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CONFIDENTIAL
ITALICS POST-WAR ECONOMIC RELATIONS.
Some preliminary notesf
Bruno Foa,
Division of Research and Statistics,
Board of Governors of the
Federal Reserve Svstem*
May 19244.
TABLE OF CONTENTS
SUMMARY AND CONCLUSIONS.
pp. i-iii
I.
THE PROBLEM,
pp. 1-3
Introductory Remarks.
The Alternatives•
American Interests in Italy.
Political and Security Factors.
Economic Security and Political Stability.
II.
ITALY'S PROSPECTS: A PRELIMINARY VIEK,
pp. U - H
War Damage and Peace Terms.
The Pessimistic View*
An Optimistic View.
The "Optimistic" Case,
The "Pessimistic" Case.
The Impact of Fascism.
Preliminary Conclusions*
III.
THE TRADE BALANCE.
pp. 12-25
Italy as an International Trading Country.
The Traditional Trade Pattern.
An Analysis of Imports*
Conclusions Regarding Imports.
An Analysis of Exports.
The Terms of Trade.
Geographical Distribution of Trade.
IV.
THE FUTURE OF ITALY'S FOREIGN TRADE*
Multilateralism.
Autarky,
Bilateralism.
Regional Arrangements.
Trade Prospects with the United States.
pp. 26^29
V.
THE BALANCE~0F PAYMENTS.
pp. 30-38
The Role of the United States.
The 1900-1913 Pattern.
The Inter-war Pattern•
Military Expenditure and the Balance of Paymentst
The^Future of the "Invisible Items".
Prospects and Difficulties Ahead.
Problems of Transition - Conclusions.
APPENDIX A) - THE POPULATION OF ITALY.'
APPENDIX B) - THE NATIONAL INCOME OF ITALY.
pp. 394*1
pp. 1+2-24-7
SUMMARY AND CONCLUSIONS•
The long-term prospects of Italy as a factor in international trade
relations are examined and discussed *
The American economic interests at stake in Italy are very small* However,
political and security factors also have to be considered* In the past,
the lack of balance between hopes and aspirations, on the one hand, and
resources and opportunities on the other, have produced an explosive
combination, of which fascism was the result* The recurrence of that
pattern can only be prevented if Italy is in a position to gain some degree
of economic security and to raise its standards of living*
The damages wrought by the war, and the imposition of comparatively mild
or harsh economic peace terms, while important, are not likely to affect
decisively the long-term prospects of the country, as far as international
trade relations are concerned*
According to one school of thought, Italy i$ hopeless as an economic
proposition* According to another, Italy could easily pay its way and
even prosper, given a large degree of international freedom of trade*
The population pressure, though serious, is over the long pull less severe
than it is commonly thought. The birth rate is falling, and Italy's
population should become stabilized at 1+9,500,000 around 1970*
Italy's economic development was notable between 186l and
particularly striking between 1900 and 19lUt when the value of the national
income rose from 9 to 18 billion lire,
Italy's basic economic weaknesses, owing to lack of raw materials and to
the fact that most of its exports belong to highly competitive lines, are
also to be considered* Small fluctuations in international demand affect
considerably the position of the country* This great dependence on international conditions was emphasized by the effects of the Great Depression
and by Italy's difficulties during the inter-war period.
Fascist economic policies, up to 19355 did not make much difference as far
as underlying trends were concerned* In that year they became irrevocably
tied to a pattern of foreign and military adventure which could only
lead, as it did, to disaster*
The basic fact governing Italy's past and future economic role is the close
relationship between international and domestic conditions and trends*
Italy prospered when the value of foreign trade per head increased, declined
when it diminished* The same is likely to happen in the future*
Italy's foreign trade is of very sizable proportions: it reached almost
2 billion dollars in 1929, and averaged slightly above 1 billion in the
decade 1929-38*
11
A "functional" classification of Italian imports shows that, in 19J8,
s :>me ll\. per cent of* the total was constituted by essential foodstuffs,
2)4 per cent by fuels and other imports essentials for the maintenance of
utilities and industrial operations, I4X per cent by raw materials processed
into domestic articles of consumption (both consumers1 and producers* goods),
10 per cent by materials processed into export articles, 11 per cent by
non-essential consumption imports. The import content of exports (in terms
of the value of industrial output) was approximately 11*6 per cent*
By and large, Italy's procurement problem presents very serious but not unsurmountable difficulties •
Foodstuffs (raw and processed) constituted about one^third of the pre-war
export trade, and textiles (natural and synthetic) another third• Italy's
export trade pattern is on the whole weak* Given an unfavorable international situation, domestic adjustments in the price-cost structure
cannot remedy the situation. The income level of foreign buyers is the
ultimate factor whic^h governs the value of Italy's export trade •
Political and other factors brought about a reorientation of Italian trade
toward Germany, and away from Britain and other western European countries,
after the Great Depression* Normally, however, Italy's foreign trade is
fairly evenly distributed among the principal relevant trading areas:
the United States, the pound area, France and Western Europe, and Germany•
In the inter-war period, the oversea markets became increasingly important
for the export trade* There was also increased trade with the Balkans*
Italy therefore has much to gain from a multilateral system, especially if
its restoration is associated with the vigorous development of new markets
in comparatively poor areas, with the help of the great financial powers•
Any other alternative would involve serious disadvanteiges. Autarky is out
of the question, and bilateralism holds out very little hopes for Italy*
The only practical alternative to multilateralism would be regionalism,
involving closer relations with either Russia or the British Empire. The
first course would be tantamount to Italy's absorption into the Soviet
Union, A straight partnership with Britain might be advantageous, but
seems hardly practicable* However, there would remain the possibility of
closer ties with France, Spain, and a Western-European bloc linked to the
pound area—if there is going to be one*
American developments will, however, influence in any case—except if
Italy enters the Soviet orbit—Italian developments, and the Italian
balance of payments, given the American contribution to m°st invisible
items (tourist trade, shipping passenger traffic, etc.) ,
iii
Italy had no difficulty to balance its foreign
payments, both-on
current and capital account, between 1900 and 19lU« In the inter-war
period, however, the difficulties were very serious* Future prospects
are uncertain, and ultimately hinge on the question whether after the war
there will be a moderately but steadily expanding world economy, or a
feturn to the inter-war pattern. In the latter case, the deterioration
in real income inherent to an adjustment in Italy's international accounts
at a low level of exports and imports might be almost intolerable: and
lead the country to desperate step.s, including the sacrifice of its
independence,
CONFIDENTIAL
ITALYTS POST-gvAR ECONOMIC REIATI0;NS.i/
Some preliminary notes•
Bruno Foa,
Division of Research -and Statistics,
Board of Governors of the
Federal Reserve System.
TEE PROBLEM ••
Introductory RemarksThe present memorandum is purely preliminary and exploratory. Its
purpose is to set out a number of facts and relationships relating
to the long-term prospects of Italy as a factor in international
economic relations^
Though this memorandum deals with long-term factors, and abstracts
from the problems of the present emergency state of affairs in Italy,
as well as from those connected with the peace settlement, its bearing
on present day policies and problems is plain* Obviously, many
decisions taken under the stress of war 'conditions will have a lasting
effect on the long-term configuration of the ..xrea. They will influence
the nature of ItalyTs post-war economic relations, their pattern,
and the very survival of Italy a$ an independent economic and political
unit in the decades to come. To the extent to which the United States
has an interest in the area, and in the economic and security problems
connected with the Mediterranean, south-western Europe, and the Near
East, they are also a matter of American concern.
The. AlternativesYvill Italy after the war 'be in a position to revert to the situation
of 1900-19139 to enjoy the benefits and an expanding international
and domestic economy, and regain its status as a member o.f the peaceloving family of nations? Or will it be caught-again in the vicious
circle of depression and frustration which had so much to do with the
rise and consolidation of fascism, and become once more a trouble
spot of the European and world map? Or will Italy, as a result of
the impoverishment and destruction suffered in the present war and
under the stra.in of the highly competitive cmditi^ns '^f the post-war
economy, find it impossible to achieve economic stability—and j^in
a BritisH-contrclled Western .European bloc !or perhaps the Soviet
Union?
\J
The writer is indebted to Professors Howard S9 Ellis and
Gottfried Haberler who read the manuscript and contributed
valuable suggestions•
- 2 To decide which of those alternatives would be favorable, and which
prejudicial to American interest? is a matter of high policy—though,
at least with reference to some of those alternatives the answer
seems obvious• However, policy decisions involve not only matters
of principle -but also of degree--&nd are goxrerned to a considerable
extant by the underlying facts, It may therefore be desirable to
make clear as much as possible under what assumptions the indicated
alternatives would be likely to occur--and consequently the conditions
which may favor or hinder any desired policy. This is the objective
of the present memorandum* *
American Economic Interests in ItalyThe American economic interests at stake in Italy are very small.2/
In 1939$ Italian purchases constituted only 1*9 per cent of total
American exports, and Italian supplies only 1.7 P e r cent 6'f total
American imports. We sell to Italy chiefly raw and semi^processed
materials (oil, cotton, iron and steel scraps), and buy from Italy
raw silk and a variety of processed foodstuffs of secondary importance.
Outstanding dollar loans which have not been re-purchased by Italians
are probably in the order of only $100-150 million.^/ Direct American
investment in Italy is confined chiefly to a participation in certain
electric power, and. other utility companies, and in some oil refineries,
The flow of emigrants1 remittances from this country to Itaiy has
dwindled to a very small trickle (not more than $8-10 million in the
immediate•pre-war ye&rs). Thus, economic interests alone would hardly
justify a large and sustained measure of American preoccupation over
Italian affairs.
Political and Security Factors-*
Political and security factors, however, play a considerable role in
the picture. Italy constitutes a lump of l\5 million people, placed
at a strategic point of the world map. Though in the present war its
contribution to the enemy war effort has been almost" negligible,
Italian intervention cut for almost three years the Allied communications through the Mediterranean, and gave to the Germans an invaluable
springboard for action. After the war, Italy will probably find
itself on the borderline between*the Russian and the Western areas*
T7
For a detailed study of U.S.-Italian trade relations cf. the
excellent Report No. II42, Second Series, issued by the U.S. Tariff
Commission - Italian Commercial Policy and Foreign Trade 1922-19U0*
2j Italy contracted substantial long-term loans in the United States
between 1925 and 1928, for a total slightly in excess of 1300 million.
Of these, $100 million were borrowed by the Italian government
(Morgan loan), $60 million by the cities of Rome and Milan, the
rest by various industriesf chiefly the electric power (some
|80 million) and the shipbuilding (some, $22 million) industriesf
A large fraction of those issues however was purchased by Italian
investors out of their dollar resources, and eventually surrendered
to the Italian government-*-and exchanged into Italian Treasury
Bonds^-in 1935*
Moreover, it is plain that Italy has been, wittingly or unwittingly,
a considerable factor of international disturbance for a generation
or so* The Italian-Turkish war of 1911^12 played a part in accelerating
the crisis that resulted in the First World War, In the inter-war
period, the rise of fascism was a major factor which influenced the
growth of national-socialism* It should not be -forgotten that Hitler
played for many years the part of Mussolini's admiring disciple, and
that his movement received considerable help—at the period of its
lowest ebb, after 1923—*frcm the Italian fascist government. Mussolini's
record of unbridles aggressiori, from the Corfu incident of 1923 to
the Abyssinian war, the intervention in Spain and later adventures,
is familiar to everyone. And though experience has shown that fascism
did not 3ucceed in taking firm roots among the Italian people, the
basic factors which produced Mussolini will outlive him. For the
lack of balance between population and resources, and between hopes
and aspirations on the -one hand and opportunities on the other, have
produced an explosive combination, of which fascism was both a symptom
and an effect. And while alone Italy is incapable of setting the
whol^ world aflamQ, it can generate or propagate world trends of
incalculable danger—as exemplified by national socialism.
There seems to be a growing realization on the part of the best
democratic Italian elements of the fact that their country is not
fitted to play power politics—and that Italy should chart its future
alrmg the route successfully followed in the past by Sweden and nther
countries, concentrating exclusively, on the achievement ^f a balanced
economy and of a satisfactory social structure, and keeping aloof
from the world game of politics. Plainly, this is the course that
would be more consistent with American interests, and with the .American
ideas of a peaceful post-war world, in which the smaller nations would
be able to preserve their independence, would not be pawns in the
game of third powers, and. would not become sources of international
disturbances•
Economic Security and Political StabilityIf, howeyer, the past affords any guidance with regard to the future,
it is obvious, that such a development would be predicated upon Italy's
ability t^ achieve a balanced economic structure, involving a reasonable
degree >~>f security, and to raise gradually but perceptibly its standard
of living. Therefore it becomes important to ascertain under what
assumptions Italy could economically stand on its own feet, or whether
the possibility itself is to be dismissed as an idle dream.
