Stock Exchange – Industrial Indices – Silk – Rice

«The Economist», 18 marzo 1933, pp. 583-584

Turin, March 6

The amount of business done on the Stock Exchanges in January was in excess of 1 billion lire, a record since March, 1931; and three-fourths of the total refers to fixed-interest securities, the record in this case dating back to May, 1930. The upward movement continued until the beginning of February. According to the new index number compiled by the Milan financial paper Borsa, the average price of 50 representative variable dividend securities increased from the basis 100 for December, 1932, to a maximum of 108.20 in the week ended February 4^th, to react afterwards gradually to 104.76 in the week ended February 25^th. Even lower prices ruled these last days. Balance sheets of big joint-stock companies which are forthcoming this month make mixed reading. Snia-Viscosa (rayon) keeps a formidable cash or liquid reserve of 128 million lire (against 152.1 at the end of 1931) and a State or other debenture reserve of 78.2 millions, and has earned 22.3 million lire net, against 23.5 millions in the preceding year. The Fiat Company on the contrary has, for the second time, made no net profit, so that, if a dividend is declared, it will have to come out of reserves. Many dividends will be decreased, and it appears that the Banca Commerciale Italiana will distribute 25 lire (5 per cent.), as against 40 for 1931, 60 for 1930 and 65 for 1929; Credito Italiano will distribute 25 lire, against 30, 40 and 40.

The number of unemployed was 1,225,470 at the end of January, 1933; the highest previous figure was 1,147,945 in February, 1932. The total number of men employed in December, 1932, was 66.8 per cent, of that in the first week of September, 1926. International commerce is waning: imports in January, 1933, were 668.7 million lire, against 731.9 millions and 1,025.3 millions for 1932 and 1931; and exports 454 millions, against 525.3 millions and 692.2 millions. Cars loaded on the State Railways amounted in January, 1933, to 362,000, against 399,000 in January, 1932, and the goods loaded to 3 million tons, against 3.4 millions. Travellers decreased from 6.7 millions in January, 1931, to 6 millions in 1932 and 5.7 millions in 1933. On the other hand, the downward movement in navigation seems to have been checked; 2,467,410 tons were loaded and unloaded in January, 1933, against 2,428,341 in January, 1932. The competition of motor cars only partly accounts for the decrease in the railway traffic; the number of motor cars, motor cycles, autobuses, autocars, etc., after increasing from 340,136 at the end of 1929 to 385,855 at the end of 1930, increased only to 437,149 at September 30, 1932. Notwithstanding the success of the smallest Fiat model, motor cars are still a luxury in Italy, as the high tariff doubles the price paid by consumers. High protection and high taxation obstruct production in too many cases. Sugar stocks increased from 105,000 tons in July 31, 1931, to 127,800 in July, 1932, and not the least important reason was the crushing weight of taxation, amounting to 4 lire per kilogram, and the 165 lire protective duty, which together kept down the consumption to 7.54 kg. per head. An experiment made in 1924 of reducing taxation from 4 lire to 1 lira per kg. for sugar used for marmalade and other preserved fruits resulted in a 30-fold increase of consumption. Chocolate manufacturers claim that a similar reduction in the tax on sugar used in their industry would greatly increase the consumption of chocolate, which is at present only 0.175 kg. yearly per head in Italy, against 1.316 kg. in England and 1.023 kg. in France.

The situation of cocoon producers and silk spinners and manufacturers is uniformly bad. The Government paid in 1932, and will again pay in 1933, a premium of 1 lira per kg. of fresh cocoons to maintain the cultivation of mulberry trees, which farmers threaten to abandon, as the sale of cocoons at the price of 3.50 lire per kg. – corresponding to less than 1 pre-war lira, when a price of 2-2.50 lire per kg. was deemed before 1914 merely sufficient to cover costs – means a dead loss. The position of silk spinners is no better, as the current price of 52.50 lire per kg. of raw silk is about a third of the pre-war price. The number of active spinning mills at the end of December, 1932, was only 306, out of a total of 779 existent; in the weaving section, 13,702 looms only are active out of a total of 24,609. As the number of active mills is fast decreasing, spinners are demanding a bounty like that granted in France, but French production is very much less than the Italian, and the burden might easily become crushing to the Italian Exchequer. The system of export bounties has already broken down in the case of rice, the price of which has fallen from about 750-800 lire last autumn to 500 lire per ton. The area under rice will have to be restricted to that sufficient to provide for home consumption. Beet-growers and sugar producers have at last agreed about the area to be devoted to beet cultivation, so that the unsold sugar stocks may not further increase.