mussolini’s economic policies. economic policies a great country, a great lira. a great country, a...

Mussolini’s Economic policies

Economic policies

• A Great Country, A Great Lira.

• World Slump? Not Here.

• Buy Italian. Italy Can Provide for All Your Needs.

• Italy: Strong at Work, Strong in War.

• The Corporative State, One Prosperous, United Family.

Economic policies:AIMS

• To consolidate the political system

• To make Italy self-sufficient (autarky)

• To provide an economic basis for military might


“I consider the Italian nation to be in a permanent state of war… To live for me means struggle, risk, tenacity… not submitting to fate, not even to… our so-called deficiency in raw materials.”

—Benito Mussolini, Dec. 1925


“Italy can and must attain the maximum economic independence for peace and war. The whole of the Italian economic system must be directed towards this supreme necessity; on which depends the future of the Italian people… The plan of control for Italian economic policy in the coming Fascist era… is determined by one single consideration: that our nation will be called to war.”

—Benito Mussolini, March 1936

Economic policies:The early years

• Economic Improvement:

General European Recovery

Laissez-faire policy favoring Industrialists

Weakening of Trade Unions

Ending of Socialist Threat—Increased Confidence of the Economic Elite


• The Battle of the Lira

• The Battle for Grain

• Battle of the Marshes


• The Battle of the Lira:

Stop Inflation by Fixing Lira to £

Inflation Harmed Middle-Class

Bring Stability to Italy (confirm Fascism)

Show Italians & World Lira & Italy were Mighty Power


• The Battle of the Lira:

Banks Tight Controls on Money Supply

Economy Deflated which value of Lira

Returned Lira to Gold Standard (1927)


• The Battle of the Lira Effects:

Showed Authority of Regime

Harmed Economy by Price of Exports

Hurt Smaller Firms; Often Taken Over by Larger Firms

Helped Industries Dependent on Imports (chemicals & steel)

Serious Deflation

20% Wage Cuts

1936: Forced to Devalue Lira


• The Battle for Grain:

Make Italy Self-Sufficient in Grain

Reduce balance of Trade Deficit

Free Italy “From the Slavery of Foreign Bread”

Make Italy Less Dependent on Imports (War)

Show Italy is a Major Power


• The Battle for Grain:

High Tariffs on Imported Grain

New Marginal Land (expensive to farm)

Govt. Grants to Farmers to Buy Machinery & Fertilizer


• The Battle for Grain Effects:

Cereal Production (expense of other areas of agriculture)

Wheat Imports by 75%, 1925-1935

Raised Cost of Bread & Grain

Decline in Quality of Italian Diet

Protection Benefitted Grain Producers (large landowners)

Cereal Production during War Due to Fertilizer


• The Battle of the Marshes:

Show Dynamic Govt. in Action

Increase Land Available for Cereal Production

Provide More Jobs

Improve Health by Reducing Malaria


• The Battle of the Marshes:

Laws Passed (1923,1928, 1933) on Reclamation & to Extend Previous Reclamation Efforts

Private Landowners Encouraged to Cooperate w/Drainage Programs


• The Battle of the Marshes Effects:

1928-1938: only 80,000 (10,000 sq. meters) hectares reclaimed (minute amount compared to propaganda claims)

Pontine Marshes Drained (near Rome)

¾ Land Reclaimed in North

Ambitious Plans Blocked by Southern Landowners

New Showpiece Towns Created

Bigger Impact in Providing Jobs & Improving Public Health than in Increasing Farming Production

Economic policies:The corporative state

• A Third Way of economic organization

• post-war Europe affected by tensions between capitalism & socialism

• Italy chose The Corporative State:o national interests above sectional interestso all people in economic activity worked together

(employers & workers) for national interesto Mussolini claimed this third way used the

strengths of capitalism & socialism while avoiding their weaknesses


“The corporation in which the various categories of producers, employers and workers are represented… is certainly best fitted to regulate production, not in the interest of any producer but in order to achieve the highest output, which is in the interests of all the producers but above all the national interest.”

—Alfredo Rocco, Minister of Justice & leading Fascist theorist


• The Corporative Principle

• organization consisting of all employer & workers in a specific field of economic activity (i.e steel production)

• self-governing & supposed to discuss all matters of economic activity in their field (i.e. wages, production goals, etc.)

• represented in national govt.


• The Establishment Process

• weaken traditional labor unions: strikes & lockouts made illegal, Ministry of Corporations (conciliate disputes), labor organizations dissolved

• create Corporative State structure:o work as social dutyo private enterprise most efficiento workers’ rights granted (employment, social

insurance & welfare)


• Did it succeed?

“Fascist Corporativism performed the function of a myth to solve the dual problems of class conflict and national economic poverty; in doing so it held the divergent forces within the party and the country together.”

—E. Tannenbaum, Fascism in Italy


• Did it succeed?