- 14- -
ITALY'S- PROSPECTS: -A PRELIMINARY VIEW
War Damage and Peape TermsNo one is, of course, in a position to measure the full extent of the
damage and destruction wrought on Italy by the present war. Yet,
while the damage is plainly going to be of catastrophic proportions,
and may. even involve the destruction of most of the industrial assets
and equipments built in the course of the last two generations, it
dees not alter basically the terms of. the problem--though naturally
it increases their proportions. Actually, everything will hinge on
the long-term prospects and economic potentialities of the country*
For if the^se are fairf there will be every justification for investment—
under one form or the other—*of new capital in the area, and for a
bid to foreign assistance, public and privatef Should on the other
hand long-range prospects be extremely bleak, the position would be
well-nigh impossible, even in the event that industrial and other
damage should not prove to be as heavy as expected•
Nor would the picture be substantially altered-^except in the all
important psychological and political respect--by the imposition on
Italy of comparatively mild or harsh peace terms* For it is assumed
that, from an economic viewpoint, the difference is not likely to be
very great either way. Given its "deficit" economy, and the present
catastrophic standards of living, it is not at all clear how Italy
could be subjected to substantial reparation payments—-with the
exception perhaps of seine deliveries in kind and the export of manpower. On the other hand, favorable peace terms, involving for
instance the retention of some or all its "pre^fascist" colonies,
would be of little econoxni9 benefit—no matter how much this would
appeal to Italian sslf-respect,
In one respect only will the peace settlement affect vitally the
economic future of Italy, and this is whether it,will keep Italy
permanently beyond the pale of the Yvfestern family of nations, -or will
in due course admit it back in the fold. This is, of course, the key
to everything else--and on which everything else hinges.
-5 •
The Pessimistic ViewThere is a pessimistic school of thought which considers Italy
hopeless as an economic proposition*^/ Italy's basic weakness in
terms of raw materials and other fundamental resources--the. growing
pressure of population«the dwindling importance of certain traditional
items of its balance of payments, such as emigrantsf remittances-*
the tremendous damages, suffered or about to be suffered in the course
of the present war; these are all factors which, according to many,
seem to rule out the possibility of a working equilibrium within the
present context.
This view, while plausible in many respects, may lead—if accepted
without reservations--to two opposite conclusions which are plainly
counsels of despair. The first is the one which became widespread
in Italy after the 1919 peace settlement, and which was fully
exploited by the fascists for their own ends: to the effect of which
Italy is a congested and "have not" country, which must be allowed
a considerable degree of territcrial and colonial expansionf At the
present stage of the game, and after the defeat suffered in the war,
no person in his senses can expect that such claims would find a
receptive audience^ This to say nothing of the fallacies and delusions
which they involve•£/ The second conclusion is that Italy cannot
possibly pay its way—and preserve a tolerable standard of livingsin a highly competitive world, and has to be subjected to the permanent
assistance and guardianship of foreign powers*
1/ This statement can be said to reflect the typical viewpoint of the
English and American press, weeklies and economic magazines* The
average Italian is, of course, keenly aware of the heavy handicaps
under which Italy has been placed by its lack of raw materials and
other circumstances, and feels entitled to serious grievances toward
the rich "have" countries, especially on account of their tariff
and immigration barriers* Fascist politicians harped consistently
on the "selfishness" of the "have" Powers and the need for outlets
to relieve the population pressure. Reputable economists seldom
identified themselves with extreme conclusions, but they naturally
felt bound to stress the basic economic limitations of the country,
and the fact that these could only be mitigated in an enlightened
international society in which the movement of goods, services, and
and persons could proceed untrameljed* Professor Mortara was among
the economists who emphasized more vigorously the Italian difficulties
with raw materials and foreign markets ,
2/ Yshile it can be expected that many Italians will revise radically
their fascist^fostared delusions as to colonialism and African
"imperialism" j, they will however inevitably continue to draw
envious comparisons with the lot of other more fortunate countries.
Incidentally, the possibility of having a share in the economic
advantages (true or imagined) of colonial trade (in a wide sense)
would certainly be a very powerful inducement toward joining a
wider regional or other blocf
- 6An Optimistic ViewThe optimistic school of thoughtfi/on the other hand, points to the
great strides made by Italy1s economy during the first fifty or
sixty years of unity, and without any appreciable recourse to foreign
lending—let alone assistance• It contends that the population
pressure, though heavy, is bound to diminish, because of the fall in
the birth-rate. Also, that, while' Italy is comparatively unfit for
heavy industrialisation and mass production, it can rely to a
considerable extent on its traditional manufacturing and processing
industries. There should be no difficulties, according to this view,
in procuring essential raw and other materials, so lpng as a large
degree of international freedom of trade prevails• A1JL in all, it
is concluded that population, raw materials, and market problems
are to a large extent "bogeys" and myths^-and that there is no reason
why Italy should not resume its progress in an orderly and free world.
The "Optimistic" CaseIn order to assess the conflicting claims of those two schools of
thought, let us look briefly and dispassionately into the facts.
The population pressure is serious but, over the long run, not so
serious as- some think. The birth rate fell from 36.8 in the 1000 in
1861 to 23 in the 1000 in 1936*38• The great population increase,
from the 25,000,000 people of i86l to the ^5,000,000 of the present
day, was due chiefly to the great fal}. in the death-rate • The average
net population increase over the next twenty-five years should not
exceed a quarter of million per year, and population shpuld become
stabilized in or around 1970 at [$#500,000 •£/
1/ Its most distinguished advocate can be considered Professor Luigi
Einaudif Dr. Mario Einaudi has ably presented'it in'his articale
The Reconstruction of Italy, Foreign Affairs, January 19^» That
viewpoint probably involves an underestimation of the difficulties
which Italy is bound to face in the postwar world, but it constitutes
a healthy reaction against the exaggerations of f ascis-t writers, and
their disparagement of the great--if quiet arid, undramatic--achievements of Italy's economy from i860 to 1922. In an extremely
courageous, paper printed in Italy in 19^2, (il problema industriale
italiano, tf iornale degli Economist!.") Professor Giovanni Demaria
contrasted very sharply the progress made by Italy under conditions
of economic freedom to the stagnation due to the fascist policies
of "self-sufficiency".
2j cf. Frank W. Notestein and others - The Future Population of Europe
and the Soviet Union - League of Nations, \3hk, P» 290.
Mr. Colin Clark, in his The Economics of I960, PP» 16-17 had arrived
at the same conclusion. These recent population projections, based ^n
the latest trends, are to be considered more reliable than the
earlier ones computed by C. Gini (Bulletin de '1'Institute International
de Statistique, 1931)* which appear to have underestimated the
expected declines in fertility. Some data on Italian population,
emigration, etc., have been reproduced under APPENDIX A ) .
- 7Of course, the very fact of a density of population of 138 per square
kilometer (as compared with 76 in France) poses a very serious problem:
and the impact of the Johnson Immigration Act, as a result of which
Italian emigration to the United States abruptly declined from over
a quarter of a million to a mere few thousands per. year,- was bound
to be terrific* It is clear that it played a big part in aggravating
Italy's difficulties in the inter-war period* But by now the shock
has been absorbed; and while additional and wider emigration outlets
after the war would certainly be welcome to Italy, a return to the
pre-1913 is not only unthinkable—in view of the prevailing attitude
toward immigration in the "new" countries--but not strictly necessary.
Of course, large scale emigration would permit an increase in standards
of living. But it cannot be said that the pressure of additional
population is too formidable? and is bound to lead to explosions
unless it is relieved* In other words, from now on the emigration
problem has a bearing chiefly on the chances of improvement over
existing conditions rather than en the prevention of further deterioration*
It is not denied that, in the immediate post-war problem, unemployment
cnuld reach such formidable proportions as to make imperative another
wave of large-scale emigration, But this would be a transitory, if
important, development*. Over the long run, the facts seem to justify
very largely the "optimistic" point of view in that respect.
The "optimistic" school can also score a number cf major points in
other respects* A birdseye view of Italyfs economic development-fr^m
1861 to 19114. is sufficient to confront even the most casual observer
with a very solid and impressive record of performance, which should
dispel many preconceptions as to Italy's ability to stand on its feet,
given certain assumptions. Over the whole period, the rate of economic
and industrial progress outstripped the rate of increase in populationJy
Progress was particularly striking in the period 1900-191U* when the
value of the national income doubled (from 9 billion lire in 1901 to
18.2 in 1913) &I Agricultural income per head rose from 6!±Q to 1165;
industrial income per head from 780 to 1250; other income from 90Q to
1857 lire* There was a considerable shift toward industrialization,
involving a corresponding fall from agricultural to total occupied
population.5/ Both industrial and agricultural wages were raised
above their old sub-subsistence levels*H/
l/ According to Demaria (cp#cit,p. 153)9 taking into account exports,
imports, and domestic economic growth, the rate of growth of Italian
industrial economy in the period 1870-191U approximated 2-2*5 P e r
cent per annum, on the average* This exceeded the rate of population growth which, during the same period, averaged .8 per cent
per year.
2/ As prices were moderately rising during the period, the net increase
wa s s omewhat 1 owe r •
*%
3/ cf • Colin Clark - Conditions of Economic Progress <- p. 201,
I4/ cf • Luigi Einaudi - La condotta economica e gli~ffetti sociali
""" del la guerra italiana - Carnegie Endowment Series, 1933 '-'Ch. I.
- 8 Industry, banking and investment developed. Foreign investment
played a comparatively small part. The country enjoyed between
1900 and 1913 complete monetary stability, The trade deficit of the
country increased, but was more than offset by the yield of the
"invisible" items. Italyfs aggregate balance of payments for the
period 1901-1913 1/ indicated that the country had paid in full for
its heavy and growing imports, that the balance o£ payments ^n current
account had been in equilibrium, and that the capital account of the
balance had been favorable. The 1,300 million lire of long-term
foreign capital imports had been balanced by 773 millions of Italian
securities repurchased from abroad, and by 528 millions of net gold
imports. The gold, silver, and foreign exchange assets of the three
banks of issue increased from 663*3 million lire (1901) to l*66l million
(1913} • All those were very substantial achievements.: and the more
notable in the face of the poverty and backwardness of great sections
of the country especially in the first decades of national unityf
The "Pessimistic"
The "pessimistic" case (and we refer here only to that wing of the
"pessimist" school which is uninfluenced by propaganda, or by nationalist and other emotional factors) rests, chiefly on Italy's, poverty in
basic raw materials and on the vulnerability of the country's economic
structure to international fluctuations• It is pointed out that
despite the great modern developments in the electric power industry,
Italy is still entirely dependent on abroad for fuels. Italy does
not produce "With very few and comparatively unimportant exceptions-rich or strategic materials" (though conversely is not exposed to the
wide price and income fluctuations of the countries which depend
chiefly on basic raw materials or international, staple commodities),
and almost all its exports belong to highly competitive (&n& in some
cases semi-luxury) lines* Its share of world trade does not exceed
2.5 per cent of the total, and its bargaining power is extremely weak.
While a small fluctuation in the international demand is bound to
affect considerably the level of Italiait exports, even large fluctuations in Italian demand for imports make hardly a ripple* on the
surface of world trade.
In other words, while Italy exports chiefly non-essential or highly
competitive commodities, the'demand for which is stable only if
international conditions are favorable and the income of the foreign
purchasers is expanding# Italy's imports include to a large extent
essential materials which have tctte purchased at any cost, in order
1 7 A S calculated by Professor Epicarmo Corbino in Annali d'Economia
Vol. V, p, 222f'
- 9to maintain reasonable standards of living and employment• 1/ As a
result, Italy is very vulnerable to international trade depressions,
Above all, the "pessimistic" school of thought stresses the lesson
of the inter-war period and of the Great Depression, It points to
the fact that though after 1919 the industrialization trend continued,
and remarkable industrial and other economic developments took place,
especially until 1929 # Italy*s economy as a whole remained surprisingly
stagnant^ It is true that between 1922 and 1929 the national income
revived substantially from the impoverishment produced by World War I,
and that on the eve of the Great Depression real income per head
exceeded considerably the pre-rwar level, But the advance was caught
in the vortex of the Great Slump and canceled; and while there was
a measure of recovery (to a great extent stimulated by wars and war
preparations) since 193&, the country's economy found itself never**
theless distorted and out of balance.
