Vilfredo Pareto: An Intellectual Biography: From Science To Liberty (1848-1891)

VILFREDO PARETO:
AN INTELLECTUAL BIOGRAPHY
VOLUME I
FROM SCIENCE TO LIBERTY (1848–1891)
Fiorenzo Mornati
PALGRAVE STUDIES IN THE

HISTORY OF ECONOMIC THOUGHT
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Fiorenzo Mornati
Vilfredo Pareto:
An Intellectual
Biography Volume I
From Science to Liberty (1848–1891)
Translated by Paul Wilson
Fiorenzo Mornati
Dipto di Econ e Statistica
University of Turin
Torino, Italy
Translated by Paul Wilson
Milan, Italy
Palgrave Studies in the History of Economic Thought

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Acknowledgements
I would like to express my gratitude for the ongoing support and friend-
ship provided by the following (in alphabetical order): Pascal Bridel,
Giovanni Busino, Roberto Marchionatti, Alberto Zanni. I would also like
to express my appreciation for the valuable and patient archive assistance
received from the following individuals: Banca Popolare di Sondrio, pro-
prietors of the Vilfredo Pareto archive held at the Luigi Credaro library in
Sondrio; Piercarlo Della Ferrera, director of the archive; the Ansaldo
Foundation in Genoa, owner of the minutes of the Società delle Ferriere
Italiane; Simone Fagioli, director of the Turri collection in Pistoia; Stefania
Andreini, archivist of the municipality of San Giovanni Valdarno; Massimo
Baucia, head of the historical archive at the Passerini-Landi library in
Piacenza; Paola Novaria, head of the historical archive at the University of
Turin; Margherita Bongiovanni, head of the historical archive at the
Polytechnic of Turin; Paul Wilson, translator of the original text.
v
Contents
1 Introduction 1
2 An Outline of the Life of Raffaele Pareto 15
3 Vilfredo’s School and University Education 31
4 Twenty Years in Industry Management 51
5 A Multifaceted Liberalism and a Positive Methodology 127
6 Political Activism 161
7 Amateur Publications 187
Epilogue 241
Index 245
vii
List of Tables
Table 4.1 Annual results for the Società per l’Industria del Ferro 54
Table 4.2 Estimated average annual employment for the Società
per l’Industria del Ferro 63
Table 4.3 Net final balance sheet figures for the Società delle
Ferriere Italiane 65
Table 4.4 Estimated average annual employment at the Società
delle Ferriere Italiane 66
Table 4.5 Variation of San Giovanni’s percentage share of the total
production of the developing Italian iron industry 67
Table 4.6 Yields from speculation in warrants 69
Table 4.7 Italian imports of pig iron 101
Table 4.8 Italian imports of scrap 102
Table 4.9 Italian imports of finished iron products (in hundredweight) 102
Table 6.1 Overall results of the general election of 29 October 1882 in
the constituency of Prato, Pistoia, San Marcello Pistoiese 169
Table 6.2 Results obtained by Pareto in the general election of 29
October 1882 in the constituency of Prato, Pistoia, San
Marcello Pistoiese 170
ix
1
Introduction
Nowadays, for economists, as well as for the majority of historians of

economic thought, the name Vilfredo Pareto evokes only the notion of
the Paretian optimum and, conceivably, his law on the distribution of
income. Such a condensation, while not completely off the mark, is
decidedly uncharitable with regard to one of the last scholars who
attempted, in the typically nineteenth-century manner, to examine social
phenomena from differing economic, sociological and political stand-
points. As Pareto did not spend all his life as an academic, we subscribe
to the view that to gain an understanding of his complex scientific output
requires not only a patient and detailed exegesis of this output itself but
also its meticulous contextualisation within the framework of the sub-
ject’s intellectual biography.
The 75 years of his life stretching from the second half of the nine-
teenth century to the 1920s were a period marked by social, economic
and political changes, not only on a European scale but worldwide, and
this, together with the voluminous writings which fill the 32 volumes of
his complete works, in themselves justify the publication of a very exten-
sive intellectual biography. The additional fact that his life and works
continue to be very little known, and not only among an Anglo-Saxon
readership, also warrants a detailed treatment.
© The Author(s) 2018 1

F. Mornati, Vilfredo Pareto: An Intellectual Biography Volume I, Palgrave Studies in the
History of Economic Thought, https://doi.org/10.1007/978-3-319-92549-3_1
2 F. Mornati
The organisation of the results of this wide-ranging research into three

volumes is in turn justified by the fact the Pareto’s intellectual life story
can be meaningfully thus divided. It also offers the advantage of not
imposing on our kind readership an excessive effort of concentration,
especially for those readers who are less familiar with an inductive
approach, where greater emphasis is placed on detail of analysis than on
interpretation.
The first volume deals with a part of Pareto’s intellectual biography
which is unknown to the wider public and is familiar even to the small
group of specialists only on the basis of a limited number of episodes. This
relates to the period of over 40 years which Pareto, having completed his
academic groundwork, spent at the helm of an ironworks in Tuscany
which constituted one of the first major Italian industrial concerns. From
the intellectual point of view this was a phase during which Pareto gradu-
ally relinquished his youthful enthusiasm for science as a panacea for all
social ills, to be replaced by a liberal ideology in the widest sense, that is,
covering the political, economic and broadly philosophical arenas.
This volume opens with a section devoted to Raffaele, Pareto’s father. A
younger son of a Genoese family of nobles, he was, as was common in
aristocratic Italian families of the time, destined for a military career. This
prospect, however, came to a sudden end following his involvement in a
revolt by the army of the Kingdom of Sardinia. Raffaele went into exile in
France where he remained for over 20 years (from 1833 to 1854), marry-
ing a Frenchwoman (who bore him two daughters as well as Vilfredo) and
putting to use the mathematical and engineering skills he had acquired at
the Academy of the Corps of Engineers in Turin. Back in Italy, after a
brief period engaged in teaching and in technical journalism, he embarked
on a long career in the civil service as a hydraulic engineer, dying in 1882
after taking personal charge of Vilfredo’s early education and orienting
him decisively towards mathematical and engineering studies.
The volume continues with a painstaking and groundbreaking exami-
nation of Vilfredo’s school and university education, starting from a
detailed reconstruction of the curriculum he followed at Technical
College in Casale Monferrato and in Turin, and later at the faculty of
mathematics and at the School of Specialisation for Engineers in Turin.
Thereafter, making reference once again to unpublished documentation,
Introduction 3
the content of two among the courses he attended, the courses in calculus
and in theoretical mechanics, is examined. Thus, we obtain, at last, a
picture of the origin of the two logical tools most used by Pareto in his
later scientific career, that is, calculus and the concept of equilibrium.
The best-known aspect of Pareto’s life prior to his departure for
Lausanne has hitherto been the two decades spent in the management of
a major metallurgical group in Tuscany, one of the prime operators in the
nascent Italian iron industry. Drawing on the masterly work on this sub-
ject published 40 years ago by Giovanni Busino and on a painstaking
review of extant original documentation, including the minutes of the
board of directors and, in particular, his ample unpublished correspon-
dence, this period is reconstructed with the novelty of an in-depth focus
on the twin themes of Pareto’s application of the expertise he had freshly
acquired at university and his hands-on experience of the operations of a
complex industrial concern. After touching on the short-lived and tem-
pestuous period he spent working for a railway company, a detailed
account is given of his eight intense years in the management of the iron-
works at San Giovanni Valdarno, a locality on the Florence-Arezzo rail-
way line. Here Pareto’s stance of constructive criticism in relation to the
economic fundamentals of the company under his management is
described, together with his attempts to resuscitate the business through
technological improvements and through an aggressive commercial strat-
egy, as well as his complex but caring relations with the workforce, which
help to explain his later disenchantment with humanitarian ideas.
Thereafter, the following decade he spent as General Manager of the
group, which was owned by a merchant bank and of which San Giovanni
continued to be the flagship, is reconstructed in similar detail. Having
described the ongoing problems of profitability affecting the business, a
thorough account is given of the interesting continuing debate within the
company, including Pareto’s frequently contentious contributions, on the
reasons for this poor performance and on the disastrous financial specula-
tion which brought an end to his managerial career, regarding which
many details remain in need of clarification. Against this background, the
technological and organisational set-up of the San Giovanni ironworks in
the 1880s (with Pareto still keenly involved) is described, together with
the parallel problems experienced by the other plants in the group. Space
4 F. Mornati
is also dedicated to Pareto’s failed attempts to find the ideal location for
the plants by transferring them either to Torre Annunziata near Naples,
which offered the prospect of lower transport costs for raw materials, or
to the outskirts of Milan where they would enjoy lower costs for the
transport of finished products to the city which was then becoming the
most important Italian market for iron. We then turn to the strategies
adopted by Pareto for the purchase of the disused railway line rails which
constituted the principal raw material used by the ironworks and to the
complex and shifting alliances he established with some of the main
rivals, as well as to a rather unprofitable venture on the island of Elba,
which was Italy’s only major source of iron. Also dealt with are Pareto’s
attempts to obtain more favourable railway tariffs, which he clearly pre-
ferred to the Italian government’s policy of customs protectionism.
We then accompany Pareto through the many intellectual pursuits in
which he engaged during this period, all characterised by his precocious
liberal intellectual outlook. Here we base ourselves on a dedicated new
examination of his publications and of his correspondence. This investiga-
tion begins by expanding on his political liberalism, explicitly drawing
inspiration from the ideas of John Stuart Mill but also, apart from a brief
but intense period of activism in favour of a proportional electoral system,
with further adjuncts in favour of religious freedom and of the emancipa-
tion of women. This is followed by an acknowledgement of his original
economic liberalism which was of an avowedly ideological nature, even if
it was further sustained by the disastrous consequences, as had been amply
demonstrated in the course of economic history, of state interference in
the economy. Lastly, we will underline his enduring interest in method-
ological issues, which had already manifested itself during his university
years and where he fully subscribed to Mill’s positivistic stance, comple-
mented by elements borrowed from the Franco-Belgian free-trade econo-
mist Gustave de Molinari to whom Pareto remained very close, also on a
personal level, between the late 1880s and the mid-1890s.
A further aspect of Pareto’s intellectual development prior to his depar-
ture for Lausanne, hitherto acknowledged only in a very superficial and
indirect manner, consists in his political activism. This is covered starting
out from a detailed reconstruction of the electoral campaign leading to
his ill-starred candidacy in the elections of October 1882, the first to be
held under the new proportional system with a more extended electorate.
Introduction 5
His defeat, although initially accepted with stoicism, convinced Pareto

never to repeat the experience and certainly contributed to the deep aver-
sion for politicians which underlay his later sweeping analyses of political
events. This is followed by an account of his activities with the municipal
council of San Giovanni Valdarno, of his incipient distaste for Italian
colonialism and also of his progressive but short-lived attraction for the
Radical Party, on the extreme parliamentary left, after ten years of loyalty
to the conservative liberalism of Florentine political circles.
The volume concludes once again with a detailed and instructive anal-
ysis of the amateur but incisive writings which Pareto published during
this period, and which often took their cue from the political debates
which he followed with such lively interest. Thus we present his thoughts,
emerging not only from his ideological position but also from his profes-
sional experience, in regard to the government’s proposed nationalisation
of the railways in the mid-1870s. Pareto was against this idea, especially
as regards the bureaucratic management of the lines, using arguments
which he raises into a sort of general theory of the state’s business incom-
petence. This is followed by descriptions of his novel economic analysis
of the measures proposed in the 1880s in support of the working popula-
tion and of his thoughts on the burden of taxation, public expenditure
and birth control. This is followed by an investigation of the analytical
grounds for his opposition to the customs barriers erected by Italy in
1887 and to the abolition of the fiat money which was decreed in 1883.
Lastly, we come to a systematic review of his early ideas on socialism, on
economic theory, on sociology and on political science.
The second and third volumes will deal with the last 30 years of Pareto’s
life, showing, based on the broadest possible documentation and in the
necessary wealth of analytical detail, his progressive and irreversible dedi-
cation to his scientific activities.
The second volume will focus on the relatively brief but intense period
of eight years which saw his transformation from an ex-manager of iron-
works in Italy into a university professor in Lausanne. We emphasise that,
contrary to a widespread teleological perception of Pareto’s intellectual
biography, here the element of chance played a role. However, certain of
Pareto’s qualities, such as his tenacity, his wide-ranging and adaptable
scientific skills and the fact of being a mother-tongue speaker of French,
proved decisive.
6 F. Mornati
The volume opens with a chapter reconstructing as accurately as pos-

sible the event that permitted Pareto to leave his past as a disgraced man-
ager behind him and to look towards new employment. This was the
invitation from the University of Lausanne, with the approval of the local
administration, to replace, from the spring of 1893, the French econo-
mist Léon Walras, who, in the course of 20 years, had developed a novel
mathematically based approach to economics together with a revolution-
ary general theory of economic equilibrium, which had brought a certain
international renown to himself and to the university. Pareto’s summons
to Lausanne was largely, but not decisively, prompted by Walras himself,
who, although Pareto had not been his first choice, had been favourably
impressed by Pareto’s early studies in mathematical economics and by his
perfect command of French. Thanks also to positive feedback on the part
of the students, Pareto was rapidly elevated to the chair, steadily continu-
ing the teaching activities from which his first major work, the Cours
d’économie politique, emerged, until 1898, when, having come into a
large inheritance from an uncle, he decided to retire in order to dedicate
himself to his studies of sociology. This marked the beginning of an amply
documented ten-year period of difficult relations with the university,
which, not wishing to lose its new and already prestigious professor,
agreed to all Pareto’s various requests for preferential teaching conditions,
which were also motivated by his increasingly precarious state of health.
The organisational set-up of the university during Pareto’s time, often
neglected, is here reconstructed in some detail. His involvement came to
an end in 1909, with his duties being taken over by two of his protégés,
the Italian Pasquale Boninsegni for political economy and Maurice
Millioud of Lausanne for sociology, his relations with both of whom were
to deteriorate rapidly. Our coverage will conclude with a particularly
detailed and in part innovative description of Pareto’s didactic activities
in Lausanne and of the very important role he played in the organisa-
tional innovations the university decided to adopt in this period with
regard to the social science disciplines, culminating in the creation of the
School of Social Sciences in 1902.
As in the preceding period, Pareto’s scientific ideas continued very often
to take their cue from his observation of the political scene in Italy, and
henceforth also in Switzerland. Thus, we provide a broad and in-depth
Introduction 7
account of Pareto’s views on the ongoing economic crisis in Italy (which

he attributed to the protectionist measures introduced in 1887) and of his
interpretations of the various economic, customs, monetary and banking
issues faced by Italy in the sphere of economy during this period. Further
detailed information, which has hitherto been largely ignored, is then
provided concerning his enduring sympathy for the pacifist and anti-
colonialist causes as well as the motivation for his continuing focus on the
parties of Italy’s contemporary extreme left, that is, the radicals, the repub-
licans and the socialists. We then turn to his increasingly disillusioned
comments regarding the prospects for liberalism, particularly in Italy and
in Switzerland, where he had for a period identified its last stronghold.
Lastly, we will dwell briefly on the self-help organisations which Pareto
had actively frequented towards the end of his time in Florence and after
his arrival in Lausanne, whose affirmative philosophy of mutual solidarity
he had viewed for a while as representing the harbingers of the future of
the liberal outlook.
Against the broad intellectual canvas we have thus far painstakingly
described, making use of unpublished documentation together with an
innovative systematic interpretation of Pareto’s writings prior to his
departure for Lausanne, we will at last be in a position to examine the
development of his economic thinking, which in this period was going
through its first highly intense phase. Here we will attempt to give the
most rigorous descriptions possible of all its numerous facets, making use
as necessary of mathematical demonstrations, but also, and most impor-
tantly, attempting to render his ideas in a clear manner accessible to read-
ers from all types of academic background.
We will set out from the conception of pure economics which is at the
root of all Pareto’s economic theory. After reviewing the methodological
positions he adopted at various times, in which he consistently under-
lined the need for both premises and conclusions of scientific reasoning
to conform to the real world, we pass on to his statistical approximation
of the concept of the final degree of utility which he used as the basis for
an analytical extrapolation of the laws both of supply and of demand. The
fundamental theory of economic equilibrium is then explored from the
viewpoint of pure economics, both in Walras’ version relating to exchange,
production and capitalisation and in Pareto’s supplements dealing with
international trade and economic systems involving monopolists.
8 F. Mornati
This constitutes the broad conceptual context for Pareto’s most origi-
nal contribution to economic theory, today referred to as the economics
of welfare. Beginning from a number of Pareto’s overlooked insights and
from an interesting empirical exercise relating to the utility of railways,
we follow Pareto’s first demonstration of the optimality of free competi-
tion, which led him to be able to define, for the first time, the concept of
optimal allocation (known today as Paretian optimality), that is, that
state from which it is possible to deviate only by increasing the utility of
some individuals while diminishing that of others.
This constituted the theoretical basis which Pareto took as his starting
point to develop his analysis of a number of topics which he had already
examined in the course of the 1870s and 1880s. Thus, his original free-
trade proselytism was developed, via a free-trade formal critique of the
protectionist position adopted by the Austrian mathematical economists
Auspitz and Lieben, into the formulation of an innovative mathematical
theory of international trade, in turn leading to a reformulation of
Ricardo’s theorem and to a fresh empirical assessment of the consequences
of customs protection in Italy. Issues surrounding the currency, for their
part, were re-examined on the basis of the concept of the final degree of
utility which imposes certain general speculations regarding the circula-
tion of money and also further scrutiny of the problems affecting the
precarious Latin Monetary Union. This topic is concluded by an eclectic
and innovative outline of the general equilibrium of the international
monetary system. An abundance of further reflections are then presented,
in as orderly a manner as possible, on other practical questions which had
already been touched on by Pareto before, such as the demographic issue,
public finance and socialist economic theory, to which were added others
such as the historical trend of interest rates and salaries and the investiga-
tion of economic crises.
This is the broad theoretical and empirical background to the first
insight which brought Pareto renown, that is, the law of income distribu-
tion. This topic is covered in detail both in terms of its analytical develop-
ment and in terms of its political implications (opposition to socialist
redistribution of wealth, enthusiasm for the efficiency brought by free
trade and for birth control), together with its possible conceptual links
with the related studies conducted in the same period by the German
Introduction 9
sociologist Ammon. Brief summaries of Pareto’s ideas on the calculation

of probability and on methods of interpolation follow.
The fact that, as of the summer semester of the 1896–1897 academic
year, Pareto felt able to satisfy the university’s unexpected request to teach
a course in sociology clearly suggests that his knowledge of sociological
topics was already quite advanced. This will be demonstrated by an
account of his considerations at the time in relation to private property
and on the notion of the interdependence of social phenomena, which he
viewed as also being fundamental in sociology, together with an account
of his academic treatment of evolutionism, a topic he had started to give
thought to 20 years earlier. Also provided are descriptions of the notions
which were to typify his interpretation of sociology, notable among which
was the first distinction between logical and non-logical actions. Similarly,
we will investigate some of Pareto’s theoretical ideas on politics, bearing
on themes such as the need for political organisation of society, the nature
of government, the behaviour of politicians and the classification of polit-
ical parties. The volume concludes with original research relating to
Pareto’s earliest critical success in the form of the numerous international
reviews of the Course in political economy and the initial debate which
greeted the law on income distribution.
The third and final volume bears on the last 25 years of Pareto’s life
which, with the end of his remaining illusions concerning the political
and economic acceptance of the libertarian creed, were dedicated entirely
to science. We have deemed the continuation of our attentive analysis of
Pareto’s observation of real-world phenomena to be dispensable, on the
basis that his scientific work in this period appears self-sustaining.
Notwithstanding this, the great political events of the epoch, such as the
First World War and the coming to power of the fascists in Italy, were
seen by Pareto as opportunities for the corroboration of the sociological
ideas he had been developing.
Hence, this volume will be divided into two major component parts,
each further internally subdivided as appropriate. These sections relate
respectively to the two not always easily disentangled areas of economics
and sociology into which Pareto’s thought had ultimately been chan-
nelled (with political reflections considered to fall within the sphere of
sociology, of which Pareto had a very broad conception).
10 F. Mornati
Another factor which militated in favour of Pareto’s decision to dedi-

cate himself completely to study was the maturation of a new line of
research, which was presented in an address given in December 1898 at
Stella, a society of Lausanne university students which had just appointed
him an honorary member, confirming once again the excellent relations
he had created with the student body, who appreciated his approachabil-
ity and his capacity to speak brilliantly off the cuff. According to this line
of research, even if the final degree of utility is not measurable, it is nev-
ertheless reasonable to suppose that any single individual is able to deter-
mine whether any given transaction will increase or diminish his or her
overall degree of utility or leave it unaltered. This conclusion, in Pareto’s
view, is sufficient to re-establish the science of pure economics on a com-
pletely empirical basis, in keeping with his own methodological stance.
This applies particularly to the concept of individual indifference curves
which he openly borrowed from Edgeworth. Moreover, transactions
bringing an increase in the utility of all the individual participants are
defined by Pareto as the experimental and logical actions studied in pure
economics and falling into a much broader category also including non-
logical actions, that is, actions which increase the participants’ utility only
in their own opinion (which is not shared by those better placed to
judge). These are studied in sociology and constitute, again according to
Pareto, by far the most common category of human actions.
This is the theoretical background to the writings for which Pareto was
to become best-known, such as the Manuale di economia politica (pub-
lished in Italian in 1905 and re-issued in French in 1909, with major
additions), the Systèmes socialistes (published in 1902–1903), forerunner
of the Trattato di sociologia generale (published in Italian in 1916 and re-
issued in French, with some additions, in 1917–1919).
The change of scientific and didactic approach between the Manuale-
Manuel and the Cours is clearly shown by the fact that in the former
only 20% of the text is dedicated to applied economics, compared to
80% in the Cours, the remainder dealing with pure economics and with
the development, in graphic form in the text and in analytical form in
the substantial appendix, of the experimental basis for general equilib-
rium and the consequent deduction of the parameters of Paretian
optimality.
Introduction 11
As for Systèmes socialistes, based on the critical study of a very wide-

ranging historical documentation, thus constituting a forerunner of the
similar approach later adopted for the Trattato di sociologia generale, this
work represents a development of the thesis which, in the light of the law
of income distribution, regards as illusory the claims of any particular
ideology (notably the socialist ideology) to be able to modify the personal
distribution of wealth. Among the various theoretical socialist systems,
the one which most attracts Pareto’s attention is Marxism, where he dis-
putes, in particular, its claim that economic circumstances determine all
other social conditions, asserting instead that all these conditions interact
with each other. However, Pareto was very appreciative of Marx’s concept
of class struggle, re-interpreting it as a struggle among élites for the acqui-
sition or for the maintenance of power. This struggle, according to Pareto,
constitutes a factor in social life which cannot be eliminated, and which
is a bringer of progress. Finally, Pareto in Systèmes socialistes began to
sketch out some of the fundamental ideas of the later Treatise on general
sociology, particularly as regards the notions of the circulation of élites and
of derivations, a term which he uses to refer to the arguments adopted to
justify the formulation and the proposition of socialist systems. Among
these he distinguishes, respectively, false reasoning which is harmful but
persuasive; false reasoning which is persuasive and valuable and valid rea-
soning which is neither persuasive nor valuable, with socialism falling
into the first two categories and liberalism the third.
Pareto’s novel conception of sociology is effectively summed up in the
last two chapters of the Treatise on general sociology, XII and XIII. His
starting point is that the social system is both comprehensive of and
much more complex than the economic system and should be viewed as
molecules or cells containing residues, derivations and interests. These
molecules (i.e. human beings), being subjected to numerous constraints,
duly perform logical and, more frequently, illogical actions. However,
human beings like to ascribe justifications to their non-logical actions
which are only apparently logical (i.e. derivations) and through the analy-
sis of these Pareto identifies the residues, the mental impulses which in
practice push people to perform non-logical actions. Further, human
societies are heterogeneous, in the sense that the requirement for behav-
ioural conformity is not the same for all members of a society. However,
12 F. Mornati
such a society can exist because members having a medium or high need
for conformity are much more numerous than those having a low or non-
existent need for conformity. Since in sociology it is not possible to resort
to mathematical logic, any study of shifts in the social equilibrium (which
in any case would be limited to a local level) can be performed only
through a verbal description of the interactions between the constituent
elements of the society, that is, the residues, interests, derivations and
social heterogeneity. Many different combinations of these are logically
possible, the most important of which, in Pareto’s view, is the action of
residues on the other three elements, while the least important is that of
derivations on the other three. Pareto reiterates that a continual exchange
takes place between the elements, with the social equilibrium being the
result of this.
Having recalled all this, Pareto introduces a lengthy case study involv-
ing this type of system of actions and reactions, analysing the dynamics
of customs protectionism, a topic which, as we know, interested him
throughout his life. When political economy, which is to say the science
of interests, turns its attention to customs protection, it takes into account
only its effects on specific interests, with low prices being considered a
benefit by supporters of free trade who are interested only in the interests
of consumers, and a handicap by protectionists who have only the inter-
ests of producers at heart. However, both approaches are of very little
scientific validity precisely because they both suffer from an incomplete
assessment of protectionism. A further step to a more complete analysis,
even if only in the sphere of economics, is the proof that protectionism
leads to the destruction of wealth. However, in order to show definitively
that protectionism is damaging it is necessary to consider also its indirect,
that is, non-economic, effects. Hence, Pareto’s analysis focuses once more
on industrial protectionism which, as we know, he had witnessed directly
in Italy in the 1880s. This phenomenon, which belongs to the category
of interests, has in Pareto’s opinion little effect on residues because these
are subject only to gradual modification. Industrial protectionism encour-
ages the production of protectionist economic theories, while accelerat-
ing modifications to social change by encouraging the social ascent of
those in possession of the residues of the instinct for combinations, par-
ticularly those industrialists able to obtain protectionist measures from
Introduction 13
the politicians, yielding an interesting perspective on many of Pareto’s

professional experiences of 30 years earlier. Over and above this, protec-
tionist theories have little effect on residues and interests, although they
do have a little more influence on social heterogeneity because they
encourage the rise to power of protectionist economists and their follow-
ers. Thus, in conclusion, if the long-term increase in production obtained
(mainly indirectly) through protectionism is greater than the immediate
destruction of wealth, this would constitute an example of protection
leading to a country’s increase in prosperity, thus contrasting with the
well-known arguments in favour of free trade advocated by Pareto him-
self, among others, over the years.
Pareto dedicated the final years of his life to the verification of the the-
ses contained in the Treatise. In particular, fascism was seen by him as a
reaction, exemplifying the instinct for persistence of aggregates, to the
plutocratic-demagogic cycle which, under the pressure of the residue of
instincts for combinations, had destabilised Italian society. However, it
should be remembered that Pareto immediately sensed the threat of anti-
liberal excesses in fascism, which he denounced through public warnings
addressed to Benito Mussolini’s first government, to which he dedicated
a certain benevolent but brief interest (Pareto died on the 19th of August
1923), in common with many Italian liberal intellectuals of the time.
The volume concludes with the recognition of Pareto’s fame demon-
strated by the early general critical studies of his extant works which
began to appear in the mid-1920s, soon after his death.
2
An Outline of the Life of Raffaele Pareto
In the first section of this chapter, drawing on documentation brought

together for the first time, the youthful period of Raffaele Pareto’s life will
be reconstructed in detail, including his participation in the 1833
Sardinian army revolt and the harsh repressive measures which ensued,
leading him to take refuge in exile in France. During the 20-year period
spent across the Alps, Raffaele started his own family and applied the
mathematical and engineering knowledge he had acquired during his
studies.
In Sect. 2.2, attention will be focused more specifically on his earliest
publications, dealing with the building of roads and with hydraulic engi-
neering, as well as on the problems of his involvement as director of
works in the excavation of a canal in central France.
Following his return, together with his family, to Genova in 1854,
under circumstances which remain to be fully clarified, Raffaele busied
himself in the life of the city with journalism and engineering, as well as
resuming the teaching activities he had initiated during his time in France
(Sect. 2.3).
Section 2.4 will be devoted to a brief but fully documented synopsis of
his 20-year career as a hydraulic engineer in the central administration of
the newly formed Kingdom of Italy.

16 F. Mornati
This chapter will allow us to dismiss the popular but completely

unfounded theory advanced by Franz Borkenau whereby Vilfredo’s intel-
lectual outlook emerged out of an anti-democratic and anti-rationalistic
reaction to Raffaele’s revolutionary republican ideas. Raffaele’s revolu-
tionary fervour was essentially a youthful transgression paid for through
20 years of exile, during which time it was entirely sublimated into the
passion for applied engineering which he passed on to his son Vilfredo.
2.1 H
is Youth in Italy: From the Ligustica
Academy to the Corps of Engineers
to Giovine Italia
Raffaele Pareto was born in Genoa on the 28th of July 1812 to the
Marquis Giovanni Benedetto and his wife Aurelia Spinola, also from a
local aristocratic family. Raffaele had two brothers, Damaso (1802–1862),1
the Romantic man-of-letters and patriotic follower of Mazzini, and
Domenico (1804–1898),2 the diplomat, as well as four sisters: Angiola
(1796–1878),3 Marina (1797–1870),4 Carolina5 and Emilia.6 Giovanni
Benedetto’s numerous family lived, together with other branches of the
extended Pareto clan, in the Pareto Palace located in Piazza Cinque
Lampadi in the Molo district.7
The earliest reliable information regarding Raffaele’s intellectual devel-
opment relates to his enrolment, on the 18th of October 1827,8 at the
Ligustica Academy of Fine Arts in Genoa. While it is not possible to
establish the precise nature of the studies of “figure A” which he pursued
at the Academy, we can note that, at that time, the Academy was divided
into separate schools of painting, sculpture, civil architecture, decorative
arts and copperplate engraving.9
It is not known when Raffaele moved to Turin, where he joined the
Corps of Engineers of the Kingdom of Sardinia10 and continued in his
technical and scientific studies, concerning which no further information
has reached us.
In 1833, in the early stages of the suppression of the sedition which the
Giovine Italia (“Young Italy”) group had succeeded in fomenting in the
Sardinian Army,11 Raffaele, a sapper12 cadet nearing promotion to officer
An Outline of the Life of Raffaele Pareto 17
rank, deserted in France for fear of being arrested13 as his brother

Damaso14 had been, and of being subjected to the severe provisions of the
Sardinian military penal code, whose article 144 stipulated the death
penalty for military personnel involved in conspiracy against the state.15
King Carlo Alberto showed clemency to Raffaele, and generally to all
the young aristocrats of the Genoese faction involved in the sedition,
deciding not to take “any action out of personal spite” and limiting him-
self to ordering Raffaele’s expulsion from the Corps.16
2.2 H
is 20-Year Exile in France: Work
in Hydraulic Engineering
We have no evidence to establish whether Raffaele took part in Mazzini’s
failed attempt to provoke a rebellion in Savoy in February 1834. The
earliest testimony so far discovered concerning his exile in France consists
of the text of the first lesson in a course in architecture he gave at the
Athénée Central in Paris from the 23rd of December 1834.17 This course,
intended principally for houseowners, deals with the various aspects of
the art of building private houses, starting from the affirmation that every
culture has its own type of architecture.18 At the end of 1835 Raffaele
moved from Paris to Moulins, capital of the agricultural district of Allier
in central France, where the government of Louis-Philippe had received
a number of fugitives from the abortive revolution of 1831 in the Duchy
of Modena (two of these, the officer Antonio Canevazzi and the land-
owner Camillo Franchini, appear among the witnesses at Raffaele’s
wedding19).
On the 9th of December 1835, in Moulins, Raffaele married (in a civil
ceremony according to Georges Henri Bousquet20) Marie Métenier, who
was born in Toulon sur Allier (a suburb of Moulins), daughter to the
wine producer Gilbert and Marie Foucrier,21 and who died in Florence
on the 13th of September 1889.22 Our current knowledge allows us to
identify only three points of contact between the mother and Vilfredo:
the knowledge of French, which was to constitute a key asset for him
throughout his life, their shared tendency to disguise their feelings for
fear of sentimentality23 and the discreet but profound affection that
Vilfredo felt for her.24
18 F. Mornati
This marriage produced two daughters prior to Vilfredo, who was born
in Paris on the 15th of July 1848. The first of these was Aurelia, born in
Moulins on the 22nd of February 183925 and deceased in Florence on the
15th of April 1893. Marrying Gasparo Scala, a career officer in the Italian
army, she had two sons both of whom followed in their father’s footsteps:
Raffaele (1866–1903),26 and Francesco, known as Franz (1862–1912).27
The second daughter was Cristina, who was born in Moulins on the 22nd
of May 184228 and died in Florence early in February 1907. A lifelong
spinster, she lived in the family home until her parents’ death and subse-
quently nursed her uncle Domenico in Genova in his old age, after which
she lived partly with Vilfredo in Lausanne and in Céligny and partly with
her brother-in-law Scala (now a widower) in Florence. Her correspon-
dence with Emilia Peruzzi reveals her as a cultivated person, sweet-natured
and wholly dedicated to the family.29
The official public verdict on Raffaele, as expressed in the previously
mentioned note issuing from the French Foreign Ministry on the 31st of
January 1838, describes him as “a well-educated young man, hard-
working and worthy of interest” and thus deserving of the goodwill which
the local authorities were willing to accord him.30 For his part, Raffaele
assures them in 1841 that now, whatever his ideas in the past, he is no
longer active in politics “but only in science”.31
On the 11th of December 1836 Raffaele won a competition for the
post of Roads Inspector (the official responsible for the construction and
maintenance of local highways) organised by the Allier Prefecture.32 After
having occupied this post for a couple of years in Gannat, a rural town
midway between Moulins and Clermont-Ferrand, in 1841 Raffaele
became a member of a committee set up in Moulins for the purpose of
establishing a school for roads inspectors.33 A small volume issuing from
Raffaele’s hands provides valuable evidence of his professional commit-
ment, wherein he argues that the development of the French economy
requires the improvement and maintenance of local roads, in order to
improve the efficiency of the transport system by connecting the main
and the provincial highways with the railways and the canals.34
In 1845 Raffaele was Chief Engineer of a short-lived “Compagnie
française d’irrigation”,35 leaving in December 1846 after having prepared
a project for the construction of the Sauldre canal in the region of Sologne
(north-central France).36 On the 10th of June 1848 Ulysse Trélat, Minister

for Public Works in the government of the newly formed second repub-
lic, obtained permission to acquire Pareto’s project from the liquidators of
the “Compagnie” and to allocate a million francs to start the building
work.37 On the 20th of June Raffaele, who in the meantime had been
engaged in work on the irrigation of Viscount d’Hervilly’s vast estates at
Lamotte-Beuvron in the Sologne area, was appointed by Trélat to oversee
the work.38 However, as Raffaele was qualified only as a civil engineer, the
administrative supervision of the project was entrusted to Henri Darcy,
chief engineer of the nearby Berry canal.39 Raffaele and Darcy had con-
trasting ideas regarding the route of the new canal, which Darcy wished
to modify with a view to a possible interconnection with the river Cher.40
On the 3rd of July, the competent authority, the “Conseil general des
Ponts et des Chaussées”, approved Darcy’s request and work began on the
route proposed by him.41 But Darcy was recalled to Paris and substituted
by the engineer Charles Machart, who was placed at the head of the
“Service spécial de la Sologne”, the body charged with the execution of
the project,42 on which work was halted for a first time on the 1st of May
1849 due to lack of funds, after the digging of 13 kilometres. In any case
Raffaele had already resigned from the management of the work in
February 1849.43
Even in regard to this important professional experience Raffaele left a
notable scientific commentary in the form of a long article.44 In it, he
affirms that the problem is that of rendering fertile the region of Sologne,
which the railway has now put into direct contact with Paris. The solu-
tions he proposes stem from his experience of having lived in the area and
of knowing it well.45 As a result of the lack of limestone and of the failure
to contain the numerous watercourses, the soils of the Sologne are marshy,
leading to low fertility and an unhealthy climate which in turn naturally
limits the population.46 However, “since in agriculture everything is con-
nected”, if this land could be fertilised at low cost, making use of the marl
which is abundantly available in the neighbouring regions, cultivation
would become profitable, which in turn would motivate the landowners
to perform the necessary work of irrigation and land restoration and,
with the consequent spread of grassland, would also lead to the improve-
ment of livestock.47
20 F. Mornati
Thus the contribution that the state can make to the development of
the Sologne consists principally in supplying marl at reasonable prices.
Irrigation and land restoration on the other hand should be left to private
enterprise, which the landowners would undertake, “spurred on by their
own interests” as soon as reasonably priced stocks of marl were available
to them.48 The state can provide cheap marl to the Sologne by transport-
ing the high-quality supplies available in Blancafort along the valley of
the river Saudre by means of a railway or a canal which remained to be
built: in Pareto’s opinion, the canal would be the better option.49
Raffaele, basing himself on his long experience as a hydraulic engineer
in France, also wrote a treatise.50
2.3 H
is Return to Genoa: Technical
Journalism and School-Teaching
We do not yet know the reasons which caused Raffaele to bring his
20-year exile in France to an end and to return to his native Genova,51
where he arrived in the summer of 1854 in the thick of one of the recur-
rent cholera epidemics. Raffaele was involved in combatting this terrible
calamity and was rewarded, on the 1st of August 1855, with the Silver
Medal.52 With the passing of the epidemic, Raffaele published a long
article53 in which he argued for hygienic reforms necessary to prevent its
return. This article, together with plans for the construction of affordable
hygienic housing54, marks his entry into the engineering circles of the
city, where on the 27th of February 1858 he was appointed secretary of
the local Society of Architects and Engineers.55
Raffaele was also very involved with technical journalism, as exempli-
fied by his work for the short-lived Genoese fine art periodical
“Michelangelo” and more importantly for the Milanese “Giornale
dell’Ingegnere, Architetto ed Agronomo”, of which he was Editor from
1860 to 1867.
The first article of importance he wrote for the latter consists of a
description of his proposal for the renewal of the port of Genoa.56 With
the imminent opening of the Suez Canal the Mediterranean would become
the most direct transit route for oriental goods destined for European and
North American markets. However, the port of Genoa, as things stood,

would be unable to take advantage of this opportunity because of the lim-
ited area, sheltered from wind and of sufficient depth, which was suitable
for the increasingly large cargo ships now being used.57 Thus the most
notable feature of Pareto’s proposal is the construction off-shore of a 1700-
metre quay with an inclined end, capable of protecting the entire port
from the winds.58
As he had done 20 years earlier in Moulins, alongside his engineering
and journalistic activities, Raffaele added school-teaching, specifically as
teacher of French at the Royal Naval College in Genova.59 He resigned
from this post in the first weeks of the 1859–186060 school year and, on
the following 7th of November,61 took up the teaching in accounting and
agriculture in the agronomy section of the new, pedagogically advanced
Leardi Institute in Casale Monferrato,62 where he moved together with
his family. Raffaele states emphatically that the Leardi Institute is a
“model of technical education” which is “perfectly in line with the posi-
tive trends of our century which, whatever certain philosophers might
say, are superior to those of the past” and which “more than elsewhere”
places particular emphasis on the teaching of mathematics “which is fun-
damental in technical education”.63
However, Raffaele resigned from the Leardi on the 21st of April 1862,
justifying his decision with the prospect of a reduction in the number of
teachings.64
2.4 H
is Ministerial Career in the Newly
Constituted Kingdom of Italy
The most important reason which led Raffaele to leave the teaching
profession definitively were, however, promising high-level career
openings in one of the ministries of the newly constituted Kingdom
of Italy.
The first development in the latter part of Raffaele’s intellectual biog-
raphy is undoubtedly the official recognition of his professional compe-
tence constituted by the government’s conferral of the title of Graduate
Engineer.65
22 F. Mornati
Raffaele was then appointed, as of the 1st of July 1862, First-level

Director at the Ministry of Agriculture, Industry and Commerce;66 in a
letter to his brother Domenico of the previous 5th of May,67 Raffaele
states with obvious pride that the ministerial post had been offered to
him exclusively on the basis of the high opinion expressed by Quintino
Sella (then Minister of Finance) and by Pietro Paleocapa, the prestigious
engineer, parliamentarian and ex-minister, in regard to his writings on
hydraulics. Initially, Raffaele’s ministerial career proceeded steadily: on
the 20th of November 1862 he was promoted to the rank of Director-in-
chief of the second grade68 and on the 30th of October 1864 Central
Inspector.69 On the 4th of August 1866, following a reorganisation within
the Ministry, Raffaele (who in the meantime had moved from Turin to
the new capital in Florence, together with the rest of the Central State
Administration) was demoted once again to Director-in-chief (the new
name being Head of Division).70 On the 15th of November 1869 he was
re-appointed to the rank of Inspector, this time second-grade, in the Civil
Engineering Corps71 and on the 10th of March 1877 he was named
Inspector of the first grade, which was the highest rank he ever reached.72
In the course of the 20 years in which he held high-level ministerial posi-
tions, Raffaele also took on other highly specific roles: on the 26th of
March 1864 he was appointed as a member of a commission of enquiry
into the problems of rice cultivation;73 on the 11th of September 1864 he
was called to join the General Council on Land Restoration and
Irrigation;74 on the 15th of November 1869 he was appointed member of
the Upper Council for Public Works75 and on the 15th of March 1878 he
became a member of the Commission on Industrial Monopolies.76
The technical and scientific qualities of Raffaele’s ministerial work were
also appreciated elsewhere and were recognised by his appointment as
Fellow at various academies among which, in chronological order of
appointment,77 were the Verona College of Agriculture, Commerce and
Arts,78 the Modena College of Science, Letters and Arts,79 the Genoa
Society for Scientific Readings and Debates80 and the Royal Lincei
College in Rome.81
Of particular interest among the writings produced at these institu-
tions is a long article on the misuse of averages.82 In the first part of this,
after a critical overview of the undisciplined use made of averages in the
physical sciences (especially in meteorology), Raffaele concludes that in

order to permit scholars to “appreciate the laws which regulate phenom-
ena” it is necessary to publish the complete data and not only the aver-
ages.83 Raffaele then continues by affirming that in the social sciences
“this abuse is even more widespread, since few social scientists have stud-
ied sufficient mathematics to avoid errors, and the use of creatively-
deduced averages is irresistible in order to prove what they want to
prove”.84 Raffaele died in Rome on the 28th of April 1882, still intent on
cultivating his intellectual interests, among which the Encyclopaedia of
Arts and Industries, a work in nine volumes (of which three were pub-
lished in his lifetime) for the Utet Press in Turin, co-edited by the engi-
neer Giovanni Sacheri, who oversaw its completion in 1898.
2.5 The Influence of Raffaele on Vilfredo

Guided by an undocumented intuition, the German psychologist Franz
Borkenau, in one of his first major texts on Pareto, interprets Vilfredo’s
patterns of thought as an anti-democratic and anti-rationalistic reaction
to the failure of Raffaele’s Mazzinian philosophy.85
On the other hand we have seen, albeit briefly, that Raffaele was an
engineer, if not by training at least in practice, who after a brief but
dramatic revolutionary period dedicated himself wholly to his profes-
sion first in France and then in Italy, while also cultivating his passion
for technical journalism. Raffaele, as we shall see in the next chapter,
guided and encouraged Vilfredo in technical studies leading to precisely
that type of formal technical competence which Raffaele had not had
the opportunity to acquire. As far as Raffaele’s putative political influ-
ences on Vilfredo are concerned, no documentary evidence is forthcom-
ing. Vilfredo states that in the mid-1860s, when he was a university
student, he adopted straightaway a liberal outlook which did not coin-
cide with that of his family.86 Raffaele’s authentic, though brief, revolu-
tionary experiences were by this time 30 years in the past and so it is
possible that his non-liberalism was simply the result of a lack of interest
in political questions.
24 F. Mornati
Thus the role of Raffaele in his son’s education seems to have been
absolutely fundamental, as Vilfredo’s earliest interlocutor and instigator
of his passion for mathematical and engineering studies and their
applications.
Notes
1. Married to Enrichetta Spinola, see Sertorio (1967, p. 272).
2. Married to Teresa Giustiniani, ibid.
3. Married to Marquis Giacomo Reggio (cf. Registry Office, City of Genoa)
and mother of Tommaso Reggio, archbishop of Genoa from 1892 to
1901.
4. Married to Giovanni Battista Della Torre, ibid.
5. Married to a certain De Ferrari, ibid.
6. Married to Marquis Vincenzo Spinola, ibid.
7. Registry Office, City of Genoa.
8. Ligustica Academy, Genoa, folder n° 192/5.5, Admissions Book,
1816–1828.
9. See Staglieno (1862, pp. 91, 98, 113, 244–247); on Raffaele’s artistic
philosophy, see Pesenti (2008).
10. Political directorate of the French Ministry of Foreign Affairs to the
Chief Magistrate of the Allier department, 31st January 1838, Archives
of the Allier department, Moulins.
11. See Montale (1985).
12. State Archive of Turin, Ministry of the Interior Police Inspectorate, dos-
sier 410, List of individuals born or domiciled in the Genoa area whose
opinions render them politically suspect [drafted by the Royal Carabinieri
of Genova in 1836], dossier n° 81.
13. Political directorate of the French Ministry of Foreign Affairs to the
Chief Magistrate of the Allier department, 31st January 1838; Raffaele
to the Chief Magistrate of the Allier department, 6th October 1841,
Archives of the Allier department, Moulins.
14. Damaso Pareto was arrested on the 20th of June 1833 and imprisoned
in the military fortress of Alessandria, State Archive of Turin, Ministry of
the Interior, Police Directorate, dossier 410, list of individuals who have
compromised themselves or in some manner become politically suspect
[drafted in 1836], dossier n° 181.
15. The suppression indeed ended with 12 persons being executed by firing
squad, 11 sentenced in absentia, 2 given life sentences and 37 shorter prison
sentences, “Gazzetta Piemontese”, 12th September 1833, pp.547–548.
16. State Archives of Turin, Ministry of the Interior Police Directorate, dos-
sier 410, List of individuals, section n° 290.
17. See R. Pareto (1835).
18. Ibid., pp. 4–7, 20.
19. Raffaele’s marriage certificate, Municipal Archives of Moulins sur Allier.
20. See Bousquet (1968, p. 225).
21. Raffaele’s marriage certificate.
22. Pareto to Francesco Papafava, 13th September 1889, see Pareto (1981,
p. 641).
23. Cristina Pareto to Emilia Peruzzi, 27th June 1882, Central National
Library of Florence, Manuscripts Hall, Emilia Peruzzi Collection, letters
of Cristina Pareto to Emilia Peruzzi.
24. Pareto to Guido Sensini, 22nd January 1919, see Pareto (1975a,
p. 1009).
25. Municipal Archives of Moulins sur Allier.
26. Raffaele Scala, who was taken prisoner in the battle of Adua (Pareto to
Arturo Linaker, 29th April 1896, see Pareto (1975a, p. 295); Pareto to
Maffeo Pantaleoni, 13th and 20th May 1896, see Pareto (1984, pp. 444–
445, 448)), married Marguerite Bugnion (1873–1956), daughter of
Edouard Bugnion (1845–1939), Professor of anatomy and of embryol-
ogy at the University of Lausanne. Raffaele e Marguerite had one daugh-
ter, Beatrice.
27. Franz Scala married the Genoese noblewoman Elisa Insena Negrotto
and had three daughters, Maria Aurelia, Albertina and Raffaella.
28. Municipal Archives of Moulins sur Allier.
29. Some notices about Pareto’s two life-companions. Vilfredo married
Alessandra (Dina) Bakounine (1860–1937), daughter of Modesto
Bakounine, who was a former Russian Consul in Venice, and who had
links of blood to the noble Incontri family in Florence, on the 23rd of
December 1889 in a civil ceremony (Municipality of Florence, Register
of Marital Status, marriage records for the year 1889, part I, vol. V, n°
1392) and on the 26th of December 1889 in a church ceremony
(Marriage Register of the Parish of St. Lucia de’ Magnoli in Florence,
1857–1889, p.126). Vilfredo, affirming that marriage is “an act which
always has a great influence on a man’s life” reflects that the decision to
26 F. Mornati
marry will be beneficial if it gives him “more strength for working”,

Pareto to Francesco Papafava, 17th November 1889, see Pareto (1981,
p. 645). The choice of Dina seems to have been due to Vilfredo’s estima-
tion of her character as weak and submissive, Cristina Pareto to Emilia
Peruzzi, 13th December 1889, Emilia Peruzzi Collection, letters of
Cristina Pareto to Emilia Peruzzi. From Dina’s correspondence with
Emilia Peruzzi the picture that emerges is of a polyglot much apprecia-
tive of her husband, at least in the early years of the marriage, and pos-
sessed of a high level of culture, to the point of taking up studies of
political economy herself, Dina Bakounine to Emilia Peruzzi, 27th
December 1890, Central National Library of Florence, Manuscripts
Hall, Emilia Peruzzi Collection, letters of Dina Pareto to Emilia Peruzzi.
During the time in Lausanne, the relationship between Vilfredo and
Dina broke down, culminating in November 1901 with Dina’s flight to
Russia in the company of a servant. For the Italian civil administration
the couple were to retain the separated status, which was officialised in
Florence on the 19th of April 1902, until Vilfredo’s death (Pareto to
Arturo Linaker, 24th February 1902, see Pareto (1975a, p. 445)).
Abandoned by Dina, Vilfredo rapidly found a housekeeper in the per-
son of the young Parisian Jeanne Régis (1879–1948). She was of humble
origins, and assisted him for the rest of his life with a patience for which
Vilfredo showed his gratitude by dedicating the Treatise on General
Sociology to her but also, and more pertinently, by marrying her on the
19th of June 1923 (following a divorce granted in Fiume on the 15th of
September 1922, which was valid everywhere except in Italy, Pareto to
Alessandro Orsini, 31st August and 19th September 1922, see Pareto
(1975b, pp. 1094, 1100); and by naming her as his heir (Pareto to
Arthur Sautter, 17th July 1923, see Pareto (2001, p. 409)).
30. Political Directorate of the Ministry of Foreign Affairs to the
Commissioner of the Allier department, 31st January 1838.
31. Raffaele to the Commissioner of the Allier department, 6th October
1841.
32. Prefecture of l’Allier, Moulins sur Allier, 11th December 1836, minutes
of the examination for admission to positions of Surveyor of Highways,
held in the Central State Archives, Rome, papers relating to persons,
Raffaele and Vilfredo Pareto dossier.
33. Declaration written on 7th October 1841 by a certain Professor Guyot,
about whom no further details are known.
34. See Pareto (1839, pp. 8, 15).

