The Fascisti and their Programme – Gloomy Speeches of Giolitti and Nitti -Exchanges and Prices Rising -Economic and Financial Conditions

«The Economist», 4 novembre 1922, pp. 853-854

Turin, October 28, 1922

The important question is, what is the economic platform of the new party? Signor Mussolini, the chief, is not an economist. Passionate and full of vigour, he is able to commit his party to headlong plunges into unknown seas. For the moment, he has uttered at Naples only one economic sentence: “Italy needs at the helm a man capable of saying No to all requests of new expenditure”. So far, so good. All leaders are saying the same thing. Signors Nitti and Giolitti have recently made speeches, in which Italy’s situation was coloured very darkly, and public opinion was seriously and gravely warned of the necessity of putting an end to the increase in public expenditure, and of reducing even useful expenses. Signor Giolitti was very resolute on the topic, and prophesied the lira going to ruin, following the evil example of the German mark, if the State Budget were not put in order in a reasonably short time. The words of the old statesman, who is passing his eightieth birthday, had an immediate effect. The lira went trumbling in foreign markets, and in a few days the pound sterling rose from 105 to 117 lire, and the dollar from 24 to 26 lire.

From this rise was born in the Italian bourses a faint approximation to a tentative valuta boom, as is apparent from the following table:

Nearly all shares have participated in the boomlet, rise of prices being the highest in textiles, where high profits are obtained. Consols and all other fixed interest securities are low. Although prices are increasing, the following figures on the cost of living of a working man’s family of five in Turin do not yet bear the full repercussion of recent rises in foreign exchanges. This rise in the cost of living has, however, not been accompanied up to date by requests for higher wages.

Will the new party have the will and the power to redress the awkward financial situation of the State, which is the only true cause of the present unfavourable movements of exchanges and prices? I say the only cause of the trouble, as the economic situation of the country is not bad. Far from it. Agriculture has had some adverse experiences – the wheat harvest under the average, and a deficiency of rain, which in various regions made havoc among the cattle; but the cocoons and vintage seasons went very favourably, and prices of agricultural products are high, so that the agricultural community is faring well. Textile products are, therefore, in good demand, and building shows, after years of complete quiet, some signs of vitality. State and banking circulation are not increasing, and the State finances itself by means of Treasury bills sold to real investors. The deficit of the current fiscal year was estimated by Signor Giolitti at not less than seven billions lire – i.e., Italian savers are buying this year State securities to the tune of seven billions lire for the sake of balancing the State Budget. If we assume that the present lira is worth only 20 per cent, of the old good money, we must conclude that the minimum capacity to save of Italians is not less than 1,400 millions gold lire. At present, unfortunately, all these savings are poured into the all-devouring State Treasury.

Therefore, the most urgent necessity is the reduction of public expenses. Even if taxes should be somewhat increased, the balancing of the State Budget would set free a large margin of savings for industrial and agricultural investments. Economy in public services is possible; the huge deficit of the State Railways of over one billion lire is related to two principal causes: high exchanges, which raise the price of coal, and the bad organisation of the eight hours day, in virtue of which many rail-waymen work effectively only for two or three hours a day. In the postal services the tale is very much the same. Large sums could be saved if the State could buy all they want in the cheapest market; if State bounties and subsidies were suspended or reduced; if war pensions were revised, so as to limit them; if plans for public works were restricted to a minimum. But the man who will attempt to put in practice the Mussolini dictum of replying No to all requests of expenditure will possess remarkable courage. Populars and Socialists have not this sort of courage, as they cater for the vote of multitudes crying always after State aid, and it is to be feared that Fascisti, who are proud of marshalling 800,000 adherents, will hesitate before the task.