Wheat Duty Increase – Foreign Trade – Industrial Conditions – Unemployment

«The Economist», 29 settembre 1928, pp. 556-557

Turin, September 18

Suddenly, by a decree dated September 12th, the Custom duty on wheat has been raised from 75 to 110 gold lire per ton. A Press communique states that on July 24, 1925, when the duty on wheat, which during the war was put on the free list, was restored at the pre-war rate of 75 gold lire per ton, the gold lire equalled 5.28 paper lire, and the wheat duty was paid at the rate of 396 paper lire per ton. Therefore the present 110 gold lire duty, being equivalent, at the new foreign rate of 367 paper lire against 100 gold lire, to 403.70 paper lire, cannot be said to be higher, as far as the paper lire incidence is concerned, than the old 75 gold lire duty. The statement would mean that the purchasing power of the paper lire has not increased since the middle of 1925; which is contrary to experience, as the wholesale index number has decreased from an average of 646.2 for 1925 to 485.2 at the end of August, 1928. A better explanation of the increase of the wheat duty is to be found in the course of internal wheat prices, which from about 150 lire in May decreased to 118 in the first days of September, and to even as low as 115-112 lire in certain rural markets. In view of the next seeding campaign the Government deemed it necessary to assure agriculturists against further price falls, as, in spite of the battle of wheat, foreign imports from August, 1927, to July, 1928, amounted to 2.3 million tons, or about the same as in 1926-7 and not much less than in the previous five years’ average. Big wheat imports are ascribed to the increase of internal consumption, and the Provincial Economy Council of Novara observes that the milling regulations, providing that the flour extracted from a given weight of wheat shall not be less than 82 per cent., have had effects very divergent from the wheat savings aimed at. The by-products of the milling industry being less, and therefore more costly, agriculturists sometimes give bread flour to cattle; and the human utilisation of bread being less perfect, there is more waste in bread consumption. In some Press comments the increase in the wheat duty is considered as an anticipation of a sliding scale aiming at maintaining stability in internal wheat prices.

Foreign trade has had an interesting evolution in the first seven months of the year. The following table shows the results in millions of lire:

From a “mercantilistic” point of view the first quarter marked in 1928 a distinct improvement (a decrease of the excess of imports over exports of 546.6 million lire), while the second quarter, and still more the month of July, were characterised by a net loss of 837.7 and 400.3 million lire respectively. The explanation of this change is more reassuring. It is that industry at last is having a revival, and therefore is induced to resume its long-delayed imports of raw materials. If this is true, exports should begin to increase in a few months. In the first six months of the year imports of “free” coal decreased from 6,226,290 to 3,981,685 tons (German “reparations” coal increasing, however, from 1,436,287 to 2,185,957 tons); of broken iron and steel from 357,864 to 317,739 tons; of pig-iron from 71,311 to 55,977 tons; of machines and their parts from 44,251 to 38,623 tons; of mineral phosphates from 503,952 to 285,153 tons; of wood from 953,209 to 777,996 tons; and of mineral oils distillations by-products from 224,959 to 188,492 tons. There were increases of imports of raw cotton from 119,072 to 122,956 tons; of natural wool from 24,674 to 32,685 tons; of dried cocoons from 335 to 885 tons; of pig and broken copper from 8,125 to 13,299 tons; of benzine from 110,134 to 148,514 tons; of nitrate of sodium from 39,480 to 58,820 tons; of potash manures from 12,160 to 27,800 tons; of cellulose from 53,530 to 85,268 tons. Noteworthy progress was recorded in textile exports. Cotton yarns rose from 9,614 to 12,350 tons; cotton piece goods from 21,207 to 24,291 tons; wool piece goods from 2,083 to 2,648 tons; artificial silk from 8,142 to 8,517 tons; and silk mixed piece goods from 1,904 to 3,430 tons.

A good index of the industrial situation is provided by the production of electrical energy in 1927 and 1928. In millions of Kwh, the months from January to June compare as follows: – January, from 618 to 638 (increase 3.23 per cent.); February, from 563 to 611 (increase 8.52 per cent.); in March, from 600 to 654 (increase 9 per cent.); in April, from 580 to 629 (increase 8.44 per cent.); in May, from 629 to 705 (increase 12 per cent.); and in June, from 609 to 697 (increase 14.45 per cent.). Unemployment is decreasing, as is shown by the following table:

It will be seen that the comparison between the two years has at last turned in the right direction. The general conclusion regarding Italian industrial conditions is that the present outlook is not with distinct elements of hope.