35. Constituted in Paris on the 28th August 1845, entered into liquidation
in December 1847; see Mauret-Cribellier (2008, p. 1).
36. See Mauret-Cribellier (2004, p. 4).
37. Ibid., p. 5.
38. Letter of engagement, Raffaele and Vilfredo Pareto dossier.
40. Ibid., p. 6.
41. Ibid.
42. Ibid.
44. See Pareto (1850, 1851a).
45. See Pareto (1850, p. 278).
46. Ibid.
47. See Pareto (1850, pp. 281–283).
48. See Pareto (1850, p. 284).
49. Ibid.
50. See Pareto (1851b).
51. He took up residence, at least from November 1854, in Salita delle
Battistine 8 in the city centre, where he kept a technical studio, see
Pareto (1854a, p. 52).
52. Letter of award of the Silver Medal, Raffaele and Vilfredo Pareto
dossier.
54. See Pareto (1854a, pp. 47–62).
55. Notification of appointment, Raffaele and Vilfredo Pareto dossier.
56. See Pareto (1856, p. 3).
57. Ibid., pp. 11–13.
58. Ibid., pp. 25–26.
59. Ordinance of 7th May 1859, confirming the appointment as teacher,
60. Ordinance of 20th November 1859, relating to his resignation from the
teaching position, ibid.
61. Historical archive of the municipality of Casale Monferrato, Leardi
Archive, chronological register of the deliberations of the administrative
commission.
62. The Leardi was founded by the Municipality in 1858 thanks to a gener-
ous bequest from the local benefactress Clara Leardi. On the history of
the Institute, see Eccettuato (1975).
28 F. Mornati
63. See Pareto (1860).

64. Historical archive of the municipality of Casale Monferrato, Leardi
Archive, Letters and documents 1857–1869.
65. Ordinance of conferral of the title of Graduate Engineer, 4th April 1861,
66. Ordinance of appointment, 26th June 1862, ibid.
67. See Giacalone-Monaco (1966, p. 17).
68. Ordinance of appointment, 20th November 1862, Raffaele and Vilfredo
Pareto dossier.
69. Ordinance of appointment, 30th October 1864, ibid.
70. Ordinance of appointment, 4th August 1866, ibid.
71. Ordinance of appointment, 15th November 1869, ibid.
72. Ordinance of appointment, 10th March 1877, ibid.
74. Ordinance of appointment, 11th September 1864, ibid.
75. Ordinance of appointment, 15th November 1869, ibid.
77. Already during his time in France, on the 31st of December 1849,
Raffaele had been appointed “free” academic at the Royal Agrarian
College in Turin (diploma of appointment of that date, ibid.).
78. Letter of appointment of the 20th January 1867, ibid.
79. Ordinance of appointment of the 30th December 1867, ibid.
80. Ordinance of appointment of the 30th January 1871, ibid.
81. Ordinance of appointment of the 24th April 1873, ibid.
82. See Pareto (1869, pp. 72–91).
83. Ibid., pp. 91–92.
84. Ibid., pp. 98–99.
85. See Borkenau (1936, pp. 9–11).
86. Pareto to Alceste (not Antonio, as was long believed!) Antonucci, 7th
December 1907, see Pareto (1975a, p. 613).
Bibliography
Borkenau, Franz. 1936. Pareto. London: Chapman and Hall.
Bousquet, Georges-Henri. 1968. Concerning Marie Metenier, mother of Pareto.
Events and reflections (A propos de Marie Metenier, mère de V. Pareto. Faits
et réflexions). Cahiers Vilfredo Pareto VI (15): 223–229.
Eccettuato, Alfredo. 1975. The Leardi Technical Institute following its first centen-
nial: School Gazette from 1858 to 1971 (L’Istituto tecnico Leardi dopo il primo
Centenario : Notiziario scolastico dal 1858 al 1971). Casale Monferrato:
Cartostampa.
Giacalone-Monaco, Tommaso. 1966. Vilfredo Pareto. Reflections and research
(with unpublished letters and youthful writings) (Vilfredo Pareto. Riflessioni e
ricerche, con lettere inedite e scritti giovanili). Padua: Cedam.
Mauret-Cribellier, Valérie. 2004. The canal of the Sauldre (Le canal de la Sauldre).
Orléans: AREP-Centre Éditions.
———. 2008. Engineer Raffaele Pareto (elements of biography) (Ingénieur Raffaele
Pareto, éléments de biographie).
Montale, Bianca. 1985. The Sardinian Army and the Giovine Italia conspir-
acy,1833–34 (L’esercito sardo e la congiura della Giovine Italia, 1833–1834).
Bollettino della Domus Mazziniana XXXI: 17–29.
Pareto, Raffaele. 1835. Course of architecture at the Athénée Central. First Lesson
(Cours d’architecture de l’Athénée Central. Première Leçon). Paris: Chez l’auteur,
Faubourg Saint-Jacques, 277 et à l’Athénée Central, Passage du Saumon, 6.
———. 1839. Considerations on the construction and maintenance of local byways
(Considérations sur les chemins vicinaux, leur constructions et leur entretien).
Moulins: P.-A. Desrosiers Press.
———. 1850. On the improvement of the Sologne (De l’amélioration de la
Sologne). L’agriculteur praticien XI: 277–285, 296–302.
———. 1851a. On the improvement of the Sologne (De l’amélioration de la
Sologne). L’agriculteur praticien XII: 138–149, 164–177, 198–211, 232–268.
———. 1851b. Irrigation and treatment of soils. Treatise on the use of water in
agriculture (Irrigation et assainissement des terres. Traité de l’emploi des eaux en
agriculture). Paris: Roret.
———. 1854a. Appendix to the Statute compiled by the Promoting Committee of
the Anonymous Association for the construction and rental of housing for poor
working people (appendice allo Statuto compilato dal Comitato promotore della
Società Anonima per la costruzione ed affittanza delle case ad uso della classe
povera e laboriosa). Genoa: Ferrando.
———. 1854b. Studies concerning hygienic improvements achievable in Genoa
(Studi sopra i miglioramenti igienici praticabili in Genova). Il Corriere Mercantile,
21st–22nd–26th–27th–28th–29th–30th September, 6th–10th–11th October.
———. 1856. Studies concerning the port of Genoa (Studj sul porto di
Genova). Giornale dell’Ingegnere, Architetto ed Agronomo IV: 3–36.
———. 1860. Technical teaching (Insegnamento tecnico). Giornale
dell’Ingegnere, Architetto ed Agronomo, VIII(July): 456–458.
30 F. Mornati
———. 1869. On the misuse of averages in physical and social sciences (Del
maluso che si fa delle medie nelle scienze fisiche e sociali). Memorie della
Regia Accademia di Scienze, Lettere ed Arti in Modena: 49–156.
Pareto, Vilfredo. 1975a. Letters 1890–1923 (Epistolario, 1890–1923), Complete
Works, ed. Giovani Busino, vol. XIX-I. Geneva: Droz.
———. 1975b. Letters 1890–1923 (Epistolario, 1890–1923), Complete Works,
ed. Giovanni Busino, vol. XIX-II. Geneva: Droz.
———. 1981. Letters 1860–1890 (Lettres 1860–1890), Complete Works, ed.
Giovanni Busino, vol. XXIII. Geneva: Droz
———. 1984. Letters to Maffeo Pantaleoni, 1890–1896 (Lettere a Maffeo
Pantaleoni, 1890–1896), Complete Works, ed. Gabriele De Rosa, vol.
XXVIII-I. Geneva: Droz.
———. 2001. New Letters, 1870–1923 (Nouvelles lettres, 1870–1923),
Complete Works, ed. Fiorenzo Mornati, vol. XXXI. Geneva: Droz.
Pesenti, Serena. 2008. Raffaele Pareto (1812–1882). Contribution to the debate
on art and restoration in Italian culture in the later 18th century (Raffaele
Pareto (1812–1882). Il contributo al dibattito sull’arte e il restauro nella cul-
tura italiana del secondo Ottocento). In Proceedings of the 2nd convention on
the history of engineering (Atti del II° convegno di Storia dell’Ingegneria), ed.
Salvatore D’Agostino, vol. II, 1155–1164. Naples: Cuzzolin.
Sertorio, Carlo. 1967. The Genoese upper class: The lineage of persons registered in
the Golden Book, 1797 (Il patriziato genovese: discendenza degli ascritti al Libro
d’Oro nel 1797). Genoa: Giorgio Di Stefano Editore.
Staglieno, Marcello. 1862. Memoirs and records of the Ligustica Academy of Fine
Arts. (Memorie e documenti sulla Accademia ligustica di belle arti). Genoa: Tip.
del Regio Istituto de’ Sordo-Muti.
3
Vilfredo’s School and University
Education
This chapter consists of an original and documented study of Pareto’s

scholastic and university education. Drawing on what little direct docu-
mentation we possess, as well as on the copious legislation of the time,
the first two sections will be devoted to a detailed reconstruction of the
curriculum he followed at the Technical Institute in Casale Monferrato
and thereafter in Turin at the faculty of mathematics and at the school
of specialisation for engineers. In order to contribute further to the elu-
cidation of this hitherto fairly obscure period in Pareto’s intellectual
biography, which (with the exception of the now-complete list of his
exam results) certainly warrants further investigation, brief biographies
are provided of many of his university and also his school teachers. In
Sect. 3.3, a broad description is given, based on unpublished documen-
tation, of two of the courses he followed: calculus and theoretical
mechanics. As a result, we finally gain a clearer picture regarding the two
logical tools most used by Pareto in his later scientific career, that is,
calculus and the concept of equilibrium. Section 3.4 consists of a descrip-
tion of Pareto’s scientific and mathematical patrimony at the conclusion
of the decade dedicated to studies under the guidance of his father. This
aspect of Pareto’s intellectual biography has hitherto been largely
neglected but is clearly indispensable to achieving a better understanding

32 F. Mornati
of his later scientific work, with its overarching reference to the concept
of equilibrium, characterised by an extensive but not fanatical applica-
tion of mathematical analysis. Further examination on the part of histo-
rians of mathematics in relation to Pareto’s exposure to these two
disciplines could lead to a welcome addition to our understanding of
this interesting youthful span of his intellectual biography.
3.1 School Studies

At the time of Vilfredo’s school studies (taking place between 1859–1860
and 1863–1864), the technical education1 which Raffaele chose for his
son in place of the alternative classical studies was regulated in accordance
with law n°. 3725 of the 23rd of November 1859,2 together with the
provisions for its implementation of the 19th of September 1860 and the
Royal Decree n°. 4464 of the 24th of November 1860 specifying the
examination schedule.
The aim of this technical education was to equip young people intend-
ing to “devote themselves to given careers in public service, in industry,
in commerce and in rural management with the requisite general and
specific instruction” (article 272, law of 23rd November 1859).
This curriculum was followed initially in the context of a technical
school and thereafter in a technical institute.
The technical school followed a three-year programme which, as speci-
fied in the provisions for implementation of the 19th September 1860,
article 90, culminated in an examination, and provided for the teaching
in the first year of the following subjects: Italian, geography, history,
arithmetic, calligraphy and the decorative arts; subjects studied in the
second year included: Italian, geography, history, the geometry of planes
and solids, linear drawing, decorative arts and French; while in the third
year the subjects included Italian, geography, history, citizenship, algebra
and elements of mechanics, French, accounting, architectural drawing,
basic natural sciences, physics and chemistry (ibid., section A).
The technical institute, for which there was an initial entrance examina-
tion and a final graduation examination (ibid. article 90), was divided into
an administrative and commercial department, an agronomy department
Vilfredo’s School and University Education 33
and a chemistry department (all of two years’ duration) together with a

physics and mathematics department (of three years’ duration, ibid. article
13), the latter being the only one giving access to university, and then only
to the faculty of physical, mathematical and natural sciences. In this depart-
ment the curriculum covered the following subjects (ibid. section B): in the
first year, Italian, history, geography, physics,3 mathematics,4drawing; in
the second year, Italian, history, geography, mathematics,5 English (or
German6), general inorganic chemistry, drawing; in the third year, mechan-
ics,7 English (or German), mineralogy and geology, technical drawing,8
drawing.
It was against the backdrop of this legislative framework that Pareto (of
whose primary education we know nothing) was enrolled in the autumn
of 1859 in the first year of the Leardi technical school.9 In the summer of
1860 he passed the supplementary examination giving direct access to
the third year and here too he distinguished himself for his excellence in
schooling.10
At the technical institute, Pareto was enrolled in the physics and math-
ematics department, where he attended the first year at the Leardi and the
following two at the Technical Institute (as it was then known) in Turin,11
where his father had moved in the spring/summer of 1862. In the
1862–1863 school year, the second year of the physics and mathematics
curriculum at this institute consisted of the following subjects:12 Italian
and history (taught by Pietro Caldera), English (Edmondo Cavalleri),
physical geography (Giuseppe Bruno13), descriptive geometry (Giovanni
Battista Curioni14), architectonic and topographical drawing (Giuseppe
Boidi), decorative arts (Luigi Lolli), chemistry (Pietro Antonio Borsarelli),
commodity economics and technical analysis (Giangiacomo Arnaudon);
in the 1863–1864 academic year, the third-year curriculum consisted
of:15 English (taught by Edmondo Cavalleri), mechanics (Giovanni
Delfino), kinematics and technical drawing (Giovanni Delfino), topo-
graphical drawing (Giuseppe Boidi), decorative arts (Luigi Lolli), com-
modity economics and technical analysis (Giangiacomo Arnaudon).
In the summer of 1864, Pareto obtained brilliant results in the gradu-
ation exams,16 achieving “top honours” among the 37 who passed the
exam, the highest recognition at this level.17
34 F. Mornati
3.2 University Studies

Pareto’s university studies (taking place between 1864–1865 and
1868–1869) were regulated in accordance with the Casati law and with
the section of provisions for its implementation of the 14th of September
1862 concerning the faculty of physical, mathematical and natural sci-
ences. The Casati law assigned to university education the twin aims of
enhancing the level of the country’s scientific and literary culture and of
equipping young people already in possession of “the requisite general
notions” with the specific competences needed to pursue careers in the
public and private sectors.18 According to Carlo Matteucci, the physicist
who, in his role as Minister of Education at the time, drafted the relevant
provisions, the general guidelines needed to be further regulated by these
provisions because in Italy, unlike in Germany (which constituted the
benchmark for Italy in regard to university studies), “the love of scientific
culture and the study of the sciences [had not yet] reached the point
where students know what they have to do and of their own accord put
into practice what effective regulation would prescribe”.19
These provisions assign to the faculty of physical, mathematical and
natural sciences the specific task of conferring an appropriate foundation
to prepare “young people for the specialised engineering and industrial
schools” and of preparing them “for the teaching of these sciences in
High Schools and Junior High Schools”.20 This didactic approach was
implemented by specifying that theoretical lessons should be systemati-
cally alternated with practical lessons, in the conviction that in this man-
ner “the students’ motivation could be maintained and the essential
notions could take root”.21
In order to gain admittance to the faculty it was necessary to have
passed the graduation examination in high school or in the physics and
mathematics section of the technical institute, as well as an internal
entrance examination at the faculty itself consisting of oral questions on
geometry, trigonometry and algebra and written tasks (an essay in Italian
and a translation from Italian to Latin).22 Pareto passed this exam with a
mark of 27/30.23
The faculty awarded four kinds of degree24 (in pure maths, in physics
and mathematics, in physics and chemistry and in natural history), all of
four years’ duration. On the 19th of November 186425 Pareto enrolled for
the degree course in mathematics, obtaining the following marks in the

end-of-year exams:26 in the first year, complementary algebra and theo-
retical geometry 27/30 (teacher Angelo Genocchi27), inorganic chemistry
30/30, with honours (teacher Michele Peyrone28), drawing (teacher
Angelo Marchini29—the exam for this course was held in the third year);
in the second year, differential and integral calculus 30/30 (teacher Angelo
Genocchi), descriptive geometry 30/30 (teacher Francesco Faà di
Bruno30), physics (Gilberto Govi31—the exam for this course was held in
the third year); drawing (teacher Angelo Marchini); in the third year:
rational mechanics 29/30 (teacher Bartolomeo Erba32), theoretical geode-
sics (a discipline relating to the methodology of practical geometric exer-
cises), no mark recorded (teacher Camillo Ferrati33), physics 30/30 with
honours (Gilberto Govi), drawing 27/30 (Angelo Marchini).
Thus Pareto did not complete the degree programme but was satisfied
with obtaining the “Graduation Diploma”,34 which was given to those
who had passed all the exams of the first three years35 and which granted
access “to the schools of specialisation for Engineering and to the formali-
ties for obtaining the relevant professional certification according to the
laws of the various Provinces in the Kingdom”.36
On the basis of this diploma, Pareto was able to enrol at the school of
specialisation for engineering in Turin37 which had opened in November
186038 and which aimed to provide graduates and postgraduates in math-
ematics with “the necessary skills to be able to perform the various types
of role required in the engineering profession”.39 In order to gain the title
of “Graduate Engineer”, he had to sit the following exams:40 applied
mechanics 30/30 (teacher Prospero Richelmy41), steam engines and
railways 30/30 with honours (Agostino Cavallero42), construction 30/30
with honours (Giovanni Curioni43), architecture 26/30 (Carlo Promis44),
mineralogy 30/30 (Bartolomeo Gastaldi45), practical chemistry 30/30
with honours (Ascanio Sobrero46), agricultural economics and land valu-
ation 30/30 with honours (Giuseppe Borio47), legal issues 30/30 (Giovanni
Pezzia48), practical geometry 30/30 (Pietro Mya49). Pareto graduated with
“full marks”50 on the 14th of January 1870. The title of his main thesis
was Fundamental principles of the theory of the elasticity of solid bodies
and investigations into the resolution of differential equations governing
their equilibrium,51 this topic having been chosen by him in accordance
with the regulations,52 and he also submitted a number of secondary
36 F. Mornati
dissertations.53 Pareto began this thesis, which related almost completely

to formal mathematics, by observing that since not even mathematics
“can draw valid conclusions from false premises”, theories which have “no
solid foundation” will never produce “anything exact”,54 even by means of
“analytical contortions”. This type of unfounded theory had long pre-
vailed in the science of the resistance of materials until Claude Navier,
Simon Poisson, Augustin Cauchy, Adhémar de Saint-Venant and Gabriel
Lamé established it on the basis of molecular mechanics.55 But it is only
“the combination of facts known to us” which “leads us to believe” that
matter is made up of “miniscule elements or atoms …. combined by a
force [known as] molecular attraction or chemical affinity”, which oper-
ates likewise between groups of atoms named molecules: molecular attrac-
tion is a function of the distance between molecules.56 The matter
composing solid bodies is made up of “an infinite number of physical
points which do not touch”: thus hypothetically it is only by introducing
between these “a finite number of geometrical points” that the movement
of a body may be considered continuous.57 A solid body “is in its natural
state” when no external force is brought to bear on it, so that “its mole-
cules are in equilibrium between the attractive and repulsive forces that
act on one another”.58 If a body is in its natural state, the coordinated axes
of each point deformed will, in accordance with “molecular displace-
ment”, be modified both in length (extension) and in position (lateral
movement), and these changes will be interrelated.59 It is then observed
that, following this deformation, the density of the body will also be
modified.60 A body on which external forces act is in equilibrium when
the forces acting within the body (as a result of the deformation) are in
equilibrium with the external forces which are also in equilibrium among
themselves:61 however, “the resolution of the equations [involved] pres-
ents such difficulties” that it has not yet been performed.62
3.3 T
he Courses in Calculus and Rational
Mechanics
Of the various topics studied by Pareto during his time at university, the
most relevant in terms of his later study of economics (and to some extent
of sociology) are those of calculus and rational mechanics.63
Historians of mathematics have not failed to underline the epistemo-

logical interest of Genocchi’s writings of theoretical critique.64 In them
Genocchi takes a position in favour of “the abstract and speculative part
of mathematics”65 and further underlines the importance of rigorous
methods of demonstration: in his view calculus should “subject [its prop-
ositions] to the evidence of geometry”, an objective which can be said to
have been achieved only when the analysis can constitute “a sequence of
rigorous reasonings [i.e.] having no other basis than axioms and conven-
tions”.66 Genocchi thus opposes the tendency, adopted by German math-
ematicians of the time (Weierstrass and Kronecker in particular), to free
analysis “from any intuitive reference to the evidence of geometry or
physics”67 and to re-establish it exclusively on the basis of the theory of
numbers (arithmeticisation of calculus).68 His preference, instead, is for
Cauchy and Gauss in that their methodology allows questions to be
“approached in a straightforward manner”, a procedure which, in
Genocchi’s view, can constitute a safeguard of “the evidence and [of ] the
certainty of the mathematics” which would in his opinion be “lost if …
we open the gates to transcendental speculation”.69
Against this conceptual background, Genocchi’s teaching takes as its
starting point the conception of calculus as the study of changes which a
function undergoes “when the values of the variables underlying it are
varied by very small degrees”.70 After having defined the derivative of a
function as the limit towards which the function tends when the incre-
ment of its independent variable tends to zero, and the differential of a
function, as the product of the derivative for the corresponding increment
of the independent variable, Genocchi demonstrates, by reference to sig-
nificant limits, the rules of differentiation of the explicit functions having
only one real variable.71 Having established the derivatives of simple func-
tions, he uses these to define the derivatives of inverse functions, functions
of functions and compound functions. Then Genocchi establishes deriva-
tives and differentials of the explicit functions of various real variables,72
those of imaginary variables73 and those of implicit functions.74 The rest
of the course is dedicated to applications, among which the theory of the
maxima and minima of functions is relevant, where “for the maximum
(or minimum) of a function we do not refer to “the greatest (or smallest)
… among all the values it may possess” but rather those values for which
38 F. Mornati
the function “turns from rising to falling (or from falling to rising)“.75
Thus, for a given value of the independent variable, the function will have
a maximum (or minimum) value if “the prime derivative is about to
become negative from positive (or positive from negative)”.76
Unlike Genocchi’s work, that of Bartolomeo Erba referred to by his
well-known successor Vito Volterra as “[the] most passionate admirer,
[the] most patient and thorough proselytiser and expounder” of Lagrange’s
mechanics,77 has not yet been the subject of study.
Erba introduced his course on rational mechanics78 with the notions of
movement, velocity, acceleration, the composition of various secondary
movements within a movement and the breakdown of a movement into
various secondary movements. He then introduced the notions of force
(pointing out that the effect of a force consists in modifying the velocity
and/or the direction of movement of the physical point where it is
applied) and the resultant of a number of forces (where he underlines that
the resultant is independent of the sequence in which the forces are
applied). On the basis of these premises, a single free physical point (i.e.
not bound) is defined as being in equilibrium when any one of the forces
applied to it is “equal and contrary to the resultant of all the others”.79
On the other hand, a group of physical points constitute a system
when they “act on one another”:80 systems are differentiated according to
“the nature” of the actions performed by the points or according to the
number of points, their masses and their distance from one another. A
system is continuous (or discontinuous) according to whether the masses
and the distances are (or are not) infinitely small.81 Virtual velocities are
“the tiny elementary distances” which the points of a system may (or may
not) travel “when the system passes from one position to another infi-
nitely close”.82
The actual force of a point in a system refers to the force which would
confer the same movement to the point, if it were free, as the point travels
“under the influence of the forces [effectively] applied and in accordance
with its dependence on the other points in the system”: the force which
is “equal and opposed to” the actual force is referred to as the force of
inertia. Alembert’s dynamic principle is thus the principle whereby a sys-
tem is in equilibrium when to every point, “over and above [the] forces
effectively acting upon it” is also applied the force of its own inertia: this
principle allows the reduction of the investigation of the movement of a

system “to the investigation of the equilibrium” of the movement in each
instant.83
3.4 P
areto at the End of His University
Studies
His school and university studies thus equipped Pareto with an excel-
lent command of formal mathematics, which appears however to have
interested him more for its applications than for its theoretical aspects,
and which was also subject to an interesting precocious methodological
limitation. Pareto from the start adheres to that school of thought
according to which the heuristic significance of a theory depends on the
empirical solidity of its premises more than on the formal developments
which mathematical techniques can confer on it. Thus, for example, the
emerging theory of the elasticity of solid bodies is cognitively important
only because its initial hypothesis of molecular attraction appears to
him to correspond to reality: this is a position which, as is known,
Pareto maintained in his later non-engineering studies. An inspiration,
perhaps the inspiration, for this fundamental epistemological choice
derived from the Dutch physician and physiologist Jacob Moleschott,84
one of the best-known teachers in the scientific faculties in Turin at the
time, to whom Pareto credits another important concept which he
would always remain faithful to, that is, the notion that mathematics
too is based on experience.85 At the same time, in a similar manner, we
have seen that Pareto was also exposed to the rigorous but robustly anti-
metaphysical conception of mathematics characteristic of Angelo
Genocchi, the teacher to whom he attributes all of his mathematical
knowledge.
The scientific culture which Pareto acquired during his university stud-
ies seems notable not only for its conceptual breadth and depth but also
its avoidance of either theoretical or empirical extremes: it constitutes a
set of instruments for a rigorous, in-depth but not “esoteric” investiga-
tion of reality.
40 F. Mornati
Notes
1. On the history of the beginnings of technical education in unified Italy,
see Limiti (1959).
2. The so-called Casati law, from the name of the minister Gabrio Casati
who proposed it.
3. The physics curriculum covered “heat”, light, magnetism, electricity, electro-
magnetism, meteorology, Royal decree n° 4464 of 24th November 1860.
4. The mathematics curriculum for the first year covered geometry of sol-
ids, algebra and logarithms, rectilinear trigonometry, ibid.
5. The mathematics curriculum for the second year covered practical and
descriptive geometry, ibid.
6. Pareto, a mother-tongue speaker of French, was able to read English but
not German and did not use either of these languages in writing or in
speaking, Pareto to Maffeo Pantaleoni, 17th March 1897 and 20th
October 1898, see Pareto (1984, pp. 53, 235), Pareto to Irving Fisher,
7th January 1922, see Pareto (1975, p. 1076).
7. The curriculum for mechanics covered the composition and resolution
of movements and forces, the centre of gravity, the movement of a physi-
cal point and elements of hydraulics, Royal Decree n° 4464 of 24th
November 1860.
8. The curriculum for technical drawing consisted in the graphical repre-
sentation of “notions concerning the mutual intersection of two solids”,
ibid. It also included the basics of axonometric projection and its use in
the drawing of machinery. This course, which Pareto followed in 1863–
1864, almost certainly inspired the first of his publications of which we
have knowledge; see Pareto (1866, p. 1). This publication contained a
lengthy overview of the applications of this type of projection, whose
object is “to render clearly at first glance a given mechanism or the shape
of a given body”.
9. Access to the technical school was via an entrance examination consist-
ing of written tasks, including grammatical analysis, essay-writing and
answering a “question in mathematics concerning basic operations on
whole numbers and on ordinary fractions” (provisions for implementa-
tion of 19th September 1860, articles 90 and 119).
10. Vilfredo to Domenico Pareto, 19th December 1860, see Pareto (1981,
p. 21). In this letter Vilfredo describes how his summer study programme
in preparation for the supplementary examination was undertaken under
Raffaele’s guidance, with particular regard to arithmetic and plane
geometry.
11. On the history of the Institute (known as the Germano Sommeiller

Institute after 1883) in the early 1860s, see Montaldo (2003,
pp. 143–155).
12. List of teaching staff in public education in the city of Turin in the
1862–1863 academic year.
13. On Giuseppe Bruno, who was also a member of staff in the faculty of
physical, mathematical and natural sciences at the Turin institute, see
Roero (1999a).
14. Whom Pareto was to encounter again as a teacher at the school of
specialisation.
15. Royal Technical Institute of Turin, academic curriculum approved by the
Ministry of Agriculture, Industry and Commerce for the academic year
1863–1864.
16. Raffaele to Domenico Pareto, 15th August 1864, see Giacalone-Monaco
(1966, p. 17).
17. City Hall, Turin, List of students meriting prizes or honours for
the school year 1863–1864 in the Turin Technical Institute, the High
Schools, the Junior High Schools and the Technical Schools, VI June
MDCCCLXV. The only schoolteachers mentioned by Pareto (see Pareto
(1869, p. 71); Vilfredo to Domenico Pareto, 19th December 1860, see
Pareto (1981, p. 21); Pareto to Teodoro Moneta, 8th October 1893, see
Pareto (2001, p. 70)) are Ferdinando Pio Rosellini (1814–1872), school-
manager and teacher in the mathematics at the Leardi, see Benvenuti
(1967), and Giangiacomo Arnaudon (1829–1893), teacher of chemistry
and commodity economics at the Sommeiller, see Gliozzi (1962).
Arnaudon, see Arnaudon (1892, pp. 50–51), cites his student Pareto as
one of the most active members of Italian Commodity Economics
Society founded by Arnaudon.
18. Law of 23rd November 1859, article 47.
19. See Matteucci (1862, p. XII).
20. Ibid.
21. Ibid., p. XIX.
22. Provisions for implementation of 14th September 1862, Faculty of
physical, mathematical and natural sciences, articles 2–4.
23. Vilfredo to Domenico Pareto, 26th November 1864, see Pareto (1981,
p. 22).
physical, mathematical and natural sciences, article 1.
42 F. Mornati
25. Historical archive of the University of Turin, register of enrolments in

the first year and in the courses of the Faculty of Theology, Philosophy
and Letters, Physical, Mathematical and Natural Sciences, IX. A 81, roll
number 102.
26. Ibid., Faculty of Physical, mathematical and natural sciences, Minutes of
the special examinations for inorganic chemistry, X D 86, first part, p. 67.
27. On Angelo Genocchi (1817–1889), see Giacardi (1999a) and Conte
and Giacardi (1991).
28. On Michele Peyrone (1813–1883), see Cerruti (1999).
29. On Angelo Marchini (1804–1870), see Navale (1999).
30. On Francesco Faà di Bruno (1825–1888), see Giacardi (2004).
31. On Gilberto Govi (1826–1889), see Ferraresi (2002). For many interest-
ing aspects of Govi’s conception of science see Govi (1862), which is the
introduction to the course for the academic year 1862–1863, pp. 5–26.
Scientific progress consists in “(continually) making deductions about
the scientific nature of real-world phenomena on the basis of the exami-
nation and the comparison of sensations and facts”, thus leading to the
refinement of knowledge by dividing the various phenomena into their
component elements, ibid., pp. 10–12. Further, while considering math-
ematics to be “the most valid tool for scientific enquiry”, Govi, ibid.
p. 20 considers that it is “of no profit” to transform “the exposition of
scientific research into complex and laborious mathematical formula-
tions”. Having said that, according to Govi, ibid. p. 21, the rigorous
procedures of physics, that is, “reducing all natural phenomena to a
handful of axioms” requires “a more detailed study than has so far been
performed on the links between different classes of phenomena”.
32. On Bartolomeo Erba (1819–1895), see Giacardi (1999b).
33. On Camillo Ferrati (1822–1888), see Roero (1999b).
34. In the Turin University Historical Archive, Registry book of Diplomas
from 2nd January 1863 to 31st December 1869, the award of the gradu-
ation diploma to Pareto is recorded with the number 1721 (undated).
physical, mathematical and natural sciences, article 17.
36. Ibid. article 18.
37. Historical archive of the Polytechnic of Turin.
38. On the early years of the Turin institute (after 1906 Polytechnic), see
Richelmy (1872).
39. Regulations of the Turin engineering school of specialisation, article 1,
11th October 1863.
40. Ibid., article 7 and the Historical Archive of the Polytechnic of Turin (for
the marks).
41. On Prospero Richelmy (1813–1883), see Curioni (1884, pp. 46–47).
Richelmy, see Richelmy (1872, pp. 19–20) declares himself in favour of
the study of “those elements of mathematics …. having the most fre-
quent applications” both because the latter are “the ultimate objective of
engineers” and because it is “pointless to seek [in] calculus that rigorous
exactitude which then could not be satisfied in reality”. The course in
applied mechanics relates to the theory of machines together with
“motors where no use is made of elastic fluid, measurement or water
input”, Regulations of the Turin School of Specialisation for Engineers
(11th October 1863), article 9.
42. On Agostino Cavallero (1833–1885), see Curioni (1885). The course in
steam engines and railways concerns the theory of machines where “an
elastic fluid is used” and where locomotion is “especially by steam”.
There are also exercises relating particularly to “[the] practical study of
steam engines [and the] development of a design for such machines”,
regulations of the Turin School of Specialisation for Engineers, article 10
(11th October 1863).
43. On Giovanni Curioni (1831–1887), see Signorelli (1985). The course in
construction dealt with “the resistance of materials, urban buildings,
plumbing and roads”, regulations of the Turin School of Specialisation
for Engineers, article 11 (11th October 1863).
44. On Carlo Promis (1808–1888), see Fasoli and Vitulo (1994). The course
in architecture dealt with “the aesthetics of the art and the composition
and disposition of buildings”, regulations of the Turin School of
Specialisation for Engineers, article 12 (11th October 1863).
45. On Bartolomeo Gastaldi (1818–1879), see Morello (1999). The course
in mineralogy dealt with “minerals and rocks of use to engineers, where
they lie and methods for their extraction and exploitation”, regulations
of the Turin School of Specialisation for Engineers, article 13 (11th
October 1863).
46. On Ascanio Sobrero (1812–1888), the well-known inventor of nitro-
glycerine, see Di Modica (1988, pp. 5–13). The course in practical (i.e.
industrial) chemistry dealt with “the rules relating to sampling [i.e.
chemical analysis] and to the principal chemical industries of impor-
tance to engineers”, regulations of the Turin School of Specialisation for
Engineers, article 14 (11th October 1863).
44 F. Mornati
47. On Giuseppe Borio (1812.1887), see Michel (1930).

48. On Giovanni Pezzia, see Curioni (1884, p. 49). The course in legal issues
dealt with “[the] laws applying to building work, waters, domestic staff,
[the] administrative regulations relevant for civil engineers and [the]
principles of political economy”, regulations of the Turin School of
Specialisation for Engineers, article 16 (11th October 1863).
49. On Pietro Mya, see Curioni (1884, p. 45). The course in practical geom-
etry dealt with “surveying, levelling, factory measurements …. to be per-
formed on site and drawn up at the school”, regulations of the Turin
School of Specialisation for Engineers, article 17 (11th October 1863).
50. Turin Polytechnic Historical Archive.
51. On the critical importance of the theory of elasticity in contemporary
studies of the resistance of materials and, in general, in the science of
construction, see Capecchi and Ruta (2011).
52. Regulations of the Turin School of Specialisation for Engineers (11th
October 1863) article 30.
53. Works which have not come down to us on: applied mechanics and
hydraulics (On steering-wheels. Geometric shapes most commonly used for
these and the technical reasons for such geometric shapes. Calculations for a
steering-wheel); civil and hydraulic construction (On foundations in gen-
eral and those of bridges in particular. Foundations with closed or open tanks
and caissons); steam engines and railways (Second fundamental principle of
thermodynamics; its demonstration on the basis of Clausius’ theories of
equivalence and of the W. Thomson method. Correspondence denied by
Clausius but admitted by Saint-Robert regarding the quantity (1/A) Z with
dv); practical geometry (Trigonometrical levelling); architecture (On solid
iron roofs and their use in civil construction); agricultural economics and
land valuation (On drains (and drainage)); chemistry (Analysis of a tin,
lead, copper, nickel, cobalt and iron alloy); mineralogy and geology (On
the ice age in Europe), see Pareto (1869, p. 50).
54. Ibid., p. 27.
55. Ibid.
56. Ibid., p. 28.
57. Ibid., p. 29.
58. Ibid., p. 28.
59. Ibid., pp. 30–32.
60. Ibid., p. 28.
61. Ibid., p. 38.
62. Ibid., p. 43.
63. Genocchi and Curioni are the only university teachers mentioned, with
gratitude, by Pareto, ibid., pp. 27, 71. Immediately after his graduation,
Pareto writes to Genocchi, January and 9th February 1870, see Pareto
(2001, pp. 1–2), to recall “the beautiful lessons in calculus” to which he
owes “everything that he knows [concerning] mathematics”.
64. See Viola (1991, p. 17).
65. This position, which was much discussed elsewhere, constituted a par-
ticularly urgent question in Italy, where by this time “the fashion for
discrediting theoretical studies had spread”, see Genocchi (1871, p. 364).
66. Including the definitions and the notations used, see Genocchi (1883,
p. 195). Genocchi gives a number of examples of definitions reformu-
lated in what in his view is a rigorous manner: the most interesting is
that the definition which “fully conforms to the evidence and to geomet-
ric exactitude” of the limit identifies it as that value to which a variable
“approaches” leaving a difference which is “never inexistent” but is “less
than any other given fraction”, ibid. p. 198.
67. See Bottazzini (1990, p. 67).
68. See Bottazzini (1981, pp. 214–241).
69. Ibid., p. 202.
70. A. Genocchi, Differential calculus, sheet 1, p. 1. Genocchi’s manuscript
relating to the course held in the 1865–1866 academic year is held in the
Genocchi Collection within the Old Documents Collection of the
Municipal Library of Piacenza.
71. Ibid., sheets 2–4.
73. Ibid., sheet 17.
75. [Anonymous], Genocchi, Differential calculus academic year 1871–1872,
p. 273, for the consultation of this document my gratitude is due to
friendly courtesy of Professor Livia Giacardi of the Department of
Mathematics of the University of Turin. Many years later Pareto, having
underlined that at that time in pure mathematics “all kinds of subtleties
were pursued in the name of or under the pretext of rigour”, affirms that
“for the applications, old-fashioned science is only ever what is required”,
as represented by Jules Hoüel, see Hoüel (1878–1881), Pareto to Guido
Sensini, 18th January 1905, see Pareto (1975, p. 533).
76. Ibid. pp. 273–281.
77. See Volterra (1897, p. 148).
46 F. Mornati
78. B. Erba, Summary of the lessons in rational mechanics for the academic year
1866–1867, Turin University Historical Archive, Erba Collection.
79. Ibid. lessons for 9th and 11th February 1867.
80. Ibid. lessons for 11th, 12th, 14th June 1867 specifies that in a system
consisting of three points M’, M”, M”’, each is subjected not only to the
directly corresponding force (F′, F″, F″’ respectively) but also to those
directly corresponding to the other points. Thus if the point M’ had the
original position M’ 0 and was subjected only to its own force F′, it
would follow the curve M’ 0A: but since the action of the other points
modifies the effects of the force F′, M’ will follow the different curve M’
0B.
81. Ibid., lessons for 29th and 30th March 1st and 2nd April 1867.
82. Ibid., lessons for 11th, 12th and 14th June 1867.
83. Ibid., lessons for 14th and 15th June 1867.
84. On Jacob Moleschott (1822–1893), A. Gissi, Jacob Moleschott, in Italian
Dictionary of Biography, vol. 75, Istituto dell’Enciclopedia Italiana,
Rome, 2011, pp. 335–338.
85. See Pareto (1869, p. 27).
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———. 1999b. Giuseppe Bartolomeo Erba. In The faculty of physical, mathe-

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———. 1982. Youthful writings (Écrits de jeunesse), Complete Works, ed.
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4
Twenty Years in Industry Management
The most familiar facet of Pareto’s biography prior to his period in

Lausanne is the 20 years he spent at the helm of a major metallurgical
group in Tuscany, one of the most important entities in the nascent
Italian iron industry. Hence, after a brief description, in Sect. 4.1 of the
chapter, of his short-lived and turbulent involvement with a railway com-
pany, in Sect. 4.2 a detailed reconstruction is provided of the intense
eight-year period he spent in the management of the ironworks at San
Giovanni Valdarno. Among the aspects examined will be his stance of
constructive criticism with regard to the fundamentals of corporate
finance, his attempts to resuscitate the business through technological
modernisation and through the implementation of an aggressive com-
mercial strategy, and his complex but caring relations with the workforce,
which amply account for the disenchantment he later demonstrated
towards humanitarian ideas.
Further on, in Sect. 4.3, a similarly detailed dissection is made of the
ensuing period of ten years spent as director of the industrial group,
which was owned by a merchant bank and of which San Giovanni con-
tinued to be the flagship. Having examined the business’s poor historical
profitability, we will go at length into Pareto’s sometimes-heated contri-
bution to the intriguing debate ongoing within the company regarding

