Mussolini and the Economy Flashcards
When was de Stefani appointed as finance minister?
1922
What kind of economic policy did de Stefani prefer and what exactly did he introduce to win the support of the industrial elites?
- Little gov interference (laissez-faire economics)
- Reduction of gov spending
- Privatisation of telephone sector
- Taxes on excess war profits reduced/abandoned
- Cartels/Large firms allowed to expand
How successful were de Stefani’s policies and what problems did he encounter along the way?
- From 1921 to 1924 –> manufacturing production improved, achieved budget surplus, exports in textiles, cars + agricultural produce doubles
However: - Agricultural grps unhappy about reduction in tariffs
- Inflation issues
- Pressure on lira in foreign markets
By 1930s, how had Mussolini’s economic focus shifted and why did this happen?
- Focus is rearmament
- Achieving autarky
- This is because he wanted to expand Italian territory
When was de Stefani replaced and what did this change mark?
- Jul 1925
- Transition into more regulated, state-run economy
What was the first example of this change?
- Aug 1926 –> Battle for Lira launched
What was the exchange rate in 1922 and how did this change in 1926?
- 1922 –> 90 lira to British pound
- 1926 –> 150 lira
Why did this number worry Mussolini?
- Risk of inflation (Weimar Germany 1923) particularly impacting middle classes
- Believed strength of lira represented strength of fascist regime
What important statement did Mussolini make to Volpi, when and what action was taken as a result?
- Aug 1926 –> “the fate of the regime is tied to the fate of the lira”
- Dec 1927 –> Lira artificially fixed at 92.46 to British pound
At this point in time what did Fascist propaganda focus on?
- Showing need for revaluation
- Acceptance of wage cuts
What were the economic costs of revaluation and who lost the most as a result of this decision?
- Import tariffs introduced
- Workers’ wages fell more than prices
- Living standards declined
- Export industries eg. car manufacturing suffered the most as foreign buyers’ prices doubled, textile industry went into depression
What were positive consequences of revaluation of the lira, but how did one of these this conflict w/ another one of Mussolini’s aims?
- Imports became cheaper, which benefitted rearmament industries, steel, chemical, which conflicts w/ aim of autarky
- Raised prestige w/ foreign bankers and Italian public
What does the term ‘Corporate State’ actually describe?
Every industry being part of a Fascist-led corporation resolving disputes and improving production
How was the Corporate State formed and what did it begin with?
- After failure of fascist syndicates to balance everyone’s interests (Rocco Law)
- 1926 –> Began w/ setting up of Ministry of Corporations
What was the Ministry of Corporations designed to be?
Mixed union of workers and employers implementing national economic planning serving both their interests
What was drawn up in 1927, by who and what did it promise?
- Charter of Labour
- By Giuseppe Bottai (Head of Ministry of Corporations)
- Promised organisation of economy and guaranteed workers’ rights
Giuseppe Bottai:
- Active in March on Rome
- Supported antisemitic laws
What did the Charter and the Ministry actually do?
- Charter was never followed through
- Ministry did very little but mediate in labour disputes and reduce fascist syndicates’ power
What major change was made in 1928?
- Edmondo Rossoni (head of fascist syndicates) dismissed
- Syndicates split into 6 parts representing main areas of economy mirrored by 6 employers’ confederations representing same grps
Edmondo Rossoni:
- Began as socialist
- Held syndicalist views as a result
What was founded in Mar 1930 and what was this designed to do?
- National Council of Corporations
- Consultative body of employer and worker organisations representing 7 large sectors of economy
What law was passed in 1934 that made the system fully operational and what did these corporations have the power to do?
- Law implementing mixed corporations representing 22 major economic sectors
Powers: - Fix prices of goods and rates of service
- Settle industrial disputes
- Regulate apprenticeships
- Advise gov on economic issues
Although this system appears effective, how was it flawed?
- Only one side was actually represented in meetings, as workers were represented by Fascist officials approved by Mussolini (Minister of Corporations)
- Any plans put forward by corporations had to be approved by National Council of Corporations, headed by Mussolini , who decided whether it would become the law
- Mussolini controlled everything
As a result, in reality, what was the purpose of the Corporate State and how did it effectively achieve this?
- Propaganda
- Catholic social teachings were implemented
- Mussolini had overcome class conflict issues and found a third way between capitalism and communism
Overall, how successful was the Corporate State?
Failures:
- By end of 1920s –> Only one corporation created
- Took until 1934 to cover all areas of economy
- Only in 1938 were paid holidays introduced
- Workers were not truly represented
- Leading industrialists ignored corporations
What did the National Council of Corporations become in 1935?
Central Corporative Committee
What was the impact of the Depression on the Italian economy?