The Impact of FascismThe developments of the inter-war period, however, can hardly be
considered as "normal", in view of the impact on them of three major
factors, namely the consequences of World T/ar I, th$ Great Depression,
and the domestic and foreign economic policies of fascism. As the
first two affected all Europe-rand the second the whole world--the
degree of economic deterioration imputable to them is not necessarily
connected with Italy's basic weaknesses, real or imaginary. The
third was specifically Italian, and calls for a few words of comment•
It would, of course, be impossible to review in a few paragraphs the
economic consequences of fascism for Italy, Surprising as this may
seem, however, up to 1955» fascism did not make much difference as
far as underlying trends were concerned• \n the comparatively
prosperous period of 1923-29, many foreign observers were lavish in
their praises of the remarkable economic strides made by Italy
1/ In the language of theoretical economics, this would imply that
the demand for Italian exports is governed, primarily by the
"income effect", namely by ths effects of fluctuations in foreign
buyers' income. Since Italian exports are to a great extent
offered, in a competitive market, "price elasticities" (namely,
changes in demand associated with price changes) play normally
a very smal,l rolef On the other hand, the Italian demand for
imports is, with respect to fuel3, essential materials and foodstuffs, pretty inelastic--that is to sayf Italy has to import,
within certain limit, no matter how high th$ pricesf Therefore,
if international trade conditions are unfavorable, Italy is
inevitably led. to cut drastically the price of its exports, and
to resort to various forms of dumping, in order to pay for its
essential requirements•
- 10 allegedly, in the climate of "stability stnd ord$r" brought about by
fascism. But that revival was a natural development which would
have taken place just as much under any other type of government*
In fact by 1922 the wave of disorder and unrest of 1919-20 had almost
entirely spent its force, That Italy was.capable of progressing
also under allegedly "weak" democratic governments, had been evidenced
by the history of the 1900-1913 period* Conversely, it would be
unfair to say that the fascist government, during the crisis years
of 193O-3U* behaved much differently.from most other European,
governments, though its blunders were very serious ©.specially in the
monetary and foreign trade sphere• The turning point came by the
end of 193U or the beginning of 1935#•*when the. fascist economic
policies became irrevocably tied to a pattern of foreign and military
adventures which could only lead, as they did, to ignominy and
disaster#
The catastrophe into which fascism has plunged Italy has inevitably
set the economic clock back by one and possibly two. generation's•
The Italians will have to start again more or less from scratch, as
they did in 1890-1900. But the basic potentialities and' drawbacks
of the country are more or less the same as in the past~-and these
only will condition., together with all other relevant factors, the
post-war long-term.-trend, which is ultimately the only thing that
counts•
Preliminary ConclusionsIt is at this point that the dispute between the two schools of
thought can be fully appraised and, it is hoped,, settled, a.t. least
in its more general- aspect's • There-cannot be much dispute as tp
basic facts*— though differences of temper&irent play a. certain part
in their evaluation* It all boils down to 'a divergence, in the
assumptions relating to the world in which Italy has -to live. It
is an;uncontroverted fact that1 Italy prospered so long as the international situation was favorable, world income and trade expanded,
and a large degree of international division of labor prevailed; and
that it declined when the reverse conditionsroVtairiea". F/Hether"the
post-war worl'd will revert to the basic, features of pre-rl913> &s
far as international trade is concerned', or wilL follow the vicious
pattern of the' inter-war period, is a matter o'f speculation,
A .close relationship between international and Italian eanrzomio and
and trade trends- has been conclusively established. Th'at-^irrespective of forecasts or predHections-~must be the governing consideration in any estimate of Italy's post~war rolet
•This relationship is exhibited most clearly by the fluctuations in
the value, of foreign trade per head of population under prosperity
and depression. It stood at "Lire" Ul4 per-head1 (in "lire"' of .1938
purchasing power) in the "pre-historic" period 1871"*1875« It rose
from the "Lire" 507 of 1896-1900 to "Lira" 811 in 1913-liu
-• 11 *'
It was moderately high during the recovery period of 1922-29; it
nose-dived almost to the starting t>oint, being only "Lire" I4J4O ,
in the nine-year period 1930-1938tl/ The parallelism with the
fluctuations in national income, and above all in real income, was
throughout the period very close • It. would, of course, be mistaken
to attempt to explain a highly complex situation, involving a very
large number* of variables (some of which non-economic, such as wars)
in terms of a causal relationship between, say, foreign trade and
national income. But the correlation between those two factors is
obvious-^and their fluctuations and interplay over the whole period
exhibited «the high degree of dependence of Italy on world conditions
.which has already been pointed out.
But nothing would be1 farther from the truth than to interpret this
dependence to mean that Italy is an economic deadweight, never able
to pay its way and bound to drag along on eleemosynary supportf
On the contrary, the record shows that this is "bound to be the case
only if international conditions are stagnant or deteriorating.
In a world of expanding economy, Italy can very well' take care of
itself, reach a position of full employment, raise gradually but
perceptibly its standards of living, and keep its balance of payments
in equilibrium. Actually, the very dependence of Italy on worjd
trends, and the heavy impact of even small fluctuations in international income and demand, work both ways: just as a small slump
in world demand is sufficient to throw Italy's economy out of gear,
a small degree of world revival carries with it more than
proportionate benefits to Italy,
l/ pemarja-opf'citf pV 153* an(* Annuario Statistico Italians, 1940 <
in.
THE TRADE.BALANCE.
Itkly'As An International Trading'Country'A less cursory consideration of the; matter, requires some references
to the -pattern of .Italyf.s, foreign trade and to the balance' of payments.
Though, as we have already pointed out, Italy cannot compare with
the United States, Britain and Germany, noi*'with France, as a world
trading country, its foreign trade is of very sizable proportions*
Its value was as high as $1*892 million in the peak year 1929i and
was slightly in excess*of a billion dollars even during the last
pre-war years* The average annual value of imports over the decade
1929-1938 w a s $66lt6. million; the corresponding average value of
exports was $507»8* As a whole, in the iriter-war period, the value
df Italy's foreign trade was approximately the same as that of
Canada, India, Japan, Belgium, Holland, and exceeded that 'of
Argentina and Australia* In Europe, Italy occupied on average the
fifth or sixth place, and its share of total European foreign trade
was around 5 P er cent, }j
The Traditional Trade PatternThe historical development of Italy's foreign trade followed a
familiar pattern* At the beginning, only domestic materials were
processed by the Italian industryf The chief exports were silk,
cheese$ wines, ol^ve oil, and a few others* Eventually, imported
materials were also used—and exports of secondary products developed*
In 1913-lUt imported materials accounted for 1+0 per cent of the value
of total materials processed* By that time, Italian industrial
economy had assumed the configuration inevitable for a country rich
in manpower and skills, but poor in fuels and raw materials, that is,
it was based essentially on secondary processing industries, relying
chiefly on important raw materials and semi-finished products*
Accordingly, as of' the beginning of^t)ie century, Italy's trade
balance exhibited a large deficit* <y The export balance, together
with other foreign sources of income, provided the currency required
to finance the import of raw and other materials.
1/ cf. League of Nations - Europe's Trade, 19Ul» Review of World
Trade, 1938, and Network""of World TracTe,
2j This configuration has remained unchanged up to the present day,
Until ,1913 ^ e Italian trade balance, was.,negative_not only as a
whole but also for the balances of all aomodity5 groups" taken
separately (A.0* Hirschman - The Commodity Structure of World Trade
Quarterly Journal of Economics, August 19U3* V* 570) . In the
inter-war period.agricultural exports on the whole exceeded
agricultural imports* Another interesting characteristic of the
Italian trade balance is that imports exceed exports with respect
to almost all countries which are trading with Italy, the only
significant exception being Switzerland* (The relevant data can be
found in League of Nations - Europe's Trade «• 19Ul» p? 89)
- 13This 7self-*liquidating" process was of great importance in promoting
the expansion of Italian industry, -It involved the combination of
cheap raw materials (bought An thQ international competitive market)
arid chea#—but by no means unskilledr-manpower. It brought about,
as we have already noted, a striking increase in the national income
and in standards of living• In this connection, it may be interesting to. note that the ratio of growth In imports from 1901^5 ^° 1913
was identical to that of growth in the .national income*
An Analysis of ImportsIn the inter-war period, imports of foodstuffs fluctuated between
one-fourth and one-sixth of the total, and exhibited a marked downward tendency, which was due chiefly to the domestic expansion in
wheat production under the much-advertised "battle of the wheat".
Raw materials were responsible on average for I4.O per cent of total
imports--*with a tendency to risef Semi-manufactured products
constituted approximately another fifth of the total. The balance
(on average 15-16 per cent of the total) was represented by finished
products.
A somewhat unconventional but probably more significant analysis of
Italian imports can be offered along the following lines. There are
first of all what we may call subsistence importsf namely the
essential foodstuffs which have to be imported to maintain domestic
standards of living at a given conventional (in the case of Italy,
low) level* Second, there are what may he called overhead or
maintenance imports, namely those required to operate public,
industrial and city utilities, transportation and other essential
services, solid and liquid fuels, fertilizers, and replacements of
essential parts of machine tools and of machinery. These can be
considered as "overhead" imports in the sense that they satisfy the
overall.needs (other than for materials to be actually processed)
required to maintain the existing basic level of economic life.and
activity• There are then the industrial imports, namely the raw
materials required for actual processing (and other purposes than
"overhead" maintenance), as well as semi-manufactured goods and
finished production goodsf A particularly significant fraction of
those industrial imports is constituted by what .may be called export
imports, namely that part of the imported materials which is exported
after processing or incorporated into finished exported products,
(The balance can be said to measure the domestic industrial imports.)
Finally, there are the consumption imports, namely the* strictly nonessential (such as coffee, tobacco, spirits, $tc.) and luxury imports.
It will be noted that, under the classification here suggested, it
is not always possible to consider the imports of a given commodity
as a single lump. Thus, for instance, coal belongs to the "overhead"
class for that part that is used as fuel, and to the "industrial"
class for the part that is processed by the steel industry.
- Ik A fraction of the imports of cotton, wool,, wood pulp, e,tc.f, is to
be included with the "export" imports (rather than with "industrial"
imports in general) and so on, Limited, quantities of articles of
popular consumption (such as coffee) might be lifted.'with "subsistence"
rather than "consumption" impprts•
A preliminaryi and' vfery superficial, analysis for the year 1938*
gives the following results:
Category of Imports
Subsistence Imports
Overhead Imports
Domestic Industrial Imports
Export Imports
Consumption Imports
Total
Value
(in millions of lire)
1,600
.2.UB6
iw675
I«l2lj.
1.218
11,271
Percent of Total
~ (approx.)
100
The value of industrial output for 1938 was estimated at 65 billion
lire,
That output was produced with the us.e of the following imports:
2/3 of Overhead Imports }J
Industrial Domestic Imports
Export Imports £ /
Total
lf768 million'lire
l+«675
"
1,12)4
"
7,567 million lire
The ratio between the value of the inpyit of. imported material, and
commodities and that of industrial output was therefore, in 1938,11 # 6 per cent. Oh the assumption* that the input ,vas, evenly spread.,
in the appropriate proportions, over all items of putput*
\J It has been estimated (Office of Economic Warfare-- RR-65
Evaluation of Italian Industries for Purposes of'? Ocqupation, 19U3)
that the other third viras absorbed by non^incLustrial utilities and
services •
2 / Export Imports have been calculated (admittedly in a. somewhat
- arbitrary way) by adding to the known share of basic materials,
such as cotton, wool, wbod pulp, eto-yv absorbed by export
production, a flat 10 f>er cent from th^ total value of industrial
imports, v/hich was in 1938 of $.12.2 jnillion lir^« Industrial
imports included not onjy raw materials but a,i,so se?mi«rfinished
production goodsf
- 15 -.
irrespective of their ultimate domestic or foreign destination,
this can be described as the import content of exports J}j
The particular figure itself is subject to a considerable margin of
error, and no definite conclusions should be drawn unless the
analysis is extended to cover a period of at least 8-10 years,
However, it gives an idea of the order of-magnitudes involved. The
same applies to the analysis of imports.
Conclusions Regarding Imports*
Whatever the actual "normal" percentages of the Various classes, the
foregoing table gives a number of valuable clues to the understanding
of the Italian import problem*
It v/ill be seen, first of all, that subsistence imports do not play
a disproportionate role--nor are they likely to d^ sof once the
dislocation inherent to the war will be Tver,* However, there is
likely to be a departure from the excessive emphasis placed on wheatgrowing under fascism, and the level of foodstuff imports is likely
to be higher than it was in the years immediately before the war?
It is also apparent (though it would be unwise to arrive at definite
conclusions until more adequate investigations of the problem are
made) that the share of imported materials processed by the export
industries is also comparatively small, It is also believed that
the share of overhead imports (primarily fuel) required by the export
industries is not very large.
On the other hand, the requirements for "overhead11 and "domestic
industrial" imports are formidable, and are bound to constitute quite
a problem, unless world trade conditions are favorable1.
The overhead imports constitute to a gresut extent a rockbottom
minimum,>wtiich is to be satisfied if industry and essential" services
(including transportation) are to function at all, The further
development of the electric power industry and of railroad electrification can alleviate the problem; but, if past experience affords
•any guidance, .they can help to contain within narrower limits'the
increase in fuel and other requirements, rather than to compress them
further. Besides it is much to be feared that the war and, ab^ve all,
German systematic destruction may inflict grave damages to the electric
1/-The significance of the measurement of the import content of
exports lies in the fact that it gives an indication of the rate
at which impprts have to increase if a given rate of increase in
exports is desired. However, with respect tc any given short-term
situation, it would be necessary to estimate the marginal, rather
than the average ratio of the import content of exports.