52 F. Mornati
the reasons for this modest performance as well as into his involvement
in the disastrous financial speculation which put an end to his managerial
career. Against this background, the technological and organisational his-
tory of the San Giovanni ironworks during the 1880s is traced, along
with Pareto’s continuing desire to make a contribution in relation to
managerial issues, together with the parallel problems experienced at the
other two ironworks making up the group (which were located respec-
tively at Mammiano in the Tuscan Apennines and at Corneto Tarquinia
on the coast near Rome). At the same time, a detailed account will be
given of Pareto’s unsuccessful attempts to establish the optimal location
for the plants by transferring them either to Torre Annunziata or to the
outskirts of Milan. Subsequently, the strategies adopted by Pareto for the
purchase of the disused railway rails which constituted the main source of
raw material for the ironworks will be analysed, as will the complicated
and shifting cooperative agreements he established with a number of the
main competitors. Among other matters covered will be an unprofitable
venture on the island of Elba and his various attempts to procure more
favourable railway tariffs, an alternative he clearly favoured over the gov-
ernment’s proposed measures for customs tariffs protection, which would
lead to the neutralisation of the new methods of production he had
recently introduced at San Giovanni.
4.1 E
xperiences with the Società delle Strade
Ferrate Romane
Pareto, despite not having a “great taste for locomotion” but having rather
“the dream of working in mechanical or metallurgical industry”,1 in the
summer of 18702 took up employment with the Società delle Strade
Ferrate Romane in Florence3 as an engineer in the locomotion and rolling
stock section,4 being made Section Head5 in the summer of 1872. His
role involved identifying improvements for the locomotives and for the
repair workshops in Florence and in Civitavecchia, which he did to “the
entire satisfaction” of his superior (the French engineer Devillard), achiev-
ing fuel savings as well as improving the efficiency of repairs to the
locomotives.6
Twenty Years in Industry Management 53
However, in the autumn of 1872 Pareto complained about changes

pending in the higher echelons of the company which would see people
promoted who were inappropriate and thus unacceptable to him, leading
him to tender his resignation.7 This is what he did on the 24th of October
1873,8 on the grounds that while he had performed all that was required
of him, he had not obtained the least advancement within the company.9
4.2 Experiences with the Società

per l’Industria del Ferro
After his resignation from the Roman Railways Company, Pareto soon
found a new and potentially (in the light of the preferences described
above) more gratifying position, being hired in the following November,
on the recommendation of Ubaldino Peruzzi,10 by the Società per
l’Industria del Ferro (Iron Industry Company), which had been consti-
tuted in Florence on the 24th of September 1872. This company had been
created to follow up on the engineer Luigi Langer’s proposal to exploit the
deposits of coal (or more exactly xyloid lignite), located in Castelnuovo dei
Sabbioni in the municipality of Cavriglia (in the vicinity of San Giovanni
Valdarno), as a source of low-cost fuel for use in the boilers of steam loco-
motives and, in particular, in the ovens of the ironworks the company was
planning to build to Langer’s specifications in San Giovanni Valdarno (on
the Livorno-Florence-Arezzo-Rome railway line).11
At the time of Pareto’s hiring, the Chairman of the company was
Ubaldino Peruzzi, the General Manager Luigi Langer, and the ten mem-
bers of the board of directors included Carlo Fenzi,12 representing the
Florentine family bank Banca Emanuele Fenzi & Co. which, together
with the Banca Generale di Roma and the Banca del Popolo di Firenze,
was one of the principal shareholders.13
On the 5th of November 1873, Pareto was named “person in charge”
of the management of the San Giovanni Valdarno ironworks,14 while
from the 16th of February 1874 the management of the Castelnuovo
mine was entrusted to the engineer Leopoldo Gigli who retained the post
until the 5th of December 1880 when he resigned following disagree-
ments with Pareto.15
54 F. Mornati
Table 4.1 Annual results for Year Lire

the Società per l’Industria del
Ferro 1872–1873 −84,887.80
1874 −136,947.95
1875 −394,661.30
1876 −104,290.99
1877 −40,996.08
1878 −395,602.36
1879 −165,825.72
1880 −173,707.37
Source: See Busino (1977, p. 58)
Pareto’s first management experience was characterised by annual

results which were constantly negative (Table 4.1).
The inevitable consequence of this was the reduction in share capital
from six to three million lire which was decided at the shareholders’ meet-
ings held on the 29th of April and the 1st of July 1876.16 At the meeting
of the 17th of May 1879, the company acknowledged that the losses
sustained in the 1878 financial year meant a further reduction in share
capital of 1,194,000 lire, more than a third of the remaining capital,
which, in accordance with article 3 of the company statute, required a
decision as to whether to continue operations with a recapitalisation or
whether to liquidate the company. It was decided to proceed with the
liquidation, as a major recapitalisation, while essential to finance the
investments required at San Giovanni Valdarno and also in order to pro-
vide the company with the necessary working capital to be able to pursue
a profitable trading strategy, was impossible due to the unfavourable
industrial situation.17
In November 1879,18 Pareto hoped that the liquidation could be con-
cluded as rapidly as possible and informed the Banca Generale, which in
the meantime had become the principal shareholder,19 that the “San
Giovanni ironworks is falling to pieces, large sums are spent on repairs
but it is not possible to keep it in good shape. So we have to find a radical
solution, the whole plant needs renovation”. In February 188020 Pareto
invited Antonio Allievi, managing director of the Banca Generale, to put
pressure on the company to swiftly sell both San Giovanni and
Castelnuovo to the bank, his view being that any possible rivals would
not in fact be able to buy but would nevertheless be able to cause the
a sking price to rise. If the bank bought the company, it would need to
begin the upgrading of the plant very quickly, or the 1881 financial year
would again end in a loss.
The experts responsible for valuing the plants assigned a value of
1000,000 lire to the San Giovanni ironworks, 600,000 lire to the mine
and 350,00021 lire to the Mammiano ironworks.22
Pareto made a thorough exploration of the option whereby the iron-
works and mine might be acquired by buyers other than the bank.23 In
this case the bank, by collecting the moneys owed to it by the company,
by claiming an indemnity for the premature termination of the contract
for production of iron,24 merging its own metallurgical interests with the
Piombino ironworks “Società Anonima Stabilimento Metallurgico di
Piombino” (joint stock company of the Piombino metallurgical plant)25
and then transferring there all the raw materials currently held at San
Giovanni and Corneto Tarquinia,26 would stand to “gain enormous sums,
even more than in San Giovanni, since the rails arrive by sea and will cost
less delivered to Piombino than to San Giovanni”. On the other hand, in
Pareto’s view, any other buyers would lose heavily, due to the need to
acquire raw materials then available only at high cost as well as to the dif-
ficulties of running San Giovanni and Castelnuovo, so that “when they
are tired of losing … a favourable opportunity will present itself to buy
back the mine and the ironworks at a very low cost”. But even more,
while the new owners of the company were in difficulty, the bank would
be able to reorganise Piombino at its leisure so as no longer to fear any
competition. “Basically we have to face the facts: if we have been able to
achieve anything it is because Piombino was in the hands of people with
no business acumen, because in fact they enjoyed fundamentals much
superior to our own and could have posed a very serious and damaging
competitive threat.”
In the end the Società del Ferro sold the San Giovanni and Castelnuovo
plants to the Banca Generale in the spring of 1880 for a price of 1,400,000
lire.27 During the complex negotiations which preceded the sale, Pareto
acknowledges having given priority to the bank’s interests while seeking
at the same time not to sacrifice those of the company, in the sense that
the sum returned to shareholders amounts in his view to double the real
value of the San Giovanni and Castelnuovo plants.28 As for the Mammiano
56 F. Mornati
ironworks,29 Pareto suggested the bank compete with Fenzi’s attempt to

buy it at auction at the knockdown price of 200,000 lire, obliging him to
pay a higher amount. Indeed, the more Fenzi paid, the less Mammiano
would pose a threat to San Giovanni. In the end the Mammiano iron-
works was also acquired by the Banca Generale for 302,000 lire.30
The company was formally wound up on the 31st of December 1880.
The liquidation allowed for the payment of outstanding debts only, so
that the shareholders were obliged to bear the loss of the entire capital,31
Pareto’s previous claim notwithstanding.
4.2.1 Initial Assessments of the Corporate Crisis
Having taken over the management of the ironworks between the end of
March and the beginning of April 1874, Pareto immediately formed a
highly negative opinion of the company’s entire production process32 for
reasons which he assigns to what he considered his direct superior Langer’s33
fundamental technical, managerial and commercial incompetence.
At the beginning of June 1874, at the moment of his first periodic
report on his management, Pareto proposed the substitution of the pud-
dling furnaces with reheating furnaces,34 the use of waste lignite as fuel
and the production of common iron rather than refined iron, as he was
convinced that in this way the company could obtain an annual return,
albeit modest,35 in place of a loss. It was his view that shareholders, if they
failed to grasp this “means of deliverance”, could “prepare themselves to
close shop”.36
Fenzi’s response showed his gratitude for Pareto’s constructive criticism
in regard to the problems at San Giovanni and his favourable opinion of
the use of waste lignite, agreeing that the puddling furnaces were not yet
fully reliable, yet stated his view that as long as the cost of raw materials
continued to be high, iron production could but have limited profitabil-
ity no matter what technology was adopted.37
At the beginning of March 1875 Pareto reported that the San Giovanni
ironworks continued to operate at a loss. As the Banca Industriale di
Firenze appeared reluctant to extend further credit to the company, the
future looked bleak.38 At the same time, despite Langer’s resignation (ten-
dered supposedly because of Pareto’s indiscipline39 and approved40 by the
board on the 3rd of May 187541), Pareto thought that the “the company’s
financial fortunes are too compromised to recover soon, if ever”.42 Thus
the attempts by Fenzi (leader of the committee of board members tempo-
rarily running the company43) to further involve the Banca Generale and
to involve the Credito Mobiliare di Firenze in the ironworks44 appear to
him vain. In reality the Banca Generale was trying to reduce its holding
in the company45 while the Credito Mobiliare had “no interest in sup-
porting an ironworks which would be in competition” with its own,
referred to above, in Piombino.46
To emerge from this corporate crisis, Pareto now considered that only
two strategic options remained: either the partial renovation of the iron-
works or alternatively the adoption of an aggressive commercial strategy.
4.2.2 The Partial Renovation of the Ironworks
In the summer of 1876,47 Pareto visited ironworks in Belgium (at Liège

and Charleroi) and in France (at Creusot, in the Saone-Loire depart-
ment, and at Anzin in the Nord department).48 On his return he informed
the board as to the best technological options for the ironworks.49
The crisis which was affecting the iron industry at that time, particu-
larly in Germany and in Belgium, was due mainly to the progressive
substitution of steel for iron. The only types of iron which remained
competitive were standard merchant iron (possibly never to be replaced
by steel) and girders.
In the light of this, the fundamental choice for San Giovanni was
whether or not to retain the original large steam engine. Keeping it meant
one among the following: an investment of 119,000 lire to produce gird-
ers and for the purchase of a small rolling mill for smaller templates; an
investment of 85,000 lire for the purchase of a small rolling mill or an
investment of 135,000 lire for the purchase of two small rolling mills.
The best option for replacing the steam engine was with a smaller
60-horsepower model costing 103,000 lire.
Pareto had no preconceptions regarding the best of these options but
whichever one the board decided to adopt he was ready to “make every effort
to make it succeed”. On the other hand, it appeared clear to him that “we
cannot continue as now” and that “urgent action is needed”. In the middle
58 F. Mornati
of September he came out in support of the 85,000 lire option because it

would ensure a profit which while “modest” was at least “certain”, thus facili-
tating the raising of the capital needed for the production of girders.50
An order for the small rolling mill was placed with Crozet and it was
delivered in March 1877, prompting Pareto to express his dissatisfaction
with the various shortcomings of the new machine,51 which began oper-
ating in May, with regular production starting in June.52 In the summer
of 1877 Pareto noted with satisfaction the early results of the small rolling
mill where monthly production had risen from 133 metric tons in June
to 145 metric tons in July and 218 metric tons in August, thanks to the
availability of good-quality rails, the improved expertise of the workforce
and the reduced production of complicated templates.53
Pareto was further convinced, with Fenzi, that only the production of
girders could “secure the future of the ironworks” as demand for these
was constantly rising. Many ironworks were being upgraded to produce
them more efficiently but at San Giovanni, if they were able to “learn
from experience”, it would be possible to lay the foundations for “a more
perfect production process than many of our competitors”.54
In November 187755 Pareto stated that the improved financial results
following the successful technological upgrading of the ironworks had
not yet materialised due to the fall in the price of iron caused by competi-
tors, with their continuing advantage in production costs over San
Giovanni. However, since56 in any case the production costs of Italian
ironworks were far from being minimised, any producer with the capital
necessary to ensure optimum production conditions (i.e. the minimum
costs of production technologically possible) would be able to sweep aside
all competitors and, as a monopolist, could obtain “reasonable earnings”
by the opportune fixing of market prices. Taking into account that the
company, unlike its competitors, could count on its own source of fuel,57
Pareto calculated that it could overcome all competition in Italy by:
–– investing 100,000 lire in the Castelnuovo mine in order to extract
the lignite using the powerful machinery now available and trans-
porting it from Castelnuovo to San Giovanni by rail;
–– investing 600,000 lire for the upgrading of the large old rolling mill
and for the purchase of a medium-sized rolling mill for the more effi-
cient production of small, medium-sized and large templates from the
iron rails which would long continue to be available in Italy, Spain and
in Russia;58 and
–– definitively reducing the production of iron from pig iron, as not
profitable.
None of Pareto’s new proposals were acted on.
4.2.3 P
roposal for an Aggressive Commercial
Strategy
Pareto also proposed an aggressive pricing policy.

At the beginning of November 1876,59 he explained that the current
situation of the ironworks was unsustainable, with an enormous quantity
of iron in stock and a complete dearth of orders. The only alternatives
were thus either for the company to be satisfied with the meagre profits
obtainable by lowering the price of lignite and of iron, allowing both San
Giovanni and Castelnuovo “to be able to struggle on”,60 or, if it wished to
have a larger, although fictitious, profit at Castelnuovo, it had to accept
an effective loss at the ironworks, which would be forced to suspend
operations, compelling Castelnuovo to follow suit. In the light of this,
two possible sales strategies could be adopted:61 either to maintain fairly
high prices and then offer large discounts or other favourable terms on a
case-by-case basis, or to cut prices to the bone and offer only very small
further discounts. In Pareto’s view the second strategy should be followed.
In fact, “it is evident that when there is such strong competition as there
currently is in the iron business, it is up to the producers to make over-
tures to buyers by offering the goods at the lowest possible price, while if
it is decided to wait, then the current situation will continue, with sales
low or non-existent”. However, Pareto’s attempts to provoke a price war
were not followed up by the management.
4.2.4 The Workforce
Unlike Langer, Pareto considered it quite reasonable that the top man-
agement of the company should be informed of the composition of the
ironworks’ workforce as well as its overall cost, while leaving the task of
60 F. Mornati
hiring employees to Pareto. Initially however he accepted a compromise

whereby hiring was done not by Langer but by the board.62 Pareto shared
Fenzi’s view that piecework was the best way to remunerate the workers
and to incentivise them to greater efficiency, and this is the system he
adopted when he was the director of the ironworks.63
Towards the end of 1877, Pareto was convinced that any improvement
in the ironworks’ profitability meant reducing labour costs.64 To that end
he persuaded the French factory supervisor Louis Gagne to move from
Savona (where he was employed in the ironworks owned by Giuseppe
Tardy and Stefano Benech) to San Giovanni, in order to take responsibil-
ity for the workforce of the small rolling mill. This position, which
included the power of hiring and firing, was paid a fixed monthly salary
of 250 lire plus a third of any savings achieved in terms of manpower for
each metric ton of iron produced, in comparison to the initial level.65
Pareto also took pains to create optimum working conditions for the
workforce. This included training, for example in instructing new opera-
tors regarding the use of the shears to cut the iron rails without getting
hurt.66 He also consulted the chemist Ugo Schiff, a lecturer at Florence’s
Museum of Physics and Natural History and an habitué of Emilia
Peruzzi’s salon, concerning the correct proportions of coffee and schnapps
to be provided to the men working at the furnaces in place of water,
which was harmful to them.67
On the other hand, Pareto was intransigent in imposing workplace
discipline, on the 8th of April 1874 proceeding to fire on the spot eight
employees working with the shears who had asked for a pay rise and
threatened to quit if not satisfied. When they staged a protest, Pareto had
them accompanied off the premises by the police, hoping in this way to
set an example to “people who try to throw their weight around”.68 For a
few weeks peace69 returned to the ironworks, confirming Pareto in his
opinion that in relations with the workforce “you need always to be fair,
but above all assertive and not let yourself be put upon”.70
But on the 10th of July conflict broke out once again, more violently.
Pareto was struck by a workman whom he had just fired for threatening the
foremen.71 On the eve of the trial, which was held on the 24th of August at
Arezzo, Pareto, downplaying the incident, confided that he would not
object if his aggressor were to be acquitted72 but, at the conclusion of the
proceedings, with the defendant sentenced to the minimum punishment

of a month and three days’ imprisonment, he criticised the organisation of
the trial (witnesses were examined only partially and the presiding judge
expressed doubts on whether violence at the workplace should be punish-
able by dismissal), saying that it constituted “a real disgrace”, with negative
repercussions for the disciplinary climate of the ironworks.73
At the end of 1879,74 on the occasion of a strike by the workforce of
the Piombino ironworks in protest against the use there of prisoners con-
demned to forced labour, Pareto noted that this practice also harms the
workers at San Giovanni, to whom the company is able to pay salaries as
low as those paid in Piombino thanks to their use of forced labour. Pareto
agreed to sign a letter of protest prepared by his workers and also asked
his Genoese allies75 to put pressure on the administration to demand that
Piombino pay the forced labourers the same as free workers.
More generally, in 1880 Pareto asserted that the lower productivity of
Italian compared to English workers is not due to lower salaries as
claimed by the current finance minister Agostino Magliani but to the
fact that “they make use of equipment and machinery which is much
less perfect”.76
In 1882 Pareto, noting that Italian industry needs “good workmen and
good foremen”, says he is willing to help “young people with some school-
ing” to enter on satisfying company careers, starting out as ordinary
workers but then, thanks to their technical training and their brains,
“attaining better remunerated positions”, while he is not interested in
those youngsters “who fear to get their hands dirty and aspire to be
penpushers”.77
In 1883, he noted that it was probably “the good-natured Italian tem-
perament”, together with Italy’s limited industrial development, which
meant that “the possibility of conflict between workers and employers is
unlikely” because the former understood that excessive demands on
their part could prompt the latter to close their businesses which already
were barely profitable. Therefore, said Pareto, possible social legislation,
in its attempt to protect industrial workers, apart from “creating caste
divisions … does not answer to any urgent need on the part of the
Italian population”.78
62 F. Mornati
Here Pareto is alluding specifically to two interconnected pieces of

draft legislation.79
The first, which became law n° 1473 of the 8th of July 1883, concerns
the creation of the national fund for insurance against workplace acci-
dents. Pareto approved of the principle but made some constructive criti-
cisms of the law’s shortcomings.80 In particular, while he approved of the
savings banks’ participation in the fund, as by statute they are obliged to
reserve a part of their profits for charitable ends, he nevertheless felt that
clarification was necessary as to how the state would provide support to
the fund in case of need, support which was required for imperative ethi-
cal reasons even if it was not formally specified in the draft law. He also
considered it inappropriate to pay compensation in a lump sum which
the beneficiary might squander, as well as believing to be unacceptable
and discriminatory the fact that only manual workers were covered by the
scheme.81
Pareto also took a positive view of the cooperation between insurance
companies both in reducing the costs of accident assessments and in
establishing the amount of insurance premiums, which were supposed to
vary in relation to the varying exposure to risk of different types of job as
well as to varying levels of pay (e.g. miners are among the workers most
exposed to risk but are also among the best-paid and so could pay higher
premiums compared to workers who were less well paid but also less at
risk82).
On the other hand, Pareto was totally against the draft legislation on
the civil liability of entrepreneurs for cases of workplace accidents,83 firstly
because it had not been demonstrated that workers are more interested in
their physical “preservation” than are their bosses; secondly because of the
injustice of the employers always having to bear the burden of proof; and
thirdly because any such law would be paid for by the workers through
the cutting of salaries84 and possibly of jobs.85
Lastly, we have the following estimate of the company’s average overall
annual employment figures, showing a pattern of growth, albeit irregular
and mainly accounted for by the increase in jobs at San Giovanni, the
most important of the plants, while employment at Mammiano and
Castelnuovo remained essentially stable in absolute terms (Table 4.2).
Table 4.2 Estimated average annual employment for the Società per l’Industria
del Ferro
Year San Giovanni Mammiano Castelnuovo Total
1872–1873 700 200 600 1500
1874 750 220 698 1668
1875 800 220 680 1700
1876 900 250 690 1840
1877 950 260 610 1820
1878 960 260 610 1830
1879 960 260 690 1910
1880 830 240 660 1730
4.3 E
xperiences with the Società delle
Ferriere Italiane
In the final stages in the history of the Società per l’Industria del Ferro,
relations between Pareto and the Banca Generale became very close.
At the end of 1877, at the shareholders’ meeting it was decided not to
renew the mandate of the board of directors’ committee (composed of
Carlo Fenzi, Moisé Valensin and Filippo Schwarzenberg) which, follow-
ing Langer’s resignation in May 1875, had assumed collective responsi-
bility for the running of the company. The managerial role was assigned
to Pareto, who moved to the new headquarters in Florence while retain-
ing interim responsibility for the management of San Giovanni. Pareto
nevertheless sought to continue to exercise direct control over the iron-
works, obliging the factory supervisor of the time, Lorenzo Corsi, to send
him the daily production digest, together with comments, and making
provision for cash penalties if these reports were incomplete.86
In May 1878 the Banca Generale decided, albeit reluctantly, to take on
greater responsibility for the running of the company.87 In particular, an
agreement was made whereby the San Giovanni ironworks would pro-
duce and sell iron on behalf of the bank, using iron rails bought from it,88
for a fixed price of six lire per metric ton. This agreement was lucrative for
San Giovanni which was able to make a modest profit of 51,383 lire for
the financial year 1878.89
64 F. Mornati
In the new organisational setup, Pareto was given power of attorney to

act on behalf of the Banca Generale in commercial transactions90 and on
the basis of this he selected the suppliers of rails,91 negotiated sales of the
iron produced and freely decided between San Giovanni and Corneto
Tarquinia92 in allocating orders received from clients. Pareto thus began
to glimpse the fulfilment of his desire for “the manager to have a very free
hand in business and in industry, with the counterbalance of a very close
check kept on his actions by the board”.93 On the other hand, towards
the end of his experience in general management,94 Pareto stated that the
need to submit variations in the sales price for iron and for supplies to the
prior approval, or at least the ratification, of the board of directors means
depriving the company of that “speed of reaction, that unity and efficacy
of purpose which is the foremost requirement for success in industrial
businesses”. This means “clients must have a rapid response” and this
response must be given by a single person rather than by “a committee
meeting every so often”. Thus, it was essential that “the general manager
should have complete liberty of action”.
At the conclusion of the aforementioned liquidation of the Società per
l’Industria del Ferro, on the 28th of August 1880 the Banca Generale set
up the Società Italiana delle Ferriere (Italian Ironworks Company),95
immediately transferring the Castelnuovo and San Giovanni plants to it
together with the lease for the ironworks of Corneto Tarquinia and, a few
months later, the Mammiano plant.96
The capital of the new company was 4000,000 lire, divided into
16,000 shares of 250 lire each: the bank underwrote 50% of the capital
and was confident of being able to place the remainder via a public issue.97
The board of directors appointed Ubaldino Peruzzi as chairman of the
company, Antonio Allievi98 Managing Director and Pareto General
Manager.99
The principal concern of the Banca Generale, pending the recovery of
the sums invested in the iron industry with little return, seems to have
been not to increase its exposure towards the new company.100 During
the time Pareto was in charge, this aim was not fulfilled, in that the com-
pany’s debts towards the bank increased steadily from 2,602,553 lire in
1881 to 6,637,525 in 1890.101 At the beginning of 1884 Allievi, at the
request of the bank, asked Pareto to prepare a precise proposal in regard
to the company’s maximum normal requirement in terms of working

capital. Pareto asked for a maximum of five million lire, to which Allievi
objected, but Pareto, although “perfectly aware that the first rule of good
administration is to restrict the amount of working capital as much as
possible”, said that he did not think he would be able to “keep to a lower
limit”.102
The decade that Pareto ran the company saw wild swings in produc-
tion, sales and stocks of iron, as well as sales volumes which were nor-
mally lower than production volumes, giving rise to high average volumes
of stock.103 The fact that sales did not keep up with production obviously
had a negative impact on the company’s profitability, which was also
weighed down by the considerable cost of stocks. Pareto’s management
seems thus to have been more focused on production factors than on
commercial ones (Table 4.3).104
In fact (very meagre) dividends were paid out only in the three-year
period 1881–1883. The net positive balances achieved in the financial
years from 1885 to 1889 were used to make good the loss for the finan-
cial year 1884, for which it had been decided not to reduce the capital
accordingly, in order to avoid the need to ask the shareholders to pay in
new capital to cover the missing amount. Allievi hoped that 1889 (Pareto’s
last complete financial year in charge) would yield a profit which would
cover the remaining part of the loss for 1884 and allow the distribution
of dividends to the shareholders to be resumed. Instead he had to be con-
tent with seeing the loss reduced to a value of 26,000 lire.105
Table 4.3 Net final balance sheet Year Lire

figures for the Società delle
Ferriere Italiane 1881 1000
1882 4000
1883 180
1884 −279,000
1885 29,000
1886 61,000
1887 66,000
1888 91,000
1889 6000
Source: See Confalonieri (1974, p. 288)
66 F. Mornati
The company’s results depended both on its own productive efficiency

and on the general state of the market for iron, which was represented, in
Pareto’s view, by the Glasgow price of warrants for pig iron. This price
followed a cyclical pattern, leading Pareto to conclude that they should
“always exercise caution and remember that neither sharp rises nor steep
falls are ever of long duration”.106 In particular, Pareto thought that a
positive state of the market could be equated with a price of iron which
exceeded 45 shillings per metric ton.107
It is interesting to note that Pareto’s management of the company had
a beneficial effect on the headcount, which increased at all the plants,
particularly at San Giovanni, which had always been the biggest employer,
and which now saw an increase of 75% in the number of employees. It
also led to an increase in the company’s share of iron production in Italy
(Tables 4.4 and 4.5).
An interesting critical assessment of Pareto’s administration was
expressed by Giovanni Battista Favero, an engineer, University of Rome
professor108 and member of the board, who at the board meeting of the
28th of August 1884 blamed the crisis at the company not on the diffi-
culty of achieving sales (which, in Pareto’s opinion, affected all companies
in the sector) but squarely on the grave shortcomings of Pareto’s manage-
ment, the latter being incapable either of producing and selling iron (due
to “[his] insufficiently docile character, unbending in response to
Table 4.4 Estimated average annual employment at the Società delle Ferriere
Italiane
Year San Giovanni Mammiano Castelnuovo Corneto Rogoredo Total
1881 850 250 680 180 1960
1882 950 300 600 210 2060
1883 1150 300 600 210 2260
1884 1500 300 600 210 2610
1885 1500 300 650 250 2700
1886 1500 300 650 250 2700
1887 1500 300 650 250 106 2806
1888 1500 300 650 250 106 2806
1889 1500 300 650 250 102 2802
1890 1500 300 650 250 102 2802
Table 4.5 Variation of San Giovanni’s percentage share of the total production of
the developing Italian iron industry
1881 1882 1883 1884 1885 1886 1887 1888 1889 1890
9.6% 13% 15.6% 17.3% 11.6% 11.9% 12.7% 12.5% 11.2% 14.2%
Source: See Scagnetti (1923, pp. 173, 188)
c ustomers’ demands [, which] does not endear him to clients”109), or of

directing personnel and running the plants in keeping with stable and
prudent principles.110
Pareto’s immediate reaction was to propose to the board to appoint
Favero as General Manager, declaring himself ready to continue to repre-
sent the company within the buying consortium set up with Tardy and
Raggio111 while continuing as technical director of the plants only.112
Later Pareto made a more complete response to Favero’s accusations.113
Here he emphasised that even Raggio at Genoa had enormous stocks of
merchant iron, “which everyone produces, where competition is greatest
and profits lowest” while Tardy at Savona was better placed because they
produced for the builders, a type of demand they had been able to antici-
pate and satisfy for years: “that is the only way to make money in this
industry”. Pareto added that “it is evident that our attempts to fix fair
prices for iron114 chiefly benefit those ironworks which are not part of the
agreement”, for example those of Udine or Angelo Migliavacca’s at
Vobarno in the vicinity of Brescia, which sold all their iron at prices
slightly lower than those agreed by Pareto with Raggio and Tardy. Further,
if the agreement was terminated, with the ex-partners becoming com-
petitors once again, prices would descend “far below those prevailing
now”, with the result that the ex-partners would suffer more than the
smaller ironworks “because our production volumes are higher”. The
choice in regard to commercial strategy was therefore between continu-
ing to favour the interests of the smaller ironworks to the detriment of
the company itself as well as Raggio and Tardy, or to inflict damage on
them at the cost of doing even greater damage to the three ex-partners.
Lastly, Pareto remarks that none of the producers selling iron to wholesal-
ers asks them what use is to be made of it, simply because the latter, being
only intermediaries, do not know what use their clients will make of it.
68 F. Mornati
Pareto emphasises that, in general, “if in a business as disparate as ours

you try to construct an accusation based on the complaints of one or two
of the clients, then no management will survive such a test”.
In an attempt to sustain the company’s fortunes, in the second half of
the 1880s Pareto obtained the authorisation of the bank’s board of direc-
tors to start short-selling115 the above-mentioned Glasgow warrants. Up
to 1888 this speculation was successful, producing a cumulative return of
309,714 lire,116 but in 1889 it yielded a loss of 244,110 lire.117 In order
to avoid negative repercussions on the company’s credit and on the bank,
Pareto’s resignation, which was consequently imposed by Allievi (and
officially tendered on the 15th of May 1890), was justified by Pareto’s
supposed reluctance to move to the company’s new headquarters in
Rome, and was also mitigated by a contract for technical consultancy
which expired, without being renewed or indeed ever performed by
Pareto, on the 31st of December 1891.118
Pareto’s assessment of his long experience in management can be found
in the following bitter and harsh words, from a letter written to Emilia
Peruzzi on the day following his resignation; “I seem to be completely
reborn now I am free of that company, cursed be the day that I joined it!”.119
Although the conclusion of Pareto’s long management experience
might seem to have come out of the blue, and have been mainly due to
other people’s actions for which (as we will see shortly), Pareto was
responsible only in failing to exercise sufficient oversight; nevertheless, it
represents what was possibly the inevitable culmination of a difficult
relationship (bearing in mind the number of occasions on which Pareto
had previously resigned, only to be begged to rescind his decision) in
which the undoubted awkwardness of his character together with the
less-than-brilliant financial results came to outweigh the future professor
of political economy at the University of Lausanne’s outstanding techni-
cal competence, strategic intelligence and ongoing devotion to the com-
pany’s cause in the minds of the shareholders.
Little is known of Pareto’s engineering activities following his resigna-
tion. There are some traces of attempts to return to freelance professional
work, which came to nothing due to a supposed government antipathy
which put possible clients off,120 as well as of a brief period in charge of
the lease of Ubaldino Peruzzi’s cement oven at Monte Pilli near Florence,
likewise penalised by the government.121 Having realised the impossibil-
ity of continuing in the engineering profession and pending other oppor-
tunities, Pareto kept writing occasionally on reviews as in the final period
of his time in management.122
Appendix: The Warrants Affair

A warrant (or warehouse warrant) is a certificate issued at the time of an
article’s delivery to a warehouse which thus can then be traded or used as
security in requesting loans.
On the 14th of January 1887 Pareto obtained the authorization of the
bank’s board of directors for the short-selling of warrants for pig iron at
the then price of 47 or 48 shillings on the basis that if thereafter the price
of purchasing warrants for delivery to customers were to fall, the com-
pany would derive a profit from the speculation to set against the fall in
the market price for materials held in stock.123 This type of speculation
had been performed since the company was set up and had yielded the
following constantly positive annual results (in round figures; Table 4.6):
On the 17th of April 1889 Pareto asked the company’s board of direc-
tors “to issue a general authorisation which, up to a certain figure, allowed
the general manager to undertake such operations for the sale of warrants
at times of an ongoing increase in the price of materials” in order to make
good any losses caused by the rise in the sales price for raw materials. The
board approved such operations for amounts corresponding to two
months’ consumption of raw materials.124
Table 4.6 Yields from speculation in Year Lire

warrants
1881 101,267
1882 35, 036
1883 59, 947
1884 16,668
1885 511
1886 28,495
1887 37,250
1888 30,541
70 F. Mornati
However, at the council sitting of the 18th of March 1890125 and in

the justified absence of Pareto (who normally participated very actively in
these meetings), Allievi was obliged to report that in 1889 “operations of
trading in warrants were undertaken with no notification being given to
either the managing director or to the board, using an arbitrary policy
different from [the one] the board had authorised and leading to the loss
already confirmed for 1889 as well as to a possible loss for 1890”. Pareto
sought to justify himself to Allievi by maintaining that these operations
“had the aim of protecting the company from the effects of variations and
oscillations in the prices of raw materials”. But Allievi reminded Pareto
that he had been given a limited authorisation, which had been violated,
to engage in speculative operations in which, as Pareto himself admitted,
sales, repurchase and subsequent resale transactions had been performed
“in order to cover the loss, but making it even larger”.126
Allievi was in no doubt of Pareto’s good intentions but deplored his
having misinterpreted his powers and having informed him about the
events when the damage had already been done. Therefore, he requested
that the supervision of the general manager’s performance on the part of
the managing director, as specified in article 21 of the company’s statute,
should be implemented (even if Pareto considered that it was “impossible
to implement”) and to this end he asked that, in accordance with article
2 of the company’s statute, the company headquarters be transferred to
Rome, where Allievi had his principal business premises at the bank.
According to Allievi “it is regrettable that while the business is going well,
and largely thanks to Mr. Pareto, the results of the balance sheet should
be such as not (in all probability) to reassure the shareholders as regards
the good order of our company”. In the meantime, Pareto had resigned,
recognising that he had exceeded his powers but declaring himself willing
to remain within the company as technical director or simply as a techni-
cal consultant.
This being decided, for the inevitable company reorganisation Allievi
suggested the setting up of an advisory commission consisting of himself,
Favero and the councillor Cesare Ceradini (an engineer and teacher at the
Engineering School of the university of Rome), who, together with chief
accountant of the bank, had just performed a check on the company’s
accounts, finding them in good order and concluding that the affair of
the warrants was an isolated case.
After Allievi had announced, at the board meeting of the 2nd of May
1890, his discovery that the warrants affair had been the direct responsi-
bility of the company’s sole chief accounts clerk, who was also one of
Pareto’s right-hand men,127 Pareto at the meeting of the 12th of May
1890128 “accepted that closer collaboration with the managing director
would have saved us the warrants business”.
However, Allievi reiterated that the revelation of the head clerk’s deci-
sive role, while not aggravating Pareto’s personal responsibility, made
abundantly clear the need for appropriate close supervision of the admin-
istration. Allievi further announced that “in the committee and in the
council of the Banca Generale the news of what has happened made an
terrible impression, particularly in the present negative climate for busi-
ness in general”, especially as it meant Allievi would have to rectify the
forecasts for the 1889 financial year, when the process of making good the
losses of 1884 was due to be completed, allowing the paying of dividends
to be resumed. At this point Pareto gave in, declaring himself to be in any
case “at the complete disposal of the board, ready, if they wish to retain
my services, to go wherever they desire, in whatever capacity they see fit”.
At the next meeting of the 15th of May 1890,129 with Pareto absent,
the board, prompted by Allievi, agreed to transfer the administration
from Florence to Rome. They also considered it “opportune that Mr.
Pareto” should quit “his present position of general manager” for “that of
technical consultant to the company”. As the sting in the tail, Allievi
reports that “Mr. Pareto was informed of this decision, and it was further
pointed out that it was also based on an estimation of his character as
being ill-suited to bearing the responsibilities associated with manage-
ment and on his diminished authority with the workforce as well as
reduced trust in him on the part of the board in the light of these
occurrences”.130
4.3.1 The San Giovanni Ironworks in the 1880s
At San Giovanni, the bank, having taken over the company, rapidly
added to the existing ironworks a new ironworks consisting of a com-
pound steam engine, a large rolling mill and a smaller rolling mill.131
Thus, commenting on San Giovanni’s disastrous results in February
72 F. Mornati
1883, Pareto does not ascribe these to production problems132 but to the
collapse in the price for refined iron133 together with the absence of a cor-
responding fall in the price for scrap. To be more exact, the price of iron
from abroad is never stable but “shows an uninterrupted sequence of
consecutive falls and rises”. At the same time, the price of rails exhibits a
variation which is always “deferred in comparison to finished iron”
because those holding stocks of rails “prefer to and are able to wait, at the
beginning of a fall, to see if the price will rise, and only after the fall has
continued for a long period will decide to sell at a lower price”.
Allievi observed that the crisis makes it incumbent “on the managers
to make a careful and diligent assessment in regard to every detail of both
commercial and industrial performance”.134 In particular, Allievi referred
to the need to make changes to the organisation of the company’s sales
network in Rome, Florence and Ancona to eliminate the monopolies
which the agents (Sinigaglia in Rome, Fossi in Florence and Costantini in
Ancona) had created “to their own singular advantage”. Pareto stated that
he would seek to do this but pointed out that these agents, in taking
upon themselves the risks, had freed the company from any responsibility
or worry in regard to credit risks of individual clients; if the company
were to deal directly with the ultimate clients, it would succeed in selling,
and necessarily on credit, less than a quarter of what the agents are able
to achieve, thanks to the fact that each of them keeps a close everyday
watch over his own clients and performs his work “with courage but also
with skill”.135
Since the old ironworks was making a loss while the new one was mak-
ing a profit, in September 1883 Pareto proposed the suspension of opera-
tions at the former in order to reap the resulting benefits,136 as follows:
lower consumption of raw materials in a period in which they were scarce;
increased availability of lignite for sale in the trade; reduction in general
expenditure thanks to the possibility of laying off half of the technicians
and workforce.137 However, in the months of October and November
1883 production everywhere became profitable once again, with the
most profitable area being precisely that of refined iron which had previ-
ously brought losses “and this largely because of puddling and because
the factory hands have now acquired the expertise which they were
lacking”.138
In May 1884 Pareto observed that the new ironworks was producing
900 metric tons a month as against 700 anticipated in 1880 while the
average monthly costs were 46.42 lire per metric ton against the 48
anticipated. Hence the objective for the new ironworks to “produce large
quantities at a good price”139 had been abundantly achieved. The fact that
profits were lower than forecast was due rather to the selling price being
170 lire per metric ton as opposed to the forecast 195 lire.
The general conclusion was that “every industry is subject to crises and
every type of merchandise undergoes variations in value which are impossible
to predict: the highs generally counterbalance the lows and in industry calcu-
lations should be based on the averages of a substantial number of years”.
In the spring of 1885, Pareto reiterated that “nowadays as regards
improvements in the processing of iron, not much more can be achieved
at San Giovanni. We are the best producers of rounds, for small girders
we do the best we can in the absence of a sufficiently powerful machine,
as the board well knows; our best iron has overcome the competition
from German iron in the northern Italian markets”.140 In the autumn of
1885, Pareto adds that the production costs at San Giovanni are now
lower than those of Raggio or Tardy and this is the reason why the iron-
works can be competitive with rival ironworks located on the coast or
benefitting from hydraulic power.141
However, in the autumn of 1886 Pareto was obliged to report that San
Giovanni was suffering a diaspora of workers attracted by the better rates
of pay on offer at the new steelworks at Terni thanks to the favourable
government treatment it enjoyed. Pareto proposed to the board that they
should close the ironworks and inform the municipality of San Giovanni
that the reason for this was the special treatment afforded by the govern-
ment to Terni. Raggio, who had previously made a complaint, had
obtained orders from the government. The board authorised Pareto to
inform the Strade Ferrate Romane and the municipality of the company’s
intentions.142
In 1887 Pareto, having noted that in previous years the return on capi-
tal at San Giovanni had been 7.21% (which he considered “reasonably
satisfactory”143), affirmed that its current bad performance was due to the
fall in prices to 165 lire per metric ton as well as partly to the mediocre
output of the French workers hired to replace those who had left for
Terni.144
74 F. Mornati
At the beginning of 1889, Pareto remarked that the profits produced

by San Giovanni in 1888 (amounting to 255,884.58 lire) “considering
the way the metallurgical industry is going, … is quite a lot … and is due
to the existence of our specialised plant specifically dedicated to the pro-
duction of refined iron and other speciality products where other plants
are not able to compete with us”.145
A short time before his resignation, Pareto formulated an interesting
conclusive assessment of his experience at San Giovanni.146 The value of an
industrial plant depends not on its cost but on its yield. This means that,
where Mammiano produces little and thus is worth little, San Giovanni
produces a lot and therefore is worth a lot, even if this value would decrease
if ironworks located on the coast, enjoying very low transport costs, could
reach the same level of productive efficiency as it had achieved.
Apart from the alternating patterns of the market, in 1883 Pareto pro-
nounced that the San Giovanni ironworks was “parfaitement montée”,
with the only serious problem being to find someone other than himself
capable of managing it well.147
Initially, for the management staff, Pareto contemplated two alterna-
tive organisational structures:148 either two good supervisors for the roll-
ing mills (each to receive 3600 lire a year, plus bonuses in proportion to
the savings achieved on working costs and on improvements introduced
for the rolling mills), to be supervised by a highly expert and motivated
young engineer who would receive 4500 lire a year, rising in accordance
with increasing expertise; or, alternatively, a top-class manager with
plenty of experience to whom the task could be entrusted of training
other supervisors chosen from among the best hands working at the
plant. Pareto was willing to pay this manager 6000–8000 lire a year.
However, since such a person was very difficult to find, Pareto was ori-
ented towards the former solution.
Faced with the possible candidacy of a French engineer, Pareto wished
to propose a remuneration package consisting of a fixed element plus an
element proportional to the quantities of saleable iron stocks together
with a share of the profits.149 This was intended to provide an incentive
for the engineer to take complete charge of all aspects of the work of the
plant. After having assessed a number of foreign candidates with unsatis-
factory results, Pareto continued seeking abroad for a manager who
would be willing to take on the task of producing iron on the basis of a

fixed remuneration, that is, who would agree to produce an agreed quan-
tity of iron in return for payment of a given sum of money together with
a certain quantity of raw material per metric ton of iron.150 Alternatively,
Pareto was prepared, on a trial basis, to take on a foreign factory supervi-
sor who, under the direction of a manager, would display his ability in
return for an annual salary of 10,000 francs, of which half would be fixed
and the other half varying according to the reduction in production costs
he had been able to achieve.151
Above all, however, Pareto was convinced that San Giovanni needed a
manager who could demonstrate, day in and day out, “a rigorous and
constant approach, brought reliably into play as required by the
circumstances”.152
Allievi wondered, in the light of the difficulties of finding a new man-
ager on the market who could satisfy Pareto, whether it would not be
better for Pareto himself to take the position. But Pareto reminded him
that every day between 9 and 3 he looked after San Giovanni, while from
3 pm to 7 pm he took care of the company’s commercial interests, which
required “long experience, knowledge of the business and great
circumspection in order to avoid being vulnerable to deception”. Hence
it was not possible for him to return as manager of San Giovanni while
continuing to be responsible for commercial matters.153 Allievi and Favero
continued to see Pareto as “the right person to impose, through a coher-
ent, vigorous, authoritative and intelligent administration, the smooth
and stable approach which the San Giovanni ironworks has been missing
so far”.154 Wishing to do everything in his power in the interests of the
company, Pareto stated that he was willing to take back in hand the run-
ning of San Giovanni for the time needed “to get everything shipshape”,
on condition that a new company’s general manager were appointed. This
constituted “the greatest possible demonstration of abnegation and dedi-
cation to the company’s interests, because it is not easy to find a chief
executive who is happy to be relegated to second place”. He refused, how-
ever, to cover the two roles because the dual commitment would exceed
his capacities. It was no coincidence if in other ironworks, technical and
commercial responsibilities were covered by two different people. In the
end, nevertheless, Pareto acquiesced, agreeing to return to San Giovanni
76 F. Mornati
in mid-September 1883 in order to take over the management of the new

ironworks while maintaining his role as company’s general manager, if
only on a temporary basis.
Pareto recorded as follows the early results of his return to the manage-
ment of San Giovanni:155 having arrived on the 14th of September “very
quickly everyone learnt that when an order was given it only remained to
obey it and those who were not sufficiently quick to learn this were shown
the door in short order”. Thus, in the first half of September there had
been a profit of only 3144 lire, while in the second half profits rose to
18,158 lire.
Pareto returned to San Giovanni fundamentally in order to establish
whether “the bad performance of the ironworks was the result of a few
key technical factors or whether it was mainly due to a number of lesser
causes”. “After much examination”, the answer was found to be the latter,
in the sense that all the employees needed to possess “the habit of a ttention
to detail and order”, which had never been acquired, or had been lost,
under the direction of the former managers. These habits needed to be
imposed, firmly and consistently, by the manager of the ironworks. He
thought that the current deputy manager Arturo Manassei, with a good
new factory supervisor (the existing one being sloppy and unmethodical)
“could manage the ironworks” and confirmed his willingness occasionally
to spend “a few other fortnights there … in support of its management”.
The board member Francesco Brioschi (the well-known mathematician
who founded the polytechnic of Milan) gained the board’s approval for
the option whereby Pareto could go to San Giovanni every so often “as
required by the circumstances, in order to oversee the technical manage-
ment of the ironworks”, with authorisation to take on “a trusted lieuten-
ant to support him” so as to provide continuity in the efficient management
of commercial matters”.
In May 1884 Pareto felt able to reiterate once again that “if experi-
ence is to be any guide, we are forced to conclude that, even making
ample allowance for incidental factors, the management organisation is
the principal reason for the results we have seen” at San Giovanni.156
Indeed, under the listless direction of Francesco Marzucchi157 (and of
his temporary successor Ridolfo Ridolfi), the plant attained an average
monthly profit of only 2700 lire where the much more dynamic
Manassei, assisted by Pareto, obtained average monthly profits of 19,000

lire. This contrast in performance could not be ascribed to prices since
in Marzucchi’s time the difference between the price of iron and that of
raw materials was 100 lire and in Ridolfi’s 92 lire, while under Manassei-
Pareto it was only 72 lire.
At the beginning of 1885, since Manassei wished to resign, Pareto
proposed to seek a new manager from Germany.158 He negotiated with a
candidate who was willing to accept a fixed salary of 9000 lire plus 5% of
savings on production costs, on condition that the duration of the con-
tract was at least three years. Pareto wanted the candidate to accept the
principle of paying penalties if production costs increased or if there were
complaints from customers regarding the quality of the iron.159
This contact was not followed up but Pareto had noted that the two
young engineers who were present in that period at San Giovanni, Arturo
Luzzatto and Giuseppe Mani were proficient in puddling (Mani) and in
milling (Luzzatto).160 So, in the autumn of 1886, to prevent the resigna-
tion of Luzzatto, who was being courted by Terni, Pareto proposed the
acceptance of his request to be appointed deputy manager for three years
(the manager was the Frenchman Dutard, with whom Pareto was not
happy), raising his salary to 500 lire per month.161
In the spring of 1888 the German Michelis was appointed manager
for a trial period of one year. Pareto hoped that he would be able to
introduce improvements in the techniques of production and reduce
wastage of iron. At San Giovanni “it is necessary to perform the difficult
types of work and do it better than the others in order to reap a reward
for our quality of production. For the simpler types we know that we are
not able to compete with ironworks located on the coast”. But Michelis
was a disappointment, not being capable of performing these difficult
types of work and hence Pareto dismissed him, replacing him with
Luzzatto, who with the assistance of a good factory supervisor could do
a good job.162
At the beginning of 1889 Pareto decided once again that in order to
keep Luzzatto it was opportune to grant him another salary increase,
which the board of directors, prompted by Pareto, formulated in terms of
a 5% share in profits if these exceeded 180,000 lire. This profit share was
to be from a minimum of 1000 to a maximum of 4000 lire.163
78 F. Mornati
4.3.2 T
he Problems of the Corneto Tarquinia
Ironworks
As mentioned above, since the time he began selling iron on behalf of the
Banca Generale, Pareto had been able to allocate orders received between
the ironworks controlled by the bank, that is, San Giovanni, Mammiano
and Corneto Tarquinia. Thus, at the beginning of 1878, the bank, wish-
ing to take advantage of the reduced transportation costs for raw materi-
als unloaded at the nearby port of Civitavecchia, took out an annual lease
on the Corneto Tarquinia ironworks, at the same time agreeing with the
proprietor, Jacopo Bozza, a contract for the production of iron on a
piecework basis.164
Pareto reserved to Corneto the supply of the markets in Naples, Rome,
Apulia and the coast of Tuscany.165 For example, on receiving an order
from Palermo for 100 metric tons of iron, Pareto decided not to pass this
to San Giovanni, as it would not have been highly profitable due to the
transport costs (which were borne by San Giovanni) but to offer it to
Bozza for a payment which, according to Pareto, was “meagre”.166 The
first contract for piecework having expired in April 1879,167 the bank
needed to decide whether to renew it or not.168 Pareto was critical of
Bozza’s high production costs which obliged the bank, in order to make
even a modest profit, to “save every penny on purchases of rails”. Basically,
the agreement with Bozza yielded nothing and did not confer on the
bank “even the influence to be expected from having an ironworks on the
coast”.169 Pareto170 thus concluded that the bank would do well to disen-
gage from Bozza: actually from him “nothing will ever be obtained,
because he is too restless, always thinking of new schemes without wor-
rying about making a success of those he already has in hand”.
Despite this, at the request of the bank, Pareto developed and presented
Bozza with a new piecework project (which he intentionally made
extremely unlucrative so as to discourage Bozza from accepting it) with an
expiry date corresponding to the expiry of the lease on the ironworks (i.e.
31st December 1879). To Pareto’s “surprise”, Bozza accepted the offer, if
only verbally. In this project, basically the bank would provide Bozza with
470 metric tons of rails each month,171 and these were to be converted into
400 metric tons of merchant iron. For the production work, including
transport to Corneto railway station, the bank was to pay Bozza 54 lire per
metric ton plus a third of any profits the bank made out of the Corneto
ironworks.
In December 1879, although Bozza had still not made up his mind to
sign the piecework contract,172 Pareto, in view of the possibility (which
rapidly came to nothing) of a merger between the ironworks of San
Giovanni and Piombino, proposed to the bank the renewal of the lease
on Corneto for one year, with the option of an additional year. At the
same time, he reiterated that “whether or not we reach an agreement with
Piombino, we must realise, in the light of past experience, that we can
never seriously rely on the Corneto ironworks, because of Bozza. Corneto
can be a temporary weapon for the bank but never a serious base for our
activities. Bozza has always lost his own and other people’s money and
unfortunately he does not seem inclined to change”.173
The company’s turbulent relations with Bozza culminated with his
death on the 6th of October 1881.174 Nevertheless, the bank’s dealings
with Corneto continued for a while. In November 1883, Pareto proposed
to the board of directors to take a cue from the crisis in the market for
iron and not to renew the lease on Corneto, with the option subsequently
of taking it back “on improved terms”.175 Pareto did not think it was pos-
sible, in a period of low demand for iron and of correspondingly reduced
production, to accept the request made by Bozza’s heirs to increase out-
put of iron, especially since San Giovanni and Tardy had likewise reduced
production. Further, if Bozza’s heirs decided not to renew the contract,
going back to selling independently, they would be faced with competi-
tion of San Giovanni, Raggio and Tardy who “sooner than halt produc-
tion” would all be willing to accept working temporarily at a loss much
greater than Corneto could bear.176
Pareto obtained the authorisation of the board, together with that of
Tardy and Raggio, to proceed as he saw fit in order to terminate the con-
tract.177 Bozza’s heirs, having accepted the termination but not having
been able to find an alternative partner, returned to Pareto who, with the
authorisation of the board as well as of Tardy and Raggio, insisted on hav-
ing the partners’ explicit agreement on more favourable terms than the
previous ones, in order to negotiate the renewal. It was not in the com-
pany’s interest to act in isolation because, by signing together with the
80 F. Mornati
other partners, they would be able to jointly manage the business in

