State Revenue – Industrial Employment -Moderate Bourse Reaction

«The Economist», 23 agosto 1930, p, 364

Turin, August 4

The world economic crisis has had its inevitable effects on the State revenue, as may be seen from the following comparative table of Exchequer receipts:

Apart from the salt monopoly, whose yield increased owing to the increase in the price of common salt, the only bright spot is tobacco. The sales of tobacco jumped from 20,206 tons in the fiscal year 1913-14 to 29,162 tons in 1921-22, the war having enormously popularised the smoking habit. In the last four years, notwithstanding a rise in the price from an index figure of 100 in 1912-14 to 540 in 1921-22, and 659 in the first ten months of 1929-30, the consumption has been maintained at about 30,000 tons a year. There was much curiosity about the effect of the 23 per cent, average increase in price, effective from April, 1930, which raised the price index from 659 to 812. In the first month the reaction was formidable; sales fell from 2,564 tons in April to 1,755 tons in May; but in June the sales increased again to 2,695 tons – enough to make the Exchequer feel sure that an increased yield will be forthcoming to enable it to pay the estimated 500 million lire yearly to the Consols Sinking Fund.

It is, however, doubtful if the increased tax burden as a whole will favour the much-needed revival of trade and industry. The following figures of some important imports suggest a hand-to-mouth purchasing policy:

Official statistics show that there is a progressive slackening in the industrial activity. Taking 100 to represent the number of men occupied in a certain number of factories in September, 1926, the relative numbers have declined as follows:

The figures are not exactly comparable, because the number of reporting factories increased from 5,565 in January, 1929, to 6,490 in May, 1930; but they are indicative of the general trend. The number of unemployed, which in 1929 decreased from the maximum of 489,347 in February, to the minimum of 193,325 in June, decreased between the same dates in 1930 only from 456,628 to 322,291; and the number of insured unemployed in receipt of subsidy was in February, 1930 (the last figure published) 120,286, a figure surpassed only in February and March, 1928.

It is but natural that, in consequence of the lesser needs of trade, the activity of the banks is being contracted. Bank of Italy discounts were low at 2,891 million lire of June 30, 1930, against 4,010 millions at the same date of 1929; advances were 1,609 against 1,994 millions; and notes issued were 15,846 against 16,753 millions. It is interesting to note that, in the face of a deteriorating industrial situation, the fall in quotations of variable dividend securities has been less marked in Italy than in other countries. According to Professor Bachi, the decrease was 2.63 per cent, during the six months between December 31, 1929, and June 30, 1930, and 7.52 per cent, during the year following June 30, 1929. This cannot be called a spectacular decline.