- 16 ^
power plants, which are the pride of Italy J/ If .so,, the fuel and
power problem will acquire and maintain.staggering dimensions for
many years•
As to domestic industrial imports, these have been in the past,
are likely to continue to be the lifehlood of Italian production and
employment, In the past--pwith the exception of the brief spell of
infatuation for "autarky"—their development was to a large extent
a function of the growth of exports as a whole# So long as world
trade and output were expanding and the yield of. the "invisible" items"
(emigrant's remittances, shipping freights ,. etc.) was high, no
difficulty whatever was experienced irv obtaining these imports • In
the inter-war period, of course, things went very differently; and
the difficulties, which were real enough/ were intensified by the
policies of nationalism and "self-sufficiency" of the fascist goV£rnmentt
After World War I, Italians became very conscious of the "raw
materials problem". In later years, a skillful and unceasing
propaganda persuaded many of them that Italy had a real grievance
against the great colonial" powers endowed with a wealth of raw
materials « A good deal about it was heard in the period, of the
aggression, against Abyssinia and the dispute with the League of
Nations •£/
This is not the place for a-discussion of the so-called problem of
raw materials# It is permissible to surmise, however, that the issue
is unnecessarily befogged by two opposite misconceptions. The one
is that the difficulties of the countries which are poor in raw
materials .could only be eliminated through the physical', possession
of colonial and other territories endowed with rich natural resources*
The other is that so- long as all countries can purchase on equal
terms and without discrimination the raw materials of the would,
wherever these are located, there is no other problem or difficulty
involved. The crux of the problem, with respect to peacetime conditions, and once discriminations, monopolistic practices and the
like have been eliminated, is another: namely, whether the would-be
purchasers have access to adequate supplies of the, currencies in
which those materials are to be paidf In other"words, it is whether
or not they qire permitted to expost goods and services .to the extqht
1/ As far as it is known, the Germans have sabotaged and demolished
most of the city and other power plants in Southern *I.ta*lyV' • The,"
great installations * of the Sila mountains are believed, however-to
have escaped•
2j It is interesting to point out, on the other hand, that th§
exaggerated fears about the procurement*of raw materials which
were current after 1919 was demonstrated to be baseless by'an
Italian writer, Professor Cdrradd Gini, in his Report on the
Problem of Raw Materials and Foodstuffs, League of Nations, 1921 •
- 17*required to finance the purchases of raw materials which aire essential
to maintain full employment and a reasonable standard of living.
The .problem of raw materials is therefore to a large extent only one
aspect of the wider problems relating to the expansion of international
trade and the equilibrium of the balances of payment.
The Atlantic Charter of course pledges'to all states, great and small,
victor and vanquished, access on equal terns to the trade and to the
raw materials of the world. This implies a recognition of the vital
truth that the mere access to raw materials, without a corresponding
access to v<rorld trade, would be meaningless—and that the free procurement of raw materials can only go hand in hand with a large degree
of freedom in international trade as a whole. It can be surmised,
therefore, that a few decades of expanding world trade, by giving to
the "have not" countries access to an adequate supply of dollars and
other "scarce" currenciesf would effectively dispose of that "problem"
as such.
An Analysis of ExportsExports- of foodstuff's fluctuated in the inter-war period between onefourth and one-third of the total. Raw materials constituted only
a small (and declining) fraction--from 12 to 8 per cent of the total.
Manufactured and semi-manufactured products constituted by far the
most important class, and were responsible for about 60 per cent of
the total. The basic pattern of Italy's export trade can be seen
with reference to one of the recent years, say 1938> a s follows
(value terms)s
Vegetables and Fruits
Cereals and Legumes
Cheese and Dairy Products
Wines
Total chief foodstuffs
Cotton Goods
Rayon and Synthetic Fibers
Wool Articles
Hemp
Silk and Silk Articles
Total Textiles
Vehicles (chiefly automobiles)
Sulphur, Marble, Non-metallic
Minerals
22f\% of t o t a l
3«9^
2,6?£
2.1$
33,0#
9.9%
8*7%
5.8%
UfO%
3 ,Q%
"*
5ft>%
6*2%
Total of these groups in total exports
32 f *$
Thus, a comparatively small number of items' was responsible for
almost 80 per cent of total exports #, Foodstuffs and textiles alone
represent one-*third each of the total # Clearly, these were the two
chief pillars on which Italy's export trad« stood before the war.
The weakness of the export trade pattern is obvious'. Minerals and
strategic materials are almost non-existent, with the exception of
quicksilver and sulphur. Italy controls almost I4O per cent of the
world production of quicksilver (the balance being produced by Spain),
and is by far tfye biggest producer of sulphuf outside the United
States• However, the values involved are comparatively small. The
bargaining position is also good with respect to rayon: before the
war Italian production (all concentrated in the Snia-Cis'a group)
was the third highest of the world (after Japan and the United States),
and the Snia, though partly controlled by British (Courtaulds) and
German (Glan&stoffe A,G.) interests, had an important voice in
cartel and other international agreements. But the bulk of other
Italian exports was constituted to an almost overwhelming degree by
highly competitive articles. Silk production, of great importance
in the past, had, been almost ruined by Japanese competition- and by
the rise of rayon. Citrus fruits faced the increasing competition
of Spain and Palestine on their traditional markets (Central Europe
and Britain). Cotton goods--and to .a smaller degree woollen
textiles—were subject to competition from Lancashire, Japan, India,
and from the infant textile industry in process of development in
many other countries. Cheese and wines could rely on a fairly stable
foreign clientele, but were meeting growing competition in their
most valuable market, the United States. Automobiles, marble,
and many nondescript export articles (including antiques) were
primarily luxury goods•
The Terms of Trade- \f
The extent to which the weakness of the Italian export pattern
(combined with the rigiditytffessential import requirements) makes
the country vulnerable to international trade fluctuations is
documented by the changes in value and quantum of Italian foreign,
trade during and after the.- Great Depression, as shown in the
\J For a discussion of the conception of "terms of trade" and of
its statistical determination, cff G. Haberler, Theory of
International Trade, pp. 159-66. "Price" indexes 'of the terms
of trade "are computed by dividing the indexes of export (or,
alternatively, import) pricfes by those of import (or, alternatively^, export) prices, Accordingly, they measure percentage changes
in export (or import) prices with respect to percentage changes
in import (or export) prices• The same operations can be performed
on the quantity indexes to obtain the corresponding "quantity"
indexes of the terms of trade.
- 19 following table:
Year
Value
1929
1950
1951
1952
1955
193U
1955
1956
1937
1938
Import indexes
Price
Quantity
81.3
66.2
I4I+J+
51.6
75.0
65.2
U9.2
59.1
28.1+
29,5
29.7
25.1
* 55.2
* 3U.0
35.5
55.2
67,3
1+3.0
1+3.2
6U.0
112.1
103.7
Value
-
89.3
•80.0
79.8
85.5
82.9
52.8
77.7
65.7
Source: U.S. Tariff Commission, opici'b.
Export indexes
Price
Quantity
81.5
66.5
55.9
57.5
32.8
28,6
28.7
30.5
57.1
57,2
DD.
-72,5
60.6
1+9.2
1+0.9
35.8
33.0
33-1
37.5
1+7.1
1+8.2
nil.9
109.3
111,1+
91.1
91.5
86.6
86.6
81,5
120.9
117.6
27*3-7.
It is clear that, while during the early years of the Depression
the fall in export prices was more than compensated by that in
import prices (because of the catastrophic slump in raw materials
and staple commodities prices), later on the maintenance and,
indeed expansion^of a large volume of exports involved a sharp
deterioration in the terms of trade.
\J It should be noted that 1937 and 193& were two years of restocking, following the strain of the Abyssinian warf .Those more
than'normal import needs led to an export drive, involving a
good deal of subsidisation and dumping•
* 20 -
Indexes of Italy's Price and Quantity Terms of Trade, 1925-58 Zl
(1925*100)
' "—^
''
Year
1925
1926
1927
1928
1929
1930
1931
Index of terms of trade
Price
.Quantity
.Quantity
100,0
105.0
105.2
10l+',l
99.3
95.9
100.0
100.0
98.3
93.4
102.5
105.4
124.7
Year
1932
1933
1934
' 1935
1956
1937
1938
Index of terms of trade
Price
Quantity
Price
io4.6
ioi.7
97,1
'9512
'86.3
"70,0
75.3
113,9
114.4
101.5
104.5
154.0
155,6
179.0
Mr, Colin Clark-/ made the following international comparisons of
price terms of trade (computed as in-the above table) between 1935
and 1937* I* will be seen that the deterioration in that period
was much greater for Italy than for any other country;
1/ The three indexes are based on the price and quantity indexes of
the previous table• The price indexes of the terms of trade
have been computed by dividing the indexes of export prices by
those for import prices• Therefore, they indicate the average
changes in export with respect to import pricesf The quantity
indexes have been computed by dividing the quantity indexes of
exports by the corresponding quantity indexes of imports.
Accordingly, they indicate average changes in export with
respect to import quantities• For a discussion of Italy's
terms of trade after 1925 cf• U«S, Tariff Commission - Italian
Commercial Policy and Foreign Trade, 1922-1+0, pp f 275-281*7
and League of Nations * Review of World .Trade, 1938, p# Uhf
All Italian trade figures are quoted from the Annuarjo Statistico
Italiano.
"""'
2 / Conditions of Economic Progress, p
- 21 -
Price Terms of Trade
(19^7- 100)
U.S. America
Germany
France
Finland
Great Britain
South Africa
(exc. gold)
Norway
Latvia
Estonia
1933
1933
1937
137.8"
139.2
118.9
91.6
122.3
128.9
lli+,3
113.7
110,7
107,3
101.2
HungaryCanada
Chile
Yugoslavia
Ireland
Denmark
100.3
9U.1
Italy
Dutch East Indies
Japan
8lu?
103.2
61.6
79.0
78.2
75-5
82.7
71.3
92.3
82.5
97,0
68.6
81.9
1937
91.1
89.3
89.1
89.0
87.3
78.1
67.7
67.2
60.5
91.8
TNhile some of the 'feature's of that particular period were certainly
abnormal, the lesson to be drawn from those fluctuations is quite
clear, Italian agricultural exports do no consist of staple
commodities, cyad as such they are to some extent sheltered from the
extreme price fluctuations to which the latter are subjected.
On the other hand, Italian industrial exports are in a very weak
.position, because of the high degree of inelasticity of their demand,
Thus Italy in the' 1933-37 period lost ground (as far as the terms
of trade were concerned}' not only in comparison to preponderantly
agricultural but also with respect to the chief industrial countries•
It follows that if a trade recession or additional trade barriers
hit Italy's export trade', or abnormally large import requirements
necessitates a corresponding e^Cport increase, domestic adjustments
in the industrial cost-price structure, and price cuts, are not
likely to improve the position materiallyf Other circumstances
being equal, the 'income "level of foreign buyers—rather than prices-is the chief factor whic'h governs the * value of Italyfs export balance,
This point, of course, is of the greatest importancef
Geographical Distribution of TradeProm the geographical point of view, Italy has always been dependent,
in varying but substantial proportions, on both European (including
British) and oversea trade* Between 1909 and 1913# Italy imported
from Europe some 50 per cent of its requirements, and exported to
it on the average 66?6 per cent of its total exports. The latter
figure was high in itself, but lower than the one which ob.ta.ined for
all other industrial countries on the continent* After the war, the
export trade with North and South America, Africa, and Asia increased
in importance—so that on average, in 1925-30* ^G European markets
absorbed a somewhat lower percentage--59*2--of total exports• On the
other hand, the European share of Italian imports increased-rtheugh
at least in the 1936-38 period this was due chiefly to political
developments• "Exports" to Italian dependencies, which had been
negligible until 19351 jumped.from-that year to an abnormally high
level. This was the result of"t¥& Abyssinian war and of the ambitious
colonization schemes launched in East Africa and in Lybiu. Actually,
of .course, those "exports" were simply a drain on the metropolitan
resources • Imports from the colonies', thaugh increasing, continued
to be almost negligible also after 1936.2/ The all-round changes in
the geographical distribution of trade wrought by the Depression and
later developments can be evinced by the following table:
Italian Imports of All Merchandise, By Continents and Principal
Suppliers, for*- Specified.Years ,.1922and 1938.
Percent'of Total Va lue
1922
1925
100.0 100,0
All Countries
Non-Italian Countries
99.7
99.5
Italian Dependencies
.3
.5
America
34.0
38.3
23.6
United States
27.9
Argentina
5.2
4.9
Other America
5.2
5.5
Asia
9*8
7.8
British India and Ceylon 1^7
6.6
Other Asia
.
3f2
3.1
Africaf/
Europe3/
Germany
United Kingdom
France
Austria
Rumania
Switzerland
Hungary
Other Europe
Oceania
Australia
Other Oceania
Sources
2.7
45.1
7.9
3.8
47.0
8.3
1931
1934
1935
1936
1937
1938
100.0
99.3
100,0
100,0
100.0
100.0
100.0
98.8
1.2
98.4
97.4
97.5
98.1
22,3
21.0
11.4
12.5
20.3
1,1.3
3.8-
,7
1.6
2.6
24.7
14.8-
5.2
7.6
4.1
7.9
5.7
3.1-
2.3
8.5
3.6
3.5
3.6
4.9
3.4
4.9
4.9
62.5
13.2
59 .'9
6.9
15.8
62.4
18.3-
60.9
26.8
1.8
2.1
,5
2.8
U6
3.1.