Naples, whereas otherwise in Naples they would be competitors.178
Raggio, given the difficult business climate, declared his unwillingness to
sign a contract with Bozza’s heirs179 and the company ended up renewing
it alone, only to cede it to Piombino as early as 1885, under the partner-
ship agreement.180
4.3.3 The Difficulties of Managing Mammiano
During Pareto’s time in charge the main innovation for the Mammiano
ironworks, which was investigated by the company but never imple-
mented, was the building of a narrow-gauge mountain railway between
Mammiano and Pracchia, a station on the first trans-Apennine line, the
Bologna-Pistoia, which had been opened in 1864.181 At the end of 1882
Pareto stated that the company “is perfectly capable of acting alone” in
constructing the Pracchia-Mammiano branch, while being quite happy
to build it with other partners if this was more advantageous. To this end,
the proposal made to him by the English engineer Charles Sheibner war-
ranted further investigation,182 and in fact a few weeks later Pareto issued
a mandate to local industrialist Cipriano Turri to commission a plan from
Sheibner for a railway line to be built in short order: three months for the
blueprint and three more for the preparation, again on Sheibner’s part, of
a contract for the building and running of the new line. The expenditure
for the planning of the project was not to exceed 3000 lire, divided
between the company (1500 lire), Giovanni and Cosimo Cini, owners of
the Lima paper mill (1000 lire) and Felice Ponsard & Co. (belonging to
the brothers Cipriano and Giulio Turri), owners of the factory at Limestre
producing pins and copperware (500 lire).183 The blueprint was presented
before the deadline but the three parties concerned rejected it (perhaps
on the basis of the high cost, amounting to two to three million lire), just
as they had rejected, in the summer of 1882, a similar scheme commis-
sioned from the engineer Narciso Frosali.184
In this period, the performance of Mammiano was in any case still
satisfactory, with Pareto attributing this to a particularly efficient new
furnace.185 However, at the beginning of 1884 Pareto was worrying about
the competition to Mammiano from the ironworks in Udine, whose iron

was worse in quality but cheaper. At Mammiano it would be necessary to
start new types of production but this would require fresh investment.186
In the summer of 1884 Pareto acknowledged that the iron from
Mammiano was no longer competitive, even in terms of quality and
range, with Raggio and San Giovanni, let alone with the German prod-
uct. Favero then pointed out that when Mammiano was purchased it had
been said that “it had a sure market and could count on earnings which,
while not enormous, would be reliable and steady”. Pareto replied that
Mammiano had not kept up to date technologically and that, in order to
do this, an investment of 8500 lire would be necessary. This would
improve the quality of the iron but would not guarantee better commer-
cial results, as these were also dependent on the general economic situa-
tion and on the competition, which was not always legitimate, as in the
case of Udine.187 Thus, Pareto proposed for the first time the leasing out
of the Mammiano ironworks as opposed to keeping it going at a loss.188
A year later, Pareto reiterated that in order to turn Mammiano around, it
would be necessary to upgrade the rolling mill to produce merchant iron
from scrap, an operation requiring an investment of 10,000 lire, which
the board approved.189
At the beginning of 1886 Pareto, recalling that in 1885 Mammiano
had shown a profit of 40,000 lire while in 1884 the profit had been
89,529 lire, announced that Udine’s tariff privileges had at last been
revoked and that for the current year improvements could be expected
for Mammiano. This was also thanks to the three newly purchased rollers
which were due to come on line.190 In place of Auberger, who had
resigned, and who had tolerated undisciplined behaviour on the part of
the workforce, Pareto appointed the engineer Mani mentioned above as
manager, and Mani re-imposed discipline. The workers’ response to this
(in May 1886) was a strike. Pareto considered the current rates of pay at
Mammiano to be reasonable and thus was prepared to listen to their pos-
sible grievances only when they had returned to work. Otherwise he
proposed to close the ironworks and re-open it when new employees were
available. The board approved Pareto’s actions,191 which were successful
in countering the strike with the dismissal of ten ringleaders (who could
be re-employed only at San Giovanni) and reinstating the other strikers
82 F. Mornati
on payment of fines ranging from three to ten days’ pay.192 In the same
turbulent period, in place of Mani, Felice Ponsard (son of Auguste
Ponsard, the French engineer who had been the first design engineer of
the San Giovanni ironworks) was hired as manager at a monthly pay of
300 lire plus 5% of the profits, up to a maximum of 2000 lire per annum.193
By then in fact (this was 1887), Mammiano’s standard product, high-
quality bars priced at 27 lire, had been undercut by extremely low-quality
ones priced at 21 lire. The choice was therefore to sell Mammiano or
overhaul it in order to upgrade the manufacture of smaller finished prod-
ucts by installing a new turbine to produce the longer pieces now
demanded by the market.194 For Pareto the best solution was the sale or
the lease of the plant, which would avoid the need to continue commit-
ting working capital which yielded a very low return. However, since
either of these solutions was difficult to achieve in the short term, the
installation of a new turbine costing 12,000 lire could be contemplated.
The board decided to close Mammiano at the end of the year, but
approved the purchase of the turbine in order to facilitate the sale or lease
of the plant.195 Implementation of this decision was then delayed because
since the beginning of 1888, Mammiano’s profitability had been restored,
thanks to Ponsard and to the adoption, on Pareto’s suggestion, of a
Swedish method of production of standard iron using the charcoal which
was abundantly available on the spot.196
However, in the summer of 1889, Pareto repeated that if Mammiano
was unexceptionable from the production point of view, the enormous
costs of transportation absorbed all the profit, so that “the best thing
would be to get rid of this ironworks”, if possible by selling it, even for as
little as 300,000 lire, to the Cinis, the owners of a nearby paper mill who
had often complained that the ironworks took all the wood available.197
Just a few months before Pareto’s resignation, negotiations got underway
with Cipriano Turri for the lease of the plant. Pareto personally proposed
a term of between 12 and 15 years, with an average annual rent of 12,000
lire starting from 6000 lire for the first year and then rising by 1000 lire
each year for the following years.198 Turri agreed about the need for a
long-term lease, “since we have to make Mammiano into a plant of
importance” and also showed interest in obtaining a first option on the
ironworks at a pre-established price. On the other hand, he could not
accept the price offered by Pareto for the lease, proposing instead to pay
a minimum annual rent of 5000 lire, increasing by sums proportional to
the number of steam-horsepower effectively used.199 Negotiations with
Pareto came to an end at this point, since Pareto considered the sum pro-
posed by Turri200 too low, but offered to rent him the ironworks for 5000
lire a year for ten years.201
4.3.4 P
roblems in Deciding the Ideal Location:
The Options of Torre Annunziata (Naples)
and Milan-Rogoredo
In 1885 Pareto decided that despite all the efforts lavished on San
Giovanni, it did not produce a good enough return. This was in part due
to the excessive costs of transportation, deriving from the fact that it was
distant “from the principal points of consumption” for its products, that
is, Milan, Naples and Bari.202 Pareto had long hoped to compensate for
this disadvantage by reducing the costs of production through use of fuel
from the mine and through technical improvements. The contemporary
fall in the price of anthracite had, however, reduced the advantage to be
derived from the use of the company’s lignite and also, as to technical
improvements, “a tremendous amount would be needed to outweigh the
higher transport costs”.
Only two solutions therefore remained: to bring the clients nearer to
San Giovanni, in terms of transport costs, or to bring San Giovanni
nearer to the clients.
If the ironworks stayed at San Giovanni it would be worthwhile, in
order to bring the clients closer, to buy the rival ironworks of Colle Val
d’Elsa and to convert it into a nail factory. Alternatively, relations with
Turri’s pin factory mentioned above, another potential client for the
company, could be strengthened.
As regards the second option, the possibility of transferring the iron-
works to the Ancona area had already been mooted. From there, the
transportation of iron to Bari could be performed at a cost of 5 lire per
metric ton instead of the 25 lire for delivery from San Giovanni.203 On
the other hand, the transfer of the ironworks from San Giovanni to
84 F. Mornati
Ancona would cost the considerable sum of around 300,000 lire, so that
“before contemplating that, every other possibility should be attempted”.
The company thus started to examine the possibility of transferring
the small rolling mill from San Giovanni to Torre Annunziata (a coastal
town near Naples), and of taking advantage of the local municipality’s
willingness to grant the land needed free of charge.204 In the autumn of
1885 Pareto started negotiations with the municipality for the free
acquisition of a plot of land for the construction of a small ironworks
where the small rolling mill could be transferred. Allievi, however,
demanded further study because the bank was willing to give its approval
for the transfer only if it would permit the reduction of the working
capital invested in the company from five to four million lire. In par-
ticular, it was asked whether the new ironworks would really cost no
more than the 200–250,000 lire estimated, whether coordination
among the ironworks owned by the company would be possible and
whether the company’s growing presence in the Naples area with the
new ironworks would not damage relations with Tardy and Raggio.
Pareto’s response was that he saw the new ironworks as the start of a
gradual dismantling of San Giovanni, which could be achieved by offer-
ing some compensation to Tardy and Raggio. The overall cost of the
transfer, amounting to 500,000 lire, of which half for the construction
and half for working capital, would leave the company’s exposure to the
bank unchanged, as Pareto expected soon to get back the 500,000 lire
of credit owed to the company by the former agents Costantini and
Fossi. At this point Allievi agreed to submit the proposal for a transfer
to the bank’s consideration.205
On the 27th of January 1886 Pareto signed a preliminary agreement
with the municipality of Torre Annunziata giving the company three
months to confirm or otherwise its intention to build an ironworks on
the land which the municipality was prepared to cede free of charge.206
Allievi pointed out that everything possible should be done to remove the
obstacles hindering the improvement of the business’s profitability: “the
question of transportation is one of the most serious obstacles and, since
a partial solution is to locate production operations on the sea”, he
declares himself in favour of Torre Annunziata,207 which could serve to
re-establish and expand the Naples market as well as to put pressure on
the railways and on the government (by demonstrating the company’s

ability to reduce its dependence on railway transport in order to obtain
more favourable tariffs).208 In particular, the Mammiano rolling mill
could be transferred to Torre Annunziata and could begin production of
tin, then unknown in Italy. For San Giovanni this would be ideal as it
could then provide all the iron supplied by the company to the central
Italian market.209
However, the bank in the end did not follow up on the proposal for a
move to Torre Annunziata,210 seemingly considering the cost excessive.
On the other hand, in the summer of 1887, the bank moved to
strengthen the company’s position in the increasingly important Milan
market by taking a lease on an ironworks at Rogoredo (an area in the
south of Milan) which had been built in 1886. It was technologically
backward but well placed from the point of view of transport costs, being
convenient for the Milan marketplace and benefitting, for the transporta-
tion of raw materials arriving mainly from Germany, from the favourable
German railway tariffs and the short distances travelled on the Italian
railways.211
Pareto had contacted Luigi Riva, the proprietor of the ironworks, pro-
posing initially to purchase his entire output but desisting when faced
with his demands.212 As an alternative, Pareto proposed to Riva a contract
for the production of iron which would pay him 160 lire per metric ton,
inclusive of the purchase of scrap together with the rental of the iron-
works. Riva’s margin would thus amount to the varying difference
between 160 lire and all the production costs. It was in any case probable
that Rogoredo would yield a monthly profit of 4000 lire to the bank, a
figure which Pareto considered worthwhile in relation to a maximum
working capital of 80,000 lire. However, Pareto’s view was that these con-
ditions were too unfavourable to Riva, and planned to modify them in
his favour in order to incentivise him to continue production. In the end
the board of directors approved the contract proposed by Pareto213 and
the latter soon afterwards discovered that Raggio had attempted to sabo-
tage Pareto’s project by making Riva bankrupt. This attempt had not
succeeded because the liquidator asked the company to continue the
operations of the ironworks so as to give Riva a means of paying his
creditors.214
86 F. Mornati
In the spring of 1888, Pareto pointed out that Rogoredo’s results con-
tinued to improve, adding that “if we had the production facilities there
that we have in San Giovanni, we would be able to say that our compa-
ny’s problems were successfully resolved”.215
However, soon after this, Pareto changed his mind completely, saying
that Rogoredo would be alright as long as it stayed small, so that San
Giovanni could not be transferred there. San Giovanni would likewise
suffer from a partial removal.216 But, in view of the fact that Rogoredo
was able to cover at least part of the needs which had led to the idea of
Torre Annunziata, Allievi, in the summer of 1889, was in favour of devel-
oping it, on condition that Merati (Riva’s principal creditor) was dealt
with. The latter in the meantime had purchased the ownership of the
ironworks, but agreed to the role of lessee in exchange for a share of the
plant’s profits. Pareto noted that Merati could be removed from the equa-
tion only by buying out his share, but alternatively the company could
develop Rogoredo at its own expense on condition that Merati conceded
an extension of the lease from 10 to 22 years.217
In January 1890, Pareto informed the board that Merati, who was in
financial difficulties, had asked for a lump sum, to be paid immediately,
in return for his profit share for the financial years 1889 and 1890. A sum
of 32,000 lire was agreed, which was favourable for the company in view
of the fact that the profit share for 1889 alone would have been 20,000.218
Pareto’s final decision in relation to Rogoredo was to close it for two
months in the spring of 1890, on the basis that “with the crisis that Milan
and Lombardy are going through, no iron can be sold at all”.219
4.3.5 The Purchase of Rails
In Pareto’s management strategy, the limitation of production costs also

meant the limitation of the cost of raw materials through agreements
with the competitors in Liguria.
In May 1879220 Pareto observed that “the purchase of used material is
the most difficult aspect of our business and I need to be judged by the
results obtained and not by the methods I use” especially as, in this regard,
“we are the best-placed”, as shown by the fact that in that period Pareto
was purchasing the bulk of the disused rails from the three biggest Italian
railway companies (Alta Italia, Romane and Meridionali) as well as sourc-
ing large quantities from abroad.
Pareto made use of a number of intermediaries. At the end of May
1879,221 with the despatch to Civitavecchia of a first shipload of Spanish
rails for Corneto and San Giovanni, Pareto acknowledged the role played
in the operation by the intermediary Petri in Livorno, especially in view
of that fact that he had beaten Tardy and Raggio to get hold of them,
prompting the latter to sign an agreement with Pareto for the joint pur-
chase of foreign rails222 (particularly from Russia and Spain). However,
the difficulties of implementing this agreement led Pareto to propose its
annulment to Raggio, while maintaining a mutual commitment when in
competition to conclude “partial agreements, with clear and well-defined
terms, in order to keep prices down”.
More solid, at least in intention, was the relationship which, again in
1879, Pareto sought to establish with Ferdinando Nota, an intermediary
from Bologna, of which no further trace can be found. Pareto drew up an
agreement223 whereby Nota would purchase old iron, in his own name but
on behalf of the Banca Generale and as directed by Pareto, on the follow-
ing basis: the bank would take on all the risks of these operations and
commit to all the expenses necessary “provided they are approved” by
Pareto; the material purchased would be the property of the Banca
Generale, and Nota would receive a commission of 1% “on the price at the
place of origin” while for material sold on behalf of Pareto, he would
receive 25% of the net profit generated by the operation. In return for
these commissions, Nota would make every effort to ensure a successful
outcome of the transactions and would appear as both purchaser and seller
of the material. Pareto224 informed Nota that the time was ripe to do good
business in Egypt because the railways there needed money and so were
keen to sell. More generally it would be wise to have good correspondents
in the East (specifically at Alexandria in Egypt, Smyrna and Constantinople)
“to grab all the opportunities that arise” but that care must be taken, in
finding these agents, “not to end up in the claws of our competitors”.
Later, the agreement with Tardy and Raggio to maintain the price of
iron225 led Pareto once again to explore the possibility of acting in concert
also for the purchase of raw materials. For example, he was considering
88 F. Mornati
the possibility of setting up joint purchasing agencies with Raggio in

Odessa and in Alexandria.226 But for this, three conditions had to be met:
firstly, the prolongation of the agreement on the prices of iron for a num-
ber of years; secondly, just as Raggio wished for his own appointee to be
put in charge of the agency in Odessa, so Pareto wanted to be personally
involved in the finances of one of the agencies because “I greatly enjoy
dealing with commercial matters and I would hate to be excluded”;
thirdly, obtaining the bank’s approval.227
During the difficult period of September 1883, Pareto pointed out, in
regard to the joint purchases made with Raggio and Tardy, “no one is
better-off than us and many are worse”,228 claiming that “it is certain that,
within the iron industry, Tardy, Raggio and ourselves alone are able to get
good value purchasing abroad, which is not at all easy”.229 In the following
October Pareto proposed to Raggio’s general manager, Giuseppe Cenni, to
decrease the price of iron in Milan by one lira for a few days in order to
“frighten” the competitors, particularly Migliavacca and Piombino. The
idea was that, fearing further reductions heralding a collapse in their earn-
ings, they would not participate in the auction for iron scrap due to take
place in Milan, allowing Pareto and the other partners to win the auction,
who then could put prices up again and also sell on some of the scrap to
other competitors with a mark-up.230 In the month of November, Pareto
reminded the Ligurian partners of the opportunity to participate in the
auction for rails in order to prevent Piombino and Migliavacca acquiring
them “too cheaply”.231 In the month of December Pareto advised Tardy to
offer the Andalusian railway company a lower price than that offered by
Pareto for the purchase of a batch of rails. This, in combination with a
letter from Pareto to the Spanish company informing them that Italian
ironworks were in a position to produce iron from pig iron, thus doing
without Spanish rails, was intended to prompt the Spaniards to sign a
three-year contract with the company together with Tardy and Raggio for
the supply of their rails at a price more advantageous to the latter.232
Lastly, strategic sales to competitors also occurred.233 For example, still
in the spring of 1879, Pareto sold Russian rails to the Perseveranza plant
in Piombino under Petri’s name because the plant, belonging to Credito
Mobiliare, had repeatedly declared that it would not purchase from the
Banca Generale. This operation was motivated by the following reasons
(apart from the good profit obtained): firstly, the rails in question were
not of good quality and so, where San Giovanni could have made them
into good iron, Corneto would have been able to produce only bad iron
so that the bank had an interest in consuming as little as possible; sec-
ondly, the bank did not wish for La Perseveranza to be short of rails
because this would induce the Piombino plant to compete with it for the
purchase of good rails, both in Italy and elsewhere.
4.3.6 Collusive Agreements
The manoeuvres described above for the lowering of the price of iron, set
in motion by the Ligurian competitors, prompted Pareto to meet Tardy
and Raggio234 in Milan at the end of May and the beginning of June
1879 to attempt to fix the price of iron and to agree on the division of the
Italian market.235
Prior to a successful agreement, according to Pareto, the bank had to
commit itself to purchasing the output of the Piombino ironworks, whose
production was small but only for as long as prices stayed low; if this situ-
ation changed it would increase its production greatly and this would be
fatal for any higher price that had been agreed. As regards the means of
enforcing the agreement, Pareto excluded penalties for infringements,
partly to avoid the risk of having to pay them and partly to avoid “falling
victim to sharp practice” by other parties. It was thus preferable “to rely,
not exactly on good faith, but on the common interest all the parties have
in maintaining the agreement, in the full knowledge that if this fails, our
competitors will immediately begin a war”. In relation to the division of
the market, Pareto noted that once the agreement had been finalised, it
would be a simple matter for the bank to spot any violations and resume
hostilities against the competitors, if the traditional clients stopped buy-
ing from the company in Tuscany (the region reserved to it) and in Milan
(where all the parties had the right to sell). Pareto was also in favour of an
agreement “based on the principle that each party retains its current
position without either losing or gaining anything”, thus allowing the
company to retain the stock of iron which it held in Milan with the
wholesalers Mangili and Gerli. Pareto was prepared to create a stock
90 F. Mornati
in Milan in common with the other parties to the agreement but only on
condition that “neither Mangili nor Gerli should suffer” as he was certain
that if “we want committed agents we must never abandon them”.
The agreement which was drawn up related to the joint purchase and
sale of Piombino’s output for one year, to a uniform sale price of 19 lire
per hundredweight, in distinct geographical regions, with the sole excep-
tion of Milan where all three could sell on condition that the price was no
lower than that specified.236
At the beginning of October 1879, Pareto observed that “now the
firms of Raggio and Tardy and the Banca Generale [are] so united in the
iron trade that they may be considered as almost a single entity”.237
However, Pareto assured Allievi that he was wary of the partners to the
point that “behind each of their proposals I perceive a trap and, before
accepting, … I inspect and consider it from every point of view”.238
In 1880 the new company confirmed the agreement with Tardy and
Raggio,239 with a provision that any of the three firms could, if desired,
pass contracts received to one of the other partners. Thus, at the begin-
ning of 1884 Pareto passed an order received from the Impresa Italiana di
Costruzioni Metalliche (Italian Industrial Metalwork Company) in
Castellammare di Stabia (owned and directed by Alfredo Cottrau) to
Tardy, possibly because San Giovanni was not able to supply all the spe-
cific finished products requested, and because the cost of transportation
of a metric ton of iron from San Giovanni to Castellammare di Stabia was
21 lire whereas the same quantity transported (by sea) from Savona cost
only six lire.240
Pareto also kept an eye out for competitors from abroad, who had at all
costs to be prevented from entering the Italian market by consistently
offering purchasers in Italy prices lower than those of foreign producers.241
Thus, at the beginning of February 1884, in the light of the strong com-
petition from German iron in the Milan marketplace, Pareto proposed to
the Ligurian partners a reduction of 0.5 lire per hundredweight.242
There was also some friction which Pareto opted not to place impor-
tance on, at least initially. For example, he reported to Allievi that the
partners imported pig iron without payment of customs duties, which
amounted to unfair competition with San Giovanni. Nevertheless, he
asked Allievi to find a discreet solution which would not compromise
relations between the partners.243
In the context of the previously mentioned negative situation in the

iron market, the summer of 1884 marked an important step forward in
Pareto’s alliance with Raggio and Tardy. Pareto underlined the fact that in
the Milan market, the company sold more than Tardy and Raggio, com-
mercial conditions being equal.244 Neither Pareto nor Tardy accepted
Raggio’s consequent proposal to break the agreement and the Genoese
firm did not insist. This decision on Pareto’s part was due to his fear that,
in case of a split, the arrival on the market of the large stockpile held by
Raggio could cause a fall in prices and quantities sold, which would be
disastrous for the company.245
Pareto and Tardy decided to strengthen their collaboration anyway, pre-
paring a contract whereby the purchase of raw materials and the sale of
iron would be performed jointly.246 However, while purchasing operations
could be performed by Pareto and then the raw materials shared with
Tardy, it would be impossible to assign responsibility for and sharing out
of sales “to the arbitrary decisions of either party, since the two producers
have separate existences and interests”. As an alternative, Pareto proposed
a division by types of product and of territory, with Tardy being assigned
the supply of larger items “for construction and heavy industry” together
with retail orders from Sicily and Piedmont, while the company would,
“after the agreement with Raggio”, supply retail orders from elsewhere.
Pareto247 thought that Raggio might take the opportunity presented by
an agreement between the company and Tardy to free himself but Allievi
was convinced that Raggio would remain in the agreement because, if he
left, the company and Tardy together would be able to defeat him. Allievi
also thought that the agreement would be “greatly to the benefit” of the
company as there was “no doubt” of Tardy’s superiority, with “the plant’s
coastal location, its assembly capabilities and its technical expertise”. He
also added that the agreement could be concluded only if the bank was
willing to become a limited partner for Tardy, offering access to working
capital on better terms than those available in Savona or Turin. The bank
would be able to invest 300,000–500,000 lire in Tardy’s business if it
were able to reduce its exposure to the company by the same amount.
Pareto warned that this would lead to an increase in production costs and
to resulting losses. The company’s board nevertheless approved the agree-
ment with Tardy, to be confirmed in writing, including a clause stating
92 F. Mornati
that “the two parties will agree to produce types and forms of iron which
are as different as possible, according to the advantages offered by the
specific characteristics of the two ironworks, so as not to enter into com-
petition and to maximise profits for both”. Pareto thought that the buy-
ing consortium was an excellent idea on condition that the company
appointed an expert person to oversee it.248
Still in the summer of 1884, the weak demand for iron prompted the
company to reduce production,249 which nevertheless did not prevent the
further accumulation of iron in stock. The board member Alessandro
Spada proposed running down the stocks by selling them off at cost but
Pareto replied that Piombino and Migliavacca would follow the compa-
ny’s lead in lowering prices, making it difficult to sell the iron. He also
pointed out that in any case, “by the terms of the agreement with Raggio,
we cannot sell in certain areas and anyway we do not wish to clash with
Raggio, so it is in our interest for both parties to abide by the terms of the
agreement”.
On the basis of the closer collaboration with Tardy, in the autumn of
1884 negotiations began to expand the three-way agreement between the
company, Tardy and Raggio to Piombino and Migliavacca, for a period
of three years. The main purpose of this was to agree on the types of
production assigned to each of the partners.250 In Pareto’s view it would
be in the company’s interest to join the enlarged pact,251 even at the cost
of a reduction in production, because the pact would raise the price of
basic iron. However, it remained to be seen whether “the loss252 would be
determined proportionally and then divided among all the parties”,
which seemed strange to him because Tardy, Piombino and Migliavacca
had no stock. The only other option would be to voluntarily reduce the
company’s production to what it could sell, since the sale of stock at any
price was not possible “there being no one buying”.
Favero proposed that Pareto should negotiate on behalf of the com-
pany, with the dual aims of determining, firstly, a price which would
avoid losses and, secondly, the minimum quantities of merchant iron to
be produced by each ironworks. The sum of the maximum production
quotas initially assigned to each exceeded the Italian demand for iron, so
these would have to be reduced.253 Pareto was happy with 10,000 metric
tons a month, even if this would render one of the two plants at San
Giovanni redundant. He also underlined that “those outside the pact are
not bound by its provisions and can sell their output for 10 cents less and
be sure of finding buyers”. The idea of leaving the sale of all stock to the
consortium was abandoned as the consortium’s required margin was too
high (20%). Therefore, each of the partners would sell their stock inde-
pendently. Lastly, it was decided to organise the consortium in terms not
of a contract but of a convention “which would have a very limited value,
while everything would rest on the good faith of the parties”. The con-
vention would continue in force for as long as all the parties had “an
interest in keeping to the agreed terms”. Allievi’s final opinion was that
the introduction of the consortium model into the iron industry in Italy
would mean that instead of producing more than what it could sell and
thus falling victim to a competition which was “damaging to all”, it
would “at least gain the benefit” of not losing.
The expanded agreement took effect in 1885254 with a duration of
three years. Piombino did not join but agreed to limit its monthly pro-
duction to 9000 metric tons.255
Pareto soon began to complain about the consortium, saying that the
company’s survival now depended on the production of refined iron,
which was outside the scope of the agreement.256 In November 1886,257
in response to Allievi’s proposal that the consortium should increase its
price for finished iron in view of the increase in the price of raw materials,
Pareto stated that “to all intents and purposes the consortium no longer
exists” and that in any case it could not increase prices given the reduc-
tions offered by ironworks in Belgium and in England at that time.
In May 1887, at the conclusion of the price war between Raggio and
his Genoese competitor Tassara, in which Raggio had emerged victori-
ous, the consortium was renewed, with the company accepting (as the
lesser of two evils in comparison to the alternative of an all-out price war)
the sacrifice of Naples, where it could get a price of 17 lire per hundred-
weight, Piacenza, Parma and Modena, in return for Bari, where it could
obtain 18 lire per hundredweight. Each of the partners had agreed to
place a sum of 10,000 lire in a bank, to be forfeited if “in the unanimous
judgement of three arbitrators, it was found to have violated the terms
provided for in the convention”.258 Pareto259 remarked with annoyance
that if, at the time of the renewal of the consortium the company had had
control of Rogoredo, “we would have carried more weight and would
have obtained much more favourable terms” especially as Pareto had
94 F. Mornati
quickly been able to ascertain that the partners were selling iron at a price
lower than that agreed, with no redress possible as no one had paid in the
10,000 lire as promised.260
In September 1888 Pareto wrote that, at a time of renewed major dif-
ficulties for the iron industry, “in Milan we have all the sales, so that
Raggio has threatened not to abide by the convention if we didn’t find a
way for him to sell something too”. Thus Pareto instructed one of his
Milanese agents to procure some orders for Raggio.261 In the spring of
1889 Pareto262 informed the company’s board of directors that the con-
sortium would be definitively wound up in October of that year.
4.3.7 An Unprofitable Venture on the Island of Elba
In the autumn of 1880, in view of the forthcoming expiry (due on the

30th of June 1881) of the 30-year concession held by the Regia
Cointeressata (a public-private body) for the management of the iron
mines on Elba, Pareto proposed to the bank to sponsor an agreement
between the company, Tardy and Raggio to set up a company for the
exploitation of these mines, with the strategically innovative263 aim of
supplying ironworks in Italy with pig iron obtained by mixing the mate-
rial from Elba with carbon coke.264 However, Tardy and Raggio took the
view that pig iron produced from this source would not be of good qual-
ity and that for this reason it would be better simply to continue selling
it abroad.265 Pareto found these criticisms pertinent although he consid-
ered that by mixing manganese (also to be found in Italy) with the Elban
product, pig iron of sufficiently good quality could be obtained.266
The idea appeared to be taking shape at the beginning of December
1880 with Pareto’s proposal to submit a scheme to the government for
the creation of a company which would, respectively, pay the government
two lire per metric ton of material extracted; commit to building blast
furnaces for the production of pig iron from this material, either on the
island or on the mainland; and also, if the state were to build an iron-
works for military and naval requirements, to supply pig iron from Elba
at cost price.267 The capital required was estimated at eight million lire, to
be raised in Italy.268
On the 29th of April 1881 the company, together with Tardy and
Raggio, succeeded in obtaining the three-year lease on the mines, which,
however, yielded only 32,714.15 lire.269 Pareto attributed this result to
the incompetent management of the mines on the part of the bank’s
partners in Livorno, which manifested itself for example in, for example,
frequent deliveries of quantities greater than those established by weigh-
ing operations which themselves were erratic;270 deliveries of pig iron to
San Giovanni “of different quality to that ordered”, that is, containing
only 4% of manganese instead of 10%.271 These deliveries were rejected
by Pareto himself.
On the basis of these initial experiences,272 Pareto concluded that it
would be difficult to find significant foreign partners for the construction
of a major military arsenal on Elba and hence the only possible ways for-
ward were to construct blast furnaces for the production of pig iron or to
continue as before to exploit the mines only for the export market. The
construction of blast furnaces, urged by Pareto even if this would be pos-
sible only if the state renounced its payment for the lease on exploitation,
would require an investment of two million lire, of which only a small
part would be forthcoming from Tardy. If this were not feasible, Pareto
considered that the company could take the exploitation of the mines in
hand on condition that efficiency were improved, which he thought was
possible. In regard to the next auction for the mining concession, Pareto’s
view was that the bank should take part, competing with the Livorno
circle of financiers if the latter were not disposed to come to an agreement
which also suited the bank.
The bank dropped the idea of producing pig iron on Elba273 but, after
having been granted a one-year extension to the previous contract,274
won back the lease on the mines in collaboration with Vincenzo Stefano
Breda,275 Pareto’s fierce rival, who had founded the Terni steelworks the
year before.276
Thus, notwithstanding Pareto’s advice, the two periods in which the
Banca Generale had control of the Elba operations did not modify the
existing strategy of exporting the bulk of the output. In the 1881–1882
financial year the percentage of output destined for export was 109.6%
while in the following three financial years this declined to 94.1%.277
96 F. Mornati
4.3.8 The Railway Tariffs
For the San Giovanni ironworks, which was logistically obliged to make
use of the railways for the transport both of raw materials and of the fin-
ished products, relations with the railway operators were fundamental.
Pareto’s initial position on this topic was shown in his testimony in
Florence on the 7th of January 1880 to the parliamentary commission of
enquiry into the running of the Italian railways. Pareto made use princi-
pally of the port of Livorno where he had no complaint about the service
provided by the Ferrovie Romane railways, although he complained
about the exorbitant tariffs demanded by the firm holding a monopoly of
porterage and about the duty imposed, without any service being pro-
vided, by the management of the steamships. This duty obliged Pareto to
dispense with the transport of English raw materials by steamship, which
was otherwise very cheap.278
Contrary to traders’ normal practice of demanding reductions in rail-
way tariffs for the transport of their merchandise, Pareto tolerated the
current rates because for the moment they did not hinder the develop-
ment of the iron industry. However, he wished that the tariffs could be
simplified and increases announced in good time.279 At the same time, he
was strongly against any increase in railway tariffs, both in his own inter-
ests (due to the highly competitive nature of the iron market, the com-
pany could not pass on additional costs to clients), and also in the interests
of the railways themselves, who would encounter greater competition
from transport by sea.280 Pareto was also in favour of differential tariffs
(whereby prices increased with distance but not proportionally to the
increased distance), as otherwise long-distance transportation would be
heavily penalised, and of lower tariffs for the return journeys, as this
would provide an incentive to traders to fill their waggons in both direc-
tions instead of returning empty.281
In recognition of the principle that “costly merchandise should pay
more and cheap merchandise less”, Pareto asked the Alta Italia railway
company to modify the disparity of conditions whereby five cents were
charged for the transportation of a metric ton of lignite (whose produc-
tion cost was 10.5 lire) and only four cents for the transportation of a ton
of iron (whose production cost was 22–23 lire). This high cost prevented
the company from transporting lignite any further than Prato and
Florence, for example.282 Furthermore, Pareto considered that the state,
in order to promote “the really serious and legitimate interests of industry
and commerce”,283 should, in the matter of tariffs, fix the maximum
amounts in line with the public interest and the minimum amounts at
such a level as “not to permit this artificial competition from wiping out
other means of transport”. Within these limits, the railways should be
granted the liberty to set and to modify tariffs.284
Lastly, Pareto was in favour of Depretis’ proposal to divide the Italian
railways into an Adriatic network and a Tyrrhenian network, since “the
principal movements of commerce in Italy are along these two longitudi-
nal axes”. On the other hand, he did not agree with the proposal to put
the running of these lines under the control of various small operators
since these would pursue narrow local interests which “a management
based in Rome” would be able to resist.285
On the 15th of November 1881, in accordance with Pareto’s wishes,
the tariff for the transport of nationally produced fuel by rail was in fact
reduced from five to three cents per kilometre-ton and this revived sales
of lignite from Castelnuovo.286 In December 1883 Pareto told Allievi
once again that the only government aid that the company had need of
was the reduction of railway tariffs for the transportation of its material,
saying that the high tariffs amounted to “protectionism in favour of for-
eigners”.287 In the same period he proposed to Tardy and Raggio to lodge
appeals asking for the railway tariff applied to fuel produced nationally to
be applied also to raw materials and to finished products from Italian
ironworks alone.288
Pareto also concerned himself in advance with what were to become
the railway regulations of 1885. In the spring of 1884289 he informed the
board of the company that, although the current railway tariffs cause
“grave damage” to the company’s interests with no possible remedy in
sight, “the government, thanks to the new railway regulations, is
threatening a sharp rise in tariffs which would be enough literally to ren-
der our industry unviable”. Pareto declared his willingness to draw up a
memorandum, pursuant to the board’s recommendations, for the prime
minister and the ministers of finance and agriculture, together with both
houses of parliament, but added that he considered it fruitless, preferring
98 F. Mornati
to come to an agreement with Raggio and Tardy to put pressure on the

government through the closure of the plants.290 A few weeks later,
Peruzzi291 claimed that he had received a promise that the current tariff
for the transport of lignite would be retained. Pareto’s proposal, men-
tioned above, for a reduction in tariffs for the transportation of iron was
still being examined by the government.
At the beginning of 1885292 Pareto insisted that without concessions
on tariffs, ironworks located inland would not be able to compete with
those on the coast or in Germany. Keeping tariffs unchanged would not
be sufficient because, with decreases in the prices of iron and of raw mate-
rials, the relative weight of these was greater. Once again he proposed
closing the ironworks as a way of putting pressure on the government.
Allievi, learning that the new tariffs had not yet been approved, proposed
a petition to the producers’ consortium instead but was against closing
the plants because this would breach the consortium’s agreements on pro-
duction levels and prompt other producers to attempt to supply the needs
of the company’s clients, with possible repercussions on its credit. Pareto’s
view, instead, was that closure, even only for a month, would permit the
reduction of stocks as well as giving the moral satisfaction of having “tried
every means in our power”. There would be no problems with the con-
sortium, and if the reasons for the closure were explained to the work-
force, there would be no losses of labour. In the end the board approved
Allievi’s proposal. Not succeeding in obtaining the railway tariff conces-
sions requested, Pareto reduced piecework rates by 7–8%, a measure
which, after a few strike threats, was accepted by the workers.293
On the 8th of February 1885 Peruzzi gave a talk at the Georgofili on
the theme “The trade in foodstuffs, particularly for export, in relation to
the conditions for their transport by rail”. In this talk he advanced the
thesis that the export trade in agricultural products was highly stimulated
by the railway tariffs provided for in the 1885 conventions (still being
examined in parliament) which decreased with increases in quantity and
in distance travelled, even if such tariffs were of benefit only to exporters
of large quantities of goods such as Francesco Cirio of Turin.294 In the
debate, Pareto agreed that it was positive for the country that exports
should be conducted by large-scale producers as these alone have “hopes
of longevity” and thus are able to “bring a benefit to our country by con-
ducting trade in national products”.295 However, he disagreed with
Peruzzi in regard to Cirio’s ability to single-handedly establish Italian

products in foreign markets, saying that each type of product should have
“a solid” exporter in the context of a differentiation of operations which,
however, was hampered precisely by the fact that this preferential tariff
was available only to Cirio. For this reason, Pareto was against the tariff
in question,296 adding that, in his view, if there were free competition
between railways (which was prevented by legislation prohibiting the
building of parallel railway lines) they would not of their own accord
grant Cirio the favourable tariff which the government offered him, as it
had not been proven that leasing railway waggons to a single operator
cost less than leasing them to a number of operators.297 In any case he
affirmed that railway tariffs were high not to compensate for reductions
granted to certain categories but because of the “countless railway lines
which have been established for political or for other motives and which
do not offer and never will offer anything”, which the railways are obliged
to apply, spreading the costs of this over all the tariffs.298
At the end of 1885 Pareto, having tried without success to obtain from
the Romane and the Mediterranee lines tariffs more favourable than, or
at least equivalent to, those enjoyed by competitors, concluded an agree-
ment with the Adriatic network for a 5% discount in return for a com-
mitment to use the operator for all the company’s traffic. Allievi, who was
Vice-President of the Mediterranee, seeing that the Adriatica would con-
tinue to supply its needs for iron from Piombino, asked for a discount of
10%. Pareto replied that the Mediterranee, who likewise did not buy iron
from the company, would offer a maximum discount of 3–4% and also
refused to sell their used rails to the company, whereas the Adriatica sold
its rails and would potentially purchase refined iron. The board approved
Pareto’s proposal.299
4.3.9 P
areto’s Reaction to the Protectionist Turn
of 1887
Pareto’s reaction to the protectionist turn of 1887 constitutes the most

evident link between his managerial experience and his subsequent intel-
lectual development.
100 F. Mornati
The customs duties of the 30th of May 1878 (which, as is known, had
put an end to the long period of customs laissez-faire policies in Italy
beginning with the extension of the Piedmont tariffs to the whole king-
dom) had imposed the following duties on the iron industry per metric
ton imported: exemption for raw pig iron and scrap, 40 lire for refined
pig iron and 46.2 lire for milled iron products.300 With the prospect of an
even more protectionist reform of customs duties, on the 19th of January
1881 Italian iron and steel entrepreneurs met in Bergamo to formulate
their demands to the government.301 Pareto, who was unable to partici-
pate in this meeting, advised the Lombard industrialist Giulio Rubini to
drop the request for an increase in customs duties (as the Italian govern-
ment was bound by its commercial treaty signed with Austria on the 27th
of December 1878) and to focus on a request for a reduction in railway
tariffs as well as for a preference for Italian bidders in public tenders where
they were able to offer the same terms as foreign competitors.302 This did
not yield any result and in the years 1883–1884 the company was yet
further penalised in relation to the customs regime because, firstly, its
imports of rails were subject to meddling, and secondly because, as
described above, certain competitors were able to import contraband fin-
ished products, thus putting Mammiano in serious difficulties. Pareto’s
and Allievi’s complaints to the tax office obtained no result.303
At the beginning of 1886304 Pareto stated that at San Giovanni “we can
say that we have solved the problem of producing good quality iron with-
out rails, at least for certain types of product. Up to now we had always
used English pig iron. However now it is said that Breda has engineered
the imposition of a duty of 10 lire on pig iron coming from abroad which
is currently free of duty. Breda wants to construct blast furnaces using the
material from Elba” which cost more than the English product, whence
the need for customs protection. Pareto, having expressed his conviction
that “our hopes for the future lie with puddling”,305 said that “this aim
will be achieved as long as no duties are imposed on pig iron originating
from abroad, for then we would not only lose the expected benefits but
all our previous sacrifices would be rendered practically vain”. Obviously,
a duty on pig iron would raise the costs of production at San Giovanni
and this would mean, other things being equal, a reduction in profits or
the need to raise prices.
The major controversy of that time over the protection of the iron and
steel industry was sparked by the report of the parliamentary commission
for the review of customs duties which was chaired by Vittorio Ellena, a
high-ranking official in the ministry of finance who subsequently became
a politician.306 In Ellena’s view Italian production of iron from pig iron,
which in 1884 was “very low”, standing at 20,000 metric tons per year,
should be developed principally at the new Terni complex using Italian
pig iron, the production of which thus needed to be boosted through
appropriate customs protection.307 The alternative technology of the
“annealing of scrap” yielded low-quality iron which was usable “only for
jobs where prices prevail over quality”308 and not for prestige products
such as ships with iron and steel hulls”.309
Up until then no substantial duty had been applied to pig iron mainly
because its production in Italy appeared impossible without resorting to
an “exorbitant duty”.310 Table 4.7, showing the trend of imports of pig
iron free of duty, in metric tons, shows the quantities of which “Italian
labour” was being deprived:311
A ton of pig iron produced using ore from Elba cost 72 lire312 and a ton
of the competing British ematite cast iron cost 65 lire, so a duty of ten lire
per metric ton was proposed in order to protect the production from
Elba.313 Yet, up to the 1887 tariff reform, the exemption from duty con-
tributed to the accumulation of the following amounts of scrap, in metric
tons (Table 4.8).
If, in case of the introduction of the duty on pig iron, the exemption
on imports of scrap were maintained, production of annealed iron
would gain an additional incentive, in contrast to what is claimed. The
commission therefore also proposed a duty of ten lire per metric ton on
the import of scrap.314 On the basis of the following imports of large-
dimension finished iron products, incurring a duty of 4.62 lire per hun-
dredweight, and of small-dimension finished iron products, incurring a
duty of 8 lire per hundredweight (Table 4.9):
Table 4.7 Italian imports of pig iron

1879 1880 1881 1882 1883 1884 1885
27,907 28,687 46,227 40,314 74,424 67,749 54,759
Source: See Ellena (1886a, p. 365)
102 F. Mornati
Table 4.8 Italian imports of scrap

1881 1882 1883 1884 1885
52,056 70,373 80,756 81,856 78,155
Source: See Ellena (1886a, p. 365)
Table 4.9 Italian imports of finished iron products (in hundredweight)

1879 1880 1881 1882 1883 1884 1885 1886
Large 357,076 405,474 570,117 655,318 664,661 706,961 743,800 642,842
Small 61,970 59,277 86,375 65,226 103,819 89,696 90,322 53,599
Source: see (Ellena, 1886–I, p. 379–380).
The commission proposed, in compensation for the duty on pig iron

and on scrap, to set the duty for products of large dimensions at 6 lire per
hundredweight and that on products of small dimensions at 9 or 12 lire
per hundredweight (according to the diameter).315
Pareto’s first comment was that in Italy, and generally in all civilised
countries, if a certain type of productive activity is not practised, it is not
through “ignorance or excessive caution” but because capital will receive
a better return from other activities. Thus, if pig iron is needed, it makes
sense to import it from England in exchange for Italian agricultural
products, rather than to produce it nationally, with the result that the
proposed duty on pig iron, “favouring certain industrialists or specula-
tors” will have to be maintained perpetually because otherwise its pro-
duction in Italy would “come to a halt” immediately.316
Pareto then claimed that in 1886 San Giovanni had processed 5273
metric tons of pig iron (the only ironworks in Italy which had such a
capacity) and would have processed even more if the railway tariffs apply-
ing to the transportation of pig iron had not been so unfavourable.317
This result318 was made possible because the production of iron from pig
iron requires more coal than when scrap is used, a requirement which the
company was able to satisfy thanks to the availability of lignite residue
from Castelnuovo at very low cost.
Lastly, Pareto observed319 that it was curious that, in order to develop
the processing of pig iron in the iron and steel industry, heavy additional
duties were to be imposed on all the finished products and that the only
Italian producer (in San Giovanni) capable of producing iron from pig
iron would thereby be destroyed. Pareto, together with many other indus-
trialists, wished to develop the industry not on the basis of sacrifices made
by taxpayers “but instead by perfecting working methods”. Allievi pro-
posed that Pareto’s report should be sent to the parliamentary commis-
sion of enquiry,320 while Pareto acknowledged that he did not possess “the
ability to obtain favours by distributing sweeteners to people who can
pull strings with the present government, and many times I have begged
the board to appoint others in my position who possess this ability which
I lack and which perhaps I never desired to possess. The progress made in
puddling I have achieved after years of hard work but will be of little use
to the company … the only way to do successful business in Italy” being
the methods used by Terni to get orders for steel rails at a price 30 lire
higher than the going rate, yielding profits of 4500,000 lire. Pareto’s pro-
tests duly showed themselves vain, as the 1887 tariff per metric ton321
provided for duties of 10 lire on raw pig iron and on scrap, 50 lire for
refined pig iron and 65 lire for laminated iron.
At the end of 1888, Pareto informed his friend and correspondent
Francesco Papafava (1864–1912) that the naval minister Admiral
Benedetto Brin (who held the office uninterruptedly from 1884 to
1891) had addressed a specific complaint, apparently to Allievi, about
Pareto’s anti-protectionist article which had appeared in the “Journal
des Économistes”,322 and had urged Pareto’s dismissal, a prospect which
he would have accepted without difficulty as he had no “family” to
maintain.323
In the spring of 1889,324 a duty on puddling (i.e. iron in semi-liquid
form) was also introduced, which on one hand was positive for San
Giovanni, as a producer, but on the other hand negative, as an importer
of the additional puddled product necessary to meet all the requirements
of the ironworks. Further, since the duty on the puddled product was the
same as that on pig iron, Pareto prompted the company to request the
government to reduce the duty on pig iron by 1.40 lire in order to eradi-
cate the totally unjustified “penalty” represented by the 10 lire duty for
the production of puddled iron.325 Nothing is known regarding the out-
come of Pareto’s request.
104 F. Mornati
Notes
1. Pareto to Emilia Peruzzi, 23rd April 1873, see Pareto (1984a,
pp. 200–201).
2. The Società per le Strade Ferrate Romane was incorporated under law
n° 2279 of 14th May 1865 which reorganised the regime for railway
concessions, bringing together a number of private companies which
had operated the principal interior and coastal lines of central Italy. The
management of the company was catastrophic, with the result that the
state, under the order of 17th November 1873, was obliged to inter-
vene to save it from bankruptcy.
3. Pareto to Emilia Peruzzi, 1st September 1873, see Pareto (1984a,
p. 268).
4. See Giacalone-Monaco (1963, pp. 542–543).
5. Pareto to Emilia Peruzzi, 14th August 1872, see Pareto (1984a, p. 28).
On the position of the Italian railway engineer of the time, see Merger
(1999).
6. Pareto to Ubaldino Peruzzi, 3rd October 1873, see Pareto (1981,
p. 28). On the operations of Italian railway repair yards at the time, see
Merger (2003).
7. Pareto to Emilia Peruzzi, 7th October 1872, see Pareto (1984a, p. 49).
8. Pareto to Emilia Peruzzi, 24th October 1873, ibid. p. 281.
9. Pareto to Emilia Peruzzi, 24th August and 1st September 1873, ibid.
pp. 256, 268.
10. On Ubaldino Peruzzi (1822–1891), patriot, statesman, engineer and
entrepreneur, and his cultured and philanthropic wife Emilia Peruzzi
née Toscanelli (1827–1900), Pareto’s closest friends in Tuscany, see
Bagnoli (1994).
11. Langer was convinced that 75 tons of lignite, combined with iron ore,
could yield 13 tons of pig iron from which 9 tons of iron proper could
be obtained: the fact that this lignite was available at low cost would
thus permit production of iron at a highly competitive yet profitable
price, see Busino (1977, p. 16). On the basis of these assumptions,
Langer had forecast a gross annual profit of 560,000 lire against an
investment of 3000,000 lire, see Fallani (1976, pp. 250–253). This
project revealed itself to be excessively optimistic with regard to the
underlying variables: the price and demand for iron (forecast too high);
and the costs of production and of capital (forecast too low), see Busino
(1977, pp. 18–19).
12. On Carlo Fenzi (1823–1881), patriot, banker, parliamentarian, see