“When it came to dealing with the effects of the depression, the corporative system proved totally irrelevant.”

—A. de Grand, Italian Fascism, its Origins and Development


• Did it succeed?

“Corporativism in practice… involved the thinly disguised exploitation and oppression of labor… For the Duce Corporativism was… an apparent social and political experiment useful for bestowing respectability on his regime in the eyes of foreigners; and an elaborate façade behind which corruption and exploitation could floursish.”

—M. Blinkhorn, Mussolini and Fascist Italy


• Did it succeed?

“Corporative theory constituted a not unintelligent reaction to fragmentation of modern society. But its application in Fascist Italy was an elaborate fraud. In this, the Corporative State was a true child of Mussolini: the great poseur brought forth an organization that was a travesty of what it purported to be.”

—A. Cassels, Fascist Italy

Economic policies:The Great Depression

• Impact:

• American investment after 1924-1925—much of money withdrawn from economy

• farmers hit hard because committed to Battle for Grain then prices collapsed

• Unemployment increased to 2,000,000

• wages fell

• GDP declined about 5.4% for Italy (7.1% rest of western Europe)


• What did Mussolini’s govt. do?

• increased govt. intervention in the economy—moved away from laissez-faire

• made claims that the corporative structure of Italy protected citizens from woes of other countries

• did prevent widespread political & social unrest and political turmoil of most other European countries

• Mussolini survived the crisis, unlike most European rulers

• Italy recovered from Depression faster than other countries


• Government Intervention:

• IMI: organization to support banks after a number of bank failures through govt. loans & bonds

• encouraged price-fixing by businesses

• encouraged cartels

• increased public works: land reclamation, roads, electrification



• reduced working day—help share work

• lifted ban on emigration

• extended welfare system: childcare allowances, infant welfare programs

• NO: health insurance (1943); ne extension of pensions; no improvement in unemployment insurance



• Institute for Industrial Reconstruction (IRI), 1933o IRI took control of industrial shares held by banks

& other companies in troubleo IRI reorganized companies to maintain productiono 1937: extended power to take over private firmso 1937: becomes permanent instead of temporaryo like an economic hospital service for failing & sick

businesseso 1939: 75% pig iron production; 45% steel

production; 90% ship building; and, controlled 20% of all industrial production



• 1935– Fascist Italy virtually always at war (Abyssinia, Spanish Civil War, WW II)

• govt. intervention for industries supplying military materiel

• budget deficit (2 billion lira in 1934 to 28 billion lira in 1939)

• taxation to pay for deficits

• Most programs designed to increase power of nation

Economic policies:An assessment

“Overall Italy was more prosperous in 1939 than in 1923. On average, the gross domestic product increased… but this modest increase did not filter through equally to all sections of the Italian population.

The industrialists and great landowners from the north profited most… but the middle classes also gained stability and protections from Socialism… By doubling the number of public employees... his regime was able to offer the more educated member of the middle classes secure jobs in the state service...”

—D. Williamson, Mussolini, from Socialist to Fascist


“Like the monarchy, the Church and the armed forces, big business, both urban and rural, co-operated with the regime when it had to but never committed itself completely and ran its own affairs with very little outside interference… With these giants [Fiat, Pirelli, Bank of Italy] the regime destroyed Italy’s independent labor movement and herded the workers into its own unions. These unions were uniquely Fascist, not company unions and not really state unions either. They were the outstanding example of the way in which the regime pushed millions of people around while merely barking, so to speak, occasionally at the rich and powerful.”

—E. Tannenbaum, Fascism in Italy


“The rhythm of Italian industrial development does not, therefore, seem particularly tied to the Fascist regime… Fascists interventions were part of a longer pattern of periodic public initiatives… Italian Fascism… encouraged spurts of development when it came to power and switched to autarky…

The Italian fascists took charge of a country still dualist in nature, still ripe for the major transformation associated with industrialization. Nevertheless, the Fascists did not succeed in pushing through structural changes outside the regions already on their way to development… The regime enjoyed two growth spurts, 1922-25 and 1935-39; between the two, Fascists suffered from the same stagnation that afflicted all the capitalist economies…”

—C. Maier, In Search of Stability


“

Fascist economic policies had their failures, particularly in agriculture and in the field of wages. But those policies also stimulated important modern industries such as electricity, steel, engineering, chemicals and artificial fibers. Italy’s profile began to resemble that of modern European countries to a greater degree than in the past.”

—S. di Scalia, Italy, From Revolution to Republic


“Under Fascist rule, Italy underwent rapid capitalist development with the electrification of the whole country, the blossoming of the automobile and silk industries, the creation of an up-to-date banking system, the prospering of agriculture… Italy’s rapid progress after World War II.., would have been impossible without the social progress begun during the Fascist period.”

—M. Vajda, The Rise of Fascism in Italy and Germany

mussolini’s economic policies. economic policies a great country, a great lira. a great country, a...

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