The impact of Fascist economic policies on Italian industry Flashcards
How was M fortunate in terms of when he came to power?
Because he did so just as Italian industry was beginning a boom period
Why was it also beneficial that the economic climate throughout the whole of Europe was improving?
Because many Italian companies were able to sell their products abroad with ease
Give a statistic to prove this
Exports, particularly of cars, textiles and agricultural produce, doubled between 1922-5
What did the regime claim the credit for?
Increasing company profits
How did the regime attempt to win over industrialists early on?
They appointed an economics professor, Alberto de Stefani, as treasury minister
Why did his economic policy reassure industrialists?
Because it was traditional, limiting government spending, which helped prevent inflation
Give an example of him reducing state intervention in industry
The telephone network was taken out of government control and handed back to private companies
What liberal policy was reduced/abandoned to reassure industrialists?
Taxes levies on industries that had made huge profits from government contracts during WWI
Why were industrialists pleased with the Vidoni Palace Pact in 1925?
Because it outlawed socialist and catholic TUs
What did M begin to do after 1925?
Take less notice of business interests
What were two important early examples of this?
The dismissal of de Stefani and the revaluation of the Italian currency
What is revaluation?
Changing the value of a currency compared to another country’s currency
How did the regime try to bring about revaluation?
They tried to increase the value of the lira against other countries’ currencies
What prompted the revaluation?
By 1926 the boom was coming to an end and the lira was falling against other currencies. The exchange rate slipped to around 150 lire to the pound, a rate M found unacceptable
What did this prompt him to announce?
His ‘battle for the lira’
Give a M quote where he announced his ‘battle for the lira’?
‘The fascist regime is ready to make the sacrifices needed, so that our lira, which is itself a symbol of our nation, our wealth, our efforts, our strength, our sacrifices, our tears, our blood, is and will be defended’
What did he do to emphasise his point that a strong, vibrant country should have a strong, vibrant currency?
He tried to set a new exchange rate of 90 lire to the pound in Dec 1927
Why was the 90 lire figure significant?
Because it restored the lira to its value in relation to the pound in Oct 1922, the month when he became PM
Why was the decision positive for M?
Because it increased his prestige with Italians and foreign bankers, who saw the policy as a way of restricting government spending. He had achieved the propaganda victory he desired
Why was the decision negative for M?
It had adverse effects on the Italian economy
List these adverse effects
- Foreign buyers found Italians good nearly twice as expensive, meaning export industries like textiles went into depression
- Unemployment trebled between 1926-8
- Even Fiat, the huge Turin vehicle manufacturer, was exporting fewer cars in the late 1930s than it had done in the early 1920s
Why should the revaluation have benefitted the Italian consumer?
Because imports of foods and other products abroad should have become cheaper
Who were the winners in these economic terms?
Industries such as steel, armaments and shipbuilding
Why?
- They had access to the large supplies of cheap, tariff free imported raw materials that they needed
- These industries would be promoted by the regime
- They made healthy profits from the protected domestic market while export industries were neglected
What did the workers benefit from at the start of the regime?
The economic revival of the early 1920s, falling unemployment and de Stefani’s policies curbing inflation
How were the workers shafted at the start of the regime?
The years of 1925-6 saw the banning of independent TUs and the abolition of the right to strike
What did M claim he was about to do at this time?
Transform the Italian economy
What was he committed to creating by 1926?
A corporate state
What is a corporate state?
M’s model for the economy whereby every industry would be part of a fascist led corporation that would sort out disputes between workers and management and help to organise production, pay and conditions
What would there be within each corporation?
Employers and fascist TUs to represent the workers
What would happen if the employers and fascist TUs could not agree?
They would go to a labour court administered by the new Ministry of Corporations where the dispute would be sorted out quickly and amicably
Why did the regime say that this system would be beneficial?
Because it would see employers and workers cooperating to maximise production for the good of the nation
What would there apparently not be as there was in Britain and France?
There would be no bitter industrial disputes that lead to strikes and class conflict
What could there still be unlike in communist Russia?
A role for businessman whose energy and entrepreneurship would help industries to prosper
How did the fascist TUs get off to a good start?
It appeared as though they might provide a real say for workers in the running of their industries
What soon destroyed these hopes?
Rivalries within the PNF and M’s reluctance to alienate his big business allies
Who was Rossoni?
The head of the fascist TU movement
What did he envisage?
A major role for his unions
Who was he opposed by?
The employers organisation
What did confindustria think?