- Stocks and shares declined by more than 35%
- Manufacturing down by 14% between 1931 and 1932 compared to 1929
- Unemployment rose from around 300,000 to more than 1 mil
- Balance of payments deficit increased
What economic policies did Mussolini introduce during the Depression?
- Nov 1930 –> Wages cut by around 12%
- Price fixing and cartelisation encouraged
- Mergers were common (sometimes compulsory)
- Public work schemes eg. railway electrification, road building
- Welfare increased
- Ensured major banks that had loaned to Italian businesses were protected from collapse through IMI policy
- Bought up shares in banking, industry and commerce
- Provided education on new management techniques + financial assistance to support growth of newly state-owned businesses
Give one stat to show increased welfare spending:
Between 1930 and 40, percentage of all state and local tax receipts increased from 6.9% to 20.6%
Cartelisation:
- Fascist gov assists large companies to take over smaller ones
- Less competition so less chance of small businesses closing
What are the negatives of cartelisation?
Less innovation and competition result in continuous high prices for Italian public
When was cartelisation made compulsory and under what condition ?
- Jun 1932
- Under the condition where a significant majority in a sector wanted it
Why were mergers used?
- Ensured employment levels stayed fairly stable
- Fewer businesses would be forced to close
How did public work scheme help the economy and give one stat to show the increased production
- Provided employment
- Between 1929 and 1933 –> Gov funding of road building doubled, 5000 km of railway electrified
What was the IMI policy and when was it set up?
- 1931
- Policy that provided credit to banks
How did the gov buy up shares in these industries, how did this help the economy and what did they do with the shares once the companies were in a healthy state?
- Through IRI scheme set up in 1933
- Ensured these companies would not collapse
- Sold them to private ownership
What other things did the IRI scheme do?
- Lent money
- Helped develop more effective management
- Took control of some private firms if they were important for autarky or imperialist goals of gov
What was one negative of the IMI and IRI scheme?
Banking system was basically state-owned at this point
What was set up in 1934 and for what purpose?
- Institute for Foreign Exchange (IFE)
- Monopolise and regulate foreign exchange and currency trading to maintain lira’s value
When was the policy of autarky formally announced?
1936
When was the High Commission on Autarky introduced and what was its purpose?
- 1937
- Supervise autarkic policies
Which two battles were significant for the aim of autarky?
- Battle for Births
- Battle for Grain
What two purposes did these battles serve?
- Modernise the economy
- Tranform society
Why did Mussolini want autarky so much?
- General decline in overseas trade due to overvalued lira and Depression
- Sanctions were placed on Italy in 1936 in response to militaristic actions in Africa
- Prep for war
What other measures were taken to implement autarky w/ examples?
- Increased control on currency
- Quotas on foreign imports
- Import substitutes produced eg. lanital (wool), rayon (cotton), new mineral sources
- Searches for new energy sources to avoid importing eg. AGIP state agency explored for gas in Albania
How did Mussolini strengthen their control of foreign currency and boost Italy’s exports, when did this happen and why was it done?
- Oct 1936 –> Revalued lira
- Become more self-sufficient by relying less on imports
The production of what kind of good became less of a priority, why and how did this help autarky and rearmament?
- Consumer goods
- Focus was on autarky
- Decreased demand for imports
- More finance available to invest in military developement
How was trade conducted and how was this method helpful for autarky?
- Bilateral agreements
- Ensured value of imports = value of exports, so that Italy could control its imports w/out having to use foreign currency
What kinds of products were stockpiled and why was this done?
- Agricultural products like cereals and wool
- Raw materials
- To boost stocks and guarantee supply at regular prices
How did government spending on autarkic measures and heavy industry change between 1934 and 1938?
30 to 60 bil lire
When was the Battle for Grain announced,what was it a response to and what was its aim?
- Jul 1925
- Response to substantial growth in grain imports and their international price
- Make Italy self-sufficient in grain
What was the approach to making Italy autarkic in grain?(7)
- High wheat tariffs brought in, which were increased in 1928 and 29
- Propaganda to free Italy from ‘slavery of foreign bread’
- Annual wheat growing competitions
- Gov grants given to subsidise wheat and cereal production
- Educated growers on modern farming techniques
- Provided fertilisers, farm machinery eg. tractors & more resistant seeds
- Marginal land farmed to bring more land into production
How much did wheat production rise from and to between 1925 and 1935?
5.9 mil to 7.27 mil
In northern and central Italy how much did grain production rise by in comparison to 1914?
50%
In what way was Battle for Grain unsuccessful?