Fallani and Milana (1996).
13. The share capital was divided into 12,000 shares with a unit value of
500 lire: the Banca Fenzi held 2000 shares, the Banca Generale 4000
(founded in 1871 in Rome, this was the second-biggest investment
bank in Italy, after Credito Mobiliare di Firenze, and was represented
on the board by Moisé Valensin), while the Banca del Popolo di Firenze
held 1995 (this bank was founded in 1865, and was represented on the
board by Ubaldino Peruzzi, who was also its chairman), see Biagianti
(1984, p. 22).
14. See Fallani (1976, p. 259).
15. See Chiosi (1973, p. 33). Pareto and Gigli were paid 3600 lire
per annum plus 3% of any profits, Pareto to Antonio Allievi, 31st May
1880, Banca Popolare di Sondrio Vilfredo Pareto letter archive (hence-
forth BPS-la). Gigli’s successors in the 1880s were the Frenchman
Clément Conti, Celso Capacci and Lorenzo Prodi. Under Gigli’s direc-
tion average production was 25,055 tons per annum (standard devia-
tion 6509 tons), average yearly sales were 140,098 lire (standard
deviation 69,090 lire) and the average yearly price per ton was 6.92 lire
(standard deviation 1.97 lire). In the course of the 1880s average annual
production rose to 61,883 tons (standard deviation 13,448 tons) but
average annual sales fell to 70,796 lire (standard deviation 32,272 lire)
due to a sharp drop in prices: in that time the average annual price fell
to 3.85 lire per ton (standard deviation 1.69 lire), see Busino (1977,
pp. 141–144).
16. Royal decree of 28th February 1877 approving the reduction in
capital.
17. See Società per l’Industria del Ferro (1879, pp. 6–10).
18. Pareto to Antonio Allievi, 10th November 1879, BPS-la.
19. On the history of the Banca Generale, see (Confalonieri 1974) where
the problems specifically noted were the bank’s modest growth due to
its limited territorial expansion, ibid. pp. 278–279, 281, the high valu-
ation in the balance sheet assigned to commercial credits compared to
investments in securities, ibid. pp. 276–277 and the difficulty of rolling
over its investments in industrial stock, ibid. p. 280.
20. Pareto to Antonio Allievi, 1st February 1880, BPS-la.
21. Pareto to Antonio Allievi, 7th February 1880, BPS-la.
22. The ironworks of Mammiano (a village in the Apennines near Pistoia
in the vicinity of San Marcello Pistoiese) was originally owned by the
106 F. Mornati
Fenzi family, and was sold by them, together with the nearby smaller
ironworks of Sestajone, to the Società del Ferro on the 31st January
1873. This was undoubtedly a good deal for the Fenzis because they
received 193,786 lire compared to only 100,000 lire paid up to the
company at the time of its creation, (Busino 1977, pp. 26–27).
24. See Sect. 4.3.2 below.
25. The ironworks had been founded in 1865 under the name of
“Perseveranza” by Jacopo Bozza, see (Nesti 2010), who had sold it in
1875 to Credito Mobiliare, who had renamed it as it appears in the
text.
27. Pareto to Antonio Allievi, 3rd June 1880, BPS-la.
28. Pareto to Emilia Peruzzi, 13th February and 14th July 1880, see Pareto
(1984b, pp. 82, 101).
29. Pareto to Antonio Allievi, 3rd August 1880, BPS-la.
30. See Busino (1977, p. 66).
31. Ibid., pp. 61, 67.
32. The production process at the San Giovanni ironworks can be sum-
marised as follows: the lignite provided fuel both for the boilers (which
produced the steam needed to convey the raw materials to be smelted
into the ovens and to convey the molten iron into the rolling mills) and
for the ovens where this raw material was smelted (these were, respec-
tively, reheating furnaces using scrap, in particular disused railway line
rails, and puddling furnaces using pig iron); in the rolling mills the
molten iron was mechanically shaped into larger, medium or smaller
products by means of special breakdown and finishing cylinders.
33. Pareto to Emilia Peruzzi, 21st September and 9th October 1874, see
Pareto (1984a, pp. 410, 430, 434–435).
34. Pareto to Carlo Fenzi, 16th June 1874, see Pareto (1981, p. 39).
35. Pareto to Emilia Peruzzi, 4th and 16th June 1874, see Pareto (1984a,
pp. 366, 371), and to Carlo Fenzi, 16th June 1874, see Pareto (1981, p. 39).
36. Pareto to Emilia Peruzzi, 16th June 1874, see Pareto (1984a, p. 372).
37. Pareto to Emilia Peruzzi, 17th June 1874, ibid., pp. 372–373.
38. Pareto to Emilia Peruzzi, 5th March 1875, ibid., p. 491). Pareto
described to Fenzi the technical problems of the San Giovanni iron-
works, comparing it to an ironworks in Staffordshire (UK): for the pro-
duction of similar templates of small dimensions each plant made use
of two furnaces for 12 hours each day; the English plant, from an input
of 23.75 tons of scrap iron, obtained 22 tons of finished iron (consum-

ing 0.25 tons of anthracite for every ton of finished iron) while San
Giovanni, from an input of 7.647 tons of scrap iron, obtained 6.73
tons of finished iron, consuming over 2 tons of lignite for every ton of
finished iron. Thus, considering that the heating power of lignite is less
than half of that of anthracite, in San Giovanni, for every ton pro-
duced, a quantity of fuel was used which was four times greater than at
the English plant, while the shrinkage (i.e. the percentage difference in
weight between the input and the finished product) is also greater
(13% at San Giovanni versus 8% in Staffordshire), Pareto to Carlo
Fenzi, 1st March 1875, see Pareto (1981, pp. 97–100).
39. Who, against Langer’s instructions but with the authorisation of
Peruzzi, had taken part in the shareholders’ meeting.
40. By request of Fenzi, who was dissatisfied with Langer’s management,
see Fallani (1976, p. 270).
41. Pareto refused the offer of promotion to General Manager of the com-
pany on this occasion because he felt “able to do a good job … only on
the technical side” as he was “not able to sell iron”, Pareto to Emilia
Peruzzi, 6th January 1875, see Pareto (1984a, p. 481).
42. Pareto to Emilia Peruzzi, 11th June 1875, ibid., p. 514).
43. See Fallani (1976, p. 270).
44. Pareto to Emilia Peruzzi, 11th September 1875, see Pareto (1984a,
p. 539).
45. See Fallani (1976, p. 260).
46. Pareto to Emilia Peruzzi, 18th November 1875, see Pareto (1984a,
p. 551). Negotiations took place, however, with Credito Mobiliare, but
failed due to the Banca del Popolo’s obstructionism, See Fallani (1976,
pp. 266–267).
47. At the beginning of August 1875, Pareto had visited the ironworks and
the mines in the area of Saint-Etienne (in the Loire region) where he
reported having “found much to study and learn from”, Pareto to
Emilia Peruzzi, 7th August 1875, see Pareto (1984a, p. 530). It is of
interest to note that from that moment Pareto also turned to French
companies for the supplies needed for the ironworks, notably Crozet-
Fourneyon in Chambon Feugerolles (Loire department) for spare parts
for the machines, Vial and Garras in Saint Julien en Jarez (Loire depart-
ment) for bricks for the ovens and to Gadot in Voreppe (Isère depart-
ment) for fire clay, Pareto to Crozet & Cie, 21st October 1875, Vial et
108 F. Mornati
Garras, 12th November 1875, Gadot, 23rd November 1875, BPS-la.

As regards the increasingly critical supply of cylinders, Pareto initially
turned to the Macina foundry in Florence, then contacted the Benini
foundry in Florence and the Orlando steelworks in Livorno before
finally opting for Creusot as having the lowest cost, Pareto to Macina,
25th November 1875, to the general management of the Società del
Ferro, 15th February 1876, to Pietro Benini, 20th August 1876, to
Luigi Orlando, 31st August and 21st September 1876, ibid.
48. Pareto to Emilia Peruzzi, 23rd and 27th July 1875, see Pareto (1984a,
pp. 596–598).
49. Pareto to Carlo Fenzi, 8th August 1876, see Pareto (1981, p. 140) and
to the general management of the Società del Ferro, 8th August 1876,
BPS-la.
50. Pareto to the management of the Società del Ferro, 19th September
1876, ibid.
51. Pareto to Crozet, 21st March 1877, ibid.
52. Pareto to the management of the Società del Ferro, 21st June 1877,
ibid.
53. Pareto to Carlo Fenzi, 6th September 1877, ibid.
54. Pareto to Carlo Fenzi, 29th July and 15th August 1876, see Pareto
(1981, pp. 138, 143), and to the general management of the Società del
Ferro, 23rd December 1876, BPS-la.
55. Pareto to Carlo Fenzi, 26th November 1877, ibid.
56. Pareto to the general management of the Società del Ferro, 26th
November 1877, ibid.
57. Which thus would be obtainable by the ironworks at a price which
would at worst be stable, whereas for the competitors using anthracite
the price of fuel was variable, with disastrous consequences for them if
it should increase, for example in case of war.
58. In November 1878, Pareto also tried to purchase rails in Germany, in
Egypt and in India, Pareto to Emilia Peruzzi, 29th November 1878, see
Pareto (1984b, p. 29).
59. Pareto to the general management of the Società del Ferro, 6th
November 1876, BPS-la.
60. According to the balance sheet for the month of October 1876, the cost
of production for a hundredweight of iron was 20.27 lire, made up as
follows: 12.92 lire for the rails, 2.43 lire for fuel, 2.75 lire for wages,
2.17 lire for running costs and repairs. In regard to the fuel, sourced
entirely from the Castelnuovo mines, Pareto estimates that the profit
margin for the company (the surplus between the price charged to the
ironworks and the cost of extracting the lignite) was at least 25%. If this
were set aside, the cost of fuel would decrease to 1.82 lire and the price
of a hundredweight of iron would therefore fall to 19.66 lire which was
the true cost of the iron. The company could therefore sell the iron at
20 lire at San Giovanni and for 21 lire 30 in Rome, enough to beat the
competition and to guarantee the future of the ironworks without the
need to offer discounts, Pareto to the general management of the
Società del Ferro, 20th December 1876, ibid.
61. Pareto to the general management of the Società del Ferro, 19th January
1877, ibid.
62. Pareto to Carlo Fenzi, 12th and 13th October 1874, see Pareto (1981,
pp. 51, 53).
63. Pareto to Carlo Fenzi, 17th April 1874, ibid., pp. 32, 35.
64. Pareto to Carlo Fenzi, 10th December 1877, ibid.
65. Pareto to Louis Gagne, 23rd July 1876, ibid.
66. Pareto to Emilia Peruzzi, 10th April 1874, see Pareto (1984a, p. 338).
67. Pareto to Emilia Peruzzi, 9th June 1874, ibid., p. 368.
68. Pareto to Emilia Peruzzi, 8th April 1874, ibid., p. 337.
70. Ibid.
71. Pareto to Emilia Peruzzi, 10th July 1874, ibid., p. 384.
72. Pareto to Emilia Peruzzi, 22nd August 1874, ibid., p. 400.
73. Pareto to Emilia Peruzzi, 25th August 1874, ibid., p. 403.
74. Pareto to Giuseppe Cenni, 20th November 1879, BPS-la.
75. See Sects. 4.3.5 and 4.3.6 below.
76. See Pareto (1880, p. 72). However, years later, Pareto stated that, “hav-
ing observed at first hand the diets of Italian and English workers”, this
lower productivity is in fact due to inferior diet resulting from lower
real salaries and caused by higher prices for bread in turn a consequence
of higher direct taxes, Pareto to Luigi Bodio, 26th February 1891, see
Pareto (2001, p. 16).
77. See Pareto (1885a, p. 189).
78. See Pareto (1883a, pp. 144–145).
79. On these, see Strinati (2007, pp. 158–174).
80. See Pareto (1883a, p. 157).
81. Ibid., pp. 149–150.
110 F. Mornati
82. Ibid., pp. 151–152, 156. Years later, Pareto noted that each year an
Italian family (consisting of parents and one minor) consumed 778
kilos of bread, paying seven cents a kilo in customs duties and local
taxation to a total of 54.46 lire. If a worker were able to avoid paying
that sum, instead investing it from the age of 22 in a pension scheme,
he would obtain from the age of 65 a yearly income as high as 835 lire,
see Pareto (1890, p. 354). Thus Pareto, ibid., gives the following
tongue-in-cheek advice to the government: “If … it really wants to help
the workers”, to abolish the customs duties on grain and invest this
money, in their interests, in a “good insurance company” so securing
sustenance for those wretched folk when old age deprives them of the
means to earn it through their work”.
83. See Pareto (1883b, pp. 165, 174, 179). The draft legislation was defini-
tively blocked in the Senate and never became law, see Strinati (2007,
p. 170).
84. To compensate employers for the new insurance obligations which the
law would encourage (but not oblige) them to assume.
85. Because the burden of insurance payments would reduce profitability
in industry, thus discouraging investment.
86. Pareto to Lorenzo Corsi, 1st July 1879, BPS-la.
87. See Busino (1977, pp. 58–59).
88. Pareto to Leopoldo Gigli, 9th May 1878, to Carlo Fenzi, 7th August
1878, see Pareto (1981, pp. 155, 163) and Busino (1977, p. 59).
89. See Società per l’industria del ferro (1879, p. 5).
90. Pareto to Ferdinando Nota, 16th April 1879, BPS-la.
91. Pareto was convinced of the extreme importance of the quality of the
rails. In June 1877, which closed with a loss of 1734 lire, he asserts, in
an interesting foretaste of the theory of general equilibrium, that a
hypothetical improvement in the quality of the iron would bring about
the following consequences: an increase in the quantity of iron pro-
duced from 408.5 tons to 518.8 tons, which, assuming a constant price
of 205.7 lire per ton, would bring an increase in income from iron sales
of 22,689 lire, an increase of 131.4 tons in the quantity of rails used
(due to the increase of 110.3 tons in the quantity of iron produced
multiplied by 1.191, representing the number of tons of rails needed to
make a ton of iron) and, assuming a constant price for rails of 114 lire
per ton, an increase of expenditure on rails of 14,980 lire and on labour
costs of 453 lire for the handling of the increased production, trans-
forming the above-mentioned loss (all other factors being equal) into a
profit of 5522 lire. The passage from bad-quality rails to better-quality

ones would thus bring the company a benefit of 7256 lire, which could
otherwise be achieved (again, hypothetically) by reducing expenditure
on rails by 9.7% (74,862 lire) or labour, repairs and other costs by 34%
(21,242 lire). Pareto adds that this calculation of the advantage accru-
ing from good-quality rails represents an underestimation because the
use of good-quality raw materials would enhance San Giovanni iron’s
reputation for good quality, making it easier to sell, and also saving on
heat, Pareto to the general management of the Società del Ferro, 16th
August 1877, ibid.
93. Pareto to Ubaldino Peruzzi, 17th November 1883, see Pareto (1981,
p. 289).
94. Società delle Ferriere Italiane – minutes, board of directors’ meeting,
9th March 1889.
95. See Busino (1977, p. 72).
96. Ibid., p. 75.
97. Ibid., p. 66.
98. On Antonio Allievi (1824–1896), patriot, journalist, banker, see
Cantarella (1997) and Decleva (1997).
99. See Busino (1977, p. 74).
100. Ibid., p. 103.
101. Ibid., p. 107.
12th February 1884.
103. Average annual production of iron was 11,446 metric tons (standard
deviation 1720 metric tons), average annual sales of iron were 9548
metric tons (standard deviation 1585 metric tons), average annual
stocks of iron were 3936 metric tons (standard deviation 1924 metric
tons), See Busino (1977, pp. 90–91).
104. Ibid., pp. 96, 113.
13th May 1890.
pp. 302–303).
107. Pareto to Ubaldino Peruzzi, 25th September 1884, ibid., p. 483.
108. On Giovanni Battista Favero (1832–1906), see Pozzato (1995).
27th August 1884.
112 F. Mornati
110. Pareto to Ubaldino Peruzzi, 25th September 1884, see Pareto (1981,
p. 484).
111. See below Sect. 4.3.6. On the history of the Tardy-Benech business in
Savona, set up in 1861 and going into bankruptcy in 1892 after having
been the biggest Italian iron and steel company in the early 1880s
before the creation of Terni, see Penner (2010, pp. 11–64), and
Leonardi (1956, p. 623). On the Genoese entrepreneur Armando
Raggio, whose metallurgical interests were centred on the ironworks at
Sestri Ponente, see Doria (2008a, p. 325) and Doria (2008b, pp. 31–32),
112. Pareto to Emilia Peruzzi, 18th September 1884, see Pareto (1984b,
p. 277), to Ubaldino Peruzzi, 25th September 1884, see Pareto (1981,
p. 517).
25th September 1884.
114. See below Sect. 4.3.5.
115. Short-selling is a speculative transaction which consists in selling stocks
one does not currently possess, in the knowledge that they can subse-
quently be purchased before the delivery date at a lower price than that
agreed for the sale.
116. See Busino (1977, p. 100).
117. A proportion of the loss amounting to 45,385 lire was charged to the
balance sheet for 1889, 79,168 lire to that for 1890 and 119,557 lire
for 1891, ibid.
118. Pareto to Ubaldino Peruzzi, 9th June 1890, see Pareto (1981, pp. 647–
648). This contract provided for Pareto to receive an annual emolu-
ment of 8000 lire plus the same sum in case of termination by the
company, in return for a commitment to contribute “to the company’s
smooth technical operations”, responding to any technical queries from
Allievi and inspecting the company’s plants.
119. Pareto to Emilia Peruzzi, 16th May 1890, see Pareto (1984b, p. 450).
120. Pareto to Francesco Papafava, 16th January 1892, see Pareto (1989,
p. 150).
121. Pareto to Maffeo Pantaleoni, 26th January 1892, see Pareto (1984c,
p. 167).
122. See below Chap. 6.
14th January 1887.
124. Ibid., meeting of 17th April 1889.
125. Ibid., meeting of 8th March 1890.
126. Evidently, the sales price in this period did not follow the expected
trend.
127. Ibid., meeting of 2nd May 1890.
128. Ibid., meeting of 12th May 1890.
129. Ibid.
130. Pareto was replaced by his subordinate Arturo Luzzatto (1861–1945)
who directed the company for the following 30 years, see Biagianti
(1984, pp. 153–411).
131. Pareto to Clemens, 11th May 1880, to Porra, 21st May 1880, BPS-la.
132. Pareto specifies that “the medium-sized train yields an output which I
believe no other rolling mill in Italy can match … while as for the pud-
dling, it continues to go well and this I consider to be our best hope for
the future”, Società delle Ferriere Italiane – minutes, board of directors’
meeting, 19th November 1883.
133. Due to the crisis affecting the industry in England and to the “extraor-
dinarily low railway tariffs following the opening of the Gotthard tun-
nel (in 1882) which allow outsiders to transport iron from Westphalia
to the market in Milan at very low cost”, ibid., meetings of 21st and
24th April 1883.
134. Ibid., meeting of 19th July 1883.
135. Ibid., meeting of 12th February 1884.
136. Ibid., meeting of 5th September 1883.
137. Ibid., meeting of 19th November 1883.
138. Ibid., meeting of 5th January 1884.
141. Letter to Antonio Allievi of 18th October 1885, BPS-la.
19th November 1886.
147. Pareto to John Batt, 30th August 1883, see Pareto (1981, p. 252).
148. Pareto to Clemens, 11th May 1880, BPS-la.
149. Ibid.
150. Pareto to John Batt, 30th August 1883, see Pareto (1981, pp. 251–
252). The manager’s remuneration would thus correspond to the differ-
ence between the amount paid to him by the company and the amount
spent by him on wages.
114 F. Mornati
151. Pareto to John Batt, 8th September 1883, ibid., p. 255.

152. Pareto to Ubaldino Peruzzi, 17th November 1883, ibid., pp. 293–294.
5th September 1883.
157. Marzucchi, one of the managers fired by Pareto, had been a personal
friend as fellow students at the School of Specialisation where he had
qualified in 1869, Pareto to Ubaldino Peruzzi, 17th November 1883,
see Pareto (1981, p. 296).
158. Società delle Ferriere Italiane –board of directors’ meeting, 8th January
1885.
159. Ibid., meeting of 12th October 1885.
162. Ibid., meeting of 8th June 1886.
163. Ibid., meetings of 16th January and 9th March 1889.
164. Pareto to Antonio Allievi, 8th May 1879, BPS-la.
165. Pareto to Angelo Sinigaglia, 11th January 1884, see Pareto (1981,
p. 341).
166. Pareto to Jacopo Bozza, 28th August 1878, BPS-la. The terms of the
Palermo deal, per hundredweight of iron, were the following: the price
per hundredweight, net of commission and collection expenses, was
17.935 lire and the Banca Generale’s share was 5.3%, amounting to
around 1 lira. If the rails cost 9 lire a hundredweight and 1.12 hundred-
weight of these was needed to make 1 hundredweight of iron, the latter
should be paid 10.08 lire. Bozza’s return would thus be only 6.85 lire. The
deal would become more remunerative if the rails could be bought for less
than 9 lire, with the bank and Bozza splitting the saving 50–50, ibid.
167. Pareto to Antonio Allievi, 8th May 1879, ibid.
168. Pareto to Raffaele Jona, 2nd May 1879, ibid.
170. Pareto to Antonio Allievi, 1st June 1879, ibid.
171. Ibid.
172. Pareto to unidentified recipient, 30th September 1879, to Antonio
Allievi, 3rd October 1879, ibid.
173. Pareto to Antonio Allievi, 2nd December 1879, ibid.
174. See Nesti (2010, p. 543).
p. 303).
176. Pareto to Angelo Sinigaglia, 11th January 1884, ibid., pp. 340–341.
177. Società delle Ferriere Italiane –board of directors’ meeting, 19th
November 1883.
181. See Fagioli (2007a, p. 63). The aim of this mountain railway was that
of reducing the transportation costs of Mammiano ironworks.
182. Pareto to Cipriano Turri, 13th and 15th December 1882, Turri-Pistoia
Collection (T-PC).
183. Pareto to Cipriano Turri, 21st January 1883, ibid., and see Fagioli
(2007a, p. 63).
184. Ibid., pp. 71–73. The Pracchia-Mammiano railway line was opened
only in 1926, ibid., p. 75.
185. Società delle Ferriere Italiane – board of directors’ meeting, 19th March
1883.
187. Ibid., meeting of 28th August 1884.
198. Pareto to Cipriano Turri, 12th September 1889, (T-PC).
199. Cipriano Turri to Pareto, 13th September 1889, ibid.
200. Pareto to Cipriano Turri, 21st September 1889, BPS-la.
201. Società delle Ferriere Italiane –board of directors’ meeting, 15th April
1890. In the end Turri took the lease on the ironworks in 1892, buying
it in 1894 and converting it into a leading Italian producer of copper;
see Fagioli (2007b, p. 21).
202. Pareto to Antonio Allievi, 20th June 1885, BPS-la.
116 F. Mornati
203. Costantini and Fossi, having lost their position as agents following the
creation of the consortium between the company, Raggio and Tardy
(see below Sect. 4.3.6), conceived the idea of building their own iron-
works on the coast in the region of Ancona, offering the general man-
agement to Pareto. The latter had initially thought of offering these
ex-agents the Mammiano plant which, once it had been transferred to
the coast, could have provided competition to Raggio and Tardy,
Società delle Ferriere Italiane – meeting of 17th November 1884.
204. Pareto to Antonio Allievi, 18th October 1885, BPS-la.
205. Società delle Ferriere Italiane – meeting of 12th October 1885.
209. Ibid.
210. The choice of Rogoredo was initially also a way to “wait more patiently”
on events in Torre Annunziata, ibid., meeting of 24th April 1888.
211. See Busino (1977, p. 87).
212. Società delle Ferriere Italiane – meeting of 11th July 1887.
213. Ibid., meeting of 3rd September 1887.
221. Ibid.
222. Pareto to the firm Armando Raggio, 15th May, 1879, ibid.
223. Pareto to Ferdinando Nota, 16th April 1879, ibid.
224. Pareto to Ferdinando Nota, 18th April and 3rd May 1879, ibid.
226. Pareto to Armando Raggio, 6th February 1889, ibid.
227. Ibid.
228. Società delle Ferriere Italiane – meeting of 5th September 1883.
230. Pareto to Giuseppe Cenni, 2nd October 1883, see Pareto (1981,
pp. 264–265).
231. Pareto to Giuseppe Tardy, 15th November 1883, to Giuseppe Cenni
15th November 1883, ibid., pp. 286–287.
232. Pareto to Giuseppe Tardy, 10th December 1883, ibid., p. 316.

234. In 1886 the ironworks of Liguria and Tuscany produced 60% of the
national output, see Leonardi (1956, p. 622).
236. Pareto to Antonio Allievi, 1st June 1879, to Francesco Marzucchi, 21st
September 1879, ibid.
237. Pareto to Giuseppe Cenni, 1st November 1879, ibid.
238. Pareto to Antonio Allievi, 2nd February 1880, ibid.
239. Pareto to Antonio Allievi, 17th November 1880, ibid.
240. Pareto to Antonio Allievi, 11th January 1884, see Pareto (1981, p. 343).
242. Pareto to Giuseppe Cenni, 2nd February 1884, see Pareto (1981,
p. 357).
243. Pareto to Antonio Allievi, 11th March 1884, ibid. p. 377.
244. Ibid, p. 497.
245. Ibid, p. 486.
246. Pareto to Antonio Alievi, 17th August 1884, ibid., pp. 467–468.
247. Società delle Ferriere Italiane – minutes of the meeting of 28th August
1884.
250. Pareto to Antonio Allievi, 23rd October 1884, in Pareto, Letters 1860–
1890, pp. 521–522, see Biagianti (1984, p. 221).
251. Società delle Ferriere Italiane – minutes of the meeting of 25th
September 1884.
252. Due to the reduction in production.
254. Pareto to Antonio Allievi, 20th June 1885, BPS-la., and see Biagianti
(1984, p. 221).
255. Società delle Ferriere Italiane – minutes of the meeting of 8th January
1885.
256. Pareto to Antonio Allievi, 20th June 1885, BPS-la.
November 1886.
260. Ibid., meeting of 3rd September 1887.
118 F. Mornati

263. See Biagianti (1984, p. 178). In fact, the Regia in the 1860s and 1870s
had exported as much as 84.5% of its output, see Lungonelli (1991, p. 7).
264. Pareto to Antonio Allievi, 9th October 1880, BPS-la.
265. Pareto to Antonio Allievi, 12th October 1880, ibid.
266. Ibid.
267. For similar projects at that time, see Lungonelli (1997, p. 10).
268. Pareto to Antonio Allievi, 5th and 18th December 1880, BPS-la.
269. See Busino (1977, p. 150).
270. Società delle Ferriere Italiane – minutes of the meeting of 19th July 1883.
271. Ibid., meetings of 11th June and 19th July 1883.
272. Pareto to Antonio Allievi, 10th August 1883, see Pareto (1981,
pp. 238–239).
273. See Biagianti (1984, p. 184).
274. See Lungonelli (1997, p. 12).
275. Under the new contract, the amount payable to the state for each met-
ric ton of ore exported fell from 5.25 lire to 4.5 lire while the maximum
quantity exportable each year fell from 200,000 to 180,000 metric
tons, ibid., p. 11.
276. Pareto, see Pareto (1888, p. 26), states that while the Terni steelworks
were built officially to produce armour plating for the ships of the
Italian navy, “the real purpose” involved was to “carry on a speculation
at the expenses of the country”, where the government showed clear
favouritism for Breda, who was its political supporter.
277. See Lungonelli (1997, p. 12). Obviously. In the 1881–1882 financial
year, part of the stock was also exported.
278. Pareto to Francesco Genala, 23rd April 1880, see Pareto (1981,
pp. 176–177).
279. Ibid., pp. 182–183.
280. Ibid., p. 184.
281. Ibid., pp. 185–186.
282. Ibid., pp. 186–187.
283. Ibid., p. 189.
284. Ibid., p. 190.
285. Ibid., pp. 193–195. Pareto’s fears, as is known, turned out to be
unfounded as the two Italian railway networks were granted in 1885 to
the two largest private national railway companies—the Meridionali
(which received the Adriatic network) and the new Società Italiana per
le Strade Ferrate del Mediterraneo (which received the Tyrrhenian
network).
286. See Busino (1977, pp. 174, 176). In his review of Isaac Pereire’s book The
railways question, see Pareto (1881), Pareto underlined the French finan-
cier’s proposal to eliminate the duties on imports of iron and machinery
in order to promote the construction of new railways, and to compen-
sate the increased profits thus obtained by the railway companies by
reducing tariffs, particularly for the transport of coal and pig iron.
287. Pareto to Antonio Allievi, 9th December 1883, see Pareto (1981,
p. 315).
288. Pareto to Giuseppe Cenni, 30th January 1884, ibid., p. 354.
289. Società delle Ferriere Italiane – minutes of the meeting of 14th May 1884.
290. Pareto to Antonio Allievi, 10th June 1884, see Pareto (1981, p. 422).
291. Società delle Ferriere Italiane – minutes of the meeting of 9th July
1884.
293. Ibid., meeting of 17th April 1885. The 1885 conventions, whose con-
ception Pareto attributed to the engineer Secondo Borgnini (general
manager of the Meridionali) who had become “omnipotent in Italy”,
were deplored by Pareto also because they allowed for a “form of gov-
ernment participation… that impedes the free circulation of traffic”,
Pareto to Emilia Peruzzi, 30th August 1885, see Pareto (1984b, p. 384).
294. See Peruzzi (1885, pp. 1–32).
295. See Pareto (1885b, p. 65).
296. Ibid., pp. 67, 69.
297. Ibid., pp. 67, 68.
298. Ibid., p. 69.
December 1885.
300. See Biagianti (1984, p. 197, note 146).
301. See Busino (1977, p. 161).
302. Pareto to Giulio Rubini, 13th and 31st January 1881, see Pareto (1981,
pp. 217–220).
303. See Busino (1977, pp. 161–164).
304. Società delle Ferriere Italiane – minutes of the meeting of 19th February
1886.
120 F. Mornati
306. Among the many responses to the questionnaire circulated by the com-
mission in relation to its proposed reform of duties, those of the Società
di letture e conversazioni scientifiche di Genova (Genoa Society for
Scientific Readings and Debates) and of Rubini (mentioned above) are
of interest. The Genoa club demanded, like Pareto, “special low tariffs”
for transportation by rail of raw materials and finished products of the
metal industry and was against the imposition of duties on pig iron,
partly so as not to handicap the puddling technology “now developing
here too”, and partly because production of pig iron in Italy was too
costly and could not continue for very long in view of the modest
quantities of ore from Elba which could be used for the purpose; see
Ellena (1886b, p. 30). On the contrary Rubini, having stated his con-
viction that “true iron industry [can] be none other than that involving
minerals and pig irons, which alone can satisfy all requirements of con-
sumption”, proposed, in agreement with the “principal firms in Italy
active in the iron and steel industry” but clearly not with Pareto’s com-
pany, the imposition of duties on pig iron, scrap and on finished prod-
ucts, expressing his trust that Italian iron ore deposits “would be
sufficient to meet the bulk of our needs for a long period”, ibid.,
pp. 6–8, 10–12, 50–52.
307. See Ellena (1886a, pp. 363–365).
308. Ibid., p. 363.
309. Ibid., p. 365.
310. Ibid.
311. Ibid.
312. Broken down as follows: 1.75 metric t. of ore at 10 lire per ton cost
17.50 lire; 1.10 metric t. of carbon coke at 35 per ton cost 38.50 lire;
the flux cost 2.50 lire; salaries and maintenance cost 7.50 lire; over-
heads amounted to 6 lire, ibid., p. 367.
313. Ibid.
314. Ibid.
315. Ibid., pp. 379–380.
316. See Pareto (1887a, p. 225).
317. Pareto to Ubaldino Peruzzi, 9th March 1887, see Pareto (1981, p. 572).
318. Società delle Ferriere Italiane – minutes of the meeting of 9th March
1887.
319. Ibid.
320. Ibid.
321. See Biagianti (1984, p. 197, note 146).

323. Pareto to Francesco Papafava, 9th December 1888, see Pareto (1981,
p. 604). On this important interlocutor of Pareto, V. Mogavero,
Francesco Papafava of the Carraresi, in Italian Dictionary of Biography,
vol. 81, Istituto dell’Enciclopedia Italiana, Rome, 2014, pp. 222–226.
324. Società delle Ferriere Italiane – minutes of the meeting of 14th May
1889.
325. The duty of 10 lire per metric ton of puddled iron implies an increase
of 10 lire in the proceeds of the sale of the same. The duty of 10 lire per
metric ton of pig iron implies an increase of 11.6 lire in the cost of
production of puddled iron, since 1.16 tons of pig iron are needed to
make a ton of puddled iron. In order to avoid the duty damaging the
profitability of puddled iron production it would thus be necessary to
prevent the increase in the cost of production of a ton of puddled iron
exceeding 10 lire. This would be possible if the duty on pig iron were
reduced, in line with Pareto’s request, to 8.60 lire per ton.
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Decleva, Enrico. 1997. A man of bold ideas (Un uomo di “idee ardite”). In
Antonio Allievi: dalle scienze civili alla pratica del credito, ed. Enrico Decleva,
7–44. Milan/Rome: Cariplo/Laterza.
Doria, Giorgio. 2008a. Investment and economic development in Genoa on the eve
of the First World War, volume one. The first stages (1815–1882) (Investimenti e
sviluppo economico a Genova alla vigilia della prima guerra mondiale, volume
primo. Le premesse (1815–1882)). Milan: Edizioni Pantarei.
———. 2008b. Investment and economic development in Genoa on the eve of the
First World War (1815–1882), volume two (Investimenti e sviluppo economico a
Genova alla vigilia della prima guerra mondiale, volume secondo. (1883–1914)).
Milan: Edizioni Pantarei.
Ellena, Vittorio. 1886a. Proceedings of the commission of enquiry for the revision of
customs duties, II: Industrial section, report of the member of parliament,
V. Ellena, (Atti della Commissione d’Inchiesta per la revisione della tariffa doga-
nale, II: parte industriale, Relazione del deputato V. Ellena). Rome: Tipografia
Eredi Botta.
———. 1886b. Proceedings of the Commission of Enquiry for the revision of cus-
toms duties, II: Industrial section, report of the member of parliament, V. Ellena,
attachments, dossier IV (Atti della Commissione d’Inchiesta per la revisione della
tariffa doganale, II: parte industriale, Relazione del deputato V. Ellena, Allegati.
Fascicolo IV). Rome: Tipografia Eredi Botta.
Fagioli, Simone. 2007a. The Pracchia-La Lima railway in the documents of the
Turri Collection (1880–1888) (La ferrovia Pracchia-La Lima nei documenti
del Fondo Turri (1880–1888)). In The Turri collection. Industry and
entrepreneurship in the mountains of Pistoia in the second half of the 19th cen-
tury (Il Fondo Turri. Industria ed imprenditoria sulla Montagna Pistoiese nella
seconda metà dell’Ottocento), ed. Simone Fagioli, 63–78. Pistoia: Etruria
Editrice.
———. 2007b. The Turri collection. A first examination (Il Fondo Turri. Una
prima indagine). In The Turri collection. Industry and entrepreneurship in the
mountains of Pistoia in the second half of the 19th century (Il Fondo Turri.
Industria ed imprenditoria sulla Montagna Pistoiese nella seconda metà
dell’Ottocento), ed. Simone Fagioli, 19–28. Pistoia: Etruria Editrice.
Fallani, Luigi. 1976. The Iron industry company (1872–1880) (La Società per
l’Industria del Ferro (1872–1880)). Rassegna storica toscana XXII (2):
241–274.
Fallani, Luigi, and Lucia Milana. 1996. Carlo Fenzi. In Italian dictionary of
biography (Dizionario Biografico degli Italiani), vol. 46, 144–149. Rome:
Istituto dell’Enciclopedia Italiana.
Giacalone-Monaco, Tommaso. 1963. Engineer Vilfredo Pareto at the Società

delle Strade ferrate Romane (1870–1873) (L’ing. Vilfredo Pareto nella Societa
delle Strade ferrate Romane (1870–1873)). Giornale degli Economisti e Annali
di Economia XXII (7-8): 537–578.
Leonardi, Silvio. 1956. The Italian metallurgical industry from the time of uni-
fication to the first world war (L’industria siderurgica italiana dall’unità alla
prima guerra mondiale). Movimento operaio VII: 609–638.
Lungonelli, Michele. 1991. The iron foundry in Italy. Business, work and technolo-
gies of a century of Tuscan steel industry (La Magona d’Italia. Impresa, lavoro e
tecnologie di un secolo di siderurgia Toscana (1865–1975)). Bologna: Il Mulino.
———. 1997. An industrial past. Mines and the iron and steel industry on the isle
of Elba in the 19th and 20th centuries (Un passato industriale. Miniere e side-
rurgia all’isola d’Elba fra Ottocento e Novecento). Torino: Edizioni della
Fondazione Giovanni Agnelli.
Merger, Michelle. 1999. The railway engineer in the 19th century (L’ingegnere
ferroviario nell’Ottocento). In Engineers in Italy between 1800 and 1900 (Gli
ingegneri in Italia tra ‘800 e ‘900), ed. Andrea Giuntini and Michela Minesso,
81–99. Milan: Franco Angeli.
———. 2003. Railway repair yards in Italy in the 19th century (Les ateliers de
réparation ferroviaire en Italie au XIXe siècle). Revue d’histoire des chemins de
fer (28-29): 111–128.
Mogavero, Valeria. 2014. Francesco Papafava of the Carraresi. In Italian diction-
ary of biography (Dizionario Biografico degli Italiani), vol. 81, 222–226.
Rome: Istituto dell’Enciclopedia Italiana.
Nesti, Angelo. 2010. Jacopo Bozza, a metallurgical entrepreneur in post-
unification Italy (Jacopo Bozza: imprenditore siderurgico nell’Italia post-
unitaria). Ricerche storiche XL: 533–544.
Pareto, Vilfredo. 1880. Address in first public conference on the plan to exit the
fiat money, held on the 13th December 1880, chaired by U. Peruzzi
(Intervento in Prima conferenza pubblica intorno al progetto di abolizione
del corso forzato, tenuta il 13 dicembre 1880 sotto la presidenza di U.
Peruzzi). L’Economista, December 26, 1652–1656. Reprinted in Pareto
(2005, pp. 60–72).
———. 1881. Review of Isaac Pereire’s book. The railways question (La questione
ferroviaria). Milano: Stamperia Reale, 1881. Rassegna Nazionale V (3):
775–776.
———. 1883a. Two draft social laws (Due disegni di leggi sociali). Rassegna di
scienze sociali e politiche, June 15, pp. 353–354. Reprinted in Pareto (1974b,
pp. 144–157).
124 F. Mornati
———. 1883b. The law on civil liability of employers and entrepreneurs in case
of workplace accidents (La legge sulla responsabilità civile dei padroni e
imprenditori pei casi d’infortunio sul lavoro). Rassegna di scienze sociali e
politiche, July 15, pp. 521–541. Reprinted in Pareto (1974b, pp. 158–180).
———. 1885a. Letter to Professor Guido Vimercati of 7th July 1882 (Lettera
al Prof. Guido Vimercati del 7 luglio 1882). Atti della Reale Accademia
economico-agraria dei Georgofili di Firenze VIII: 430–433. Reprinted in Pareto
(1974b, pp. 189–190).
———. 1885b. [Discussion of ] Peruzzi, Ubaldino. “The trade in foodstuffs,
particularly for export, in relation to the conditions for their transport by rail
(Il commercio delle derrate alimentari, e specialmente di esportazione, in
relazione con le condizioni del loro trasporto sulle Strade Ferrate)”. Atti della
Reale Accademia economico-agraria dei Georgofili di Firenze VIII: 65–69.
———. (1887a). On the recrudescence of customs protection in Italy (Sulla
recrudescenza della protezione doganale in Italia. Memoria letta dal socio
ordinario marchese ing. Vilfredo Pareto nell’adunanza del dí 29 maggio
1887). Atti della Reale Accademia economico-agraria dei Georgofili di Firenze
X: 27–52. Reprinted in Pareto (1974b, pp. 218–234).
———. 1887b. The new Italian customs tariff (Le nouveau tarif douanier ital-
ien). Journal des Économistes XLVI (4): 5–23. Reprinted in Pareto (1965,
pp. 1–19).
———. 1888. Letters from Italy. Liberty, October 18, p. 5. Reprinted in Pareto
(1974a, pp. 25–29).
———. 1890. Empty promises (Promesse fallaci). Il Secolo, December 16–17.
Reprinted in Pareto (1974b, pp. 354–355).
———. 1965. In Free trade, protectionism and socialism (Libre-échange, protec-
tionnism, socialisme), Complete works, ed. Giovanni Busino, vol. IV. Geneva:
Droz.
———. 1974a. In Miscellaneous writings (Écrits épars), Complete works, ed.
Giovanni Busino, vol. XVI. Geneva: Droz.
———. 1974b. In Political writings, The development of capitalism (1872–1895)
(Scritti politici. Lo sviluppo del capitalismo (1872–1895)), Complete works,
ed. Giovanni Busino, vol. XVII. Geneva: Droz.
———. 1981. In Letters 1860–1890 (Lettres 1860–1890), Complete works, ed.
Giovanni Busino, vol. XXIII. Geneva: Droz.
———. 1984a. In Letters to Emilia Peruzzi 1872–1877 (Lettere a Emilia Peruzzi
1872–1877), Complete works, ed. Tommaso Giacalone-Monaco, vol.
XXVII.I. Geneva: Droz.
———. 1984b. In Letters to Emilia Peruzzi 1878–1900 (Lettere a Emilia Peruzzi

1878–1900), Complete works, ed. Tommaso Giacalone-Monaco, vol.
XXVII.II. Geneva: Droz.
———. 1984c. In Letters to Maffeo Pantaleoni, 1890–1896 (Lettere a Maffeo
Pantaleoni, 1890–1896), Complete works, ed. Gabriele De Rosa, vol.
XXVIII-I. Geneva: Droz.
———. 1984d. In Letters to Maffeo Pantaleoni, 1897–1906 (Lettere a Maffeo
Pantaleoni, 1897–1896), Complete works, ed. Gabriele De Rosa, vol.
XXVIII-II. Geneva: Droz.
———. 1989. In Letters and correspondence (Lettres et correspondances), Complete
works, ed. Giovanni Busino, vol. XXX. Geneva: Droz.
———. 2001. In New Letters, 1870–1923 (Nouvelles lettres, 1870–1923),
Complete works, ed. Fiorenzo Mornati, vol. XXXI. Geneva: Droz.
———. 2005. In New letters, unpublished material and addenda (Inédits et
Addenda), Complete works, ed. Fiorenzo Mornati, vol. XXXII. Geneva:
Droz.
Penner, Marco. 2010. A factory under the Priamar. The iron and steel industry in
Savona (1861–1993) (Una fabbrica all’ombra del Priamàr. L’industria del ferro
e dell’acciaio a Savona (1861–1993)). Savona: Società Savonese di Storia
Patria, Savona.
Peruzzi, Ubaldino. 1885. The trade in foodstuffs, particularly for export, in rela-
tion to the conditions for their transport by rail (Il commercio delle derrate
alimentari, e specialmente di esportazione, in relazione con le condizioni del
loro trasporto sulle Strade Ferrate). Atti della Reale Accademia economico-
agraria dei Georgofili di Firenze VIII: 1–32.
Pozzato, Enzo. 1995. Giovanni Battista Favero. In Italian dictionary of biography
Scagnetti, Giulio. 1923. Ironmaking in Italy (La siderurgia in Italia). Rome:
Industria Tipografica Romana.
Società per l’Industria del Ferro. 1879. Balance sheet for the 1878 financial year
(Bilancio dell’esercizio 1878). Florence: Barbera.
Strinati, Valerio. 2007. The responsibility of entrepreneurs and the national
fund for insurance against workplace accidents: legislative initiatives and par-
liamentary debates (1879–1885) (La responsabilità degli imprenditori e la
Cassa nazionale di assicurazione per gli operai contro gli infortuni sul lavoro:
iniziative legislative e dibattiti parlamentari (1879–1885)). Le Carte e la
Storia XIII (1): 158–174.
5
A Multifaceted Liberalism and a Positive
Methodology
This chapter will deal with Pareto’s wide-ranging intellectual interests

during the Tuscan period, characterised by his early adoption of a liberal
ideological outlook. The first section will examine the political liberalism
of the young Pareto, with its clear orientation towards the ideas of John
Stuart Mill,1 including his brief but intense alliance with political activ-
ism in favour of legislation on proportional representation, of freedom
of religion (Sect. 5.2) and of the emancipation of women (Sect. 5.3).
This is followed in Sect. 5.4 by an initial overview of Pareto’s early eco-
nomic liberalism, which he recognised as ideological in character not-
withstanding the clear evidence of the disastrous consequences of state
intervention in the economy revealed by economic history. Lastly, in
Sects. 5.5, 5.6, and 5.7 we highlight his ongoing interest in method-
ological questions which can be traced back to his university years, where
his wholesale endorsement of John Stuart Mill’s positivistic approach
was complemented by ideas borrowed from the Franco-Belgian econo-
mist and advocate of free trade Gustave de Molinari, with whom Pareto
maintained close ties, also of friendship, between the late 1880s and the
mid-1890s.