They disliked all kind of TUs and were determined to ensure that businessmen kept control of their industries
Who acted as the media between the fascist TUs and the employers organisation?
The Ministry of Corporations
Who was the Ministry of Corporations headed up by?
Giuseppe Bottai
Describe Bottai’s attitudes?
He distrusted Rossini, seeing little roles for the unions, and wanted to see corporations dominated by a partnership of employers and technical experts from his own ministry
What did he think this would be the best way of doing?
Maximising industrial production
Why was this state of affairs beneficial for M?
Because all sides turned to him to clarify his vision of what a corporate state should look like
Who side did he come down on in 1927?
Bottai and the confindustria
What task was Bottai charged with?
The task of writing a Labour Charter setting out the rights of workers
How was this charter no threat to employers?
Private ownership of businesses was declared the most efficient way of running an economy. As for worker’s rights, employers might but were not obliged to provide annual paid holidays
What were employers given the right to do under the new charter?
Alter working hours and night shifts without any real consultation
How was Rossoni’s radical influence reduced further in 1928?
His single confederation of fascists TUs was split into six smaller federations and his followers in these federations were removed from their posts
Why was the Ministry of Corporations claiming success by 1929?
Because the corporate state was ushering in a new economic era and had allegedly removed all class conflict in industry
How had the corporate state developed by 1934?
There were 22 corporations covering nearly every area of the economy and with the apparent ability to influence every aspect of industry
Why can the corporate system be called undemocratic?
Workers were unable to choose their own union representatives in their corporation, having fascists nominees foisted upon them
What did these fascist officials tend to do?
Side with employers’ representatives over the key issues of wages and working conditions
What are the only ways the corporations furthered workers’ interests?
On issues such as sick pay and the belated introduction of paid national holidays in 1938
Why was there not parity in terms of how the corporate system treated employers and workers?
Because industrialists were allowed to keep their own non fascist employers’ organisations, and largely ignored the existence of the corporations
What rule allowed employers to maintain their power and independence?
The regulations issued by corporations were only advisory
What can we conclude if we are honest about the corporate revolution?
It never materialised
Explain why the corporate revolution did not really take off?
Conflict between employer and employee was not solved, only suppressed, and the corporations never achieved the pivotal role in the state and the economy that M had envisaged
Why did it not really matter that parliament abolished itself and was replaced by the Chamber of Fasces and Corporations in 1939?
Because parliament had long since lost any meaning and the new chamber was equally unimportant
What was the consequence of the 1929 Wall Street Crash?
It caused a global economic depression that Italy would not escape from
Define the Great Depression
A period of economic stagnation that began in the US and affected all industrialised European countries for most of the 1930s
Give some statistics to show how GDP was impacted
A large number of companies collapsed and car production fell by 50%
Give some statistics to show how employment was affected?
From under half a million in 1928, unemployment had risen to 2 million by 1933
Why were western democratic governments reluctant to intervene and help the private sector?
Because their laissez faire principles showed them it was reckless. It was thought that raising money to help these industries might cause serious government debt
What made the Italian fascist state different here?
It had no such worries
What did it introduce in response to the depression?
Public works schemes, notably the building of motorways and hydroelectric power plants
What effect did these work schemes have?
It put the unemployed back to work
Why was this important?
Because it significantly increased the amount of money in circulation which stimulated demand and created more jobs, creating a virtuous circle
What did the regime make efforts to avoid?
The banking collapse which affected the USA and Germany in particular
Why did Italian banks find themselves in a difficult situation?
They had lent money to industry, but many companies could no longer meet the repayments on their loans. The banks therefore found themselves without enough money to pay their investors
What did the regime do?
Stepped in and bailed out the banks
What did this intervention lead to the creation of in Jan 1933?
The Institute for Industrial Reconstruction (IRI)
What was the role of the IRI?
Many banks had major shareholdings in Italian companies and when these banks were bailed out of their financial troubles, IRI took control of these shares
How was the IRI beneficial for the Italian state?
The Italian state, under the guise of the IRI, thus became the major shareholder and the effective owner of many top Italian companies
What responsibility did it take away from the banks?
They took the responsibility for providing loans for Italian industry
What did the IRI attempt to promote with some success?
The latest managerial techniques
Why was it a worthy sacrifice that the government measures cost the taxpayer loads of money?
It enabled Italy to weather the depression better than its democratic neighbours
What was M delighted to hear his admirers claim about FDR’s New Deal?
