Italy. Rise in saving deposits. Public revenue. Security index number

«The Economist», 15 luglio 1922, p. 108

Turin, June 30

The collapse of the Banca Italiana di Sconto has led to a new increase in the deposits of the State postal savings banks. The following are the most significant figures (in million of lire):-

The increase in the December, 1921, figure was wholly due to a sum of 206.3 million lire of yearly interest falling due. Apart from this exceptional variation, the stagnation of deposits in the second half of 1921 compares strikingly with the increase in the first three months of 1922. The public, uneasy about the private banks, are again bringing their savings to the public postal savings banks.

The latest accounts of the principal revenue items are not so satisfactory as the previous ones:

These results are not so satisfactory as they appear on the face of it: -(1) It is uncertain how much the month of June will yield; but it seems unlikely that the sum total of principal revenue items for the fiscal year 1921-22, which ends to-day, will exceed 13 billion lire. Minor items of revenue may perhaps bring it up to 17-18 billion lire; but even that leaves us far below the expenditure total. The latest hints from the Treasury point to a deficit of 6.7 billion lire for the fiscal year just ending. (2) A beginning of slackening is noticeable in various items. For instance, in the taxes on incomes group the war profit tax in the 11 months has yielded 1,565 million lire, against 1,623 millions in the preceding year; and this item is bound to go rapidly to zero. How this source of revenue is to be replaced is uncertain. The new tax on income will be slow to give abundant fruits. In the meantime, the extraordinary capital levy will tell the position, especially if taxpayers can be induced to pay the whole of tax in a lump sum instead of spreading it over 10 or 20 years.

Another doubtful item is the increase of 189.6 million lire in the yield of the stamp tax. The good result is for the greater part due to 134.5 million lire of increase in the yield of the stamp tax on luxury sales. This tax is 12 per cent. on the sale of luxury goods to customers and of 6.30 per cent. on the sales between merchants and merchants. Like the sale tax in France, this tax has given somewhat disappointing results. The estimated yield was 350 million lire for the whole fiscal year; and the actual yield for the first 11 months was only 188.3 millions. Other items in this group are rather disconcerting. Apart from an increase of 52.2 million lire in the tax for the benefit of wounded and mutilated men and their families, which is simply an additional tax on all stamps, we see decreases in the yield of the stamps on contracts (-22.6 million lire), on motor-cars (-18.6), on precious stones (-9.3), & c. The greatest increase in the old stamp taxes is ominous: the yield of the tax on the paper circulation of issue banks has gone up from 228.9 to 273.1 million lire. As it is desirable that the paper issues should be checked, this item should be bound to decrease.

Professor Bachi has published the usual index number of share prices for May, the basis of 100 representing the price for December, 1918 (see Economist, May 13th, page 906):

In March the quotations reached low-water mark. The subsequent rise is as yet not general, nor very sure of permanency. The group of textiles shows up most prominently, and it can be said that there the crisis is past. Almost all mills are working at full time. Iron and steel engineering are still at their worst. Not only are the prices of shares seriously depressed, but a national strike has been in progress for about a week in this industry. We have no trace in Italy of the phenomenon known in Germany as the catastrophe-boom. After December, 1918, the number of lire necessary to buy a pound sterling has gone up from 30 to 80-100, but the average index number of share prices has gone down from 100 to 59.45. It is true that in December, 1918, foreign exchanges were pegged, but, at the utmost, this fact signifies that lira has not depreciated in the meantime. This should have kept up values at their former level. The degrease is a sign of the after- war liquidation process which is going on.