128 F. Mornati
5.1 Political Liberalism

Pareto considered that the acrimony of political disputes arose from the
fact that adversaries targeted the person rather than their ideas, which
needed to be examined themselves, following the example of Mill, “with
a calm mind”, and in the knowledge that “every opinion may contain a
grain of truth”.2
Having said that, Pareto thought that individuals can be spurred to
political action only by force, by trickery or by persuasion. In the absence
of the latter, the only one capable of delivering “civil progress”, it is neces-
sary to resort to the other two, which were, however, “strongly to be
deplored” not only from a moral standpoint (Pareto defines them as “bar-
barism or the product of a corrupted civilisation”) but also in practical
terms, because those making use of them will sooner or later have to give
way to opponents who are more expert in deceit or who are physically
stronger.3
Having thus declared his preference for conciliatory and civil political
debate, Pareto’s view was that elections conducted with reference not to
the principles espoused by the candidates but to their presumed suitabil-
ity to “conduct public affairs in accordance with what is right” should be
excluded because “this leads directly to individual rule and the worst
form of despotism”. Pareto’s opposition to this type of government, which
in his view negated “all civility and all scientific progress”,4 was “inter-
mingled” with the doctrine of liberty.5 Even the despotism of intelligent
and cultivated people, such as that envisaged by Auguste Comte, seems
to Pareto “neither less hateful for the people nor less fatal to progress”.6
Instead Mill, with Pareto’s approval, tempers his enthusiasm for a govern-
ment of the educated with the need to ensure individual liberties, as he
sees precisely “[in] individual originality and initiative … the most
important drivers of social progress”.7
In 1877 Pareto pointed out approvingly that in his book First Principles,
Herbert Spencer had stated that “society, no less than the individual,
requires organisation to advance” and that this organisation must continue
to evolve in order to facilitate progress, even if on occasion it can impede it.8
Pareto underlines that this conception is confirmed by Walter Bagehot in
his Physics and Politics where, without supplying the “innumerable proofs”
A Multifaceted Liberalism and a Positive Methodology 129
which are needed for his theory to be “demonstrated with certainty”, he

claims that if our forebears had had need of “a strongly-established author-
ity” which could exercise “that power over them, that moderation and spirit
of sacrifice without which no evolution of civilisation is possible”, neverthe-
less only those “very few peoples” had become civilised who had been able,
once their disciplinary purpose had been performed, to exchange the iron
rules of social behaviour for liberty, and unsophisticated “absolute power”
for “government by debate”.9
But, in Pareto’s view, the political systems current in Latin countries,
while not despotic, take account only of the party which is in power.10 In
the case of Italy, however, the formation of “a major liberal-conservative
bloc”,11 even if never achieved, would have been extremely beneficial in that
it would have liberated the political debate “from the trammels of its empir-
icism” and offered hope “of seeing the rigorous principles of the social sci-
ences brought into play”.12 Pareto thus expressed his hope that at least the
English liberal party of John Bright and William Gladstone “would con-
tinue to govern England for a while”13 (Gladstone’s first government of that
time held power from 1868 to 1874). Lastly, Pareto thought that liberals
must be equally in favour of liberty for their opponents,14 and that liberty is
a reaction not to “a preventive system” but to “a repressive system”.15
Pareto’s earliest liberal political interests need to be interpreted within
the context of this ideological framework.
One of the topics provoking the interest—and alarm—of liberals in
Europe in the 1860s and 1870s was in fact the fear that the imminent
adoption of universal suffrage, in the context of the common first-past-
the-post electoral law, could lead to the election of parliaments com-
posed exclusively of representatives of those popular classes who were in
the overwhelming majority,16 and that these would, in all probability, be
revolutionaries. Only a minority did not share this worry, considering
that if ably managed, or even in the natural course of events, universal
suffrage would confirm the traditional moderate majority in parliamen-
tary representation, reinforcing the liberal political culture with that
popular support which it had thus far lacked. The broad majority, how-
ever, were contemplating countermeasures consisting in ensuring ade-
quate representation to the better-off sections of society who were
numerically in a minority through reinforcements to the proportional
element of electoral law.
130 F. Mornati
The first evidence of Pareto’s contribution to the Florentine world of

politics and culture (and to political and cultural debate in general) relates
to the first public meeting17 of the public finance section of the renewed
Georgofili Academy.18 Although its fundamental aim was to defend
traditional liberal values of Tuscan political and economic circles, the sec-
tion was inaugurated with a conference on the groundbreaking question
of proportional representation, which was not strictly speaking an eco-
nomic matter but was chosen on the prompting of Ubaldino Peruzzi and
Carlo Fontanelli19 (the secretary of the section, whom Pareto viewed as an
“expert in all questions relating to proportionalism”),20 following the
establishment in Rome of the Associazione per lo studio della rappresen-
tanza proporzionale (Association for studies of proportional representa-
tion), with Peruzzi among its sponsors.21
The conference’s opening address was given by the lawyer Francesco
Genala of Cremona (future Minister of Public Works in the governments
of the Historical Left), who stated that the main drawbacks of the elec-
toral majority principle were the mediocre quality of the compromise
candidates who were elected and the constant danger of the parliamen-
tary majority not corresponding to that of the country as a whole (due to
the fact that often the winning party is simply the one which can count
on the highest concentration of its own voters within the territory).
Among the innumerable alternative electoral systems, Genala considered
that the most effective was that whereby each elector is given a single
vote, to be expressed within a single national electoral college to which
the candidates elected are those obtaining a number of votes at least equal
to the figure represented by the ratio between the numbers of electors and
of the elected.22
The Florentine jurist Odoardo Luchini, on the other hand, contested
the principle of proportionality partly because majorities and minorities
alternate naturally in the colleges of first-past-the-post systems but more
importantly because the sovereignty of the people, which is the true
foundation of proportional systems, does not seem to him adequate to
the task of safeguarding that principle of justice which is so vital to the
state. Indeed, it is a principle which is difficult to implement by deputies
elected by partisan political committees.23
Pareto was the first of a long series of young proponents of proportional

representation24 who intervened in the debate making use of many argu-
ments in defence of their thesis and contrary to that of Luchini. In keep-
ing with what had already become his methodological position,25 Pareto
opined that it was necessary to start from the purpose, the origins and the
limits of government.26 Since government can pursue good or, more sim-
ply, forestall bad, with the former requiring “greater intelligence and hard
work” than the latter, supporters of the theory whereby government
should pursue good ought to support proportional representation because
it is the system best able to bring “the nation’s more cultivated and intel-
ligent individuals” into parliament.27 As for the origins of government,
from a democratic standpoint they are to be seen in the taking of decisions
by majority vote, and, from a liberal point of view, in the ensuring of lib-
erty for all, so as to avoid individuals becoming victims of discrimination
and, most evidently, in the “need to provide for the preservation and prog-
ress of human society”.28 In Pareto’s view, all conceptions of the origin of
government are compatible with proportional representation in that it
corrects the “excessively absolute and very often erroneous” nature of
majority decisions, allowing people to express their own opinions, pre-
venting discrimination which would be deleterious to public order and
making it easier to identify measures for the improvement of society.29 In
regard to the limits on government, for some commentators there are
none, while for others they correspond simply to “the eternal principles of
what is right and honest”. Here too in practical terms the proportional
principle provides an effective means of limiting the excessive power of the
governing majority.30 Pareto likewise considered the proportional princi-
ple “the best remedy” to the problem of vote-rigging by parties.31
Some months after, Pareto made a definitive formulation of his elec-
toral ideas. Defining himself as “one of the humblest servants of the party
of liberty”, writing in the Turin daily “La Gazzetta del Popolo”32 he
replied to an earlier article by the respected Milanese patriot Giorgio
Pallavicino Trivulzio,33 who opposed the introduction of universal suf-
frage in Italy on the basis that there were “still too many” illiterate voters
who would be influenced by the clergy. Consequently, Pallavicino
Trivulzio was in favour of the extension of the right to vote only to male
citizens over the age of 21 having completed elementary education. For
132 F. Mornati
his part, Pareto considered the positions of both those in favour of uni-
versal suffrage and those wishing to retain the current extremely strict
voting conditions as making the same mistake, which was to consider the
vote as a right and not, as suggested by Mill in Considerations, as “the
performance of a function essential for the evolution of civil society”.34
This task can be entrusted, according to Pareto (earning the consequent
approval of Pallavicino Trivulzio thereby), only to those possessing “the
necessary culture and learning”, as demonstrated by having successfully
completed at least an elementary schooling, access to which must neces-
sarily therefore be obligatory and guaranteed to all. Pareto also takes the
trouble to show that this obligation of schooling does not conflict with
the principle of liberty, if this is understood as Pareto does, once more
following Mill, in the sense “of the freedom to do anything which does
not immediately or directly harm others”. In reality, the fact of imposing
schooling on minors means saving them the immediate and direct harm
of death by hunger, which would await them if they remained illiterate.
Lastly, Pareto points out that he is against the maintenance of the censitary
suffrage, in that there is no guarantee that people who are well-off are
also, ipso facto, sufficiently educated.35
Despite the personal twist he gave to the proportionalist thesis, Pareto
was an active supporter of it. From the summer of 1872, together with
Emilia Peruzzi,36 he organised a proportionalist conference at the Genoa
Society for Scientific Readings and Debates, where he hoped to attract
people with contrasting political ideas, convinced as he was that the
acceptance of the proportional principle by “such diverse elements will
constitute another practical demonstration of its validity and of its
force”.37 And on the 8th of January 187338 (assisted by a proportionalist
friend, the lawyer Ermogene Campeggi from Alessandria) he made a con-
ference at the Genoese association, whose outcome, in his own word, was
“excellent”.39 Taking his cue from a speech by the local nobleman Camillo
Pallavicino (who, with the aim of protecting the well-to-do minority from
the proletarian majority, had argued for the reintroduction of an electoral
system dividing the electorate into three classes, with the same number of
seats assigned to each), Pareto was scathing about the unpleasant nature of
such class discrimination. Instead, the proportionalist conception of the
English mathematician Thomas Hare (as expounded in Mill’s

Considerations40) would permit representation of all minorities identified
in society, not only those with vested interests, and could thus allow their
demands to be met in ways which were not subversive to the social order.
Again, probably at the prompting of Pareto (who had similar plans for
Genoa and for Alessandria41), in the early summer of 1873 a local branch
of the association for the study of proportional representation was set up
in Florence, with Ubaldino Peruzzi as its president, Fontanelli and Pareto
council members, Genala secretary and Sidney Sonnino treasurer.42 This
branch, at the pragmatic Peruzzi’s suggestion, had the immediate aim of
bringing proportional reforms to the electoral bylaws of the local associa-
tions, this objective being easier to achieve (by comparison to reforms to
the national electoral system) since it required simply a decision on the
part of the membership, where the Florentine supporters of proportional-
ism were active. The further exploration of this idea was entrusted to a
study commission composed of Pareto, Genala and the journalist Lorenzo
Conte.43 Among the commission’s proposals were the idea of adopting the
proportional system in the elections of councillors and supervisors of the
Philological Circle which had been founded on the 9th of January 1872
with Ubaldino Peruzzi as Chairman and with various proportionalist44
members, one of whom was Pareto.45 On this occasion Pareto pointed out
to Genala the inadvisability of adopting the “simple ratio” method because
it could lead to “the election of one or two more winners than necessary”
thus bringing the proportionalist thesis into irreversible discredit.46 As an
alternative, he proposed a method similar to that of Henry Droop for
whom the ratio in question should be calculated by adding one47 to the
number of votes divided by the number of people to be elected plus one.
Pareto for his part succeeded, in 1874, in introducing the proportional
system into the elections of board of the mutual aid society of the San
Giovanni ironworks, which had been set up in 1864 and counted an
average of 200 members, around a third of the employees. To Pareto’s
satisfaction, the first two elections held under the proportional system led
to the election of the precise number of councillors expected, with all the
areas of the ironworks represented, particularly those with the smallest
number of workers.48
134 F. Mornati
However, in July 1875 Pareto stated that he now had “little faith in the
proportional movement” but that he was nevertheless happy that it had
given him the opportunity to become friendly with the Peruzzis.49
5.2 Religious Liberalism

At the beginning of 1873, commenting on the first anti-Catholic mea-
sures taken by the government of Prussia in the Kulturkampf (“culture
war”), Pareto said that the German people knew nothing of liberty and
that this latter was, in his view, “understood and applied” only by the
English and American peoples.50 Soon afterwards,51 Pareto repeatedly
praised the recent volume by the French Protestant theologian Edmond
de Pressensé, Religious freedom in Europe since 1870, as being “the doc-
trine of true and complete liberty” and that he could not “find a single
syllable to add or to remove”. He hoped that the legislators would read it
because they might be persuaded that Cavour’s maxim of a free church in
a free state, reformulated as the French politician Edouard Laboulaye had
done to mean that the state should ignore the church,52 should be applied
without restrictions. On the other hand, Pareto’s view was that in Europe
all individual liberties (including freedom of religion) were currently
under attack by “materialists and idealists” in the name of the age-old
doctrine of the all-powerful state.53
In an 1877 article Pareto noted that the recent government bill on the
suppression of the abuses of the clergy had been introduced in the absence
of any serious sign either of the re-emergence of antipathy towards the
Kingdom of Italy on the part of the Catholic clergy or of the clerical
party’s gaining power, concluding that it was a response to the anti-cleri-
cal feelings then current in Europe.54 A scientific assessment of the bill in
question would involve the identification of all its consequences and the
determination if these “are generally positive or negative for the welfare
and progress of society”. This kind of investigation,55 however, was not yet
possible in the current state of the social science. After a lengthy examina-
tion of hypothetical situations, Pareto in any case arrived at a conclusion
in line with Mill that even in regard to the public behaviour of the clergy,
as long as “no harm is suffered in legal terms, the state has no duty to
intervene”,56 adding that the draft legislation should not be adopted
because it would simply “galvanise the very clerical party, against which it
is apparently directed, in its hostility to our institutions”.57
In 1878, having declared the ancient prime minister Marco Minghetti
to be “the most authoritative champion” of the time in regard to the prin-
ciple of the separation of church and state, Pareto praised his recent vol-
ume on State and Church for its analysis of all aspects of the question and
its logical conclusion that both for Italy and in general for all civilised
nations of the time this separation constitutes “the principle most condu-
cive to human progress and to the well-being of society”.58 He also added
that he was opposed to the introduction of a prohibition on the celebra-
tion of church marriages prior to the civil ceremony (which had by this
time become the only legally valid one) as well as being in favour of the
(gradual) introduction of the right of priests to stand in elections, remind-
ing religious minorities that liberty constituted their “only safeguard”.59
He finally noted the fact that the effects of the separation between church
and state were “beneficial” (while state interference in religion would
bring “constant conflict and discrimination possibly combined with vio-
lence”) and that the feelings of religious scepticism then current in the
country, and which pre-dated this separation, “should be attributed
exclusively to the natural inclination” of the Italian people.60 He agreed
with Minghetti that the novelty of the doctrine of a free church in a free
state made it difficult to appreciate “all the consequences which are often
obscured in the mists of ignorance and tradition”.61 On the other hand,
he did not agree with Minghetti’s notion that “the state may, indeed
should, oblige those wishing to devote themselves to the priesthood to
undertake certain studies and examinations” as its implication that the
state should mould “the minds of ministers of religion in line with its
preferences” was contrary to the separatist principle.62
5.3 M
oral Liberalism: The Role of Women
and Duty
The liberalism of the young Pareto was also expressed in a number of
considerations of a moral nature, again at the prompting of Emilia
Peruzzi.
136 F. Mornati
In the summer of 1872, Pareto rejected the idea advanced by the

younger Alexandre Dumas in his novel L’homme femme, that woman was
“an inferior creature whose purpose is to be man’s servant and hand-
maid”, stating his preference for the opposing conception shown in Mill’s
Subjection of Women.63
Later, while participating in a debate kindled by a questionnaire dis-
tributed by Emilia Peruzzi on women’s role in society,64 Pareto was one of
the few to come out in favour of female emancipation, saying for example
that if women were admitted to positions in post offices, municipal and
state offices and railway station offices (as in England), their quality
would be improved.65 Pareto also supported the participation of better-
educated and intelligent66 women in government and was absolutely in
favour of “the education of women and that they should enjoy the same
rights as men”.67 He also quoted Mill’s continuing support for the cause
of women’s emancipation as expressed in his newly published
Autobiography, a battle for social progress all the more complicated for
being advocated by tiny minorities, of either sex.68
In the same period Pareto read and was critical of Le devoir, a work by
the Protestant theologian Ernest Naville from Geneva.69 First of all,
Pareto contested Naville’s identification of duty with resignation, citing
the claims of Mill in On Liberty and of Plutarch in Cato the Younger on
the duty even of taking up arms in defence of liberty, which constitutes
anything but resignation.70 Pareto prefers the Anglo-Saxon tradition of
reacting to abuses to the Asiatic and Mediterranean tendency towards
submission. In his view, the most important form of non-submission (at
that time) consisted of legal contestation, this being the social expression
which had allowed England “to advance ever further on the road to prog-
ress and civilization”.71
5.4 Economic Liberalism

In chronological terms, Pareto’s earliest considerations of an economic
liberal nature addressed the relation between capital and work, where
only two alternatives existed: if the state were to deny the right to strike
(thus ratifying the salary levels proposed by employers), it would also
have to set prices for all other goods to allow the workers to “make ends
meet”, which would be tantamount “to socialism”; but if on the other
hand the state allowed the citizens to determine prices, this would be
equivalent to the “liberty” favoured by Pareto but where it would be nec-
essary to honour the complementary liberties “of the proprietor to sell his
products as he sees fit” and of “the worker to sell his labour” at the price
he wishes, and to make use of the right to strike, as this is “the only
means” available to him of “increasing his pay”.72 Later, Pareto noted that
according to the “liberal economists”, “the only just social state is that
wherein each receives the fruits of his own labours” and that injustice
arises whenever something is taken away from a person “arbitrarily” to be
given to someone else, no matter what reasons are invoked.73
In 1877 Pareto recognised that the free-trade doctrine is not scientific,
in practice requiring “substantial restrictions”, even if as “a practical pre-
cept it still represents the summit towards which human knowledge
aspires” and constitutes not “the a priori basis of political economy but
the sum total of this together with all the other social sciences”.74 Years
later, Pareto saw free trade more precisely as a means of pursuing the fol-
lowing ends: “low prices for food, economy of production, fair division
of taxes”, limiting of “unproductive expenses [particularly in the public
sector]”;75 all in all, a system for “obtaining the maximum output from
the minimum effort and for a fairer division of wealth”.76
Pareto’s first, vehement, public defence of the ideological aspects of
economic liberalism can be found in a sequence of conferences held at
the Georgofili. In a debate on the bill for a forestry law,77 Pareto, having
underlined that there is evidence both in support of and against the the-
ory that deforestation promotes flooding, considered that it was not
justifiable “on the basis of such uncertain results … to interfere with the
property of one group of citizens” (i.e. the owners of the forests), a step
which should be taken only when “you can prove that by so doing you are
acting in the interests of the nation”.78 In general terms, Pareto thought
that if society “considers itself obliged to place limits on citizens’ property
it must pay compensation for the damages [suffered as a consequence]”
and that, on the contrary, a citizen who sees the value of his property
increase “due to investments made by the collective, he should pay”.79 In
1885, in a conference on the agricultural crisis of the same period, Pareto
138 F. Mornati
stated that for free-traders (unlike for interventionists) the fact that
“something appears good and just” does not imply that “the state should
impose it on citizens”.80 Further, if someone is able, through his own
efforts, to establish a monopoly over some activity, the state should nei-
ther recognise this monopoly officially, nor should it seek to artificially
create competition for him, as this would amount to “taking money from
taxpayers to resist the natural order of things”.81 In 1886, in a conference
on the reform of agricultural credit which was being discussed in parlia-
ment, Pareto opposed the proposed privilege82 on land holdings used as
basis for the extension of credit. Indeed, since “no one is a more devoted
follower of the doctrines of Darwin and Spencer than him”, he was also
in favour of the disappearance of small landowners (if they were not able
to repay credit received) on condition that the competition is fair; that is,
that the creditors are not backed up by the state (as would be the case if
the credit institutions enjoyed legal privileges).83
Some years later Pareto joined in a controversy between the Rome
periodical “L’Economista d’Italia” and the Florentine “L’Economista”
when the former, on the basis of the distance between the predominant
interventionist economic policy and the laissez-faire climate prevailing in
the universities, urged parliament and the government to reduce the
number of university chairs and to reserve them for “men who are fully
aware of the economic history of the country and of its current produc-
tive capacity, over and above dogma”.84 The latter journal, noting that in
Italy the only writings on economic history and on the current economic
situation were by free-trader professors, admitted that the science of eco-
nomics was suffering from a crisis (as shown by the inevitable appearance
of differing interpretations of events “at a very particular moment of
development”) but did not agree that it should be subordinated to con-
stantly changing economic policies.85 Pareto reproached the protection-
ists behind “L’Economista d’Italia” with not having yet shown “any
scientific justification for protectionism” or aligned theory with evidence,
since they had not yet succeeded in putting forward “any evidence to
demonstrate the beneficial effects of protection”. The traditional liberal
interpretation of political economy could be completed simply by adding
“an appendix illustrating the history of all the various forms that from
ancient times to our day the art of taking advantage of the remains of the
weak and the simple folk has taken”, this art showing only “how mankind
is unable to free himself of deceivers and oppressors, certainly not that
the theories of science are unfounded”.86
In Paris in the summer of 1888 Pareto met Yves Guyot,87 who he
describes as “a free-trader economist with whom I completely agree”,
while in Italy “completely” free-trader economists do not exist. At the end
of the year, Pareto shared the view of Gustave de Molinari (1819–1912),
the well-known doyen of économistes and director of the “Journal des
Économistes” that the task facing free-traders was “to educate the people”
as it was this kind of economic and political ignorance that caused “almost
all the ills of society”.88 However, at the same time Pareto distanced him-
self “utterly” from the économistes for being “too accommodating to the
powerful, too full of excuses for monopolists, too indifferent to the well-
being of the people”.89 In particular Pareto intends to represent the “left”
among économistes because, although sharing their principles “in the face
of overwhelming evidence”, he invokes these “against oppression by the
well-off sections of society” while they invoke them “against popular
demands”.90 Pareto thus applauds Guyot when he claims that economic
liberty, contrary to the claims of the socialists of the chair, “acts not to the
benefit of the few … but of the majority” even though, as Henry George
noted, free trade “will not really transform the plight of the people very
much” if “all the rest of the protectionist system” remains in place.91
At the beginning of 1891 Pareto made a first attempt at systematising
almost two decades of reflections on economic liberalism by saying that a
number of economic liberal systems exist, all united by the idea that “the
good of society” should be pursued not through coercion but through
“the free exploitation and development of mankind’s intellectual faculties
and aptitudes”.92
Pareto divided economic liberal systems into two categories. One cat-
egory referred to conceptions aiming to “take mankind back to the state
of nature” by destroying all institutions (as envisaged by Michail Bakunin
and Alexander Herzen).93 A second category consisted of empirical sys-
tems, based on history and experience, which aimed to “use liberty as a
protection against democracy” (as in the case of de Tocqueville) to “justify
our social order [rather than] changing it” (an approach adopted by the
majority of économistes), or lastly those pursuing more radical objectives94
140 F. Mornati
(as envisaged by de Molinari and radical économistes). Pareto was of the

view that the future would be marked by conflict between the free trade-
democratic and the patriarchal-oligarchical “systems”, remarking that
both the oligarchs defending economic liberalism and the democrats
defending socialism were “wide of the mark”.95
5.5 P
areto’s Early Methodological Sources:
John Stuart Mill and Gustave de Molinari
Knowledge has come down to us of the sources of Pareto’s methodological
reflections during his 20 years spent in Tuscany. In April 1874 he was pre-
vented by his commitments at San Giovanni from pursuing his reading of
Mill’s Logic,96 which must, however, have been meticulous and well
advanced since he made the following perceptive comments. On §4 (The
sophism of confusing empirical laws with chance laws) of chapter V (Sophisms
of generalisation) of book V (On sophisms) he noted that simple enumera-
tion (the reasoning whereby if a group of individuals has two qualities,
every individual who has the first quality has also the second) corresponds
to the type of deduction used most widely in relation to investigations of
mankind and society;97 on §4 (The relationship between mental phenomena
and physical conditions) of chapter IV (On the laws of the spirit) of book VI
(On the logic of social sciences) Pareto noted (probably thinking of his own
case) that emotional people are likely to cultivate natural history and to
love beauty, what is great and moral enthusiasm, less sensitive people are
likely to love science and abstract truth and to display a lack of taste and
avoid displays of emotion.98 Pareto further praises Mill once again, judging
him “very erudite” for having brought deluded human minds back to “the
straight and narrow path” precisely through the exposing of sophisms.99
Much later, at the end of 1888, Pareto confirmed that “the writings
which most closely approach the exposition of principles of pure science”
are the sixth book of Mill’s Logic and Les lois naturelles de l’économie poli-
tique by de Molinari.100 Because of the importance that these method-
ological sources had in the development of Pareto’s thought, we will now
run through their essential points.
According to Mill, since human actions show a uniform and predict-

able, even if not inevitable,101 pattern of causation they can, like natural
phenomena, be the subject of scientific study. While some sciences may
be more exact than others, depending on the extent to which the facts
conform to predictions,102 Mill considered that the science of human
nature appears as an inexact science like tidology or meteorology, in the
sense that only the broad elements of the phenomena can be foreseen,
but not their disruptions.103
The first iteration of this type of science is that of individual psychol-
ogy, in the sense of the science of mental states.104 Empirical laws, that is,
the sequence or coexistence of phenomena (referred to as uniformity) of
which we observe the repeated manifestation and which constitute our
knowledge of human phenomena, when they cannot be linked to psy-
chological laws, should be considered not as universally valid but as valid
only within the spatial and temporal framework in which they were
observed.105
The second iteration is the science of social phenomena, which Mill is
convinced can be explained, even for pragmatic purposes, only after
succeeding in establishing the general laws.106 The laws of society, that is,
the laws regulating the passions and the actions of people gathered in a
group, depend on the laws regarding the nature of single individuals since
these do not change their nature even when members of societies.107
This model is refuted principally by those who, referring to elementary
chemistry, consider that society can be studied only empirically (i.e. only by
means of experiments and/or observations). However, this is mistaken both
because in social sciences artificial experiments are impossible108 and because
causes cannot be deduced from the observation of spontaneously arising
situations as it is impossible to find two cases which are identical in every
detail other than the case under study.109 If two cases which were identical
in every aspect except two could be found, the causation of the subsequent
phenomenon on the part of the antecedent one is irrelevant specifically in
social studies, where it is acknowledged that every phenomenon has mul-
tiple causes.110 The methodology whereby residual phenomena not
explained by the causes under consideration are attributed to other causes is
not empirical precisely because it assumes that the latter are known, when
in fact this knowledge can be deduced only from general laws.111
142 F. Mornati
Mill’s epistemological schema is also refuted by those who, inspired by

geometry but underestimating the particular nature of social phenom-
ena, retain a simple deductive conception of social science which is mis-
taken precisely because it does not take account of the fact that social
phenomena are due not to single cause but to a number of causes, whose
effects can cancel each other out to a greater or lesser extent.112
For this reason, social science (otherwise known as sociology) is funda-
mentally a deductive science but one wherein it is opportune to adopt
Mill’s concrete deductive method, that is, the method which, in line with
physical sciences (in particular astronomy), allows for the explanation of
a phenomenon as the sum of the effects of the various causes contributing
to it.113 There exists a direct version of this method, where conclusions
deduced from the principles of human nature are verified by comparison
with concrete phenomena or their empirical laws, and also an inverse ver-
sion, in which conclusions drawn from the examination of concrete phe-
nomena are verified by linking them to the principles specified above.114
Social science will seek, in the light of the state of society, to establish the
effect of a given cause or alternatively to establish the causes of that state
of society bearing in mind that it is determined by pre-existing social
conditions and that, in general, every social phenomenon is both the
result and a contributing cause of other social phenomena.115
Yet having said that, each social phenomenon is, at a first degree of
approximation, dependent only on a small number of causes, hence jus-
tifying the division of sociology into various disciplines even if these are
not independent of each other. For example, political economy, which is
the study of social phenomena relating principally to the fact that people
prefer a larger to a smaller profit, and political ethology which, being the
study of the character of different populations, constitutes by far the most
important social discipline as this will influence all the other aspects of
society.116 The conclusions of each branch of sociology will in any case
need to be reviewed in the light of the conclusions of the other branches.117
Lastly, having established that an art is an agglomerate of precepts
based on theorems of the corresponding science, Mill states specifically
that ethics is the art corresponding to sociology.118
It is interesting to note also that in 1875 Pareto, while having “a lot of ”
admiration for Herbert Spencer119 (as is known, Spencer’s complex ideas
are based on the idea that human society can arrive at perfection slowly
but spontaneously, in a process of evolution, which is characterised by the
transition from homogeneity to functional heterogeneity accompanied
by the transition from coercion to voluntary cooperation120), took the
view that some of Spencer’s “demonstrations” are unsatisfactory in that
they deviate “somewhat from the rigour of the positive sciences” showing
some tendencies towards “the metaphysical approach”, while John Stuart
Mill is “more convincing”.121
De Molinari for his part thought that economic phenomena were based
on natural laws, most importantly the economy of effort, whereby each
individual seeks to obtain the maximum satisfaction of his needs while
expending the minimum of effort.122 Having said that, goods are pro-
duced in businesses where a technologically determined optimal combina-
tion of fundamental agents (managerial supervision and working capital)
and complementary agents (productive work and auxiliary capital) is
brought into play. The natural character of this form of organisation has
further been demonstrated by the failure of socialist experiments seeking
to shift priority in companies from working capital towards productive
work where the former, however, in bearing the commercial risks, should
have the right to direct business ventures and to claim any profits.123
Economic development too is presided over by the law of economy of
effort together with the law of free competition which lowers production
costs by compelling individual firms to reduce costs through innovation
or risk bankruptcy.124 Moreover, it is the law of the progression of values,
whereby loss-making products tend to be abandoned in favour of more
profitable activities, thus naturally regulating the equilibrium between
production and consumption, where Marx’s brand of socialism imagines
itself able, through the use of statistics, to allocate output between
producers on the basis of social utility, that is, by allowing the reproduc-
tion and appropriate growth of the productive factors themselves.125
If all the obstacles, natural or artificial (particularly the violation of
private property), which stand in the way of the application of these nat-
ural laws could be removed, the result would be “man’s condition will be
as good as is permitted by the state of his knowledge and his productiv-
ity”.126 Lastly, the fact that theft constitutes a disincentive to production
is the main reason why (again in keeping with the law of economy of
144 F. Mornati
effort) the formation of governments, whose principal role is precisely to

safeguard personal property at a lower cost than private insurance, is
worthwhile.127
5.6 On Scientific Method

Pareto observed that the “search for truth” had long been pursued through
the “synthetic” method which consisted in deducing “a host of true par-
ticulars from a small number of fundamental principles”,128 the best-
known example being that of mathematics. But it was the alternative
“analytical” method, especially in its so-called “empirical variant” which
was stimulating the development of the positive sciences. This method
“takes true elements obtained by direct observation, coordinates them”
and extracts from their common characteristics “partial theorems” which
are gradually extended “thus moving towards knowledge of the general
principles which underlie the universality of things”.129
Within the analytical method, Pareto contrasted “rigorous and positive
reasoning” with the “metaphysical mode of perception, where it is all too
easy to take for real entities those empty figments which so often richly
adorn the colourful imaginings of our fantasies”.130 However, although
qualifying as a rigorous and positive mode of reasoning, mathematical
reasoning will provide a safeguard only against “so-called errors of form”
but is impotent in regard to errors originating “from insufficiently well-
founded premises” which are much more common and more difficult to
avoid than errors of form.131 The natural sciences are extremely useful for
the avoidance of this second type of error, with their painstaking pursuit
of consistency in the repercussions of any given starting theorem. Thus,
in Pareto’s view (and in confirmation of what he had learnt in his still
comparatively recent university studies), mathematical sciences and natu-
ral sciences are indispensable to each other because the former lend
human thought “the rigorous procedures of logic” while the latter supply
“the positive and concrete basis without which it would be vain to attempt
to construct anything whatsoever”.132 An early example of the efficacious
application of scientific methodology to practical problems on Pareto’s
part occurred in the autumn of 1872 when he achieved a reduction in the
quantity of fuel consumed by the locomotives for which he was respon-

sible, “a result due mainly to mathematical formulas and abstract theories
accompanied by practical common sense”.133 A few months later, faced
with a request from Carlo Fenzi for explanations regarding the shrinkage
of the iron in the ovens of San Giovanni, Pareto promised that he would
reply with a “well thought out and deeply pondered report, in order to
assert only that which is certain and based on practical and incontrovert-
ible evidence” emerging from observation and experiment.134 Unlike his
superior Langer, “who formulates a complete plan for the modification of
an oven while sitting at his desk”, Pareto was so hesitant in regard to his
“powers” that he kept observing “the ovens continually to see if I can find
anything that would show that I was mistaken in my deductions”.135
In 1877 Pareto stated that “it little matters which route we follow in
order to arrive at the truth”, but “what matters is the demonstration of
the propositions expressed”.136 Implicitly invoking the two versions of
the concrete deductive method, Pareto pointed out that it made no
difference whether one infers from facts a theorem, demonstrating that
the latter derives from a general principle, or deduces a theorem from a
general principle and then “verifies the theorem against experience”.137
In 1878 Pareto commented that “nowadays no scientific study is pos-
sible unless it is performed with such an open mind as to be prepared to
accept the results of experience, whatever they may be”, which implies
that “the very basis of science is condemned by the Encyclical Syllabus”,
i.e. the anti-liberal position recently adopted by the Catholic church.138
5.7 Scientific Debate

Pareto thought that differences of opinion in scientific discussions derive
not from errors or different modes of reasoning but from the fallacy or
the diversity of the premises from which the reasoning proceeds, deduc-
ing from this that, in order to ensure valid argumentation, we must
proceed from well-defined principles.139 In this regard, Pareto thought
that passion was particularly inopportune because it prevents us from
recognising or embracing any valid propositions advanced by the other
party and from reinforcing our belief in our position by articulating the
146 F. Mornati
arguments we think we can be sure of. In fact, “the best and possibly the
only proof of the validity of a theory is that it overcomes all the difficul-
ties or objections raised against it, and the more of these there are the
more reason we have to believe in it”.140 More generally Pareto consid-
ered, once more in line with Mill, that, when wishing to examine any
opinion, it is necessary “firstly to imagine being an advocate and seek
reasons which can be produced in its favour”.141
Having said that, Pareto considered that “the validity and the value of
a doctrine depend on intrinsic factors and never on the greater or lesser
number of its adherents”;142 he therefore hoped that he would never
accept “any opinion not because I consider it right but only because it is
that of the majority”.143 Thus, where differing opinions exist on a ques-
tion, it is necessary to examine it as attentively as possible and then to
“embrace that position which in our judgement is the best”. If, however,
this examination reveals little, then it is opportune to avoid taking any
position which would very probably turn out to be mistaken.144
Pareto added that authority “luckily” counts for nothing in the sci-
ences (where even the greatest scholars accept being corrected with no
problem) but that it does still count for something in “political and social
matters”, as a means of “defending certain doctrines which lack any solid
basis”.145 Authority prevails over reason in times “of relative ignorance”
and if the West does not share the same backwardness as China and
Turkey, this is due to its escape “from the fetters of authority”.146 Thus “in
questions of science logic and experience alone should decide” and it
must be accepted that “an opinion is to be considered valid until some-
one demonstrates that it is false by means of logic or evidence”.147
5.8 T
he Nature and Aims of Science
in General and of the Science
of Economics in Particular
As early as 1877 Pareto began making the distinction, after the fashion of
Mill, between science, which sought to establish a connection between
“phenomena and general laws”, and art, which consisted of “empirical
precepts”.148 Science limited itself to showing that “certain conditions will

give rise to certain effects” and left to art the task of “making use of these
theorems to determine how to achieve the desired end in practice”.149 In
particular, in economics the distinction “between the theorems of pure
science and the precepts derived from them by art … for the benefit of the
people” is not afforded the weight it deserves.150 For example, the proposi-
tion which states “customs protection is a direct cause of the destruction
of wealth” falls within the dominion of pure science (and can be refuted
only intentionally with the possible addition of “with the help of … per-
sonal gain”) while the judgement of whether protection is good or harm-
ful for the people must be left to the social sciences together with the task
of determining the possible social benefits accruing from customs protec-
tion and of setting these against the destruction alluded to.151
Pareto also claimed that the “undying glory” of the nineteenth century
consisted in having understood that the evolution of society is regulated
by laws, even if so far we have not understood them, implying that it is
wrong to expect to foresee the future of society. Even worse is the mistake
of confusing, as does the German historical school, “events which will
probably happen with those which it is to be hoped will happen for the
greater good of humanity or of a nation”.152 In early 1889 Pareto stated
that “the scientist in seeking for truth must strip himself of all sentiment.
Then, when he is master of what is true, must make use of it for the good
of his fellow men. The sole end of science”.153 Pareto then deplored the
fact that some economists invoke the “principles of economics” against
popular demands while ignoring them “in trying to please the power-
ful”.154 Then in October 1890 Pareto repeated that political economy “is
neither bourgeois nor proletarian, neither national nor foreign” because,
like any other science, it seeks truth,155 which is one only and does not
exist in all the varieties that men’s passions or interests would wish for”.156
At the beginning of 1891 Pareto, speaking of the socialists of the chair
again, considers it “absurd” either to change “political economy every
year, or even every century” or to “exaggerate the minute differences
which exist between the various civilized nations”.157
Having said that, Pareto shared Mill’s conviction that social phenom-
ena are “extremely complex” so their investigation, given the limitations
of the human mind, must be performed taking “into consideration all
148 F. Mornati
the sciences, natural and physical as well as social”, analysing their com-
ponent elements and then proceeding to a synthesis. In order to illustrate
this methodology, Pareto makes reference to examples from the fields of
theoretical mechanics (where however “parallels with political economy
have been exaggerated”) and thermodynamics.158 As early as the end of
1875 Pareto remarked that the laws of political economy, “exactly like”
those “of every other physical science”, represent only a first approxima-
tion of the phenomena being studied, onto which other “perturbations of
every kind and degree are superimposed” without nullifying it. By con-
trast the anti-free trade faction, having identified “certain perturbations
in the laws of economics”, reacted not by considering them as useful
further approximations in economic phenomena but as a reason to deny
the laws of political economy themselves”.159 In 1889, Pareto remarked
that there are many causes of economic phenomena but that political
economy, “ in order to identify each cause and to study the associated
effects”, does not have access, like the physical and natural sciences, to
“direct experimentation”, but only to “ simple observation”, specifically
in awaiting occasions when the cause whose effects are being investigated
has “a predominant influence”.160
Again, at the end of the 1880s, Pareto, inspired by the procedure fol-
lowed in the treatises on theoretical mechanics, wished to perform pre-
liminary studies in the form of a treatise on theoretical political economy
dealing with “the principles of the science of economics in their most
general guise”, which he wished to lay out “as clearly and concisely as
possible”.161 Pareto specified that theoretical economics needed to address
only the effects of a given measure “on the production and the distribu-
tion of wealth”: whether it would be beneficial to society or not, and thus
whether or not it should be adopted is a decision which would have to be
taken with reference to the application of all the social sciences.162
Notes
1. On the hostile reception afforded in Italy to John Stuart Mill’s political
and methodological ideas, see Urbinati (1990).
2. Pareto to Emilia Peruzzi, 3rd May 1874, ibid., p. 352.
3. See Pareto (1872a, p. 37).

4. Ibid., p. 39.
5. Ibid., pp. 37–38.
6. Ibid., p. 40.
7. Ibid., p. 41.
8. See Pareto (1980, p. 88).
9. Ibid., pp. 88–89.
10. See Pareto (1872a, p. 44).
11. By conservative Pareto referred not to those who wish to “conserve
everything whether good or bad” but who “before destroying anything”
have found “something better to replace it”, ibid., p. 46.
12. Ibid., p. 45.
p. 76).
14. Pareto to Emilia Peruzzi, 17th November 1872, ibid. p. 89.
15. Letter from Vilfredo Pareto to Marco Minghetti, 12th March 1878,
Archiginnasio Library, Bologna, Minghetti collection.
16. On this question, see Piretti (1990).
17. Instigated by Emilia Peruzzi, Carlo Fontanelli to Emilia Peruzzi, 26th
June 1872, National Central Library of Florence, Emilia Peruzzi
Collection, letters of Carlo Fontanelli.
18. On 25 March 1870 the institution, after more than a hundred years of
existence, had renewed its statutes, stating as its purpose the develop-
ment of agriculture, natural sciences and public economics. These dis-
ciplines constituted the three academic sections to which club members
could contribute actively with memoirs and readings, Atti della Reale
Accademia economico-agraria dei Georgofili di Firenze, I (1871), pp.VI–
XXVIII. On 29 April 1874, sponsored by his naturalist friend Giorgio
Roster, Pareto was received into the Academy as a member of the natu-
ral sciences section, Pareto to Emilia Peruzzi, 26th March 1874, see
Pareto (1984, p. 333). The only other Academy of which Pareto
accepted membership was the Accademia delle scienze di Torino (Turin
Academy of Sciences), which, on the 23rd June 1918, nominated him
national resident member in the moral, historical and philological sci-
ences section.
19. On the economic thinking of Carlo Fontanelli (1843–1890), see
Mornati (2000a) and Pallini (2012).
20. Pareto to Emilia Peruzzi, 9th May 1873, see Pareto (1984, p. 207).
150 F. Mornati
21. Atti dell’Associazione per lo studio della rappresentanza proporzionale.

Bollettino, I (1872), pp. 3–4. On the history of the society, see Piretti
(1990, pp. 19–31).
22. Atti dell’Associazione per lo studio della rappresentanza proporzionale.
Bollettino, I (1872), pp. 3–4.
23. Atti della Reale Accademia economico-agraria dei Georgofili di Firenze, II
(1872), pp. 121–138.
24. Among these, mention should be made of Fontanelli, according to
whom proportional representation could bring extremist parties to
moderation, thus favouring a solution to the social issue which was stir-
ring in the country; and Sidney Sonnino, who underlined the close
links (in his view) connecting proportional representation with univer-
sal suffrage, ibid., pp. 157–171, 190–196.
25. See below, §5.
26. See Pareto (1872a, pp. 34–35).
27. Ibid., p. 35.
28. Ibid., pp. 40–41.
29. Ibid..
30. Ibid., pp. 41–42.
31. Ibid., p. 44 and see Urbinati (1990, pp. 50–51).
33. See Pallavicino Trivulzio (1872).
34. See Pareto (1872b, p. 48).
35. Pareto to Emilia Peruzzi, 19th November 1872, see Pareto (1984,
p. 91). Some years later, Pareto declared himself in favour of Depretis’
idea of extending the right to vote in Italy as it was “the most restric-
tive” in Europe, Pareto to Emilia Peruzzi, 30th June 1876, see Pareto
(1989, p. 16).
36. Pareto to Emilia Peruzzi, 16th August 1872, see Pareto (1984, p. 31).
38. See Pareto and Campeggi (1873).
39. Pareto to Emilia Peruzzi, 9th January 1873, see Pareto (1984, p. 122).
40. Pareto to Emilia Peruzzi, 9th May 1873, ibid., p. 207.
41. Pareto to Emilia Peruzzi, 3rd May 1873, ibid., p. 203.
42. La Nazione, 6th July 1873.
43. Pareto to Emilia Peruzzi, 16th July 1873, see Pareto (1984, p. 237).
44. See Fontanelli (1875).
45. Pareto to Emilia Peruzzi, 1st September 1872, see Pareto (1984, p. 38).
46. Pareto to Emilia Peruzzi, 21st January 1874, in Pareto, ibid., p. 311.
47. Pareto to Emilia Peruzzi, 10th February 1874, ibid., p. 315.

49. Pareto to Emilia Peruzzi, 2nd July 1875, see Pareto (1984, p. 519).
50. Pareto to Emilia Peruzzi, 30th January 1873, ibid., p. 140.
51. Pareto to Emilia Peruzzi, 20th and 28th August 1873, ibid., pp. 254, 259.
54. See Pareto (1877a, p. 111).
55. Ibid., p. 116.
56. Ibid., p. 128.
57. Ibid., p. 133.
58. See Pareto (1878, p. 58). For an interesting Pareto’s biographical study
of Marco Minghetti (1818–1886), see Pareto (1892); here, while
appreciating Minghetti’s intelligence, culture and honesty, he disap-
proves of his tendency to “abandon himself to the prevailing current”.
59. Ibid., pp. 59–60.
60. Ibid., p. 60.
61. Letter from Vilfredo Pareto to Marco Minghetti, 12th March 1878,
Archiginnasio Library, Bologna, Minghetti collection.
62. Ibid.
63. Pareto to Emilia Peruzzi, 12th March 1878, in Pareto, Letters to Emilia
Peruzzi 1872–1877, pp. 35–37.
64. In regard to this question, see Urbinati (1998) and Tasca (2007).
65. Pareto to Emilia Peruzzi, 3rd November 1872, see Pareto (1984, p. 65).
66. Pareto to Emilia Peruzzi, 19th November 1872, ibid., p. 93.
68. Pareto to Emilia Peruzzi, 3rd May 1874, ibid., pp. 350–351. Pareto
appears the most “feminist” among the regulars at the Peruzzi salon at
the time; see Urbinati (1998, p. 265). Many years later, see Pareto
(1891a), Pareto repeats that “it is very difficult for a cooperative con-
sumer society to prosper if women are against it”.
69. Pareto to Emilia Peruzzi, 29th July 1872, see Pareto (1984, p. 16).
70. Ibid., pp. 17–18.
71. Pareto to Emilia Peruzzi, 4th December 1872, ibid., pp. 100–101.
72. Pareto to Emilia Peruzzi, 20th August 1873, ibid., p. 255. This idea is
repeated in Pareto (1886a, 209). As far as private property is concerned,
see Pareto (1872a, p. 39), probably alluding to the idea appearing in
Bastiat, see Bastiat (1848, pp. 7–8, 11, 14) where he identifies the cause
152 F. Mornati
of the “pernicious errors of the communist schools” in the merely con-

ventional definition which the ancient Romans had given to this type
of property. However, many years later, Pareto affirmed that private
property should not be seen as “a dogma of political economy” but
simply as the “least imperfect means of ensuring the generation of
wealth and the progress of the human race”, a means which could be
changed, but only after “a deep analysis of the question”, which social-
ists had neglected to perform, Pareto to Francesco Papafava, 3rd
December 1888, see Pareto (1981, pp. 596–597). Finally, at a confer-
ence given in Milan on the 5th of June 1891, Pareto stated that the
abolition of private property would be pernicious due to the cata-
strophic character of the alternative of state management of the econ-
omy, Il Secolo, 6th–7th June 1891.
73. See Pareto (1888, p. 281).
74. See Pareto (1877b, p. 87).
75. See Pareto (1889a, p. 318).
76. See Pareto (1889b, p. 289).
77. See Pareto (1877c, pp. V, VII).
78. Ibid., pp. 68–70, 102–103.
79. Ibid., p. 211.
80. See Pareto (1885, p, 65).
81. Ibid., p. 67.
82. i.e. a guarantee having precedence over guarantees held by ordinary
creditors.
84. “The teaching of political economy (L’insegnamento dell’economia
politica).” L’Economista d’Italia, 27th September 1890: 477.
85. “The teaching of political economy in the light of the contemporary
situation (L’insegnamento dell’economia politica di fronte alle ques-
tioni contemporanee).” L’Economista, 12th October 1890: 641–642.
86. See Pareto (1890a, pp. 533–536). In response to Pareto, the anony-
mous article The teaching of political economy (L’insegnamento
dell’economia politica), L’Economista d’Italia, 22nd November 1890,
pp. 574–575 accuses him of not being able to extrapolate laws from
social phenomena”, of “creating a fantasy world”, of “scorning the
teachings of history”, of “lacking precise or broadly-based economic
notions”. Pareto, see Pareto (1890b), let this go by with a few sarcastic
comments.
87. On the intellectual biography of Guyot (1843–1928), see Wartelle

(1998). On Pareto’s intellectual contacts with Guyot and de Molinari,
see (Mornati 2000a, b).
88. Pareto to Francesco Papafava, 27th November 1888, see Pareto (1981,
p. 590).
89. Pareto to Francesco Papafava, 2nd December 1888, ibid., p. 591.
90. Ibid., p. 593.
91. See Pareto (1888, pp. 275–276). For the development of George’s con-
ception of economic liberalism, see George (1886).
92. See Pareto (1891b, p. 404). In the same period, while he did not share
its ideological basis inspired by paternalistic social Catholicism, he
approved of the economists Emile Cheysson and Claude Jannet, fol-
lowers of Le Play, for their disapproval of interventionism, see Pareto
(1888, pp. 275–277).
93. See Pareto (1891b, p. 405).
94. Ibid., p. 406.
95. See Pareto (1888, pp. 275–277).
96. Pareto to Emilia Peruzzi, 24th April 1874, see Pareto (1984, p. 348).
98. Ibid.
99. Ibid.
100. Pareto to Francesco Papafava, 2nd December 1888, see Pareto (1981,
p. 592). On the ensuing change in Pareto’s attitude towards Mill on
methodological and sociological matters, see Cressati (1985).
101. See Mill (1974, pp. 838–839).
102. Ibid., pp. 844–845.
103. Ibid., p. 846.
104. Ibid., pp. 849–851.
105. Ibid., pp. 861–862.
106. Ibid., pp. 875–876.
107. Ibid., pp. 875–876.
108. Ibid., p. 881.
109. Ibid., pp. 881–882.
110. Ibid., p. 883.
111. Ibid., pp. 884–886.
112. Ibid., pp. 887–888.
113. Ibid., p. 895.
114. Ibid., pp. 896–897.
154 F. Mornati
115. Ibid., pp. 911–913.