- Domestic production of raw materials only met 1/5 of Italy’s needs –> raw materials are very expensive
- Italy unable to join WW2 when it broke out due to lack of raw materials
- Production of some export crops eg. olives did not match the same progress –> farmers removed them for gov incentives from wheat production
- Unprioritised industries suffered eg. textiles
- Animal fodder prices rose resulting in livestock numbers falling by 500,000 by end of 1927
- Not self-sufficient in fertilisers, which were necessary for high yields
- Imports of foodstuffs (besides wheat) increased –> by 1933, 500 mil tonnes of foreign food imports
- Prices rose
- Meat and egg production fell
- Living standards and quality of diet declined
- Subsidies allowed inefficient farms to survive in south
Why did the quality of diet decline?
Cattle and sheep production was reduced
How much extra did Italians have to pay every yr in food costs?
400 lira
When was the Battle for Births announced and what was the aim?
- May 1927
- To have a pop of 60 mil by 1950 from their current 40 mil and low birth rate
Why was a large population important to Mussolini?
- Need to be able to compete w/ other world powers
- Populate its overseas empire
- Creates more competition for employment, which would keep wages and labour costs low
- Increases number of consumers
- Improved quality of pop
- Improves relationship w/ RCC
How would Mussolini’s aims for a bigger population improve his relationship w/ RCC?
A woman w/ sole aim of having as many children as possible fits very closely w/ Catholic values
What town was referred to as an example for the rest of the population and why?
- Basilicata
- High birth rate
In 1927, how had gov attempted to discourage women from working and how did this backfire?
- Lowering their wages
- More appealing to hire
What rewards were granted for families w/ large numbers of children?
- Tax reductions
- Loans offeered w/ part of it cancelled after every child up to 6, when loan is cancelled completely
Mothers: - Prizes for mothers
- Health provision for them and their children improved
Fathers: - From 1928 –> Tax concessions if they had 7 children or more
- Better career opportunities
What happened if you were a bachelor during this time?
They had the bachelor’s tax, which took more of a financial burden (especially for men between 35 and 50)
What happened to birth control and what was introduced in 1933?
- All forms of birth control banned
- 1933 –> Quota introduced to limit women’s employment to 10% of workforce. Later extended to medium and large private firms
What was the marriage and birth rate like after this?
Both marriage and birth rate fell
In 1936, what percentage of industrial workforce did women make up and how did this compare to 1921?
- 33%
- Only declined by 3% since 1921
What was the aim of the Battle for Land?
The ruralisation of Italy
Why did Mussolini want to ruralise Italy and around what time did he announce this battle?
- Believed the decline in birth rate was due to urbanisation and a loss of traditional values that had to be restored
- Around Battle of Births
What was launched to encourage peasants to stay in the rural areas and what was this called?
Bonifica integrale = massive land reclamation and improvement scheme
What campaign was launched in what year?
- Empty the cities
- 1928
- Prevented internal migration from rural areas to cities
What law was passed in 1928 and what did it say?
- The Mussolini Law of 1928
- Promised huge sums of money towards land reclamation
What things were done to produce more fertile land for farming, how much land did the gov claim this would be carried out on and on what basis would peasants be chosen for it?
- Marsh draining projects
- Irrigation
- Road building
- House building
- Aqueduct construction
- Around 475 mil hectares
- Carefully selected for their working and childbearing qualities
Was land reclamation compulsory or optional?
- Compulsory
- Land would be confiscated if you refused
Give two examples of regions where the policy was a big success and state why
- Campagna
- The Pontine Marshes –> enabled patchwork of farms to be established
- Main barrier for these places was drainage so irrigation was very effective
What other benefits did land reclamation have?
- Reduced unemployment –> unemployed worked in order to reclaim land
- Health benefits –> number of malaria cases halved as irrigation got rid of the mosquitoes that carried it
In other regions, how was the policy a failure?
- 1934 –> Gov claimed reclamation either complete/under way on 4.75 mil hectares
- Half of this land untouched, other half reclaimed under previous govs
- Scheme was badly administered –> 4 bil lire given to consortia of landowners over 10 yrs w/ little oversight of whether it was being used correctly
- Compulsory purchase powers hardly used
- Number of resettled families very small (less than 10,000)
- Real wages of farmers fell by more than 50% between 1926 and 34
- Over half a mil left countryside for towns under the dictatorship
For the first time in Italy’s history, more than what percentage of pop was uninvolved in the agricultural industry?
More than 50%
How many landless peasants were actually given land through the scheme?
Only 10,000
What was the consequence of spending so heavily on schemes?
- Budget deficit grew
- Foreign reserves depleted
How did the gov attempt to solve this problem?
- Raised taxes
- Forced 5% loan on value of housing to be paid
How many direct taxes were introduced on property, capital and shareholdings between 1935 and 39?
4