3,4
3.8
3.2
l?3
U3
2,0
13.9
22.8
20.0
19.0,
5,5
4.8
2.8
3.1
-.9
1.0
5,5-
4,7
2,7
3*0.
.1
,8
1.0
..4.
10.7
5/
.3
.1
2.4
5.8
7.2
2.4
4.8'
4.9
8.2
4.6
2.1
2,0
11.9
7.5
5.7
6.1
9.4
7.1
2,5
10.4
11.0
3.0
6.9
9.0
2.6
7.3
20.1
3.6
3.9
,1
7.3
6,0
3.5
.1
6.6
54.7
18.6
.9
4.0
2.1
6.1
3,5
4.5
3,7
3.9
3.6,
13,8
5/
6.0 62.5
26.7
6.5
2.3
2.8
2.2
3,0
2,9
3-3
15.4
3.4
3.4
5/
Commercio Si Importazi one e di Esportazione arid XT f S V Tar iff
Coiranissioii oj?.cit., p;
l/ For an'analysis of the trade between Italy and its dependencies cf.
U*S« Tariff Commission., op f cit f , pj>. 104-9 and, Appendix.in.
2/ Does not' include Italian dependencies.
2/ Turkey and Russia .included in Europe
U/ Included in Germany•
2/ L^ss than 0 t 05 perce.nt>-
1.9
24.2
4.8
9.2
5.7
2,5
12.8
2.5
1.7
19.8
1.9
1.9
- 23.Italian;Exports of All Merchandise, By Continents and Frincipal
Markets , for Specified Years , 1922 to 1938
Percent of i'otal Value
1922
1925
1931,,
193U
1935
1936
1937-
1938
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
All Countries
Non-Italian countries
98.6 98 .h 97.6
69.0 75.3
95.0 85.7
76.7
I t a l i a n dependencies
1.6
5.0
14
2.U
1U.3 31.0 21+.7 23.3
America
19.6 21.6
22.0 15.5 15.3
15.8
18.0 15.1
8.0
United States
10.9 10J4. 10.2
7.5
9.9
7.5
l.k
8.1
Argentina
k.2
3-9
3.9
2.9
6.3
3-1
5.U
Other America
3.2
3-3
3-7
3-9
3-7
U.2
h-9
k.k
Asia
2.6
2-5
5.2
U.2
5-4
U.7
k-h U.i
1.8
1.8
1.1
B r i t i s h India & Ceylon
1.9
.9
2.3
1.5
X.h
Other iisia
2.1;
2.6
3.0
2.9
l-U
3.5
2.9
1.7
Africa^/
5.2
5.6
U.8
5.1
h.l
3-9
U.5
Europe?/
67.8 59 .'6 14.6.1
6U.9
50.9
1+9.1
70.5 65.9
10.!+ 11.1
Germany10.7
16.2 19.6
19.1
H+.U
15.9
8.2
2.8
12.0
United Kingdom
10.1
11.8
10.1
6.1
5.6
France
11.1
10.9
5.8
6.7
11+.7
3-1
3.1i
U.2
Switzerland
13.0
8.1+
6.2
8.9
7.5
h.7
U.9
6.U
2.8
Austria
2.6
3.6
3.5
3.1
(3)
2.3
1.0
1.2
1.2
Rumania
1-7
1.3
1.3
i.k
.h
2.1
Hungary1.6
,3
1.9
1.7
.9
2.5
.5
8
.
1
Other Europe
16.7
18.9
18.8 20.5
13.6
15.5
17 4
.8
Oceania
.7
•7
-3
' .6
.7
.7
•k
Australia
.6
.6
.7
.6
.3
.6
.7
.3
.
1
.1
.
1
.1
.
1
Other Oceania
(h)
(h)
(U)
Source:
Commercio' di tmpoftazione e di Ssportazione and U.S. Tariff
Commission op . c i t . , p.- 8/4..
*
1/Doos not include Italian dependencies.
? / Turkey and Russia included in Europe.
"3/ Included in Germany.
IJ/ Less than 0..05 percent.
The distribution of the trado bulancos varied as follows:
Direction of Trade and Distribution'of Trade Balances!/
Group
Share of
Imports
Germany, Austria
B e 1 gi UEI, Fr anc e,
United Kingdom
Other European
Industrial Countries
Rest of Europe
(excluding U.S.S.R.)
Italian Oversea
TerritoryRest of Yn'orld
Total
Share of
Jixports
1928 1933
(percentages)
1928
1938
12
27
16
21
10
5
Balance of Trade
in new 1 golc
(000,000's)
1928
1938
19
- 3U
- 53
21
10
- 139 - It
9
5
9
+ 10
- 3
10
17
18
15
-8
- 2U
1
2
2
23
+ 11+
+ 123
51
35
38
2k
- 1+99
- 78
100
100
100
100
- 656 - 39
Thus i t will be seen that there was a reorientation of trade toward
Grermany and away from Britain, Belgium, and France—namely from the
Western" to the "central" European area. Sane increase took place
in trade with other European industrial countries and in imports
from European agricultural countries (Hungary, Yugoslavia, e t c . ) - but the balance of trade v/ith these groups tended to become passive,
or less active than before, thus moving in a direction contrary to
that of I t a l y ' s total balance of trade. Exports to Italian colonies
became important—which was, however, a transitory effect of the
Abyssinian war and i t s aftermath, as well as of the colonization
schemes in Lybia. Trade with the rest of the world, and the deficit
in this trade, was greatly reduced.
The reorientation of Italian foreign trade toward Germany and
Central Europe was clearly due preponderantly to political factors.
Accordingly, a better idea of the "normal" geographical pattern is
to be obtained from pro-depression figures. In 1925* I t a l y ' s foreign
trade was fairly evenly apportioned among tho principal relevant
truding areas. The United States supplied 23*6 per cent of total
imports, and absorbed 10,J^ per cent of total exports, Tho pound
area (U.K., India, Australia, etc*) supplied 23»8 per cent of the
imports and bought 15«6 per cent of the exports, France and
Switzerland together supplied 11 per cent of the imports and
purchased 20 per cent of the exports. The corresponding figures
for Germany were 8.3 por cent and 11.1 per cent. In some respects,
l/
League of Nations - Europe's Trade, p.
the regional distribution of the Italian import trade is fairly
rigid: for instance, the United;States is bound to be the chief
source of supply for cotton, Austria and Scandinavia for wood pulp,
etc. In others, several alternative sources are available; England
Germany, or Foland for coal (though the higher quality of Cardiff
coal makes it particularly desirable, at least for certain uses),
America or Russia and Rumania for oil, Australia, Argentina, and
South Africa for wool, etc. With regard to exports, Italy has been
gradually but steadily losing ground on some of the rich oldestablished markets, such as Britain and the United States; offsetting those losses, to som.0 extent, by additional sales either
to Germany or to less developed and comparatively poorer countries,
such as Argentina, Yugoslavia, Turkey, Egypt, etc., though this
implied to moot an increasing degree of Japanese competition,
especially in toxtilos.
One recent shift which*may perhaps prove to be more permanenti/ has
been in the direction of increased trade with the Balkans, These
absorbed in 1937 8.3 P e r cent and in 1938 7*8 per cent of total
Italian exports—and supplied respectively 9*7 Ver cQnb and 10*2
per cent of all imports. Italian-Russian trade before 1913 w a s
of some importance. In the interwar years it was very erratic,
and after 193& foil to very low proportions.
The growing importance of the poorer markets for Italian export
trade in recent years offers probably a clue to tho directions
toward which post-war trado could bo oriented. In other words
it is likely to prove increasingly difficult for Italy to regain
and even loss so to expand its trade'with thp old and rich markets.
But Italian exports of, say, cotton, wool, and synthetic yarn
could be of increasing assistanco to thoso countries which are
beginning to develop a domestic toxtilo industry; and, by and
largo, a growing demand for tho industrial Italian exports might
arise as a result of tho development of a number of "poorer"
countries, both in Eastern Europe and overseas.
l/ It romains to bo soon, hunvever, how much that shift was due
~" to actual complementarity with the economy of the Balkan
countries, and how much to tho clearing devices and the
political agreements ("Rome Protocols", etc.) o
UU
- 26 IV.
THE FUTURE OF ITALY'S FOREIGN§ TRADE
M u l t i l a t e r a l ! sirw
I
This leads us i:o a general appraisal of the long-term prospects
of- Italian export trade as a whole. Agricultural exports should
be able to find sizable markets, though the impoverishment of
Germany and central Europe is bound to affect them unfavorably
for many years to come. The future of industrial exports will
bo entirely conditioned by world developments. For if on the
ono hand the old rich markets continue to reduce their purchases,
and on the other the youngsr poorer markets develop their economy
along highly protectionist and s^lf-sufficiency lines., the prospects are very bleak indeed. Salvation may como from eithor of
tho following developments:
,
a) a restoration of a large degree of free multilateral trade;:!/
b) the vigorous de\relopment of comparatively backward countries,
with the help of the great financial countries, and along lines
apt to develop triangular and multilateral trade.
AutarkyAny other alternative v/ould obviously involve serious disadvantages.
Italy might be driven once more along the dangerous and foolish
path of a maximum degree of self-sufficiency.
This, as tho fascist
experiment conclusively shows, v/ould not work. Actually Italy has
not the slightest chance of evor becoming self-sufficient in any
significant sense. The limited possible development of synthotic
and other productions would once more crush the modest but definite
potentialities of the country under the deadweight of a high-cost
and unproductive industrial structure.^/ Tho pressure on standards
of living would sooner or later become intolerable.
l/
"""
The considerations in favor of a free multilateral system after
the war, stressed in Network of jfbrld Trade (particularly
pp. 5* 10, 87 and 95) by the economic staff of the League of
Nations, apply almost without reservations to Italy. The
advantages of multilateralism for Italy have been very ably set
out by Messrs. Clough and Gideonse in a memorandum submitted to
the State Department on ^tpril 79 19U3*
2/
""
This has boon conclusively demonstrated by Gf Demaria- op.cit.
Thure are however certain exceptions, of which tho rayon industry
is tho most important. Insofar as synthetic productions are
largely based on coal and o i l , Italy is obviously out of the
picture. Thero nay be room however for developments in other
lines.
BilateralismBilateralism, clearings and barter-trade also .hold out very little
hopes for Italy. Insofar as bilateral arrangements of a large
and comprehensive scope could Be made with the smaller, countries,
they would hardly be a solution; and insofar as they vrould be
made with larger countries they might very likely lead to the
loss of independence—ag bilateralism with Germany did after
Regional ArrangementsThis brings us to tho last, and perhaps * only possible alternative
to multilateralism and free trade, the establishment of closer
connections with either Russia or the British J&npire. The first
move might involve a noteworthy commercial expansion in the
Balkans, but practically it would be tantamount to the absorption
of Italy—for good or evil-r-into the Soviet Union. A close economic
(and inevitably political) partnership with the British Empire, or,
by and large, with the pound trading area, would be likely to confer
important and lasting economic bonefits; though, of course, would
make of Italy one of tho outposts of the far-flung British Empire,
with the correlative dangers. It is very much to be doubted, however, whether tho British would bu prepared to accept Italy into
a partnership, in which—despite the undeniable strategic advantages—
Italy would be an economic liability more than an asset. Historical
and psychological factors also seem to rule i:hat possibility out,
at least for many years. There would remain, however, the
possibility of some sort of indirect and more practicable partnership, through closer ties with France, Spain, and a WesternEuropean bloc linked economically to the pound area. This would
be an arrangement which would have very much to recommend it,
being of more limited scope, and fitting more realistically into
the stratified regional structure which is likely to emerge in
the post-vfar world. The economies of Italy and Spain are actively
competitive in many respects—but could be brought closer together,
within the context of a wider system involving the backing of one
or *iriore first-class economic or financial powers. There is a good
deal of complementarity between the Italian'and tho French economies^-/
l/ Abstraction has been made here from the drawbacks of clearing
""" and bilateral arrangements in general, which have been discussed
in previous memoranda prepared in this Division by Professors
Ellis and Haberlor, Mr. Gorshenkron, and others.
2/ Though France and Italy are competitors in certain lines
""" (wines, silk manufactures and textiles), there is a basic
complementarity between the two economies. France has iron
ores, coal,(if tho S&&r basin reverts to French.control) and
capital. Italy has sufficient manpower. Both countries have
skills and capabilities which could easily and advantageously
be blended together.
- 28 but the traditional jealousies and suspicions, intensified by the
19^0 "stab in the back",JL/ are bound to make extremely difficult a
really intimate "rapproachement", unless attitudes-change rapidly
and unexpectedly. On the other hand# moro limited but far-reaching
arrangements v/ith respect to raw materials, trade and migratory
labor could develop French-Italian relations along mutually profitable lines, especially if those ties should develop within a
wider framework* involving economic collaboration with Britain,
the United States, or—even better—with both.
Trade Prospects v/ith the United StatesTrade relations with the United States are very important for Italy.