116. Ibid., pp. 900–901, 905.
117. Ibid., p. 906.
118. Ibid., pp. 943–944.
119. In particular as Spencer, in his Principles of Psychology, criticises the
metaphysical approach, thus prompting Pareto to comment that this
approach, which “formerly ruled supreme everywhere, has now beaten
a retreat in the positive sciences, except for occasional sallies which usu-
ally do not achieve very much”. Pareto to Emilia Peruzzi, 8th April
1875, see Pareto (1984, p. 501).
120. For a clear and up-to-date introduction to Spencer’s ideas, see Lanaro
(1997).
121. Pareto to Emilia Peruzzi, 18th June 1875, see Pareto (1984, p. 516).
122. See de Molinari (1886).
123. Ibid., pp. 5, 9.
124. Ibid., pp. 15–17.
125. Ibid., pp. 23–27.
126. Ibid., pp. 31, 34.
127. Ibid., pp. 42–43.
128. See Pareto (1872a, p. 33).
129. Ibid., p. 34.
130. Pareto to Emilia Peruzzi, 26th September 1872, see Pareto (1984,
p. 44).
131. Ibid.
132. Ibid. p. 45.
133. Pareto to Emilia Peruzzi, 3rd November 1872, ibid., p. 63.
134. Pareto to Carlo Fenzi, 17th April 1874, see Pareto (1981, p. 32).
135. Pareto to Carlo Fenzi, 8th January 1875, ibid., p. 79.
136. See Pareto (1877b, p. 81).
137. Ibid., p. 82.
138. Letter from Vilfredo Pareto to Marco Minghetti of the 12th of March
1878, Archiginnasio Library, Bologna, Minghetti collection.
139. See Pareto (1872a, p. 34).
140. Pareto to Emilia Peruzzi, 12th March 1874, see Pareto (1984,
pp. 325–326).
141. See Pareto (1877b, p. 76).
142. Pareto to Emilia Peruzzi, 30th October 1872, see Pareto (1984, p. 58).
144. Pareto to Emilia Peruzzi, 30th October 1872 and 5th February 1873,
ibid., pp. 58, 153–154.
145. Pareto to Emilia Peruzzi, 5th November 1872, ibid., p. 73.
146. Ibid.
147. Pareto to Emilia Peruzzi, 10th February 1873, ibid., p. 165.
148. See Pareto (1877b, p. 75).
149. Ibid.
150. See Pareto (1889a, p. 313).
151. Ibid.
152. See Pareto (1877b, p. 86).
p. 624).
154. See Pareto (1889a, p. 315).
155. See Pareto (1890c, p. 344).
156. See Pareto (1890d, p. 660).
157. See Pareto (1891b, p. 399).
158. See Pareto (1877b, p. 79).
159. See Pareto (1875, p. 817).
160. See Pareto (1889c, p. 161).
161. Pareto to Francesco Papafava, 27th November 1888, see Pareto (1981.
p. 589).
162. See Pareto (1888, p. 282).
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———. 1886a. Whether it is a good idea to fix by law a minimum salary for
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———. 1889b. On the customs union and other systems of commercial rela-
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6
Political Activism
This chapter addresses another aspect of Pareto’s intellectual development

in the years preceding Lausanne which has hitherto been dealt with only
in a superficial and anecdotal manner, that is, his political activism. We
begin in Sect. 6.1 with a broad and fully documented account of the
electoral campaign culminating in Pareto’s ill-fated candidacy in the elec-
tions of October 1882. This defeat, while initially accepted stoically by
Pareto, led him to avoid any repetition of the experience and undoubt-
edly contributed to the profound aversion for politicians which deeply
underlay his later thoughts on political events. This is followed by
accounts of his experiences with the municipal council of San Giovanni
Valdarno (Sect. 6.2), of his antipathy towards Italian colonialist ventures
(Sect. 6.3) and of his progressive but short-lived enthusiasm for the
Italian radical party (Sect. 6.4) after a decade of loyalty to the conserva-
tive liberalism of Florentine political circles.

162 F. Mornati
6.1 Electoral Experiences

On the eve of the general election of the 8th and the 15th of November
1874, Pareto, who had been critical of the merely disparaging attitude
and the lack of initiative shown by Garibaldi, and who defined himself as
“a convinced democrat”, nevertheless shared Ubaldino Peruzzi’s belief
that “the government must be a party government”, considering
Garibaldi’s notion that government should be “considered as a principle”
to be “the essence of despotism”.1
In this context Pareto pointed out to Emilia Peruzzi that in the elec-
toral constituency of Montevarchi, which included San Giovanni, sup-
porters of the consorteria (the “clique”, the Tuscan section of the Historical
Right, led by Peruzzi and Fenzi), were having difficulties in selecting a
candidate for deputy in the election, once more considering the depart-
ing Niccolò Nobili,2 but only “for want of anyone better”. In fact, “if any
significant candidate entered the contest they might easily win”.3 Accused
of supporting Nobili’s opponent, Pareto defended himself by publishing
a letter in “La Nazione” (the most important Florentine newspaper)
wherein he invited the voters of the Montevarchi constituency to vote for
Nobili, even while deploring those who saw in the candidate “an advo-
cate for their particular interests in Rome”. Instead, in Pareto’s view, a
deputy should pursue first and foremost “the interests of the nation” and
only secondarily those of the constituency, taking part in parliamentary
business “with an enlightened, honest and independent vote”.4 Pareto
also added his view that the seller of goods or productive assets (as in his
case, being director of a business yet independent) is under no obligation
to share the political opinions of the buyer and, more specifically, a
worker is not an electoral client of his employer.5
In the same elections, Pareto expressed his desire for Genala to be
elected deputy and was happy when this occurred, in the Lombard
constituency of Soresina,6 because he considered that “men like him
would make no small contribution to the public interest”.7
In the tempestuous spring of 1880 when he was involved in the nego-
tiations for the liquidation of the Società del Ferro, Pareto, who had “never
renounced political commitment” despite his absorbing work commit-
ments, was considering a possible candidacy to the lower chamber
Political Activism 163
of parliament for the constituency of Montevarchi, on the occasion of

the early elections of the 16th and the 23rd of May. However, he decided
to stand only if he thought there were “serious chances of winning”.8
Pareto, who did not agree “either with the ideas of the right or the specu-
lators” and who was “with the ministry9 as long as it continues to main-
tain a moderate line”, asked Ubaldino Peruzzi (who in March 1876 had
led the parliamentary manoeuvre of the Tuscan consorteria10 leading to
the overthrow of the last government of the Historical Right and to the
taking of power by the Historical Left) whether he was willing to support
him and to ask Bettino Ricasoli, the former Prime Minister who “had
considerable influence in the constituency”, to remain “neutral”.11
However, with the decision of the outgoing deputy Nobili to stand again,
Pareto decided to support him, viewing him as the lesser of two evils
compared to the other candidate, Giovanni Battista Martini of the
Associazione Costituzionale (the liberal political grouping loyal to
Peruzzi’s bitter rival Quintino Sella).12
The only occasion on which Pareto stood as candidate in general elec-
tions came later, in the elections of the 29th of October 1882, the first to
be held under the new electoral law of the 22nd of January 1882, which
had extended the number of voters from 2% to 7.2% of the population.13
This reform had been completed by the law of the 7th of May 1882
which had divided the electorate into 135 multiple seat constituencies
where voters could express from two up to a maximum of four prefer-
ences, depending on the size of the constituency. The candidates them-
selves were supposed to present themselves to the electorate not
individually as before but in “lists” containing a number of candidates
corresponding to the number of seats at stake.14
The implementation of the new electoral law also led to the creation of
the new constituency of Pistoia-Prato-San Marcello Pistoiese, with a pop-
ulation which was two thirds rural, one sixth mountain-dwelling and one
sixth town-dwelling. The total number of electors was 15,639, represent-
ing 9.5% of the total population, with three seats being contested.15 The
outgoing deputies, all gravitating within the orbit of the Historical Right,
were Giovanni Ciardi16 (president of the Prato section of Associazione
Costituzionale), Ippolito Martelli-Bolognini17 (former mayor of Pistoia)
and Giovanni Camici18 (president of the Pistoia mutual aid society).
164 F. Mornati
It may be wondered why Pareto stood as candidate in the constituency

of Pistoia-Prato-San Marcello Pistoiese and not in Montevarchi. In this
regard we have a number of indirect pointers. The solid electoral position
in the Montevarchi constituency of the aforementioned Giovanni Battista
Martini, the winner of the elections of 1880 and all three of the subse-
quent ones,19 would surely have denied Pareto the moderate portion of
the electorate which would constitute his only source of large numbers of
votes. However, possibly the principal reason was the tragic episode in
which Pareto was caught up, rightly or wrongly, and which his enemies
exploited abundantly in the election campaign. This was the suicide, on
the 20th of October 1880, of Evaristo Orlandini, the head warehouse-
man, bookkeeper and cashier of the San Giovanni ironworks, who had
been the subject of an internal investigation in regard to the running of
the warehouse as well, “at least according to the rumours circulating
locally”, as to continual and harsh reprimands on Pareto’s part, possibly
including the threat of serious disciplinary action.20
The political scene in the constituency was decidedly complex. The far
Left (with the support of the Prato weekly “Fieramosca” and the Pistoia
electoral flyer “Il Riflesso”) was putting forward the Pistoia landowner
Leopoldo Marini, the renowned activist, follower of Mazzini, Federico
Campanella, and the radical activist Nicola Guerrazzi from Prato, while
the progress party (supported by the Pistoia electoral flyer “Il Progresso”)
was putting forward Leopoldo Marini (mentioned above), the lawyer
Ulrico Grossi from Pistoia and a doctor Girolamo Cioni21 from Prato.
As for the circles of the Historical Right, over the summer22 they had
succeeded in agreeing a list, clerical-moderate in orientation, which
included Martelli-Bolognini (notwithstanding all the criticism levelled
at him for his extremely patchy parliamentary record), Ciardi and Count
Michelangelo Bastogi, mayor of the village of Montale, who had been
defeated by Camici in the elections of 1880.23
The first evidence of Pareto’s intention to stand for the seat dates to the
end of August 1882,24 when he requested his friends the Peruzzis to con-
vince Genala to invite one of Depretis’ not further identifiable local elec-
toral agents to intervene on his behalf, at the same time assuring them he
already had the support of Martelli-Bolognini and the business commu-
nities both of the Pistoia mountain area and of Prato (the latter led by
Attilio Cerutti, Pareto’s personal friend and ex-manager of Mammiano).

This early sign was confirmed three weeks later from San Marcello
Pistoiese, whence an anonymous correspondent wrote to “La Nazione”
that local businessmen had accepted the proposal made by their counter-
parts from Prato together with some of the leading citizens of the city of
Pistoia to put Pareto forward25 as candidate. Pareto, being “in the full
spate of youth and talent … in possession of a wide-ranging and bright
culture … endowed with an admirable eloquence, of explicitly liberal
persuasion, of indefatigable and unyielding enterprise”, was justly con-
sidered capable of defending the national interests of industry, with
whose circumstances he was already familiar from long experience,26
while upholding the sound theories of economic liberty and possessing a
sincere respect for the institutions of government.
Pareto’s electoral preparations began immediately after this announce-
ment. In a letter written by Cerutti to Cipriano Turri27 on the 26th of
September mention is made of a public meeting of the Prato business
community to be held on the 29th of September (and which Pareto asked
Turri to preside over28), to be followed by a meeting in Pistoia29 between
the followers of Pareto and Martelli-Bolognini’s committee “to come to a
decision regarding our alliance”.
Even in the face of Pareto’s agitation, Ciardi, criticised for the alliance
with the two clericalists of Pistoia and unable to influence the list in
which he appeared towards a more moderate lay position by substituting
Bastogi for Camici, jumped ship, and on the 20th of October30 agreed on
a monarchical-constitutionalist list with Camici and with General
Francesco Villani of Pistoia. The new alliance received the support of the
Prato propaganda sheet “Bollettino Elettorale”. This manoeuvre irritated
Pareto, who claimed that the “honest but weak” Camici had promised
him that he would not stand again and in fact would pledge his electoral
support.31 In the end Pareto,32 Martelli-Bolognini and Bastogi decided it
would be best to create their own list, which was announced on the 7th
of October in “La Nazione”, on Pareto’s initiative.33 Pareto imagined that
his public support for freedom of religion34 was compatible with his alli-
ance with two clerical candidates.35 The ex-mayor of Pistoia did not in
fact have his complete trust, even though he thought it would be possible
to keep him under control.36
166 F. Mornati
The only elements we have concerning Pareto’s electoral campaign are

two public addresses37 and the bitter controversy sparked by an anony-
mous pamphlet38 which was circulated around the constituency and by
him attributed to an “agent of Finocchietti”.39
Pareto’s first address took place in Prato on the 29th of September
before the assembly of industrialists. Some echo of this is found pub-
lished in “Ciompi”, a Prato weekly of the far Left.40 Having long accused
him of defaming the socialists as being the party of the dagger, the propa-
ganda sheet credits Pareto with having made “a technical rather than leg-
islative speech, [more like] a lesson in political economy” and aiming,
aside from some positive references to the monarchy, to “support busi-
ness, paying little or no attention to the equitable retribution of capital
and of work”. This led the Prato publication to warn the workers to
“beware of this type of candidate”.
Pareto’s second electoral address was held, again in Prato, on the 6th of
October.41 In it, Pareto affirmed that economic questions should occupy
first place in the Italy of that time, requiring an adequate voice in parlia-
ment. He then underlined, while agreeing that all sectors of the economy
are complementary, that the development of industry was of fundamen-
tal importance for the future of the country because it would encourage
the creation of a middle class, “the strength and power of a modern soci-
ety”, and would also improve the condition of the lower classes by offer-
ing them job opportunities which, together with their savings, are the
only reliable means for them to achieve social advancement. Closing with
words of praise for the Savoy monarchy, the speech was well received by
Pareto’s supporters for its avoidance of rhetoric and its precise focus on
the industrial situation. Pareto had also spoken of the need to reduce
railway tariffs for the transportation of fuel42 and of the opportunity for
a reorganisation of government tenders (too often favouring foreign com-
petitors) as well as of the use of the current budget surplus to reduce the
burden of taxation which weighed on production.
For its part, the above-mentioned pamphlet sparked a wave of malevo-
lent comments from anti-Pareto publications. The “Fieramosca”43 claimed
that Pareto’s failure to achieve promotion in the Strade Ferrate Romane
proved his technical inadequacy and that the liquidation of the Società per
l’Industria del Ferro demonstrated the Genoese aristocrat’s administrative
incompetence. The Prato newssheet also interpreted the ruling of the

investigating magistrate of Arezzo in the Orlandini case as meaning that
the missing 72,000 tons of iron was due to Pareto’s negligence and not that
of Orlandini, as he claimed. Lastly, Pareto’s responsibility for Orlandini’s
suicide was the real reason why Pareto had not stood in the San Giovanni
constituency “where his great merits are known”. As for the “Bollettino
Elettorale” with its motto “We don’t want Pareto”, this was motivated by
its theory that a deputy from outside would not be able properly to repre-
sent the interests of the constituency,44 and the publication reacted acerbi-
cally to the (so far untraced) response of Cerutti and of the pro-Pareto
Prato industrialist Beniamino Forti to the pamphlet. In the eyes of Ciardi’s
publication,45 the Romane’s acceptance of Pareto’s resignation suggested
that he was not “a man of great brilliance or of strong determination” and
the liquidation of the Società del Ferro demonstrated Pareto’s managerial
incompetence (he had also engaged in a shameful personal battle against
Carlo Fenzi his benefactor), while the affair of the missing iron from the
stores confirmed the appalling administrative abilities of the candidate.
In Pistoia too, electoral pamphlets joined in the attacks on Pareto.
After taking up and amplifying the original accusations, the “Riflesso”
accused Pareto of being “a perfect opportunist, having no beliefs, no
ideas, being absolutely tied to the House of Savoy and a worthy ally of
Depretis and his ilk”,46 while “Progresso” suggested that he was propped
up by his business partners with their demagogic promises of miracles.47
The claws of anti-Pareto propaganda tightened in the run-up to the
elections when the “Bollettino Elettorale” and “Progresso”48 published a
letter from Orlandini’s widow Livia Campini which, after proclaiming
the unblemished honesty of her husband, concluded with the terrible
words “they may elect him to parliament, they may make him a minister,
but, for the whole of society, Pareto will always remain the man who,
through his harassment, made a widow of an honest mother and orphans
of two innocent creatures”.49
Among the media, the only publication offering its support to Pareto’s
candidacy (vigorous support, according to him50) was “L’Elettore Pratese”,
a propaganda sheet created by Cerutti, whose third and final issue51 invited
“those who desire liberty combined with social order, reinforcement of our
institutions and improvement of the conditions of working people” to vote
168 F. Mornati
for Pareto and his list (anticipating that his “bold imagination, his profound
learning, his easy eloquence, his important position will quickly make him
one of the most highly-regarded and influential members of parliament”).
There is evidence also of support for Pareto from his friend Renato Fucini,
the writer, at that time schools inspector in Pistoia. Fucini considered it an
advantage for Pareto that the electorate could vote for a single candidate on a
list, saying, “it would be a poor thing for our country if, in order to promote
a gentleman, it were necessary to bind him to a stooge or to a nonentity”.52
Moving on, detailed statistical data is available regarding the unhappy
outcome of Pareto’s only electoral experience (Table 6.1).
Thus, Pareto came second among those not elected in a contest in
which two of the three outgoing deputies were defeated and where only
candidates from Pistoia were selected to represent the constituency in the
lower chamber.
Pareto’s votes can be broken down locally as follows (showing Pareto’s
place in the final count and the name of the winning candidate) (Table 6.2):
Pareto’s defeat in the elections thus appears to have been the outcome
of a brilliant success in the mountain area of Pistoia and a reasonable
performance in the rural areas of Prato which were more than outweighed
by mediocre results in the city and the rural areas of Pistoia and a cata-
strophic last place in the city of Prato, which had supposedly been his
electoral stronghold. This probably was not so because of the merciless
propaganda campaign against him conducted by the outgoing local dep-
uty Ciardi. It would also appear that Pareto’s alliance with Bastogi and
with Martelli-Bolognini contributed to the major success obtained by
these two in the mountain area of Pistoia (where they came second and
third with 379 and 334 votes respectively) but did not yield any advan-
tage to Pareto either in the city or in the rural areas of Pistoia.
Pareto, upon learning of the early results from the city of Prato, took
his defeat for granted, attributing it initially to a last-minute alliance
which he had “always feared”53 between Martelli-Bolognini and Ciardi,
where the former would relinquish votes to the latter in the city of
Pistoia54 and vice versa in Prato.55 Pareto thus erroneously forecast a suc-
cess for the trio Martelli-Bolognini, Ciardi and Villani, underestimating
the electoral strength of Bastogi despite having previously noted how he
had worked “very hard” on his own candidacy.56 Martelli-Bolognini, for
Table 6.1 Overall results of the general election of 29 October 1882 in the constituency of Prato, Pistoia, San Marcello
Pistoiese
Bastogi Martelli Villani Ciardi Pareto Marini Camici Cioni Campanella Grossi Guerrazzi
2888 2540 2351 2138 1950 1941 1829 1043 772 733 725
Source: See Bicci (1996, p. 162, Table I)
Political Activism
169
170
Table 6.2 Results obtained by Pareto in the general election of 29 October 1882 in the constituency of Prato, Pistoia, San
Marcello Pistoiese
Pistoia city
F. Mornati
Pareto (5th): 757

Martelli: 1365
Pistoia rural areas, of which:
Total Lamporecchio Marliana Serravalle Tizzana
Pareto (5th): 168 Pareto (6th): 12 Pareto (9th): 0 Pareto (2nd): 50 Pareto (3rd): 106
Martelli: 592 Martelli: 198 Camici: 62 Bastogi: 57 Martelli: 242
Pistoia mountain area, of which:
Total Cutigliano Montale Piteglio Sambuca San Marcello
Pareto (1st): 518 Pareto (1st): 106 Pareto (3rd): 76 Pareto (1st): 90 Pareto (4th):65 Pareto (1st): 181
Bastogi: 202 Camici: 105
Prato city
Pareto (11th): 141
Ciardi: 1041
Prato rural areas, of which:
Total Cantagallo Montemurlo Vernio Calenzano
Pareto (3rd): 366 Pareto (5th): 20 Pareto (3rd): 150 Pareto (3rd): 68 Pareto (1st) 128
Bastogi: 449 Ciardi: 33 Bastogi: 170 Ciardi: 130
Source: Personal re-working from Bicci (1996, p. 162, Table I)
his part, paid homage to his precious teammate Pareto calling his result a
good one and attributing the defeat to a lack of local renown.57
In any case, Pareto had already declared during the electoral campaign
that he was enjoying himself “very much”,58 taking “to the fray like a fish
to water”.59 It is thus in line with this state of mind that Pareto sportingly
accepted the result, recognising that Martelli-Bolognini had outsmarted
both himself and Ciardi so masterfully that “I can’t resent it”60 and, in
consideration of the fact that the defeat would save him from having to
undertake tiring trips to Rome and costly stays in the capital, in the end
“maybe it’s good for me I didn’t succeed”.61
It is difficult, however, to avoid the temptation to see in this defeat the
seeds of that profound personal revanchisme which led Pareto over the fol-
lowing 50 years to apply the theory of elitism with increasingly ferocious
sarcasm in regard to the political world from which he had been so preco-
ciously excluded. One of the first signs of this change of spirit in Pareto is
to be found when, three and a half years after the defeat, he bitterly refused
a new offer of candidacy issuing from Peruzzi’s circles with the words, “I
have had enough of one fiasco and I am really not looking for a second”.62
6.2 M
unicipal Councillor in San Giovanni
Valdarno
At the meeting of the San Giovanni Valdarno municipal council held on
the 16th of September 1876, the mayor, Enrico Rosai, announced
Pareto’s63 name among the group of newly elected councillors following
the by-elections held the previous July with 110 citizens standing.64
Available records concerning Pareto’s participation in municipal council
business show a very sporadic attendance, probably due to his pressing
work engagements, mostly relating to meetings of committees discussing
financial or engineering issues.
At the meeting of the 9th of October, the elections for the committees
dealing with the various areas of council business were decided. Pareto was
assigned to the financial committee.65 At the meeting of the 21st of April
1877 his name was added to the nominations for the political electoral list
as an engineer.66 At the meeting of the 1st of October 1879 Pareto was
172 F. Mornati
nominated member of the legal committee67 but at the meeting of the

29th of September 1880, on the occasion of the renewal of these commit-
tees, he was not confirmed in this position.68 At the meeting of the 7th of
March 1881, the council announced that the tenure of those councillors
elected five years previously, among whom Pareto, had lapsed.69
At the meeting of the 4th of August 1881, the council deliberated on,
and rejected, Pareto’s appeal against the amount he had been charged in
family tax for the year, saying that “other people paying the same amount
face financial circumstances much more arduous [than] those enjoyed by
the honourable Mr. Pareto”.70
On the following 9th of September, Pareto attended the meeting where
his re-election to the municipal council was announced following the by-
elections of the previous 31st of July.71 At the same session Pareto was
elected as a member of the public works committee72 and of the budget
audit commission for the 1881 financial year.73
On the 10th of October the council, deliberating on the budget for
1882, took up Pareto’s proposal to “urge the Mayor to approach the Royal
Prefecture in regard to the refund due to the municipality from the Royal
Exchequer in relation to employees’ housing, inviting him likewise to
concern himself with the organisation of a meeting on this topic between
the Società delle Ferrovie Romane and this municipality”.74 At the same
meeting Pareto told the council that the Società delle Ferriere Italiane had
decided to issue an annual cheque to the medical officer for the care of
the employees of the ironworks who were not resident in San Giovanni
Valdarno, thus obviating the need for the salary increase which the doc-
tor had requested from the municipality.75
On the 6th of March 1882 Pareto, probably in order to avoid a con-
flict of interest, arrived late for the meeting at which the council unani-
mously approved a request to the Società delle Ferrovie Romane to
ascertain how much the company was prepared to contribute to the costs
of constructing an access road to the new marketplace at the station.76
On the 30th of May he again arrived late for the meeting at which the
council accepted the (Società delle Ferrovie) Romane’s offer to build the
road at low cost.77
On the 18th of September 1882 Pareto’s membership of the public
works committee78 and of the budget audit commission was confirmed
for the 1882 financial year.79
On the 11th of December 1882 Pareto resigned from the audit com-
mission80 and on the 31st of January 1883 “having read a letter from Mr
Vilfredo Pareto in which he relinquishes the position of municipal coun-
cillor following his change of residence from this municipality, the
Council, unanimously regretting the fact that by law Mr. Pareto is obliged
to quit his position, accepts his departure with sadness, and asks the
Mayor to convey these sentiments to Mr. Pareto”.81
6.3 Anti-Colonialism and Anti-militarism

A couple of years after his electoral defeat and retirement from the San
Giovanni municipal council, we possess further documentary evidence
concerning Pareto’s political position, which continued to be liberal but
which seems by this time to have been quite far removed from the moder-
ate liberalism of Peruzzi which Pareto had fundamentally supported for
over a decade.
Pareto considered the occupation of Massaua (Eritrea), “unhappy land,
pestiferous to Europeans”, on the 5th of February 1885, to be a pointless
exercise just as he considered unfounded the pretexts for colonisation in
general, in terms of the creation of new outlets for trade or for settlement
by Europeans instead of Africans, as these lands were not inhabitable for
white people.82 Italian colonialism was just “more business for hustlers or
for speculators”.83 In April 1886, Pareto once again deplored “the mil-
lions squandered in the sands of Assab and of Massaua” as constituting a
luxury which should be paid for by its backers, that is, the electors, par-
ticularly the landowners.84
In February 1887, Pareto attributed the Italian bloody defeat of Dogali to
underestimation of the Ethiopians on the part of both the Foreign Minister
Carlo Felice di Robilant and the Minister of War Cesare Ricotti.85 Pareto
noted that only the socialists had demanded the withdrawal of the troops
from Massaua while the radicals, “through a false sense of national pride”,
were in favour of remaining.86 In the summer of 1888 he commended the
French liberal economists who had censured the recent French colonial
occupation of Tunis and of the North Vietnamese region of Tonkin.87 In
early 1889, Pareto assured Francesco Papafava that the “free-traders want
nothing to do” with “colonies occupied through military force”,88 adding
174 F. Mornati
that France had spent and was spending a fortune in Algeria but the result
was that “it was the Italians and Spaniards settling there who gained the
benefit”.89
Still in the summer of 1888, Pareto recalled how de Molinari, in his
volume Economic Morality which was written at that time, had under-
lined that since the days of the ancient Romans war had never been in the
interests even of the victors, who are no longer able to cover the costs of
military expenditure, so that it amounts to “the most costly luxury in
which a people can indulge”. This was based on the idea that the burden
of military expenditure is not borne equally by all the classes of society;
the less-well-off were obliged to contribute to the costs of colonisation
even if they gained no benefit from it.90
In more general terms, Pareto’s enthusiasm for the combination of indus-
trialism and free trade and his objections to the opposing combination of
militarism and protectionism derive from Spencer’s Principles of Sociology,91
especially the distinction that is there made between primitive military soci-
eties (where under government duress citizens cooperate for purposes of
external and internal defence, leading inevitably to autarchy) and more
advanced industrial societies (where citizens engage in free cooperation for
the production and exchange of goods both domestically and abroad).92
Pareto also noted that Spencer had shown that, particularly in the
aftermath of French defeat of Sedan (September 1870), the establish-
ment of the military type of society leads to the reappearance of “reli-
gious, moral and industrial protectionism” and to the degeneration of
parliament from an institution “for the safeguarding of popular rights” to
an entity which rivals “dictatorships, more or less disguised” in dissipat-
ing the resources of civilised countries.93 Protectionism in its turn encour-
ages the reinforcement of the militaristic approach, particularly as those
who benefit from it “tend, almost by instinct, to oppose anything that
can bring peoples more closely together”.94
On the other hand, Pareto pointed out that “the more closely [a people]
is connected [to other peoples] through commerce, the less it will be inclined
towards warlike adventures” and so, for the sake of peace, commercial trea-
ties are preferable to the simple application of tariffs, and customs unions95
in turn are preferable to commercial treaties, even if “they are still much
inferior to free trade”.96 He therefore, on the occasion of the first congress of
the Italian branch of the Association for Peace and International Arbitration,
proposed a motion, which was approved by a “large majority”, inviting paci-
fists to work for the greatest possible liberalisation of customs legislation in
the various countries, in the conviction that “the development of commer-
cial relations fosters the maintenance of peace”.97
In the autumn of 1889, Pareto’s antipathy towards colonialism and
militarism led to his appointment, as Vice-President, of the Florentine
committee for peace chaired by Senator Carlo Alfieri di Sostegno.98 Here
Pareto held a conference on the theme “The benefit of colonial and war-
like enterprises” in which he deplored colonisation and claimed that the
majority of citizens was against war and conquest.99 At the time of the
campaign for the general elections of the 23rd and the 30th of November
1890, Pareto, as Vice-President of the Florence committee, signed the
manifesto published by the Italian committees for peace in the 5th–6th
November issue of the “Secolo” (the important radical-leaning Milanese
daily at that time edited by the pacifist leader Teodoro Moneta100) in sup-
port of all the candidates favouring a drastic reduction in military expen-
diture. In early 1891, Pareto stated that he saw no “harm” in the possibility
of a French occupation of Tunis and some “merit” in the possibility of
Italy ceding Massaua to France.101 At this time Pareto reiterated that “war
and armed peace are the most costly luxuries that the governing class
provoke at the expense of the nation”, adding that the poor of a nation
always suffer from a war whatever its outcome.102
On the 30th of May 1891 Pareto took part in the meeting in Milan to
prepare for the third international congress for peace which was to be
held in Rome from the following 11th to the 16th of June.103 He expressed
the vain fear that the local pacifists’ proposal for the pacifist movement to
involve itself additionally in the debate for the solution of social problems
could affect its hitherto fundamentally cross-class character.104
On the 2nd of June Pareto gave an address on the theme “The eco-
nomic future of society and war”, beginning with the assertion that con-
temporary culture viewed the government as an institution at the service
of the people, which necessitated further studies on their living condi-
tions.105 For example,106 the Italian mortality rate was 28 per thousand
inhabitants, compared to 18 per thousand in England. Pareto attributed
this disparity to Italy’s inferior hygienic conditions and greater levels
176 F. Mornati
of poverty, these in turn being due to the immense military expenditure

which prevented any reduction in taxes on basic necessities as well as any
increase in productive public expenditure such as on education and pub-
lic health. Pareto further expressed his faith in the irreversibility of the
peace movement, based on the consideration that economic develop-
ment will render the harm caused by armed conflicts ever more serious
and hence ever more intolerable.
6.4 P
areto’s Approach in the Orbit
of the Radical Party
The combination of anti-colonialism and anti-militarism led Pareto to
draw nearer to the radical party which shared fundamentally the same
outlook from its extreme left-wing position in parliament.107
On the 8th of August 1885 an article in the Nazione on a speech by the
radical French statesman-to-be Georges Clemenceau prompted Pareto to
write to Emilia Peruzzi confirming his radical affiliation which was
“stronger every day”, with the proviso however that he considered himself
a liberal radical because he deplored “abuses to freedom from whichever
side they come” and defining his radical orientation with the meaning of
“not … using double standards” and condemning “wickedness on the
part of anyone” as well as holding “to the logic of the principles [he con-
sidered] to be right”.108 He thus applauded the defeat in France, in the
general election of the following 4th of October, of the opportunist polit-
ical party of Jules Ferry and hoped to see a similar end for “the turncoats
of Italy, people who drain the country, some out of hunger for power,
others for money, people lacking faith or principles”. However, he feared
that this would take time, since “the people are not yet sufficiently edu-
cated to understand the consequences of government actions”, the Italians
being even more ignorant than other peoples.109
In 1889 Pareto reproached the radicals for not feeling the “need to
study the social sciences” despite the fact that without “a deep under-
standing of political economy and the other social sciences” it is impos-
sible to recognise the “correct ideas”, that is, those needing to be
promoted.110 Thus the radicals made “the great error” of not paying atten-
tion to questions such as the National Bank’s expansion of currency in

circulation to avert the bankruptcy of the Banca Tiberina, which was a
perfect example of “how the people’s interests are increasingly sacrificed to
those of the rich and the middlemen” since it is the people who have to
pay, through the effects of inflation on their earnings, for ill-conceived
speculation which was no fault of their own.111 More generally, in Italy
there were many more well-educated people within the ranks of the con-
servatives and moderates than of the democrats;112 moreover, the fact that
the democrats were always less disciplined and astute than their oppo-
nents “is the real and fundamental cause” of the fact that the latter con-
tinued to retain power.113 But at least the Italian radicals, notably through
Cavallotti and Il Secolo, together with their French counterparts, had
understood that the very bad relations between the two countries dam-
aged the cause of liberty in both and sought to improve these.114
Pareto met Cavallotti personally during the election campaign of
October 1890, offering “his services for whatever information he might
require”115 in order to contribute, without “the least pride or ambition, to
the common cause”.116 Commenting on the fact that the Milanese radi-
cals had succeeded in having only two of their four outgoing deputies
re-elected, due to abstentions by some of the communist-oriented
working-class voters, Pareto observed that the moderates had also been
wrong in not supporting the re-election of Antonio Maffi117 precisely
because he represented the branch of the Italian workers’ party “equiva-
lent to the Trades Unions [which was] possibly the only effective barrier
against socialism”.118 Indeed, during the strikes Maffi asked only for the
government to remain neutral, inviting workers to improve their lot
through their own initiative (instead of through “state charity”) and sup-
ported the cooperative movement, disagreeing with those socialists who
opposed cooperatives as making “petits bourgeois out of the workers”.119
In Pareto’s view,120 the radicals had lost the elections of 1890 (gaining
only 52 seats out of 508 compared to the 402 won, “as was easily fore-
seen”, by Crispi) because they had not been able to convince the “sedate
and somewhat timid people who everywhere make up the majority of the
population”. This was because the party, instead of unitedly following
Cavallotti on the fertile terrain of economic criticism of the government,
had left the field to “socialist fanatics” and to “republican theorists”, who
are all people “far from inspiring the nation’s confidence”.121
178 F. Mornati
Notes
1. Pareto to Emilia Peruzzi, 7th October 1874; see Pareto (1984a, p. 429).
2. Pareto to Emilia Peruzzi, 11th October 1874, ibid. p. 438.
3. Pareto to Emilia Peruzzi, 14th October 1874, ibid., p. 441.
4. Pareto to Celestino Bianchi, 12th November 1874, see Pareto (1981,
pp. 62–63).
5. Ibid.
p. 455).
8. Pareto to Emilia Peruzzi, 4th May 1880, see Pareto (1984b, p. 89).
9. In that period power was held by the third and last government of
Benedetto Cairoli, who remained in power from 25 November 1879 to
29 May 1881.
10. On Tuscan politics in the 1880s, see Conti (1994).
11. Pareto to Ubaldino Peruzzi, 3rd May 1880, see Pareto (1981, p. 208).
12. Pareto to Ubaldino Peruzzi, 6th May 1880, ibid., p. 210, to Emilia
Peruzzi, 7th and 8th May 1880, see Pareto (1984b, p. 91).
13. See Bicci (1996, p. 158).
14. See Piretti (1996, pp. 102, 104, 109–110, 115).
15. See Bicci (1996, pp. 153–155, 157–158).
16. See Malatesta (1940a–1941, p. 255).
17. See Malatesta (1940b–1941, p. 162).
18. See Malatesta (1940a–1941, p. 88).
19. See Ceccarelli (2002–2003, p. 68).
20. Gazzetta Aretina, 30th October and 6th November 1880. Pareto to
Emilia Peruzzi, 22nd October 1880, see Pareto (1984b, pp. 116–117),
exonerated Orlandini of any blame.
21. “Let’s begin (Principiamo).” Fieramosca, 1st October 1882, p. 1.
22. Il popolo pistoiese, 22nd July, 19th August and 9th September 1882.
23. See Bicci (1996, p. 155).
24. Pareto to Emilia Peruzzi, 31st August 1882, see Pareto (1984b, p. 219).
25. “Electoral Mouvement (Movimento elettorale).” La Nazione, 22nd
September 1882.
26. Pareto requested Cipriano Turri to look after the distribution in the
area of 50 or so copies of the article, Pareto to Cipriano Turri, 20th
September 1882, (FT-PC). Flattering references to Pareto, similar to
those in La Nazione, also appeared in the Popolo Pistoiese, 7th October

1882. Yet during the election campaign, Pareto complained of also hav-
ing enemies in the mountain area of Pistoia, Pareto to Emilia Peruzzi,
20th October 1882, see Pareto (1984b, pp. 222–223).
27. T-PC.
28. Pareto to Cipriano Turri, 28th September 1882, ibid.
29. Where Pareto could also count on the welcome support of the local
journalist Giulio De’ Rossi, Pareto to Emilia Peruzzi, 14th October
1882, see Pareto (1984b, p. 220).
30. “Our correspondence from Pistoia (Nostra corrispondenza da Pistoia)”,
Il Fieramosca, 22nd October 1882, p. 2.
31. Pareto to Emilia Peruzzi, 14th October 1882, see Pareto (1984b, p. 220).
32. Pareto had also figured, together with the lawyer Ugo Michelozzi from
Pistoia and a certain Michele Amedei of whom nothing more is known,
in a short-lived monarchical-constitutionalist list for which we lack fur-
ther details, “Our correspondence from Pistoia (Nostra corrispondenza
da Pistoia).” Il Fieramosca, 8th October 1882, p. 2.
33. Pareto to Ippolito Martelli-Bolognini, 11th October 1882, see Pareto
(1981, p. 131).
34. See above, Chap. 5, Sect. 5.2.
35. Pareto to Ubaldino Peruzzi, 18th October 1882, ibid., p. 132.
36. Pareto to Emilia Peruzzi, 14th and 16th October 1882, see Pareto
(1984b, pp. 221–222), to Ubaldino Peruzzi, 18th October 1882, see
Pareto (1981, p. 232).
37. Pareto considered rallies to be a problem because, in the context of wild
party debate, there was always the risk of “offending people’s sensibilities”,
Pareto to Emilia Peruzzi, 16th October 1882, see Pareto (1984b, p. 222).
38. Who is Vilfredo Pareto (Chi è Vilfredo Pareto). Florence: Ademollo, 1882,
reprinted in the Riflesso, 22nd October 1882.
39. Pareto to Emilia Peruzzi, 16th October 1882, see Pareto (1984b,
p. 222). This refers to the Senator Francesco Finocchietti, owner of the
land bordering the company’s terrain with whom Pareto was engaged
in ongoing legal proceedings, Pareto to Emilia Peruzzi, 13th March and
25th April 1881, 22nd February 1883, ibid., pp. 134, 143, 239.
40. “Local affairs. A future candidate (Cose locali. Un futuro candidato).”
I Ciompi, 1st October 1882, p. 3.
41. Il Popolo Pistoiese, 7th October 1882. It appears that a speech which
Pareto had planned for Pistoia on Sunday 22nd October, Pareto to
Emilia Peruzzi, 16th and 20th October 1882, see Pareto (1984b,
180 F. Mornati
p. 222), was blocked by Martelli-Bolognini because he knew “he could

not have done the same due to his meagre capabilities”, “Our corre-
spondence from Pistoia (Nostre Corrispondenze. Da Pistoia).” I
Ciompi, 22nd October 1882, p. 4.
42. §3.8 above.
43. “To the defenders of Engineer Pareto (Ai difensori dell’Ing.Pareto).”
Fieramosca, 22nd October 1882, p. 3.
44. “The choice of a member of Parliament (La scelta del deputato).”
Bollettino Elettorale, 24th October 1882.
45. “Comparisons (Confronti).” idem.
46. Il Riflesso, 8th October 1882.
47. Il Progresso,1st October 1882.
48. “To the voters (Agli elettori)”. Bollettino Elettorale, 28th October 1882,
p. 1: Il Progresso, 28th October 1882.
49. Cerutti replied to these accusations with “Answers (Risposte)”. L’Elettore
Pratese, 29th October 1882, p. 1.
p. 224).
51. L’Elettore Pratese, 29th October 1882.
52. Renato Fucini to Emilia Peruzzi, 21st October 1882, see C. Lazzeri
(2006, p. 96).
p. 225).
54. However, Ciardi obtained only 492 votes in Pistoia, arriving only sev-
enth, see Bicci (1996, p. 162, table I).
55. Where, nevertheless, Martelli-Bolognini obtained only 160 votes, com-
ing 9th, ibid.
p. 225).
57. Stella di Savoia (Martelli-Bolognini’s electoral newsletter), 5th
November 1882.
p. 224).
60. Pareto to Emilia Peruzzi, 31st October 1882, ibid., p. 226.
61. Pareto to Emilia Peruzzi, 30th and 31st October 1882, ibid.,
pp. 225–226.
62. Pareto to Ubaldino Peruzzi, 16th February 1886, ibid., pp. 622–623.

In the early days of 1891, Pareto refused also the candidacy to the
Florence municipal council offered to him by the Democratic Progress
Electoral Union, see Pareto (1891a). This was a radical democratic citi-
zens’ grouping which, in the municipal elections of 18th January 1891,
succeeded in having six of its forty-two candidates elected, Il Corriere
italiano, 11th and 24th January 1891. For the rest of his life Pareto
never accepted any other electoral candidacy.
63. Historical Archive of the municipality of San Giovanni Valdarno, Series
I, 3, p. 106.
64. Ibid., p. 129.
65. Ibid., pp. 86, 141.
66. Ibid., p. 156.
67. Historical Archive of the municipality of San Giovanni Valdarno, Series
I, 5, p. 18.
68. Ibid., p. 103.
69. Ibid., p. 141.
70. Ibid., p. 171.
71. Ibid., p. 174.
72. Ibid., p. 176.
73. Ibid., p. 180.
74. Ibid., p. 183.
75. Ibid., p. 188.
76. Ibid., p. 222.
77. Ibid., p. 242.
78. Ibid., p. 251.
79. Ibid., p. 255.
80. Ibid., p. 274.
81. Ibid., p. 282.
82. For a synopsis of early Italian colonialism, see Labanca (1993).
83. Pareto to Emilia Peruzzi, 8th and 24th August 1885, see Pareto (1984b,
pp. 302, 305).
84. See Pareto (1886, p. 199, 206).
85. Pareto to Emilia Peruzzi, 3rd February 1887, see Pareto (1984b,
pp. 349–350).
86. See Pareto (1888, p. 24).
87. Pareto to Emilia Peruzzi, 15th July 1888, see Pareto (1984b, p. 382).
p. 630).
182 F. Mornati
89. Ibid.
90. See Pareto (1888, p. 16).
91. See Spencer (1882, p. 668).
92. Ibid.
93. See Pareto (1889, p. 290).
94. Ibid.
95. A customs union is a group of countries trading freely among them-
selves with no obstacles but who erect a common customs barrier
against other countries.
96. Pareto to Francesco Papafava, 26th March 1891, see Pareto (1989,
p. 128).
97. See Pareto (1889, p. 297).
98. Pareto to Luigi Ridolfi, 4th October 1889, see Pareto (1981, p. 644).
On Carlo Alfieri di Sostegno (1827–1897), friend of Pareto and expo-
nent of a form of liberalism which was elitist but not dogmatic and
open to change, see Carocci (1960).
99. La Nazione, 12th October 1889.
100. On Teodoro Moneta (1833–1918), journalist, patriot, pacifist, winner
of the Nobel Peace Prize in 1907 and friend of Pareto, see Riva and
Ronzoni (1997).
p. 125).
102. See Pareto (1891b, p. 381).
103. Il Secolo, 31st May-1st June 1891.
104. Il Secolo, 1st–2nd June 1891.
105. Vilfredo Pareto’s address at the Consulate (La conferenza di Vilfredo
Pareto al Consolato), Il Secolo, 4th–5th June 1891. On the interruption
of the conference by the police, see Pareto (1891c).
106. See Pareto (1890a, p. 418). See also Pareto to Luigi Bodio, 22nd June
1891, see Pareto (2001, p. 23).
107. On the history of the Italian radical party at the time, see Galante
Garrone (1973); on the colonial debate taking place in the party at that
time, see Colapietra (1954).
108. Pareto to Emilia Peruzzi, 8th August 1885, see Pareto (1984b, pp. 301,
303).
109. Pareto to Emilia Peruzzi, 8th October 1885, ibid., pp. 306–308.
110. Pareto to Francesco Papafava, 13th December 1888 and 19th September
1889, see Pareto (1981, pp. 620, 642).
111. Ibid., p. 643.

