Wholesale and Retail Index-Numbers – Debate on Tariffs-Exports and Imports in 1922 and First Quarter of 1923

«The Economist», 7 luglio 1923, pp. 20-21

Turin, June 24

There is talk at present of a new increase in prices. The widespread impression that there has been an increase is not borne out by the Bachi’s index number in the wholesale market, on the usual basis of 1920’s prices 100:

The only difference in the figures for this spring is the maintenance of prices at the high level reached in the autumn and winter months; while in past years the months from March to June usually saw lower levels.

Retail prices, which are always slower to move, are as follows (the figures relate to the cost of living in Turin of a working family of two parents and three sons, on the basis of the first half of 1914=100). (See table at p. 293).

The characteristic of this year is the same as in the wholesale market: retail prices are not decreasing this spring as they did in past years. Food is dear, a strange thing in the face of a good season, with plenty of vegetables and very good prospects for fruits. The Government has taken various

measures to prevent the rise of the cost of living, the most important being the abolition or lowering of various duties on animals, sugar, meats, oils, cheese. Yesterday there was held at Rome a great meeting convened by Signor Rossi, Minister of Trade and Industry, for the purpose of devising remedies against the high cost of living. Chambers of Commerce, municipal councils, and co-operatives gave various opinions on the causes of the rise in retail prices; increases of taxes on consumption (turnover tax), increases of rents of shops after the abolition of the rent restriction act and fixation of rents by arbitration tribunals; increased export of cheese, vegetables and meat; imperfect organisation of transport, and so on. Fortunately, notwithstanding some high words and threats of penalties against speculators and middlemen, no direct action by the Government was advocated. The Fascist Government gives no support to policies of maximum prices, restrictions of exports, or regulation of consumption.

The debate in the House of Deputies about the general customs tariff, although not formally closed with a vote, may be said to have come substantially to end. The protectionists mustered all their forces, and won a great deal of success. But the Government promised that the general tariff, although wanted for purpose of negotiation of the treaties of commerce with foreign countries, ought to be lowered in virtue of the lower treaty duties and the extension of the most favoured nation clause. Perhaps the most important outcome of the debate was a vote taken inviting the Government to abolish all duties on pig-iron and broken iron, and to substitute in their stead a system of premiums on pig-iron production which might be deemed necessary for the defence and independence of the nation. If we consider that the iron industry is at present the chief barrier against the adoption of a more liberal fiscal policy, that the premium system is more apt for measuring the exact sacrifice which the State is making for the support of so costly an industry, we may say that this House vote, if acted upon, is perhaps the most important step taken by the present protectionist majority of the Parliament.

The latest statistics of foreign trade relate to the first quarter of the year (in millions of lire):

The interesting fact is that figures are rising in both ways, indicating that trade is increasing. Wholesale prices, not being much different in the two periods, do not exercise a notable influence.

The distribution in 1922 of imports and exports among various classes was as follows (in millions of lire):

We see that what is called the adverse balance of Italian trade is due wholly to the necessity of importing vast quantities of food and of raw materials for the national industry. Raw material imports are likely to increase in the future; and the increase will be a good omen as a proof of better working capacity of our industry. The figures of food imports are not so encouraging. The most important items in food imports were: Wheat, 3,057; other cereals, 500.5; fish, 422.7; coffee, 305.8; meat, poultry, game, 191.2; cattle, 154.3, million lire. It should be possible to buy more manures and to improve agricultural methods, and, without increasing and even diminishing the planted area, to increase the cereal production. To many people it seems a pity that Italy, with so long a sea coast, should be obliged to buy abroad such a vast quantity of fish (85,477 tons, of a value of 422.7 million lire). It seems that such a lamentable result is due to out-of-date methods of fishing. Public opinion was therefore delighted when it was announced that, following in the steps of the Duke of Abruzzi, who is conducting a great cotton enterprise in Italian Somaliland, the Duke of Udine, of the Blood Royal, intended to start a new experiment on a vast scale in fishing with modern apparatus and fleet. The fleet will fish not only in Italian waters, but also in distant seas.