Wheat Yield – Trade Balance – Import Syndicalisation Proposal – Improved Bank Reserves

«The Economist», 14 settembre 1929, p. 477

Turin, September 8

The announcement of Signor Martelli, at the meeting of the permanent wheat committee, that the production of wheat will exceed in 1929 the record figure of 7 million tons, against 6.2 in 1928, 6.1 for the average of the period 1926-1929, and 5.05 for the average of the period 1911-1914 is heralded by the Press as a near approach to victory in the so-called wheat battle. More significant is the rise of the average yield from 1.06 tons per hec tare (0.424 per acre) in 1911-1914 to 1.25 (0.50) in 1926-29, and to 1.44 (0.576) in 1929. Hopes are raised for a decrease in the deficit of the international trade balance, owing to reduced imports of wheat and other cereals. Wheat has already figured by lesser amounts in the current year, as in the first part of 1929 imports were 1,343,466 tons, of the value of 1,321 million lire, against 1,542,307 tons of the value of 1,750 million lire in the corresponding period of 1928. Owing, however, to shortage of maize and other food products the general balance was not improved to the same extent. Average monthly imports of food products decreased only from 505 million lire in 1928 to 464 million lire in the first five months of 1929, while exports of the same food products decreased also from 275 to 245 million lire. The most significant change is in imports of raw materials, which, after reaching the high figure of 842 million lire monthly in 1926, decreased to 630 in 1927 and 640 in 1928, presumably owing to the revaluation and stabilisation of the lira, which made industrialists shy of buying raw materials in face of export difficulties. In the first five months of 1929, however, industry again took courage, and its purchases rose to 739 million lire monthly. As yet exports of finished products do not reflect these increases in the imports of raw materials, but as the internal market cannot absorb all the output, when stocks are replenished to their former level, exports are bound to increase. Among increases in imports of raw materials in the first half-year the most interesting items are: -Jute, from 30,750 to 35,488 tons; raw cotton, from 122,956 to 133,540 tons; wool, from 32,685 to 36,334 tons; broken iron, steel and pig iron, from 317,739 to 497,496 tons; pig iron, from 56,097 to 98,548 tons; lead, from 13,299 to 15,578 tons; tin, from 2,211 to 2,605 tons; spelter, from 4,514 to 5,486 tons; cellulose, from 85,268 to 93,452 tons. Coal, exclusive of Reparations coal, was up from 4,198,390 to 5,396,394 tons.

The insistence of Mr Snowden at the Hague that Italy should increase the purchase of British coal by her State railways by one million tons yearly has induced the former Finance Minister, signor De Stefani, to suggest that Italian imports should be unified under the aegis of industrial syndicates. Italy buys yearly more than 3 billion lire of cereals, potatoes, &c; 2 billion raw cotton, 1 billion wool, about 1.5 billion coal, 1 billion minerals oils, 1 billion metallic minerals, &c. At present all these purchases are made severally by individual buyers. Why should not syndicates unify the demand and come into the market as the sole buyers on account of Italian trade? Purchases would be shifted, say, from Great Britain to Germany, from Canada to United States, from Argentina to Australia, according to price, and still more according to the best counter offers forthcoming as to purchases of Italian goods. Italian exports suffer from not consisting of monopolised or privileged goods; and this appears to be one cause of the adverse trade balance; but if we could monopolise imports, we could force other countries to purchase a sufficient mass of our exports. This is a gigantic plan indeed. The author does not ask for a State monopoly of imports, but for a voluntary organised syndicalisation of the principal branches of industry and trade so that purchases in the foreign markets should go through a sort of central import board. Something of this kind worked during the war, and goes on now in the Russian collectivist system. How it would work voluntarily in Italy it is very difficult to foretell. With whom would the Italian syndicates negotiate? How can foreign sellers of coal, wool or cotton bind other interests to buy given quantities of Italian silk, oranges, cheese, rice, hemp, cotton textiles or motor cars? The system necessarily presupposes a world syndicalisation of industry and trade carried to such an extent that at present it cannot be considered practical politics.

There are, moreover, indications that the international balance of payment is being redressed without recurring to new trading systems. Perhaps the surest index is the figure of the Bank of Italy total reserve. When the general balance was passive, reserves diminished from 12,516,1 million lire at the end of March, 1928, to 10,004.9 at the end of April, 1929. The Bank of Italy was obliged to sell gold bills against paper notes to importers who did not find enough bills in the free market. From April on this tendency was reversed. At the end of July, 1929, the total reserve is up to 10,094.4 million lire; a small increase, but indicative perhaps of the turning of the tide.