That he had copied M’s example when drawing it up
What had M’s economic policies not been designed to do?
Increase the wealth of the country or the ordinary Italian
When did this become apparent?
By the mid 1930s
What happened as M became increasingly preoccupied with foreign policy?
The living standards and the general welfare of the economy suffered
What did he believe was inevitable and must be prepared for?
War, either in Europe or to further his African Empire
What did this lead him to believe?
That the armaments industry must be promoted, and Italy’s economy must become self sufficient. Italy should be an autarky, able to supply itself with all the food and material needed to fight a modern war
What improved M’s resolve that their could be no reliance on foreign imports?
The League of Nations imposed economic sanctions after Italy’s invasion of Ethiopia in 1935 which banned trade with Italy in certain goods such as grain, steel and textiles
How did he encourage the development of heavy industries like steel, chemicals and shipbuilding?
By giving out large government contracts
Give some statistics to show the extent of state control?
It was expanded to the point where 80% of shipbuilding and 50% of steel production was directed by the government
What did the regime allow in order to promote economies of scale?
They allowed major companies to merge into near monopoly organisations
Give some examples of these near monopolies
- Fiat controlled car manufacturing
- Pirelli dominated rubber
- Montecatini dominated chemicals
What took a low priority here as usual?
Exports
What had the Italian economy still not reached by the time Italy entered WWII in 1940?
A state of self sufficiency
What still had to be imported in very large quantities?
Key materials such as oil, coal and iron ore
What was the consequence of this?
Italy was unable to match its enemies’ levels of production and could not even replace it losses in shipping and aircraft
What was the only real consequence of the drive for autarky?
It only succeeded in worsening Italy’s financial difficulties
How did the drive worsen the government’s financial situation?
It was spending huge amounts of money on contracts relating to autarky and the closely related rearmament programme and also had to fund expensive military adventures in Ethiopia and Spain
How did the regime make matters worse by trying to maintain popularity?
Because it made it not want to bring in major tax increases and as a result government expenditure greatly exceeded its income by the late 1930s
What was therefore the only two remedies for these major deficits?
Massive cuts in military expenediture or very significant reductions in living standards
What did M refuse to recognise?
The seriousness of the economic situation
What was the consequence of this?
The problem remained unsolved when Italy entered WWII
What did M claim about his corporate state?
He said that it would end conflict between workers and bosses and workers would no longer be exploited and would gain greater prosperity and increased respect within society
What was the perhaps not so great reason that open conflict between workers and employers did decline?
Because free TUs were banned and strikes were ruled illegal
Why can the corporate state not be seen as bringing about greater prosperity for workers?
Because many industrial workers actually suffered a serious decline in their standards of living
What happened as the economic revival petered out in the late 1920s?
Industry responded with wage cuts
How were some of these wage cuts offset in the 1930s?
By falling prices in the shops
How did this stop in the mid 1930s?
Prices began to rise steeply as M’s drive for autarky pushed up the cost of imported goods
How much did the real wages of Italians fall between 1925-38?
An estimated 10%
What showed the impact of declining incomes?
The falling consumption of meat, fruit and vegetables
How high was unemployment in 1933 despite the public works programmes?
2 million
Why is this figure not that damaging considering the global economic situation?
Because when adjusted for population, this was similar to Britain
Who was far less likely to suffer from unemployment?
The middle class
How can the regime be seen as helping middle class employment?
The number of government employees virtually doubled during the fascist years and these million employees were not made redundant during the depression
What kind of jobs were most of these state employees in?
Traditional ones like teaching
Where did explosive growth take place within the government?
In the new fascist organisations, principally the Ministry for Corporations and the dopolavaro
Why did these middle class workers still suffer from the depression?
They suffered wage cuts in the 1930s
What is the caveat here?
These cuts were less than those suffered by industrial workers
How did M respond to the fact that the regime failed to improve living standards for the majority?
He was not concerned
What did he say in Dec 1930 that reveals this callousness?
‘Fortunately the Italian people were not accustomed to eat much and therefore feel the privation less than others’
What did he say to justify the poor living standards in 1936?
‘We must rid from our minds the idea that what we have called days of prosperity may return. We are probably moving towards a period where humanity will exist on a lower standard of living’
What had M never really been committed to doing?
Raising the living standard of ordinary Italians
What did he see economic hardhsip as being?
By no means a bad thing for his people
What did he think economic hardship would create?
Harder, tougher Italians dismissive of a soft bourgeois lifestyle