In recent years, the United States has been Italy 1 s second largest
supplier of imports (after Germany), and the second or third largest
market for exports. In 1938 # purchases from the United States
constituted 11.9 Ver cent of total Italian imports, and sales to
the United Stutes were 7»5 Ver C0 nt of total Italian exports. On
the other hand, which is inevitable, given the differences in size,
population, and wealth between the two countries, Italian supplies
constitute only a small fraction (1.7 Vor c $nt in 1939) of American
imports, and Italian purchases only a small part (i.9 per cent in
1939) of total American exports.
In the intorwar period, United States imports from Italy reached
their peak in 192? ($108.9 million). Their value declined sharply
during the, Depression, and never revived substantially: the figures
were $38.5 million in 1933, §Ul»k million in 1937, $38.8 million
in 1939.
United States exports to Italy were $203.7 million in 1925, $152.5
million in 1929, U$.i+ million in 1932, ?>77.2 million in 1937,
$58.5 million in 1939.
The deficit in the Italian trade balance with the United States declined from $101.5 million in 1925 to J5»9 million in 1932, <i29.6
million in 1937.and 019.5 million in 1939.
The chief factors which adversely affected American-Italian trade
after 1939 were, in addition of course to the Great Depression, the
Smoot-Hawley Tariff Act of 1930 &n<J, in later years, the fascist
policies of "soIf-sufficiency".
1/
"~
On the other hand, in the fateful days of Kay-June 19^0 hundreds
of thousands of Italian laborers (many of which belonging to the
"migratory" class) residing in France volunteered to fight for
tho Republic.
- 29 This is not the place for a detailed discussion of AmericanItalian trade relations.j/ It will be sufficient to say that
in recent years the Italian export trade in fc*odstuffs to the
United States contracted not only on. account of the higher
tariffs but also because of the diminishing importance of the
demand of Italian-born residents of America and of the growing
production of Italian specialties in the United States. On the
other hand, Italy concentrated its- demand for American imports
on essential raw or semip-roc8ssed commodities, in particular,
raw cqtton, crude petroleum, iron and steel scr£p? and refined
copper•
It can be-expected that after the war Italy will continue to be
highly dependant on American imports (even though there may be a
falling off in the demand for scrap metals and copper), while at
the sarne time Italian exports will face increasing difficulties
on the United Sta'tes market; Thus, unless the yield of the
invisible items is sufficiently high, the »procuretnent of adequate
amounts of dollar exchange will confront Italy with a very acute
problem.
Reciprocal trade agreements, along the lines consistently advocated
by Secretary of State Hull, would certainly be extremely useful in
mitigating those difficulties. Needless to say, adequate shortterm commercial loans will bo necessary to revive Italian-Amorican
trado. A detailed study of thuso two subjects would bo timely and
rewarding.
l/ This has been done in the excellent study of the U.S# Tariff
""" Commission already mentioned.
- 30 -
v.
THE BALANCE OF PAYMENTS
The r o l e of t h e United S t a t e s Whatever t h e n a t u r e of t h e I t a l i a n p o l i t i c a l and economic p o s t war a r r a n g e m e n t s , and no m a t t e r what amount of help t h a t a r e a
could receive through regional or semi-regional agreements, i t
is not to be expected (except of course if Italy is absorbed into
the Soviet system), that Italy can achieve a tolerably balanced
and secure international economic position unless i t is made
possible by i^merican developments.
This is true f i r s t of all in the general sense that American
policies and developments will be paramount in influencing the
world economic picture• I t is true in a more limited but more
direct sense, in connection with the problem of the Italian
balance of payments.
The 1900-1913 pattern*
Italy's balance of payments will be discussed in detail in a later
memorandum, and for this reason we may confine ourselves to a few
brief references to that problem.
The "self-liquidating" process mentioned in sect, 31-32, activated
by both tho import and export trado was, of course, never sufficient
in itself to balance Italy 1 s international accounts. Indeed, a
considerable trade deficit already in 1900-1913 had becomo a
standing feature of I t a l y ' s balance of payments; but i t was offsot by the yield of the "invisible" items, chiefly emigrants1
remittances, tourist trade, freights, and shipping services.
The typical pre-VJorld'"War I configuration can he gauged by the
balance of payments' for 191?* which was as follows:
Debit items
million lire % .of.total
Imports, exports
Interest, dividends
Emigrants remittances
Tourist expenditures
Freights, commissions, etc.
3,6^6
150
_-___
.6
h--,
-
Credit items
million lire %, of total
2,512
70
1+50
1.8
18• 7
12
120
2.5
700
3,852
3,796
65
100.0
Exports of capital;
Re-import of Italian bonds,
other debit items
3,852
Source:
100
Gf. Borgatta - The Italian Balanco of International Payments
p. 3? Recapitulation, of Statistical -Documents submitted hy the
Italian Delegation to the World War Foreign Debt Funding
Committee, 1925*
Thus, the balance on current account was in equilibrium, and
there was even a surplus which was applied to the redemption of
the foreign indebtedness (which, ho^vever, had never been very
considerable).
The interwar patternThe interv/ar period can be divided into two phases. The f i r s t ,
which lasted until 1926-27, was dominated by currency difficulties
arising from the growing exchange depreciation. The export trade
was of course comparatively favored by thx>se developments, but the
rise in import values placed a very great strain on the balance of
payments, which was increased by the declining yield of emigrants*
remittances.
However, the situation was temporarily eafeed by the monetary
stabilisation of 1926-27, and a short-lived but substantial inflow
of -American loans.
- 32 The impact of the &reat Depression inevitably throw the entire
system out of gear. Trade difficulties, became formidable, and
furthermore the yield of the invisible items declined to very
small proportions. When the worst part of the American Depression
was over, the tourist trade revived; but emigrants1 remittances
continued to exhibit a marked downward trond. The general picture
could have improved after 1935-36, but thon the effects of the
"self-sufficiency" policy and of monetary mismanagement made themselves f e l t .
As a r e s u l t , tho balance of payments was consistently unfavorable,
and the gold reserve of the Bank of Italy (built up partly with
the ijnorican loans of 1926-7) dwindled.
I t decreased from 12.1
.billion l i r e (December 31, 1927) to 5-8 billion (end of 193U)•
At tho end of 1936 the l i r a was bel&todly devalued by <L<1, and
tho gold stocks of the central bank wore revalued accordingly.
But the economic demands made by the Abyssinian war, intervention
in Spain and restocking in anticipation of a Viforld War, superimposed on the pre-oxisting trade and economic difficulties, lod to
a continuous drain. The gold stocks fell from l i r e 3*9 billion
("new" l i r e ) at the end of 1936 to 2.7 billion at the end of 1939*
The export of gold and dollar assets was actually much greater, for
the Treasury had built up a secret reserve (believed to have amounted
to approximately 1 billion) out of gold contributions (wedding rings,
etc.) collected during the winter 1935-36• In addition, the Treasury
confiscated a l l Italians-owned holdings of foreign currencies and investments (for an amount of several b i l l i o n s ) , and sold them in later
years to meet I t a l y ' s exchange requirements.
The last official available estimates of tho balance of payments
relate to the years 1928-r32« Calculations for later years have,
however, boon made by Dr. Tomagna and others, and are reproduced
in tho following table:
I t a l y f s Balance of International fayments
Balance of Current Items
(In millions of 1936 l i r e )
Year
Merchandise
Shipping
1927
- 6,716
+ 1,500
+ 3,500
+ 2,500
- 535
+
1935
1936
1937
1938
1939
- 4,475
- 2,879
- 5,904
- 3,010
- 1,500
+ 500
+ 300
+1,000
+ 900
+ 1,100
+1,500
+1,100
+2,500
+ 1,500
+ 1,100
+
+6
+
+
+
-
- 1,666
827
- 1,969
- 112
+ 1fl2k
Tourist
Remittances
900
70
560
550
500
Interests
91
- 125
- 52
- 76
Net Balance 'Gold
249
210
+
+
+
+
+
3,926
810
363
512
935
Year Redemption
1927
- 1,375
1935
1936
1937
1938
1939
-
255
-
2814.
-
269
351*:
320'
Balance of Capital Items
(jn millions of 1936; l i r e )
Omissions
Long-term Short-term
and
Capital
Capifoal
Miscellaneous;. Net Balarice Errors
+ i+,5oo
4* 1 ji/,l7
rf
iiOO
+ 120
+
3,397
- 3.U36
- 800
? 1;,O55
- 500
+ l.ioo-
+
- 1,205
-. 5^6
+
111
100
-
90
- i,36i
152
563
+
1,231
r, .,. 323
- 1,779
+
375
77
280
Ivlilitary Expenditure and the Balance of •laymentsInteresting questions, which would be worth investigating if the
necessary data were available, are the extent to which tHe he&vy
military expenditure of the 1936-ij.Q years' taxed the Italian bala.nce
of payments,, and whether the elimination of defense "expenditure
could, be expected to relieve post-war difficulties f
In the last three pre-war years, military expenditure (together
with, expenditure- in Italian Africa, which was* to a* large extent
semi-military) absorbed over $0% of the Italian public revenue,
as shown from tho following figures:
Total
Expenditure
Government
Defense
Total
Expenditure
in Africa
ExpenditureYear
(millions of lire)
1937-8
1938-9
1939-U0
13,272
15,138
27,866
5,820
19,092
39,859
3,958.
19,096
66,388
7,356
35,222
TThile i t is .easy to appraise the pressure on civilian consumption
brought about by that huge defense expenditure, the effects on the
balance of payments .are much more difficult to estimate.
Some of the import increases that took place after 1935-6 are
clearly imputablo to war preparations• Thus, iron, steel and
scrap imports increased from 378 million l i r e (1935) to 798
(1937), 778 (1938) and 681 million lire (1939). Copper imports
rose from 211 million l i r e (1935) to. 1|79 (1937), 37? (1938) and
356 million l i r e (1939) • The groat increase*'in tho. value of coal
imports (from 1,179 million l i r e in 1935 to l;98l million in 1937,
1,960 in 1938 and 1,835 million in 1939) i s undoubtedly attributable
to a large extent to defense production. The same applies to the
imports of mineral oils (kl9 million lire in 1935, 997 in 1937, 91*4in- 1938 and 867 in 1939), a ^d probably of machinery and parts (i
million lire in 1935, 599 in-1937, 759 in 1938, 717 in 1939)-
Thus, with respect to those five items, the additional strain
placed on the balance of payments between 1935 and 1937-9
was in the order of 2 billion lire per year; namely an amount
more than sufficient, other things being equal, to "wipe out
the whole deficit of the balance.
However, such a conclusion is apt to be very misleading* For
while the fascist defense program involved a considerable increaso in certain classes of imports, this was done at the exponso of other industrial imports, and to a great extent it
substituted war production for the processing for civilian
purposes of foreign materials* It is true that also the imports
of such basic civilian materials as cotton, wool, etc. increased
between 1935 &&& 1937-39* but much less than they would have
done under different conditions; for while the imports of
"defense" materials in those yoars revived to their preDepression level, cotton and wool imports picked up only to the
extent of about one-third of their old level. Moreover, the
imports of fuels (both solid and liquid) would have increased
(though to a much smaller extent) also if civilian instead of
war production had boon increased*
In other words, while the war programs of the fascist government no doubt affected very substantially the.trade balance,
an alternative program of industrial revival, designed to reabsorb unemployment (still very great in 193U-35) anc* expand
civilian production and exports, would have involved an increase
in other items of imports; so that the net effect of defense
expenditure on the balance of payments was actually much
smaller than the figures quoted above might lead one to believe*
However, thero is no question but that armament and *fselfsufficiency" investment, bofore the war, not only affected the
Italian standards of living most unfavorably but increased allround costs and weakened the competitive capacity of the export
industries* In that respect, thoir elimination after the war
will probably produce important, even though chiefly indirect,
effects on the trade balance and the balance of payments*
The future of the "invisible items"What are the long-term post-war prospects of the invisible items?
This is very difficult to say* There,may be a temporary revival
of remittances, stimulated by the abnormal needs of the present
and immediate post~w&r period—but as the ties of former Italian
emigrants to the old country become weaker and weaker, the role
of remittances seems bound to become eventually almost negligible*
V/hether thtf yield of shipping services will return to its pre-war
level, is, of course, unpredictable—for no one can tell whether
Italy will be able to resume permanently its former important role
- 35 in "transatlantic passenger transportation'.,!/' The development
.of air routes which is to be expected after the war is likely
in any case, to have an adverse effect on .that situation, as it
will skin off a, good deal of ,the profitable 'luxury passenger
trade. There remains tourist expenditure, and this should
presumably continue to be of considerable importance, though it
is a factor, subject to fluctuate, very heavily with American
conditions.
