 5 1/2 per cent, at Milan, and the rate for contangoes on stock exchange monthly settlements was between 4 and 5 3/4 per cent. Contango rates on 3 1/2 per cent. Rentes oscillated between 4 per cent, at the beginning of the year and 1-2 per cent, in September, when a moderate bear speculation took place, increasing again to 3 per cent, in the last months. Rates were generally 1/2 – 3/4 per cent, higher than in 1937.