Italy

«The Economist», 9 giugno 1934, pp. 1253-1254

Signor Mussolini’s important speech – The point in Signor Mussolini’s speech on May 26th which aroused most interest in business circles was the announcement of new foreign exchange regulations. More or less similar regulations has already been enforced by internal orders of the Fascist Banking Confederation, which bankers and brokers must observe. Henceforward, no foreign cheques will be obtainable without proving the necessity of paying for goods purchased or defraying legitimate travelling expenses. Banks, industrial and commercial companies and firms must periodically notify to the Bank of Italy the net amount of foreign exchange possessed in Italy or in foreign places. Nobody is authorised to buy foreign securities or Italian securities issued in foreign places. Notes of the Bank of Italy or cheques issued in lire cannot be exported or sold in foreign countries without licence; and a maximum sum of 5,000 lire is fixed for travelling expenses. A special licence of the Finance Minister is required for opening lire accounts in favour of foreign banks or firms, discounting lire bills issued by foreign firms against their Italian correspondents, or by Italian firms in favour of their foreign correspondents. Lire bills issued by Italian exporters against foreign firms are discountable only if accompanied by invoices of goods sold. Banks, money brokers and commercial firms are bound to exhibit all their books or documents at the request of the Bank of Italy. In case of contravention of the regulations, the payment of a fine up to the amount of the whole value of securities or transactions can be ordered by the Finance Minister.

Signor Mussolini justified the introduction of restrictions on the following grounds: (1) The deficit in the commercial foreign balance continues at a high level, 965.8 million lire appear to have changed appreciably for the worse. Signor Mussolini appears to be mainly concerned, however, with the causes of the gold losses. He attributes one-third of the 600 millions loss to wilful export of capital, lire notes or lire securities, which the Treasury, he observes, is bound to buy back in foreign centres. Hence the drastic exchange restrictions.

In your correspondent’s opinion, the present Italian balance of payments is not so precarious as capital exporters presumably imagine. Export of capital is a psychological fact which feeds on rumours and fears. According to authoritative statements by the Prime Minister and the Finance Minister, rumours and fears were afloat about new taxes or new taxation devices; abolition of bearer securities, taxation at the source of dividend coupons, a new levy on capital, compulsory investment of joint-stock companies’ reserves in State securities. Signor Mussolinìs speech should put and end to these fears. In the first place, the deficit will be halved by economies, conversion of 5 per cent. Consols into 3 1/2 per cent. redeemable bonds, the reduction of public servant’s salaries, and other economies. In the second place, no new taxes or taxing devices will be imposed.

Capitalism on the dole

In industrial and financial circles there arises from time to time a vague feeling that Signor Mussolini may turn Socialist. Business opinion is in favour of corporativism, but it would be very much more favourable, were there not some misgiving about a certain mystic affinity between corporativism and Socialism. Utterances by young philosophers and old syndacalist cause uneasiness. Signor Mussolini, however, has allayed these fears. He is not moving, he affirms, towards State capitalism or State Socialism. But, he says, nevertheless, that Italian bankers, financiers, capitalists, industrials and agriculturists have done all they could to force him and the State towards State Socialism. They have done business badly, and when they have lost their depositors’, creditors’ and shareholders’ hard-won money they have asked for State aid. At the present moment, the State is giving aid, through the I.R.I., to three-fourths of the Italian industrial and agricultural economy. Signor Mussolini here refers to the big banks and big businesses, not to medium or small-sized firms. If he chose, he adds, he could turn State capitalist or State Socialist. But it would be the fault of the capitalists and bankers and financiers, not the fruit of his own will. Instead, he is resolved to put an end to these grants-in-aid.

Since the celebrated speech of August, 1926, at Pesaro, this is the most pointed and timely of Signor Mussolini’s economic speeches.