All in all, t^ere is little room for optimism about the future of
th©. Italian balance of payments, unless unexpectedly favorable
conditions develop .with .respect to either the export trado or
tourist traffic. One item which can perhaps be expected to improve to some extent tho situation Is remittances from migratory
laborers. It would be mistaken, however, to pin groat hopos on
,.t that factor* True, thoro may bo largo openings for Italian
migratory labor, ,in tho immediate post-war future in connoction
with tho European reconstruction. But in the long run it is
difficult to foresee a permanent expansion ,of Italian migratory
labor much beyond tho already fairly considerable limits of the
pre-war period,
frospects and Difficulties AheadGiven the tremendous destruction and dislocation wrought by the
war, it is impossible to state the problem of the post-war Italian
balance of payments in quantitative terms. All we can do is to
refer to a few typical pre-war situations as "models" of alternative
and possible future equilibrium configurations. Thus, for instance,
we may refer to the situation of 1927, a year of nearly full employment and comparative prosperity, and to that of 1938, when
the state of employment was good but real incono and standards of
living were lower. In 1927, imports r^acjiod tho high.figure of
2Q.3 billion lire, and exports of 15«6 billion lire.2/ Deducting
the trade with colonies, this involved .a deficit on the merchandise
account of 6.7 billion lire, to which another 535 million havo to
bo. h.ddod, on the.debit side, as interests. Thus total outlays on
current account amounted to over, 7*2. billion lire. Almost ono-half
(3*5 billion lire) of that deficit was wiped out by tourist expenditure. Remittances from abroad covered another 2,5 billion lire*
Freights and shipping services gave the high yield of 1.5 billion.
Thus the balance on currant account closed with a surplus of
2i|9 million lire. It is cloar that to restore after the war anything resembling that situation would require not only the
l/ According to some reports (N.Y.Times, July J>1, 19U3), Italy has
lost 2/3 of its pre-wur merchant shipping tonnage and is bolioved
to have little more than 1 million tons left. Many pr.e-wa,r liners
have reportedly boon sunk; during the xyar. The crack liners "Rex"
and "Conte Di S&voia" are in German-hands.
2/ In current 1927 lire. In 193& lire this would be equivalent to
"" Jh^h billion for imports and 26.14. billion for exports.
- 36rehabilitation of Italy's full industrial capacity (at least in
the export field) and the rebuilding of its luxury passenger
fleet, but also the recurrence of all-round very favorable international conditions* It would require in fact not only an
exceptionally high volune of tourist trade, but (in view of the
fact the emigrants1 remittances have almost ceased to be a really
important factor since the Depression) either a high flow of
remittances from migratory laborers, or—which is more plausible,
though also difficult—an increase in the ordor of 2 billion in
1927 liro, equivalent to over 3«5 billion 193& lire, in the export
surplus. For the reasons mentioned in sect, 37, this would hardly
be possible by an improvement in the competitive position through
price cuts, and could only result from the grovdng demand inhering
in a. world expanding economy.
A restoration of the 1932 situation (or something similar) would
bo comparatively easier—-though in absolute terms still difficult.
During that year, imports amounted to 11.2 billion lire, and exports to 10d+ billion.^/ Since, however, the colonies absorbed
2mU billion of "exports11 (against imports for 3^9 million lire),
the actual not trade deficit with the rest of tho world was in
th':; ordor of 3 billion liro. The interest charges transferred
during the year amounted to 52 millions, Tho yield of the invisible
items was 1.5 billion for tourist expenditure, 900 million for
shipping, 550 million for emigrants remittances. The balance closed
with a.small doficit of 112 million liro. Tho 1938 situation differed from that of 1927 in two respects: for, unlike in 1927, there
v/as> still a considerable (if partly disguised) amount of unemployme n t , and because,, as a result of the changes in tho amount and
composition of foreign trade and of the distortion wrought by the
expansion, of comparatively unproductive investment ,for purposes
of "self-sufficiency", standards of living were much lower. However, in comparison with the difficulties which Italy is going to
meet in the first post-war^ years, and possibly for decades to come,
a return to the 193^ situation (with, the necessary corrections inherent to a better pattern of industrial and trade policies) would
constitute a notable step forv/ard. On the assumption of a large
degree of industrial rehabilitation (covering also the shipping
industry), a balancing of. the current international accounts, at
approximately the 193§ level, should not be in the long run an
impossibility, Eve.n if there should be a reduction in the yield
of the shipping services, an increase in tourist expenditure, or
in exports, might take care -of that gap.
But, though a restoration of Italy to a balanced state of international payments is not an impossibility, it would be unwise to
rely-on the truism that in the long, run the balance of payments is
bound to take care of itself. For this is true at a price, namely
•.through, cuts in the domestic real income and standards of living.
•If standards of living are already; very low,, it is most unlikely
that any country/will acquiesce in. tho painful and prolonged process
of readjustment, and will not have >r<3course. to more or less desperate
methods*
1/
Those and the following figures are of course in 193& liro#
- 37 froblems of Transition- Conclusions*
Heedless to say, the restoration of Italy's, international and
domestic position to Anything Approaching the pre-war level will
involve the necessity of* largq capital Imports—under one form
or another—over several years.
?7e have not concerned ourselves in this paper with the formidable
problems of the transition'period. I t ' w i l l bo sufficient, for our
purposes, to envisage the following stages along the hard road of
Italy 1 s economic rehabilitation:
a) a relief stage,, during "which both foodstuffs and essential
consumers1 goods will have to be imported. This i s , of course,
the present state of affairs. Those imports can bo "financed",
at least up to a certain point, by tho dollar and pound exchange
earmarked by the Allied Treasuries against part of the invasion
currency issued in Italy, or by some othor similar device;
b).a rehabilitation stage, involving the restoration of farm
production to a normal level, and some degree of industrial
revival. The question of which industrial activities should
receive priority in tho rehabilitation hinges partly on the
conditions of tho equipment immediately after tho liberation,
and partly on an appraisal of the conflicting claims of
employment-creating v. export-producing industries. Clearly,
those industries which, like the textile one, are important
both in terns of employment and of export trade, should receive
priority.V I t is also likely that their equipment will escapo
wholesale damage and destruction to a greater extent than the
highly concentrated heavy and mechanical industries;
c) an, export rehabilitation stage, in which a concerted drive may
be nade to revive exports to something approximately the pre-war
level. This is going to be a difficult but not impossible task.
For i t would be sufficient to restore the textile and the food
processing industries to something approximating their' pre-war
level to cover almost two-thirds of the road. The comparative
"backwardness" of the Italian foreign trade structure would be
in itself a holp in the circumstances.
A.t which point on the route Italy may be expected to become solvent
and balance i t s payments on current, account, no one can t e l l . Countless factors, most of thorn unknown, will have a bearing on the
situation. Sono principles can, however, be laid down;
a) Italy's economic rehabilitation is bound to be primarily and
essentially a function of Italian effort. Outside assistance
•will help tho Italians to the extent only to which they will
actively and aggressively help themselves.
b) Given a favorable domestic atmosphere, a solectivo measuro of
outside assistance in the sectors where i t can do most good
is an essential prorequisito to the recovery of tho area.
l/
""
Detailed plans for the rehabilitation of the textile industry
have boon prepared by tho Foreign Economic Administration.
-• 3 8 -
c) Once the relief phaso i s over, there is* no roason why foreign
invo-siment in Italy—public, sdmd-public, or private--should
not find reasonable opportunities provided, however, that
i t takes the form of investment rather than loans,jL/ &nd that
a substantial proportion of its- earnings is reinvested in the
area« Given a 20-25 year period of expanding Italian and world
conditions, past history could repeat itself—and Italian investors could be expected to buy. back gradually a large part
of that investment* In other words, investment in J t a l y could
not be self-liquidating in terms of a set schedule of repayments
(as in the case of loans), but i t might conceivably become so,
as a result of domestic capital accumulation, Fnis does not
mean that foreign investment in Italy should entirely forego
the profit-making motive, but that i t should become intimately
enmeshed with domestic investment, and should not attempt to
place a premature strain on the Italian balance of payments*
d) ^he degree to which the Italian export industry will be in a
position to alleviate the acute shortages of certain consumers'
goods (such as textiles), which is oxpected in Europe and other
areas immediately after tho war will play a great part in
accelerating (or, in the opposite case, retarding) the long
range recovery*
e) While Italy has everything to gain frosm a state of affairs of
multilateralism and free trade, i t could hardly stand prolonged ruthless competition in i t s export markets* Should for
instance Lancashire make a deliberate bid for a .restoration of
i t s former supremacy, the Italian textile trade would be hard
h i t ; though there night be some compensation if Japan were
temporarily eliminated as a competitor.
f) In conclusion, Italy 1 s only hope and future seems to lie in a
moderately but steadily expanding world economy, in which i t can
perform useful services--especially helpful to the economy of
comparatively less developed countries—and above a l l reap a
full share of i t s advantages in the field of "semi-luxury"
international economic relations.
I t is not the purpose of this paper to advocate any particular
course or type of policy with respect to- Italy; nor to overemphasize
the importance of that area from the viewpoint of American interests,
The assumptions under which Italy could be expected to restore a
balanced international economic situation, and those which would be
incompatible with such a state of affairs, have been made—it is
hoped—fairly clear* I t has also been pointed out that, in the
event of serious and prolonged international economic difficulties,
Italy is not in a position to rely on "compensatory" devices of i t s
own, and may feel inclined to give up i t s very independence—as
Mussolini did after 1936--rather than undergo an extremely painful
process of economic readjustment. On tho other hand, experience
indicates that in a comparatively free and expanding world economy,
Italy can play i t s role and pay i t s way*
Obviously, from the United States angle, Italy is only part of a
widor problem, which involves the future of American post-war
relations with tho whole of Western and Central Europe and with
tho Near East.
1/ Except with reference to short-term commercial loans.
39
APPENDIX A)
THE POPULATION OF ITALY
Population of I t a l y - 1861-1936
Census
Year
1861
1871
1881
1901
1911
1921
1931
1936
Population
(present)
Density per
square km.
25,017,000
26,801,151+
28,1*59,628
32,1+75,253
314,671,377
36,361,000
1+1,176,671
1+2,918,726
81+.3
90,3
95,9
109,3
117,1
122,1+
13.2,8
138,1+
Density of Population - International Comparisons (1936-37)
Italy
Belgium
France
Netherlands
United Kingdom
Spain
U.S.A.
Japan
138.1+
-273.1
76.1
21+3.3
191* .31+3.1+
16.1+
181.1
per sq, km,
.Population of "Metropolitan" I t a l y ( I t a l y a n d ' I t a l i a n s in.Lybia)
December 31", 1937
December 3 1 , 191+0
December 31, 191+2
1+3,657,107
1+5,010,977
l+5,661+,OOO £ /
1/ Source (unlfess otherwise specified) Anhyario Statistics Italiano,
£ / Source; Popolo d y Italia, January 20, 2.91*3
- ko Birth and Death Rates - Net Rate of Increase in Population
Deaths
Net Increase
Births
I per 1000 inhabitants)
Year
36.8
36.9
38.0
1872-75
1876-80
1881-85
1886-90
1891-95
1896-1900
1901-1905
1906-1910
1911-1915 , ,
1916-1920 1/
1921-1925
1926-1930
1931-1935
30.5
29.4
27.3
27.2
37-5
36.0
34.0
32.7
32.7
31,5
23.0
29.8
26.8
23,8
23.2
1936-1940
25.5
22.9
22.0
21,2
19.7
24.4
17.4
6.3
7.5
10.7
10,3
10,6
ll.l
10.7
11.5
11.7
1.4
16.0
12.4
10.9
l4.l
9.8
13.8
9.4
Emigration to Oversea Countries
Average
rt
t!
tt
ft
tt
tf
To
Canada
To
U.S.A.
1901-05 3.931
1906-10 9.090
1911-15 14.227
1916-20 2.199
1921-25 4.131
1931-35
415
1936-40
278
199.670
266.220
210.940
102.416
45.194
13.244
9,684
To
To
Other
Brazil Argentina Countries Total
40.021
20.652
21.484
3.692
9.705
1.491
1.008
55.702
91.217
51.992
9.918
6.515
309.242
6.434-
11,112
64.497
1.528
505.077
121,247
130.904
28,181
10.729
10.165
5*986
7.377
2.866
2.773
393.694
Repatriation from Oversea Countries
Average
tt
it
tt
tt
tt
tt
From
Canada
From
U.S.A.
From
From
Other
Brazil Argentina Countries Total
89.547
_
i4l .025
131.063
32.078
23.052
15.502
1902-05
1906-10
1911-15
1916-20
1921-25
2.633
43.295
1931-35
1936-40
839
273
109
5t367
1.062
1/ 1915-1918 World War I,
l4.no
U.339
2,213
4TO95
1.211
605
21.929
41.552
48*183
10.643
14.872
9.565
2.806
1.543
.1.993
2.005
660
1.219
2.147
974
136.071
200.072
195.178
46.656
64.320
27.306
9.941
Population Projections for I t a l y , 19U0*1970
19U0
19U5
1950
1955
I960
Total Population
(OOO's omitted) 1+2,200* U5,7OO 1*7,000 1+8,100 U8,900
Source;
1965
1970
U9,U00
1+9,500
F» Notestein and others - The Future Population of Europe and the
Soviet Uijion, p •• 290 •
'
APPENDIX B)
THE NATIONAL INCOME OF ITALY,
Italian national income statistics are rudimentary, and consist only of
rough estimates made, at various periods, by independent individual writers*
However, together with some, pther data, they are sufficient to give a
thumbnail sketch of changes in both money and real income from the beginning
of the present century to World War II.
a) 1900^1915
The earliest known estimate of the national income of Italy was 7 billion
lire for 1893 (Nitti)•
For 1901, a British writer, Bolton King, gave an estimate of 9 billion•
The greatest increase occurred between the turn of the century and the
outbreak of World War I f
Gini computed two independent estimates for 1913# which gave a value of
19^20 billion*
The first consisted in an estimate of the value of the commodities produced
and services rendered by the various classes of Italian population (including payment of interest on the national debtj^l/ as follows:
Agriculture, Pasturage, Forestry, Hunting and Fisheries
Industry
Commerce and Banking
Public Employment and Personal Services
Income from Urban Buildings
Remittances from Emigrants
Income from Government Bonds
Total
7 billion
tf
6
ft
2
Tf
2
tT
1
tf
#5
tf
f5
T97T billion lire
The other procedure also adopted by Gini, consisted in a study of food
budgets from which it appeared that, before 1913* food accounted for about
60 per cent of family expenditure. This would place the total consumption
of commodities for the Italian people, in 1912, at about 17 billion lire.
