Response to the Depression

Question 1

successful ?

Answer 1

Quite successful in shielding Italy from full impact of worldwide economic downturn

Question 2

November 1930

Answer 2

Government cut workers’ wages by 12%, encouraged price fixing and cartelisation
Mergers were common, some were compulsory; ensured employment levels stayed stable as fewer businesses were forced to close

Question 3

public works schemes

Answer 3

Large public work schemes (road building, house construction and electrification of railways) provided employment
government funding for roads doubled 1929-33
5000km of railway electrified

Question 4

welfare

Answer 4

Welfare increased to ease difficulties of workers who couldn’t find work

Question 5

banking

Answer 5

government ensured major banks that loaned millions of lire to Italian businesses protected from possible collapse through Instituto Mobiliare Italiano (IMI) policy
provided credit to banks to guarantee they could not collapse

Question 6

IRI

Answer 6

Instituto di Ricostruzione Industriale (IRI) scheme
government bought up shares in banking, industry and commerce to help prop up Italian economy and ensure these companies did not go bankrupt and collapse
provided education on new management techniques and gave financial and technical assistance to support growth of Italian industries which were now state owned
Once companies were in a healthy state, they sold shares back to private ownership

Question 7

1939

Answer 7

Government owned majority of companies on steelworks, shipbuilding, electricity, machine tool construction and telephone industries

Question 8

IRI and IMI

Answer 8

government intervention guaranteed financial support for banks and key employment industries; successful in maintaining public confidence in economy that helped sustain Italy through Great Depression

Question 9

long term consequences

Answer 9

IRI successful in ensuring bank stability and employment by sustaining failing businesses
public works schemes in roads and hydro-electricity provided jobs
considerable industrial development in 1939 compared to 1922

Question 10

expenses

Answer 10

1936: Italian state owned larger % of industry than any country except Soviet Union
Budget deficit grew, foreign reserves depleted
Increased welfare spending during depression, spending 6.9% (1930) to 20.6% (1940)
Taxes raised and ‘forced loan’ of 5% on value of housing to be paid
Cartelisation and IRI maintained jobs but restricted innovation and rationalisation of economy kept prices high