Railway Traffic and Road Competition -Winding up of Banca Agricola Italiana -Supervision of Savings Banks – Bourses

«The Economist», 2 maggio 1931, pp. 944-945

Turin, April 20

The decrease in railway and shipping traffic continues; during the first two months of 1931 goods unloaded in the ports were 3,622,000 tons, against 4,338,000 in the corresponding period of 1930; goods shipped 1,179,000 against 1,414,000 tons. Goods carried on railways decreased from 9,576,000 tons in the first two months of 1930 to 7,595,000 in the corresponding period of 1931. Passengers decreased from 15,175,437 to 12,542,255. Total traffic receipts, therefore, were reduced from 652 to 519 million lire.

These figures, which are disconcerting enough, have given rise to a lively discussion, as the economic crisis is considered an insufficient explanation of the abnormal slump in the traffic. The spokesmen for the railways denounce road competition as especially responsible for the financial difficulties of the railways, and demand the extension to motor goods transport of the regulations already governing passenger transport. Direct road competition for passengers is not allowed between places where a regular railway service already exists. State authorisation is required before starting a new passenger service, and such authorisation is given only when the motor service acts as a feeder of railways or when it serves areas not touched by railways. This restriction has not, it is alleged, prevented the growth of auto services, the lineage of public extra-urban passenger services having increased from 40,471 kilometres in 1922 to 85,450 in 1929, and the number of passengers carried in 1927 (the last year for which detailed figures are published) being 31.5 millions, with a revenue of 142 million lire.

It is argued that the same restriction should be extended to the carriage of goods by lorries, which at present is free and offers the keenest competition. Signor Bognetti, president of the largest Italian tourist organisation, the Touring Club, wrote an alarmed letter to the Corriere della Sera pointing out that motor cars paid in taxes the whole cost of the upkeep and improvement of the roads which they use, and that the proposed restriction would be an unjustifiable blow to an industry which is growing rapidly by virtue of the facilities it offers to its customers. Incidentally the unrestricted competition for goods seems less dangerous than the restricted competition for passengers, for the freight revenues of the State railways increased from 2,849 million lire in 1927-28 to 3,017 in 1929-30; while the passenger revenue decreased from 1,629 to 1,589 million lire. Even in the first two months of 1931, when the comparison with 1930 was most unfavourable, the revenue from goods decreased only by 36 per cent., while passengers yielded 40 per cent. less. The problem in made worse by the fact that here railways are the property of the State, and that automobile competition is directly damaging the public exchequer. This is a strong argument against State operated railways. Collective interest and technical economic progress should not be made to conflict.

On April 7^th all the offices and deposits of the Banca Agricola Italiana, with head offices in Turin, were taken over by other banks or institutes: in Piedmont by the Saint Paul Institute, a three centuries old Turin credit and mortgage bank; in the South of Italy by the Bank of Naples; in Tuscany by the Monte dei Paschi; and in other parts of Italy by several other banks. At the end of March the Banca Agricola Italiana held 850 million lire deposits. The president of the Saint Paul Institute, which is taking over the largest share of the deposits of the liquidated bank, hastened to circulate an interview, assuring its customers that the institute had made itself responsible for these 250 million deposits, only after being amply guaranteed by the cession of assets and other sureties for the corresponding amount. Thus has terminated the career of a bank which enjoyed a mushroom growth im mediately after the war. Hundreds of offices were created in the country districts, with the sole purpose of collecting deposits and sending them to the head office in Turin, where it was current rumour that they were diverted to the financing of the Snia-Viscosa and other Gualino concerns. The situation became eventually embarrassed, and the present winding-up and distribution of deposits amongst well-established banks is the final outcome of it. The salvage was made under the auspices of the Bank of Italy, to which is entrusted the supervision of all banks and savings banks.

The chapter on the supervision of savings is perhaps the most interesting part of the first report read to his shareholders by Signor Azzolini, the successor of Signor Stringher in the Governorship of the Bank of Italy. The reduction in the number of banks which was already in progress, continues. Between March 1, 1930, and February 28, 1931, there were cancelled from the lists kept at the Treasury 51 banks because their liquidation was completed, 69 because they ceased to receive deposits, and 35 in consequence of fusion with other banks, making 155 in total. Against this only one new bank was allowed to start business, 73 requests for the opening of new branches of old banks were approved (against 75 similar requests refused) and 85 old branches were allowed to move in order that they might be better located. The banking organisation is thus slowly becoming more concentrated, but the number of banks is still great; the official list includes, as of February 28, 1931, not less than 200 savings banks, 1,375 banks and banking firms, and 2,387 agricultural co-operative banks (casse rurali), making a total of 3,962.

The stock exchanges are lifeless. The only keen demand is for fixed-interest securities, the Milan index rising from 102.01 on January 3rd, to 104.91 on April 11th (December, 1925=100). Variable dividend securities are sagging, as many companies are passing their dividends and others reducing them. The index fell between the same dates from 66.42 to 64.70.