To this should be added from 2,2 to 2,5 billion of savings--giving a total
of 19#2-19#5 billion liref If indirect taxation were added, the total
would be slightly in excess of 20 billion lire,2/
\J Income from private investment was presumably included under "Industry".
2 / Equivalent to 94-95 billion "lire" at 1 9 2 5 T 3 U prices•
-53 The average income per head of»occupied person was Lire 1^37 in1913,
against 73U ?or 1901. In Mr* Colin Clarke "international Units",' real
income per head of occupied population for Italy was, in 1913$ I4IO'Units*
In terms of a liB-hour week (as; compared with the prevailing 60-hour" week
of the pre-1919 period) re^l income per head was 328 International Units*
Italy»s rise in real income between 1900 and 1913. compared very favorably
with that of the chief industrial countries, as shown from the following
table:
Yfear
i
"~
U»S*A»
*
Britain,
France
(International Unit?)
Germany
Italy
"
19Q0
1161
865
630
618
210
1913
1191
966
629
70l±
, 328
l
b) "The Inter^war Period
National income changes afjter 191& were greatly affected by the war,
money*~and price disturbancest and by the Qreat Depression*
The impact of World War I was naturally very great* The Financial cost
of the war was in the order of 60-65 billion gold lire. Of this, less
than one-third (19*2 billion) was met through American and British loans,
while the balance was^met out of a national income of approximately 20 (gold)
billion lire for each of the war ^nd immediate post-war years* This effort
and the difficulties of the immediate'post*waf years (when the Italianf
currency was "unpegged"!from the dollar and the. Allied loans came to an
end), involved a very considerable strain, and a deterioration in real
income #
After 1923-2i4 the situation however improved materially, and the value of
the national income, in'"old gold" lire, rofed sl6w^y but steadily, from
the 21 billion of 1920-2U to the 23 billion of 1925-26, and reached its
peak of 25 billion in 1927-28 (Mortara)• The values for 1928-29 and
1929^30 were 2k and 23 billion respectively.
In paper lire, the national income was estimated by Gini to amount to a
little over 100 billion'lire for 1925*
Gini made two independent estimates-* The first consisted of the following
computation of the value of commodities produced and services rendered:
Agriculture, Pasturage, Forestry, Hunting and Fisheries
4 4
Industry
Commerce and Bankinjg
Public Employment and Personal Services
Income from Urban Buildings
Income from Government Bonds
Remittances from Emigrants
Total
lire
32 billion
i>
tl
36
IX
it
Tl
11
m
rr
k
h
tt
N
it
n
it
tl
2
00 billion lire
-UkThe alternative method, based on food budgets, gave a total in the order
of Lire 10l;-105 billion, its components being the value of consumption
(97 billion) and the estimated amount of savings (7 to 8 billion) • This
estimate referred to the whole of Italy, including the regions gained
after 1918•
Other estimates, prepared by the staff of the Italian Confederation of
Industrialists, gave for 1925 (but with respect to the "oldft territory
only) lower figures, namely 90 and even 80 billions••
In real terms, it seems that the impoverishment imputable to World War I
was gradually wiped out, and the pre-war situation more than restored*
According to Mr» Colin Clark (who used Ginifs figures), real income per
head, in terms of actual consumption, was in 1$29 slightly in excess of
the 1913 level (U26 International Units against I4.IO) . If the additional
"leisure" gained by the working class as a result of the ZjB-hour week is
considered;- the relation was much more favorable (U26 against 328 Units) •.
Then the Great Depression came, and the ground which had been re-gained
was lost once more. For, taking the period 1925-3U as & whole (which
included five fairly good years and five of depression) the value of real
income per head (including the aforesaid "leisure") was only Jltf International Units * In terms of actual consumption, the situation was probably
worse than in 1913•
National income estimates for the period 1928-1938 are once again of doubtful reliability, but even more so than formerly« Widely varying figures
have been quoted (and none of them supported by an*adequate statistical
basis) for the income of certain years» Gini gave an estimate of 9i|. billion
lire for 1928. Mortara estimated an income of 60 billion for 1931-32 and
6U billion for 1934• For 193&, Cesare Cosciani, after having compared
five different computations made by different writers, produced the
following estimate:
Agriculture, Forestry, etc.
Income from Urban Dwellings
Industry
Commerce
Banking
Public Investment
Private Investment and Services
Public Employment
' Total
2h.h
5
billion lire
ft
ft
25.7
tf
ff
7.2
tt
tt
tt
tt
tf
tt
ft
t!
5»9
3.6
k.3
ft
ft
11.6
' 88.8 billion lire
Agostino degli Espinosa published an estimate of Lire 96.2 billion for
1937* which however overrated considerably, according to all probability,
agricultural income • On the other hand, he gave an estimate of 80 billion
for 1936*
Fear 1938, a figure; ..of/90 ,bilAi9fts;.was.jnentionecjL by. the. present writer
and Mr t Treves, while Mr*. MatzuccJhelli and "Prof f Einaudi went as far
as estimating the national income for that year at 120 b i l l i o n s t The
latter estimate,/probably Lave *• rated t h e ^ f f e c i s on.prices and incomes
of the currency devaluation bf 19?6* Semi-official Italian estimates
for that year mentioned a rahge of 90-100 b i l l i o n *
The picture j is therefore *extrenieljr confusing* However* some clues as to
the meaning ofthe/aforesaid estimates i n Veal" 'terms* arid as to actual
standards ; of 'living fromv 1928 to1 193A* c a n % b ^ obtained *from the following
tables!
I, Changes in National Inccaaej "Wholesale Prices and Cost of Living
Year
1928
1931+
1936
1938
National Iricome
(billio'hs l l r »
"
' ~ i^~
Sk
6U
80—899O*-1OO-»12O
National Income
TMiolesale
Index
Prices
'Cb&set 1928 •'-' 100} ' *
100
'
lOCiiO
6862.0
85—95
76.1+
'9^-^H)6—l27
95.3
Cost of Living
Index'
100
77 ih
83.5
99.12
Sources:' For National Income of"; text'and Bibliographical Note,
indexes, cf. Annuario Statistico Italiano.
For Price
II, Changes in Consumption Per Head of Certain Basic Commodities
(index Numbers'- base; 19^r3) (Qwantiti.es) •
Years
Wheat Fruit and Sugar Wine Coffee Meats Fats Tobacco Corn Fish Milk
Vege tables"
1922-29
1930-38
100
91
Sources:
Dem&ria - op, c i t . - p , 168, and Anfluario S t a t i s t i c o Italiano.
105
88
107
96-1
123
101
96
76
107
105
109
98
99
81
106
109
97
107
121
- 1*6 111 • Annual Changes in Consumption Per Head
(index Numbers - base 1922*»2J) (Quantities)
1928
Wheat
Corn
Potatoes
Dried Beans
Fresh Legumes
Vegetables
Fresh Fruit
Sugar
Wine
Beer
Alcool
Coffee
Meats
Fish (fresh)
Dried Fish
Eggs
Milk
Cheese
Fats
Source:
1929* 1950
1951 1952 1933 1931+ 1955 1936 1937
101.5 103.0 96.9 92.1
102.5 89.3 116.0 128.5
86,7 115.6 105.9 101.5
115.6 100.0 120.5 125.1
105.8 119.2 138.5 158.5
86 jo 90.1 91,5 89.1
111.3 102.5 90.0 95.5
113.0 111.7 106.5 101.5
102,2 151.5 115.6 98.8
81.3 78.1 62.5 50.0
75.0 62,5 5o.o 57.5
100*0 100.0 91.7 91.7
125 £ 120.0 111.2 112.4
103.2 106.5 109.7 112.9
92.9 100.0 71.1+ 85.7
•79.5 H5.5 157.9 95.1
121.3 121.5 121.7 122.4
109.5 111.9 111.9 109.5
96.8 108.0 107.2 82.6
90.7 95.5 87.3
96.8 113.2 99.3
160.1+ 137.7 155.1
138.5 130,8 123.1
li+2.3 150.0 157.7
94.4 85.0 76.6
112.0 106.0 92.4
92.2 88.3 88.3
100.1 116.6 83.6
51.5 28.1 25.0
57,5 25.0 25.0
85.5 75.0 75.0
105.3 108.2 107.6
116.1 119.1+ 1194
78.6 85.7 92.9
144.8 115.5 11+1.1+
123.1 125 #5 125.8
116.7 119.0 119.0
91.2 87.2 85.6
84.5 90.7 92.1+
115.2 90,0
97 a 107 ;5
131+.2
11+1.9
125.6 107.7 112.8
158.5 175-1 207.7
75.9 79.5 78.7
92,7 75.8 85.4
90.9 89.6 100.0
79.1+ 109.3 76.8
25.0 18.8 51.3
25.0 25.0 25 ;0
75.0 56.5 75.0
112.9 110,6 106.5
129.0 152.0 138.7
71.1+ 1+2,9 85.7
108,6 129.5 11+6.6
122.7 117.5 124.9
121.1+ 109.5 123.8
95.6 86.1+ 860+
Annuario S t a t i s t i c o Italiano.
IV4 Nutritive and Calorific Content of Average Diet
for Certain Classes of Consumption, 19^8-1957*
Years
1928
1929
1930
1931
1932
1935
1934
1955
1956
1937
Source:
Fats
(in kgs)
Carbo-hydrates
(in kgs)
43.0
9*8
194,8
44.1
10.0
9.6
9.5
9.6
198.1
Proteins
(in kgs)
42,1
4o ;8
41.6
43.1
4o,i
38.8
39,1
59,2
9.8
9.7
9.7
9,2
9*8
195.7
189,2
186.2
195.2
177.1
175.8
175.7
191*4
Annuario Statistico Italiano,
Calories i^rom itrlne'* beer* and liquor excluded^
Calories 1/
(thousands)
1.220
1.258
1.231
1,161
1.160
1.192
1,109
1.100
1.090
1.070
- k7 c) Conclusions»
In conclusion, so much can be said for changes in real income (both
aggregate and per head) in Italy:
1-
The growth in real income was very great between 1900 and 1913* As
the starting points were extremely low, however, absolute standards
of living were still very modest on the eve of World War I.
2-
World War I caused a certain impoverishment, which however was gradually
eliminated during the period 1923-1925•
3-
During the Depression years, most gains were lost and real income per
head for a while was below the 1913 l©vel»
I4* The quick advance in money income after 1935 wa-s not matched by a
corresponding increase in real income* The latter lagged very considerably behind, as a result of higher prices, the great war expenditure, of "the
compression of consumption resulting from the shift to war and synthetic
production, and of the deterioration in the qualities of the goods
purchased by the public,
BIBLIOGRAPHICAL NOTE.
The following is a summary of the principal sources on the national income
of Italy:
F. Nitti - Economic Journal, 1893# P# 156•
B# King - Journal of the Royal Statistical Society, 1903# P« 218
C. Gini - Lyammontare e la riochezza delle nazioni - Turin, 19li|.?
tf
- Problemi sociologies, del la guerra - Bologna, 1921.
11
- The Wealth axid National Income of Italy - (in Statistical
Documents submitted*lr/ tliePTtalian Delegation To the World War
ere a ^ B T ^ i " J S
9
"
- Artie lui^rrTMetr^n, 1928
G.Mortara - Prospettive" Economiche, 1922 and following years,
ft
"" ^cc^ezzei e Reddito de'lltItalia in confronto con gli Stati
Uiiiti, 1925 ("printed for private circulation) •
J# Stamp - The Wealth and Income of the Chief Powers - Journal of the
Royal Statistical Society, 1919.
Harvey E # Fisk - The Inter-Ally Debts - New York,
C. Clark - Conditions of Economic Progress - London, 19^4-0•
B* Foa and P, Treves - Italian Finance and Investment - in Economica, 1939*
A, degli Espinosa - La ricche2za e il reddito degli Ttaliani in 1936*37
Florence, 1939.
C# Cosciani -* Recenti indagini sul reddito reale degli italiani - Padua, 1939
"Lanfrancus" ^ in Quuderni Italiani, Boston, February
^"I
@FedFRASER