112. See Pareto (1888, p. 19).
113. Ibid., p. 22. On the biography of Felice Cavallotti (1842–1898), see
Galante Garrone (1976).
114. See Pareto (1888, p. 23).
115. Pareto to Teodoro Moneta, 21st October 1889, see Pareto (2001, p. 12).
116. Pareto to Felice Cavallotti, 21st October and 20th December 1890, see
Pareto (1975, p. 146, 154).
117. On the biography of Antonio Maffi (1845–1912), the Milanese typog-
rapher who in 1882 became the first working-class member of Italian
Parliament see D’Alterio (2006).
118. See Pareto (1890b, p. 417).
119. Ibid.
120. Who in Florence had belonged to a committee for the support of the
radical party’s candidates, Pareto to Teodoro Moneta, 8th January
1891, see Pareto (2001, p. 13).
121. See Pareto (1890b, p. 421).
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case of the third Florentine constituency (Lo scrutinio di lista e la soprav-
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———. 1976. Felice Cavallotti. Turin: Utet.
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———. 1889. On the customs union and other systems of commercial rela-
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———. 1890a. Distressing statistics (Statistica dolorosa). Il Secolo, April 22–23.
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7
Amateur Publications
This chapter deals with the amateur but often incisive newspaper and
review articles he produced in the 20 years leading up to his departure for
Lausanne, often in response to current political debates which he fol-
lowed with lively interest. Thus, in Sect. 7.1, we examine his response,
emerging from his professional experience as well as from his ideological
outlook, to the government’s proposal in the mid-1870s to nationalise
the railways. Pareto was not in favour of bureaucratic management of the
lines, making use of arguments which he raised into a kind of generalised
theory regarding the business incapacity of the state (Sect. 7.2). Thereafter
we pass on to an account of his economic analysis of measures proposed
in the 1880s in support of the working population (Sect. 7.3), together
with a summary of his thoughts at the time regarding taxation and public
expenditure (Sect. 7.4) and birth control (Sect. 7.5), Malthusianism
remaining an ideological position he retained throughout his life. The
conceptual principles underlying his opposition to the policy of customs
protectionism adopted by Italy in 1887 (Sect. 7.6), together with Italy’s
abolition of the fiat money in 1883 (Sect. 7.7), will then be explored.
Lastly, a systematic summary is given of his early, rudimentary reflections
on socialism, on economic theory, on sociology and on political science
(Sects. 7.8, 7.9, 7.10 and 7.11, respectively).

188 F. Mornati
7.1 The Question of the Railways

At the beginning of December 1875 Pareto mentioned a speech he was
due shortly to give in Genoa on the nationalisation of the railways pro-
posed by the Minghetti-Sella government. His distaste for this political
project was based on “many elements” acquired from his reading of the
reports from the recent parliamentary enquiry on industry1 “showing
that the government is a very bad industrialist”.2
In his speech, given on the 2nd and the 3rd of February 1876, Pareto
began by acknowledging that the question of the options for private or
state ownership and/or management of the railways had not yet been
resolved, pointing out that in England the private railway companies pos-
sessed full ownership rights while on the continent they enjoy simple
concessions, so that where in England nationalisation of railways would
entail all the problems of “an authentic enforced expropriation”, on the
continent it would involve the simple curtailment of a concession, an
operation which should therefore be evaluated “simply … from the point
of view of a financial opportunity”. In financial terms, state management
of railways was by many considered “extremely dangerous”, partly because
the variability of revenue could destabilise state finances and partly
because of the increase in costs traditionally associated with state ineffi-
ciency. On the other hand, advocates of nationalisation countered that
the dreadful performance of Italian private railway companies rendered
them in their turn indefensible.3 Pareto’s response was that this dreadful
performance was due to the “absurd terms of their concessions” and that
state management of railways would increase the power of the governing
party so much (in terms of bureaucratic control) that it would constitute
a threat to “the liberty of minorities”. State control of railways would lead
to a demagogic reduction of tariffs and an increase in costs, partly due to
favouritism and partly due to the fact that tenders are invariably more
costly for the state than for private participants due to bureaucratic red
tape, leading to deficits which would then be have to be borne by taxpay-
ers. Lastly, ministerial control would be ineffective partly because bureau-
crats, like everyone else, are disinclined to acknowledge their own
mistakes and partly because there would be no procedure for recourse.4
To be more exact, government inefficiency was due to the unsatisfactory
Amateur Publications 189
allocation of personnel and to the misconceived system of incentives

linking preferment not “to intelligence, to effort, to production” as in
private companies, but simply “to seniority”. Railways which were state-
controlled but independent from government and under parliamentary
scrutiny would, in Pareto’s view, be equally inefficient, as the parliamen-
tary control would be illusory.5
Thus, since fundamentally “companies have to worry only about their
own profit” while the state “is obliged first and foremost to comply with
the rules of justice”, making it incapable of efficient management, Pareto
was in favour, even in the wake of a possible state takeover of the railways,
of their management by private operators “through a leasing contract …
at their own risk and in their own interests”.6 However, he also hoped for
a different type of concessions from the ones then current, in particular
to make sure that the concessionaires were obliged to compensate users
for any damages suffered, but otherwise they should be left free to organ-
ise the service.7 Pareto added that if the companies, if free to act as they
saw fit, were to engage in monopolistic practices, users should be able to
defend their interests through the courts, which he saw as being quicker
than administrative challenges.8
Pareto also observed that the state, in taking over the railways, could
offer them out for lease and would no longer have to pay subsidies to
concessionaires as these were conceived to “guarantee concessionaires a
reasonable return on capital employed for construction” of lines which
the state, if it became the owner, would build itself. Rather, the state
might be able to ask concessionaires to pay sums to cover the rolling stock
they made use of.
Having said that, on the 5th of March 1876 the Adam Smith Society9
began the most famous of its conferences, which continued through
meetings held on the 6th, 12th and 26th of March and the 2nd and the
30th of April10, dealing with the urgent and hot topic of the Minghetti-
Sella government’s intention to proceed with the nationalisation and state
running of the railways, which was already on its first reading in parlia-
ment.11 Both the anti-free trade writer Leone Carpi and the then youthful
member of parliament and university professor Paolo Boselli defended
the need for nationalisation and for state management of the railways, the
former from arguments of principle stating that the railways are not a
190 F. Mornati
business but a public monopoly service, which only the state can manage
in keeping with the interests of the community. At the other end of the
scale, Ferrara, Genala and the member of parliament Giuseppe Toscanelli
(brother of Emilia Peruzzi) challenged both these alternatives by reference
to economic arguments (the groundlessness of the claimed technical
monopoly character of the railways), financial arguments (the precarious
state of the national finances) and political arguments (the nationalisation
of the railways as an intolerable instrument of electoral control).
Other speakers, while opposing the prospect of public control, main-
tained a more open position in regard to nationalisation. Among these
was Pareto, who saw behind advocates of nationalisation and of state
control firstly, the state bureaucracy (which in Pareto’s view was not
motivated by “devious and personal motives” but by “the general law
whereby every organism tends always to accumulate and spread”); sec-
ondly, people unhappy with the management of the railways (Pareto
noted that in other countries complaints were made also in regard to the
state-controlled railways); thirdly, those who saw “in the omnipotence of
the state the guardian of nations” (Pareto objected that “our conscience
rebels against this cult of the God-like state”); lastly, people who saw it as
a simple question of opportunity (Pareto considered these to be the “most
dangerous” adversaries).12 Then, having remarked that the conflict
between the state bureaucracy and the private Italian railway companies
could also be resolved through an agreement on the part of the former to
stop meddling with the latter, Pareto declared himself not to be against
nationalisation, because it was not such a fundamental question as peo-
ple thought, since the state was already the owner of the infrastructure,
private operators having only temporary concessions, circumscribed by a
large number of state-imposed restrictions.13 Pareto then remarked that
the Italian state had shown itself to be a very poor builder of railways and
anticipated, “extrapolating future events from past ones”, that it would
probably show itself to be a hopeless manager of the railways just as it had
been a disastrous manager of other productive activities, with the result
that the increased costs of transportation would be paid by the citizens,
either directly in the form of higher tariffs or indirectly in the form of
higher taxes.14
Pareto’s thoughts regarding the railways at that time culminated

with a wide-ranging study in which he observed that in general the
railways, although contributing greatly to people’s well-being and
standard of living, were not very profitable for their owners because
only those using their services directly paid for them while all citizens
enjoyed the benefits of them, hence justifying the payment of state
railway subsidies, which were in any case insufficient to recompense
the capital invested.15 Having said that, since the railways did not
yield a sufficient return on capital, particularly in Italy, on occasion
not even being able to cover their running costs, state subsidies to the
railways was inevitable. In Pareto’s view, the Italian railway industry,
which was in any case the most important in the country,16 did not
prosper precisely because of the modest and intermittent nature of the
subsidies (which Pareto contrasted with the situation in France). This
was due to the excessively low forecasts for construction and running
costs and to the financial difficulties of the state.17 Other factors which
had contributed to the disadvantages suffered by the railways were,
firstly, the devaluation of the lira due to the fiat money (from 1866),
which had increased the cost of imports of coal and iron while the
railway companies were not able to make up for this by increasing
tariffs because these were blocked by the government; secondly, the
increase in taxes on the railway companies (Pareto was of the view
that, if taxes had remained at the levels of 1863, the Meridionali com-
pany would in 1874 have had a profit margin of 8.2% instead of only
5%, which would have brought relative prosperity for the company).18
Under these circumstances, the railway companies’ primary aim was
survival and their internal checks and controls were totally ineffective,
as shown by the high levels of inefficiency in their operations. For
example, the Romane company, facing a shortfall of cargo trains, had
splashed out on a number of elegant, but far from indispensable,
saloon carriages.19
In 1885 Pareto returned to this topic, not questioning the building of
railways which did not yield “a large return immediately” as long as
“sooner or later this return materialises”.20
192 F. Mornati
7.2 State Management of Enterprises

In 1876, drawing on the reports of the recent parliamentary enquiry on
industrial problems in Italy mentioned above, as well as on his profes-
sional experience, Pareto published a wide-ranging critical assessment on
the state management of industry.
His main conclusions were as follows:
–– the fact that the state demanded down-payments, and paid contractors
only when the work was completed, obliged the latter to commit large
amounts of capital, the additional costs of which meant that the work
cost the state much more than a private operator,21 with this difference
representing, for the contractor, “an insurance policy against the costs
of possible disputes or delays in payments”;22
–– the state, placing more faith “in the inflexibility of its regulations” than
“in the responsibility of individuals”, assigned a very long duration to
the tenders, being incapable of efficiently managing the technical
problems which inevitably arose;23
–– public invitations to tender for the assignment of contracts revealed an
“immoral system which is costly to operate”,24 even if the state, with its
responsibilities towards taxpayers, had no better alternative;25
–– the favourable treatment afforded by the state to foreign suppliers
(who were not held to pay any deposit, receiving payment for a third
of the value at the moment of signing the contract and thereafter
prompt payment for the remaining instalments). Since it was not con-
ceivable that the government wished “consciously and deliberately” to
“harm national industry”, this showed that “the wheels of government
do not always respond to commands of the driver”;26
–– there is a difference between a minister and the general manager of a
private company and it consists in the fact that the former can limit
himself to “not doing damage” while the latter had to pay a dividend
to shareholders;27
–– the sameness and the conservatism typical of bureaucracies, particularly
state bureaucracies, pose a serious obstacle to technical progress.28
Explicitly making use of the concrete deductive method in both its

versions, Pareto concluded that the evidence which leads to the conclu-
sion that the state is always a worse industrialist than private companies
“is too varied … for us to conclude that it is the result of human failings
or of mere chance”.29 In fact, it is the principle of the division of labour
(“stating that only who he does few and limited things becomes skilled”)
which suggests that the state and private companies should concern
themselves with different matters, the former specifically with justice,
public order and “the defence of citizens’ liberty and their property”, the
latter with industry.30
7.3 A
n Economic Analysis of Possible
Measures for the Benefit
of the Workforce
The day-to-day management of the workforce at the ironworks in com-
bination with his liberal ideological position drew Pareto’s attention
towards moderate, though efficacious, solutions to the economic difficul-
ties faced by workers at that time.
In the spring of 1878, Pareto had characterised as “a principle which
cannot be questioned” Mill’s theory concerning wage funds, interpreted
by Pareto as a system whereby salaries depend on the “capital available for
allocation to the wage fund and the number of people competing for it”.
His conclusion was that, in a country where capital was scarce like Italy,
each time the state drew upon this capital it would harm the economy
and the workers, who “cannot hope for an improvement in their lot
except through an increase in the nation’s capital and through the devel-
opment of industry”.31 A few years later Pareto returned to this theme,
claiming that William Thornton’s refutation of the principle of wage
funds could be interpreted simply in the sense of considering these funds
(together with the analogous profit funds) not as a constant but as an
increasing function of salaries “together with a host of other variables”.
From this it could be inferred that the trades unions, no longer held back
in their demands by a non-existent wage fund constraint, would be able
194 F. Mornati
to raise salary levels “permanently”.32 In the same period Pareto noted

that customs protection, even if applied only to industry, would reduce
national income and hence the wage fund, which meant a reduction in
the number of workers, all the more so given that while the salaries in
unprotected industries and in agriculture would not change, those of
workers employed in the protected industries would rise, and would rise
“substantially”.33
In the summer of 1888 Pareto proposed to de Molinari that the écono-
mistes, in the face of the brand of socialism practised by the bourgeoisie
using state powers to their own advantage, should jointly become advocates
of “socialist measures in favour of the people, not as being good in them-
selves” but as counterbalancing the actions of the bourgeois socialists.34
Although de Molinari did not concur (considering that the économistes
should limit themselves to educating the people with regard to the truths of
liberalism), Pareto still thought his idea valid, at least for the purpose of
allowing the free-traders to gain the attention of the popular classes.
This was the reason35 why, as early as 1886, he had organised a lecture
held at the Georgofili and inspired by the controversial economic
proposals made by the ex-minister Alfredo Beccarini36 in speeches given
in 1884 and in 1885. Pareto’s analysis of Baccarini’s proposal was based
on the premise that, at the moment of the division of national product, a
minimum amount of profit must be reserved to provide an incentive to
attract capital, as well as the minimum level of salary necessary “to pro-
vide for the worker’s subsistence”. The remaining part then remained for
distribution to wage-earners and capitalists. Pareto considered immaterial
the question of what methods the two social classes advocated to secure
the bulk of this remaining part.37
Baccarini’s proposal amounted essentially to an increase in the aver-
age salaries paid to workers on public works projects. Margins for con-
tractors could not be reduced below the minimum levels obtaining in
the Italian economy, that is, 4–5%. The private finance component of
the wage fund could not be touched, at least directly, and public expen-
diture (i.e. the public finance component of the wage fund) could not
be increased in the face of resistance from taxpayers.38 The proposal thus
essentially implied that the state would “employ fewer people and pay
them better”, which would certainly improve the standard of living of
the beneficiaries but it “appeared very probable” that people who failed
to obtain employment on public works would have to emigrate.39
On a technical level Pareto disapproved of Cairnes’40 criticism of the
bargaining power of the trades unions, observing that the wage fund
comes into play only when profits are minimal. If, on the other hand,
profits were greater than those minimum levels, the sectors involved would
attract additional investment which would increase the demand for labour,
thus raising salaries41 “by the inevitable nature of things”. Pareto added
that the international mobility of capital, which might have permitted
these sectors to resist requests for salary increases, became relevant only
when the return on capital available abroad was considerably greater than
that obtaining in Italy, so that workers could attempt to pitch their claims
for salary increases at an intermediate level between the two rates.42
At the end of 1888,43 Pareto advanced a theoretical analysis for a pro-
spective reduction of working hours from the ten then obtaining to eight.
Leaving aside the study of the most difficult effect to anticipate, that
“on the increase of the population, which is nevertheless of vital impor-
tance because it could rapidly nullify any beneficial effects”,44 Pareto’s
analysis can be interpreted in the following manner, with the variables all
considered in real terms: let Y represent the national income, which is an
increasing function of capital and of labour employed; W the remunera-
tion for labour; PNC the return on new capital; PVC the return on exist-
ing capital, that is, the rent; SP public expenditure, financed through
direct and indirect taxation (the latter mainly borne by the workforce)
and through public debt; Y = W + PNC + PVC + SP, from which we can
extrapolate W = Y − PNC − PVC − SP.
Since any reduction in working hours would (in Pareto’s view) reduce
Y, other things being equal, this measure, taken in isolation, can but
45
reduce W.46 To obtain the increase of W, or at least to keep it steady, the

reduction in working hours must thus be accompanied by a change in the
“distribution of wealth” through “the existence of a minimum salary”. In
the terms of our equation, a reduction of Y would need to be accompa-
nied by the fixing of W, which implies a reduction in PNC + PVC + SP.47
Pareto made the observation that the reduction of PNC could be
brought about by “natural competition”, as happens in countries “which
do not destroy wealth” such as contemporary England, where the interest
196 F. Mornati
rate “often falls to 1.75% per annum”. In Italy, on the other hand, PNC
is high because the state “destroys much of the wealth”.48 However, to
compress PNC to below the minimum would be ruinous to the workers
themselves because it would remove the incentive to save and hence the
growth of Y.49 As regards PVC, although Pareto agreed with Henry
George50 that the rent should go “to the community”,51 his view was that
the manner in which it could be absorbed by the state required further
study. In the meantime, its growth could at least be limited by facilitating
the sale of land holdings, obliging the owners to pay taxes on the poten-
tial ground rent and not simply on the (normally much lower) effective
ground rent, and also by avoiding public works construction which might
(as in Rome at that time) increase the value of property.52 Pareto in any
case pointed out that only the component of PVC dedicated to “expen-
diture on luxuries” was detrimental to the population.53
For this reason, in order to maintain W at least stable while achieving
a reduction in working hours, it was necessary above all to reduce SP (and
consequently the tax burden, particularly the indirect taxes), notably
with regard to military expenditure.54 That was why Pareto thought that
it was essential to convince “everyone who desired the good of the people
that in the present circumstances the true enemy is the government”.55
This was the reasoning behind the “English” articles56 he wrote, where
“all the ills that afflict the population” are attributed to “government
interference”. Since the workings of government could not be modified
to act “in the people’s interest”, Pareto’s conclusion was that “the only
remedy is liberty”.57 This conviction was not arrived at a priori but “by
the most varied paths”, among which he numbered, firstly, his studies of
the Greco-Roman economic system, in regard to which he had concluded
that “well-being and happiness appear to be in inverse proportion to the
internal power of the government”; secondly, his knowledge of political
economy; thirdly, his observation of contemporary Italian policy where,
particularly in the previous decade (when the Historical Left was in
power) government action ended up harming the people, particularly by
increasing “taxes in a scandalous manner”.58
Pareto also observed that American workers enjoyed higher salaries
than Europeans thanks, not to customs protection, but to the quality of
the goods they produced and to their country’s superior socio-economic
situation, with lower taxes made possible by lower levels of military

expenditure in America than in Europe.59
However, Pareto did not agree with the proposal to introduce a mini-
mum wage in the private sector. This was because, if it were really intro-
duced, it would provoke a general increase in salaries which in turn would
give rise to a general increase in prices, so that real salaries would either
remain unvaried or some salaries would rise in real terms while others
would fall “and it has not been shown that it is fair and beneficial for
society to take from some in order to give to others”.60
Lastly, in relation to socialist demands for the creation of jobs through
public expenditure, Pareto objected (making an early implicit use of the
concept of crowding out) that “this operation could be paid for only by
taxes levied on all the citizens, who would be obliged to reduce their
expenditure by the same amount, and this in turn would lead to a reduc-
tion of work in the country precisely corresponding to what the state had
given to the workers”.61
7.4 Taxation and Public Expenditure

One important category of measures that could be adopted to improve
the living standards for workers was thus the reduction of public expen-
diture together with the corresponding levels of taxation. The point of
departure and the continuing basis for Pareto’s reflections on taxation
were the fact that the relevant aspect in economic terms was not the man-
ner of collection but the overall volume,62 because this corresponds to the
amount that each year the state “destroys, by diverting [it] from more
economically productive uses”.63
Having established this, in August of 1874 Pareto, who like his friend
Fontanelli64 was against the tax on flour, observed that the free-trader
Francesco Ferrara had been “the first to conceive” of such a tax, even if it
was contrary to the principle, championed by Ferrara himself, of the pro-
portionality of a tax to the “financial circumstances” of those paying it.65
In May 1878, during a conference organised at the Georgofili on the eve
of the parliamentary debate on the proposed abolition of the tax,66 Pareto
pointed out that the application of this tax had eliminated competition
198 F. Mornati
between mills (thus leading to the closure of the smaller mills which were
not in a position to manage the bureaucratic complexities of its imple-
mentation), leaving the ones remaining on the market to “take more than
was due” and causing a substantial rise in the price of bread.67 Although
the abolition of the tax would not have uniform effects everywhere, for
example not making any significant difference in Tuscany where its yield
was modest, and although it might encourage greater consumption of the
cheaper but pernicious maize, Pareto nevertheless approved of the mea-
sure, but only at such time as there was a stable budget surplus, which
was not yet the case.68 On the other hand, he was against the alternative
proposal to reduce the tax on all cereals69 by a quarter, because in his view
this would be of benefit only to the mill owners. In 1885 Pareto came out
unconditionally in favour of reducing the price of salt,70 which was a state
monopoly, because this would encourage an increase in consumption,
albeit modest, salt being indispensable to the good health of the popula-
tion and particularly that of working people.
Again in 1885 Pareto indicated his agreement in principle with the
Florentine lawyer Ferdinando Nobili’s proposal to reduce taxes on land
holdings and increase those on other categories of taxpayers. At the same
time, however, he noted that “there is not much left to tax in Italy”.71 In
any case, for agriculture “to thrive there must be a rich and flourishing
population” who should therefore not be further squeezed from the tax
point of view.72 Since land is not movable, landowners are obliged to put
up with the tax burden which falls to them whereas a capitalist businessman
who considered himself overtaxed, as was the case at that time in Italy,
could “go elsewhere”.73 Since the payment of taxes required wealth, which
in Italy was generated only by agriculture, the burden of taxation would
fall exclusively on agriculture,74 directly or indirectly. Regarding the pro-
posal to increase the tax on revenue in industry in order to be able to
proceed with the reduction of the tax on land holdings, Pareto antici-
pated that this would reduce the incentive for investment in industry and
in commerce, thus damaging “the sources of national wealth”.75
Despite all of this, Pareto was in favour of a general increase in the
taxes on revenue so that “those who elect the members of Parliament and,
in so doing, take on indirect responsibility for the wasting of public
money”, especially landowners, industrialists and merchants, “can begin
to realise the true cost of all these rash steps which are diverting the
nation’s energies from productive activities”.76
On the other hand, he was against an increase in indirect taxes “because
they are more surreptitious, making it more difficult to see their ill effects
and to identify remedies”.77 So it was that in the autumn of 1887 he sor-
rowfully observed that the Historical Left, having earnestly fought for a
reduction in tax on “everything which serves for the consumption of the
poor”, had then proceeded to increase duties on goods “of general con-
sumption” such as cereals, petroleum, sugar and coffee while at the same
time reducing the tax on land holdings by 30 million a year.78
In general terms, it can be said that Pareto took the view that the
expropriation of other people’s assets performed by the institutions of the
state, as opposed to by private individuals, had always been in fashion,
and seemed to him to be increasing in step with civil progress and to be
achieved increasingly through guile rather than through violence.79
The most important example of this appropriation on the part of the
state related specifically to indirect taxes. Pareto, making a comparison
between a family of Florentine artisans and a family of working people in
England, calculated that in 1889 the former had paid 23.7%80 of its
income in taxes while the latter had paid only 4.4%.81 In the article
“Gianpaolo and Giampietro” published in the 23rd–24th October issue
of the Roman daily Fanfulla, the newspaper’s financial commentator con-
tested Pareto’s figures for tax rates in Italy and in England. It was in fact
true to say that, assuming the same rate of return obtained on the wealth
of the two countries and that the amounts thus determined were used to
calculate rates of taxation (not including customs duties, as these were
not strictly speaking taxes, and also because their effects were much more
difficult to estimate than Pareto had erroneously maintained), then taxes
in Italy would not amount to six times those in England but only to two
and a half times. In his reply, Pareto82 pointed out, firstly, that the con-
cept of consumers paying a tribute to national producers who enjoy cus-
toms protection had long been recognised. Having thus established that
his theory was not substantially different from that of his critic, Pareto
expressed his hope that all those who considered Italy’s tax burden exces-
sive would rise up, regardless of party allegiance, to “rectify these condi-
tions which, in the long term, will surely lead our country to ruin”.83
200 F. Mornati
Pareto viewed taxes on consumption (which rose from 448 million lire
to 608 million lire between 1880 and 1889–1890, while direct taxes rose
from 364 million to 393 million lire) as “progressively harming the poor”,
which meant that those who “want a progressive tax on the rich”84 were
not to be condemned. According to him, however, at least the municipal
duties could be replaced by direct taxes, since the municipalities had the
power directly to implement such a transition in regard to their direct
share of the duty.85
As far as state expenditure was concerned, Pareto’s view was that this
represented “what people call overheads in private enterprise”. This meant
that, “as any reasonably clever administrator knows”, this type of expen-
diture should be limited “as much as possible” or at least kept “in some
kind of proportion” to the “wealth produced annually” by the nation.86
In terms of the relation between state expenditure and the value of inter-
national trade, one of the least precise measures in the national accounts,
for the year 1888 Italy’s figure of 76% placed it well behind France (43%)
and England (13%), and Pareto deduced from this that England had an
advantage in international competition because it not only enjoyed duty-
free imports but also a “very favourable” relationship between public
expenditure (thus defined as “overheads”) and foreign trade.87 Referring
to Maffeo Pantaleoni’s recent study of private wealth in Italy88 (which he
adjudged to be “very accurate”), Pareto deduced, in the light of the fact
that Italian wealth was estimated at only a quarter that of France while
the tax burden was equivalent to half of that in France, that Italian citi-
zens paid double what French citizens paid.89
The conclusion was that Italian public expenditure was excessive, so
that the country resembled people “who ruin themselves trying to keep
up in luxury and expenditure with others who are much richer”, thus
giving credence to the idea that Italy could emerge from its crisis beset-
ting it only by resigning itself to “occupying the place in the world which
is its due without … biting off more than it can chew”.90 Particularly, the
increase in military expenditure from 19% of the total in 1879 to 32% in
1889 (while the figures for intangible expenditure, for collection costs
and for all other services declined) made it “the main reason for the coun-
try’s economic plight”, implying that the cuts needed to balance the
state’s budget should be applied exclusively in this area. Pareto appealed
to the landowners to oblige the government to make reductions in expen-

diture which otherwise would fall to them, “because the money must be
taken from those who have it”.91
In the end, Pareto viewed public debt as “one of the most powerful
means” allowing “the well-to-do” to obtain a better return on their capital
than would be achievable through industrial or commercial investments
under free competition.92 He accepted that all the major European states
were obliged to resort to public debt to balance their budgets but, for
Italy, “it is a matter of establishing whether the debt will grow more
quickly than the country’s economic resources”.93
7.5 Birth Control

Pareto claimed to have belonged in his youth to a Malthusian society (of
which no trace has thus far been found)94 and considered that an essential
step for improving the living conditions of working people was birth
control. More specifically, in 1886 he expressed his view that a “lasting
and effective improvement in the condition of poor people” could be
achieved “by limiting the number of people in this category”.95
In 1888 he claimed that, in order to “argue against Malthus’ doctrine”
it was not enough to “show the two famous progressions to be inexact”.96
In Pareto’s opinion, studies on “the possible growth of the population are
fundamental for … the future of humanity”. In this respect Malthus’
ideas seemed to him incontrovertible, as it was evident that “the density
of population in civilised countries” was the result of a human birth rate
which was potentially much higher than was the case97 and of preventive
or restrictive actions (such as limiting births or killing newly born chil-
dren)98 which could be brought into play.
The only question remaining was whether the more beneficial results
for humanity could be achieved through preventive or through restric-
tive measures. On the basis of “political economy alone” it was evident
that preventive action was preferable, as “in order to reduce poverty, the
first step is to avoid allowing more births than the country can sup-
port”. However, after having studied Darwin, Draper, Spencer, Buckle
and so on, Pareto formed the conviction that the physiological aspect of
202 F. Mornati
the question also needed to be addressed, concluding that restrictive

measures were required in addition, because “if we succeeded in taking
the struggle for survival out of the equation, we would be doing immense
damage to the human race”.
Hence, it came down to studying ways of “eliminating all those afflic-
tions which are not indispensable for the maintenance and continuation
of human progress”.99 Making reference to Mill, Pareto stated that until
such time as a means of preventing “morally and physically imperfect
beings” from having children could be identified, poverty would con-
tinue to be necessary to eliminate them, failing which “human society
would [indeed] degenerate rapidly”.100
The inevitable residual level of poverty was thus the effect “of an exces-
sively rapid growth in the population, of mankind’s vices, weaknesses,
moral and physical imperfections”, and corresponded to the proportion
of the population which could not be supported on the basis of the maxi-
mum available national income, that is, the nominal national income less
unproductive expenditure, whether public or private.101
This minimum level of poverty could be reduced only by inculcating
people with the principle that “those bringing a child into the world
without possessing the means to educate it are committing a crime” and,
more generally, with the idea that a person’s value corresponds to their
contribution to society and not to their cost. This, in Pareto’s view, could
be achieved only by private individuals.102
At the beginning of 1891, Pareto reiterated that although he thought
it “foolishness… to assign this responsibility to the Government”, people
should concern themselves with “producing first-rate offspring” and
should disseminate the idea that it was “a grave moral failing to give birth
to a number of children greater than one’s capacity to feed and educate
them properly”.103
7.6 Against Customs Protectionism

However, in keeping with his free-trade convictions, Pareto identified the
most important aspect of the solution to the problem of poverty as being
how to attain optimum efficiency in production together with the best
possible terms of trade for goods. While the theoretical study of produc-
tive efficiency, which, in the period in question, occupied Pareto profes-
sionally, was deferred to a later date, he immediately turned the full force
of his attention to the issue of free trade. Having established that in general
the price of an item “produced nationally tends towards the price of the
equivalent imported item”, Pareto pointed out that when a customs duty
is applied to the latter, if it is not produced internally its price will increase
by at least the amount corresponding to the duty charged and, if it is pro-
duced internally, the price will increase to the maximum amount of the
duty, while if the product is produced internally and is also imported, the
price will rise at least by the amount of the duty. Pareto also considered
that variations in the amount of the duty did not have an immediate effect
on the price (mainly due to existing stocks which had incurred the old rate
of duty) and that the price of goods did not depend only on the duty.104
In particular, Pareto began his address to the first convention of the
Adam Smith Society105 by agreeing, on the basis of information emerging
from the recent industrial enquiry, that the decrease in duty on exports of
sulphur from Sicily, on account of the non-elasticity of demand for the
product internationally, would reduce the international market price by
an equivalent amount corresponding to the reduction in duty (with the
profits of Sicilian producers remaining unvaried and the Italian tax
revenue reduced). For this reason, he concluded that he saw no “eco-
nomic reason” not to maintain the duty.106
He then noted that protectionists were right in taking exception to the
fact that the specific tariff for duty applied to raw materials107 was greater
than that applied to finished goods.108 However, Pareto objected that this
was due not to the doctrine of laissez-faire, which had always argued for
equal duty based on the value109 of raw materials or of finished goods as
being the only way to avoid this divergence (cancelling out even the
effects of the “variability in the proportions of raw materials making up a
piece of equipment”), and he therefore regretted the fact that the Italian
negotiators seemed oriented towards fixed duties.110
In general, Pareto also supported the negotiator Luigi Luzzatti’s pro-
posal to increase the duty on sugar in order to bring it into line with the
existing taxes on consumer goods such as salt, flour and coffee. However,
in this case he disagreed with the increase because by raising the price of
204 F. Mornati
sugar, apart from generating additional tax revenues, it would also

increase the profits of Italian industrialists producing sugar from beet,
who evidently had no right to such a windfall.111
More than a decade later, on the 29th of May 1887, at the opening of
the parliamentary debate on the new reform of duties (which is remem-
bered for its decidedly protectionist character), Pareto presented a study
on the benefits of international trade at the Georgofili. Starting from the
premise that the “direct effect” of free trade, in permitting the production
and the acquisition through exchange of all types of goods with the mini-
mum of effort, corresponded to “the optimum result of human labour”,
Pareto observed that the increase in Italian customs tariffs would oblige
the country’s trading partners, and Italy itself, to work more in order to
obtain the same quantity of goods as before.112
In the ensuing debate Pareto, acknowledging the objection whereby
the duty on American grain (which was invading the European market)
could be shifted entirely onto its prosperous producers, thus leaving the
price of grain in Italy unchanged, argued that the profit made by American
cereal growers constituted precisely the reason which motivated them to
produce grain in the current quantities, so that a lower rate of profit con-
sequent on the hypothetical transfer of the Italian duty would cause them
to produce less grain and to sell it at a higher price than before, with the
end result that prices in Italy would still increase.113 In response to the
agronomist Vittorio Alpe’s interesting objection that the absence of cus-
toms protection for agriculture would deprive it of capital and of work as
a result of the accompanying customs protection granted to industry,
Pareto countered that instead of protecting agriculture as well, it would
be better to stop protecting industry.
Pareto anticipated that on the question of protectionism in Italy there
would be no confrontation but rather a collusion between industrialists and
cultivators to the detriment of the people who, however, having “spotted
the subterfuge”, would not only get their “own back” but would turn from
victim to oppressor, by demanding for example that salaries be fixed by law
as in the case of goods produced by landowners and industrialists.114
At a later meeting held on the 5th of February 1888, some members of
the Georgofili proposed asking the government for a further extension of
the commercial treaty with France, which had expired at the end of 1887
and had been extended until the end of February 1888, in order to per-
mit further negotiations, considering this type of extension to be less
harmful than the mutual application of the standard tariffs which would
otherwise ensue.115
A commission was set up for the examination of the proposal consist-
ing of Fontanelli, Pareto and the economist Arturo Jéhan de Johannis. To
“avoid any questions of free trade and protectionism”, they limited them-
selves to establishing whether Italy’s interest was in the application of the
tariffs (with a consequent breakdown in commercial relations) or a broad
reconfirmation of the expired treaty, as proposed by France.116
An examination of the available statistics shows that, over the period
from 1862 to 1886, the balance of trade with France, initially negative
for Italy, passed to a surplus, while commercial exchanges between Italy
and France almost doubled, as did Italian foreign trade in general.117 The
commission thus concluded that, in freeing Italian industrialists from the
competition of French manufactures amounting to a value of 150 million
lire, damage would be caused not only to Italian consumers, who do not
have protectors, but also to the 400-million lire worth of agricultural
products and raw materials exported to France, for which the alternative
outlets spoken of by the government ought to have been found before
any possible break with France, in order to avoid serious congestion in
the northern Italian silk market and in the southern markets for agricul-
tural produce.118 Thus, a break with France would lead to an economic
and commercial “shortfall” for the nation as well as to extreme difficul-
ties, in the absence of exports to France, in servicing the “enormous and
constantly-growing quantity” of Italian public debt which had been
placed there, all of which ought to induce Italy to make every possible
effort to maintain commercial relations with France.119 The commission
continued by arguing that in case of a break with France and the conse-
quent imposition by France of higher tariffs on imports from Italy, it
would be “a big mistake” on Italy’s part to respond in kind.120 Customs
reprisals could in fact be effective only “when the conflict is even or
almost even”, which was not the case because the share of Italo-French
exchanges as a proportion of Italian foreign trade was “far higher” than
the corresponding share of French foreign trade.121 Moreover, since
“products must necessarily be exchanged with other products”, if French
206 F. Mornati
imports were not further limited in response to French reprisals, the

resulting balance-of-payments deficit would sooner or later have to be
offset by an increase in Italian exports to France.122
This protectionist turn in the Italian customs regime also provided a
rare opportunity to determine whether the free-traders’ negative expecta-
tions or the protectionists’ positive expectations would be fulfilled.123
It was to a French readership that in the autumn of 1887 Pareto
addressed his first public critical analysis of the recent protectionist mea-
sures,124 drawing pleasure in private at the negotiators Luzzatti and
Vittorio Ellena’s protests at his publication while the negotiations were
still ongoing.125 Pareto anticipated that the new duty of three lire per
hundredweight on Italian imports of grain, which accounted for from a
quarter to a fifth of national consumption, would be added in its entirety
to the price of grain, while the government’s view was that the duty would
be paid by “intermediaries, speculators or foreign producers” thanks to
strict supervision of the market, thus leaving the price unchanged.126
Pareto also observed that the price of grain should be compared with
what it would have been without the duty (as evidenced, for example, by
the price obtaining in countries where no duty was charged), whereas any
stability revealed by a simple comparison with the price before the impo-
sition of the duty might be due to other favourable factors such as good
harvests and low leasing fees.127
In 1889 Pareto observed that, since the crisis, which had so “brusquely”
interrupted a period of prosperity for the Italian economy starting in
1880, had begun in 1888, it must have been caused by factors which
intervened around 1888 rather than earlier.128 Having established this,
Pareto noted that 1888 had been different from the preceding years only
in regard to the change in the customs regime and for its bad harvests. He
then pointed out that if the bad harvests had caused the crisis, then an
increase in the prices of agricultural produce should have followed
whereas it was the opposite that occurred. From this he concluded that
the crisis of 1888 could have been caused only by the move to customs
protection.129 More specifically, the crisis in Italy was caused by the fall in
exports (which in 1888 had declined by 13% compared to 1887, a decline
which affected not only raw materials but also industrial products and,
more particularly, agricultural produce130) which in turn was triggered by
the reduction in imports caused by the new customs tariff.131 The crisis
was accompanied by other symptoms which cannot have been foreseen
by protectionists, such as132 a fall in the proceeds of the taxes on letters
and on telegrams, a decline in consumption of luxury items (e.g. tobacco,
alcohol, national lotteries), a reduction in consumption of bread and a
rise in bankruptcies and in emigration.
Continuing his observation of the effects of Italian protectionism,
Pareto noted in 1890 that neither of the two promises that the govern-
ment had made to justify the new protectionist policy had been kept. In
place of the “great benefits for the nation’s work prospects”, the protected
industries themselves were having to lay off employees “for lack of orders”,
the balance-of-trade deficit which they had claimed heralded “impover-
ishment for Italy” had increased instead of shrinking and overall foreign
trade had declined.133 Crispi had interpreted the crisis in Italy as a conse-
quence of a general crisis across Europe, but Pareto claimed there was no
trace of this given the flourishing economic situation in England and
France, as demonstrated by the overall growth in their foreign trade.134
Lastly, in analysing the effects of protectionism on the mechanical
engineering industry in Italy, Pareto noted that it had stimulated a growth
in production which could not be exported “because of the high costs of
production, resulting from the system of protection and the high taxes
weighing on industry which prevent it from being competitive outside
Italy”, and so had been offloaded onto the restricted Italian market, caus-
ing an inevitable crisis in the sector.135 Pareto deplored the attempt to
combat the crisis by increasing customs protection for the sector and by
increasing orders from the state and the railways, praising the Napolitan
entrepreneur Alfredo Cottrau (a customer of San Giovanni at the time
Pareto was in charge) for having “the rare courage to openly demand free
trade for his industry”, which would enable Italian mechanical engineer-
ing industry to compete internationally, with Belgian producers for
example.136
According to Pareto, the causes of the spread of protectionism across
Europe (with a notable example being the English fair trade movement
of the time137) were to be sought in “powerful interests on one side, igno-
rance and indifference on the other”. In particular, individual citizens
were unaware of how much they paid to subsidise protected producers
208 F. Mornati
and, even if they knew, it would be an amount too small for them to
worry about; individual protected producers, on the other hand, knew
“perfectly well” the large sums they stood to gain from customs protec-
tion and so they were active in their attempts to introduce it, particularly
by buying the support of parliamentarians and newspapers.138 Thus, the
relative strengths of protected producers compared to consumers every-
where favoured the former with the sole exception of England, where
consumers “were fortunately quite well-organised” and defended their
interests ferociously.139
7.7 A
gainst the Artificial Exit from the Fiat
Money
Among the many important decisions in political economy taken during
the 1870s and 1880s,140 the one which appears to have attracted Pareto’s
greatest interest was the exit from the fiat money.141
With the revaluation of the lira, followed by the Minister of Finance
Magliani’s introduction, on the 15th of November 1880, of a bill for
withdrawal from the unconvertible currency regime,142 and with rumours
in the newspapers about the possibility of compensating increases in cus-
toms duties,143 Pareto urged Allievi to ensure that iron was not “forgot-
ten”, asking him whether it was necessary, particularly in the face of
Belgian and English competition, “to mobilise the other producers to
kick up a bit of fuss”.144 But Pareto’s principal reaction to the new bill was
seen in his altercation, at Florence under the aegis of the Adam Smith
Society, with Ettore Friedländer, editor of the pro-government Rome
daily Il Diritto.
Acknowledging that the fiat money was in any case harmful to the
nation, Pareto remarked that, according to Magliani, the damage it
caused145 was such as to render the 18-year time frame proposed for its
abolition excessive, if it were conducted only on the basis of the annual
budget of 34 million lire which the government had available for the
operation.146 Pareto, having contested point by point the government’s
estimation of the damage caused by the unconvertibility of the cur-
rency,147 expressed his regret that Magliani had not taken into account
the examples of France after Sedan and of the United States after the
Civil War. Those countries had in fact been able to achieve the aim of the
abolishment of the fiat money “in a natural manner” simply by awaiting,
through the recovery of their “productive capacity” leading to an increase
in exports and to a reduction in imports, the inflow of gold required to
restore the exchange of banknotes.148
In regard to Magliani’s plan to issue 640 million lire’s worth of govern-
ment debt in order to rapidly generate the quantities of precious metals
required for the abolition of the fiat money, Pareto expressed his agree-
ment with the government’s (as it turned out, wildly erroneous) forecasts
that this would be largely covered by an increase in the Italian savings
rate.149 At the same time, he considered that the “really critical point of
the operation” was the fact that it would be damaging for a country like
Italy to devote “a large proportion of national savings to an unproductive
use”.150 Further, Pareto pointed out that “the new factor in modern times”
was that, with the relative ease of transportation, “the struggle for sur-
vival”, which had previously involved individuals from the same country,
now involved the countries themselves, with the “only weapon” available
to them being the fact that they could count on “cheap capital”.151 Italian
entrepreneurs had to operate in the context of a base rate of 4–5% while
their English competitors enjoyed a rate of 2.5%. It would therefore be an
excellent idea if Italian savings, instead of being used to acquire g overnment
debt, were allowed to accumulate so as to “bring down” the base rate.152
On the other hand, Pareto153 agreed with Magliani on the fact that the
prices of products would fall following the abolition of the fiat money and
the consequent rise in the value of the lira. In that circumstance, were nom-
inal salaries to remain unchanged, “industry” would suffer, unless nominal
salaries declined in proportion to the rise in value of the lira, but in that case
working people would derive no benefit from quitting the fiat money.
In reality, Pareto had no doubt that its abolition would lead to a reduc-
tion in real salaries, because purchases of the corresponding issue of state
bonds would lead to a reduction in the wage fund.154 He maintained,
however, that industry would likewise suffer from the resulting lack of
capital and increase in the base rate, as well as from increases in the real
level of taxation and in railway tariffs, were these to remain unchanged in
nominal terms.155
210 F. Mornati
Lastly, Pareto, after claiming that the abolition of the fiat money should
follow and not precede the “reorganisation of the banks”,156 added that
silver, which would be acquired in order to underpin this process, would
(in accordance with the rules of the Unione Monetaria Latina) “be paid
for at the same price as gold” despite the fact that probably “it would
soon be worth much less”. This seemed to him “a bad deal”, especially as
it would allow Italy to escape from the obligations of its fiat money only
to enter into a “silver standard” which the Unione Monetaria Latina was
imposing due to the continual outflows of gold to the United States157
(and which were required to cover the European trade deficit generated
by the massive imports of American grain).
Pareto therefore judged Magliani’s idea to be “premature”, bringing
“more harm than good”,158 with the good boiling down only to “stability
in the money supply”159 (which in any case would not be absolute) and
the hope in a recovery of inflows of foreign capital.160
7.8 Early Reflections on Socialism

Pareto did not fail to take note of the growing presence of what appeared—
under various guises—as the alternative to free trade, that is, socialism,
particularly (but not only) in its economic aspects, and he began to tackle
this issue explicitly from the mid-1880s.
Pareto attributed to Bastiat the interpretation of socialism as a fruitless
“grappling over … the same sum of money”, a sum which grew ever smaller
as each transaction involved “something remains attached to the body
which oversees this process of giving and taking”—that is, the state.161
Pareto also made reference to Bastiat’s more general thesis that socialism
was “essentially” an oligarchical form of protection system.162 In fact,
according to Bastiat, “for those protected to gain any benefit from the
protection” it was necessary for them to be a minority, “because affording
equal protection to everyone is exactly equivalent to not protecting any-
one”. This signifies, therefore, that all systems of protection tend to be
oligarchical, including the socialist one, as shown by the fact that the mea-
sures invoked by socialists generally favoured only limited categories of
working people (usually citizens and voters) while the socialists themselves
ignored the government measures (such as the duty on grain) which tar-
geted “all poor people” (particularly the rural population and n
on-voters).163
In 1889, Pareto repeated that his aversion for socialism was not a question
of dogmatism but “the summary of the conclusions forced on me by innu-
merable facts”, adding that in the past he had considered that state inter-
vention could constitute a remedy for certain social ills, but that “the
experience and a more attentive study of the facts” had convinced him that
this idea was mistaken.164 Therefore, at this point he was positive that a
reduction in the “sum total of suffering in the country” could be achieved
not through a change of master but by freeing the individual from state
power. An alternative route had therefore to be found to the one which led
“to the existing bourgeois socialism” and which would in time lead to
“popular socialism”.165 In Pareto’s view, in reality, the rapidity with which
socialism took hold increased in proportion to the number of abuses com-
mitted by those in government “to economic liberty and justice”, that is,
against the natural distribution of wealth, so that socialism was weakest in
the country with the least interventionist state, that is, England.166
At the beginning of 1891, at the time of his first systematic commen-
tary on socialism, Pareto had defined it as a community of schools of
thought united by the idea of bringing about a total reform of society in
favour of the less-well-off through a limitation of individual freedom (to
be attained by “transforming the basis of property in particular and …
also that of the family”) as well as by an extension of the powers of the
state.167
Furthermore, socialism, together with protectionism, was a manifesta-
tion of interventionism, which is the doctrine whereby the state is
assigned the task of “transforming the distribution of wealth”.168Within
this classification, the popular socialists were those interventionists who
wished to modify the distribution of wealth in favour of the less-well-off
while interventionists “advocating commercial protectionism and a mili-
tary style of social organization” (alias the bourgeois socialists who
according to Pareto were in power everywhere except in England) were
for a redistribution of wealth in favour of the well-off.169
Any modification to human society required study of the existing situ-
ation, of the “modifications which it was considered opportune to make”
and of the desired objective to be reached.170 With regard to the latter,
212 F. Mornati
Pareto shared “the ideal of justice in the narrow sense” encapsulated in

Saint-Simon’s maxim “to each according to his contribution, to each con-
tribution according to its merit”.171 For the study of the existing situation
he referred to Herbert Spencer and Charles Letourneau (probably his
Sociology according to ethnography), while for the study of social reforms
he considered it necessary to make use of “economic principles” to deter-
mine the effects of the desired changes172 which could achieve stability
only if the natural inclinations of the citizens were to be modified through
education and schooling.173
Pareto’s economic conception of socialism at the end of the 1880s can
be summarised as follows174 (all considered in real terms): if Y is said to
represent the annual national product; A the proportion of this “used to
generate” other income; D the proportion reserved for consumption
“indirectly indispensable for production”, such as “expenditure on jus-
tice, defence, etc.”; E the proportion not used either directly or indirectly
for production and thus unproductive, made up of private luxuries, mili-
tary expenditure, expenditure on public works of little utility and on
customs protection, then Y = A + D + E. Pareto observed first of all that
the “rich” limit themselves to deciding the allocation of A among the
various groups of workers with the consequence that if A is reduced, Y
will follow suit and hence the well-being of the population, unless the
population declines at least proportionally to Y. Both bourgeois socialism
and popular socialism, on the other hand, seek to increase E, thus conse-
quently diminishing Y: bourgeois socialism is more harmful to the social
well-being, because the population (i.e. the workers) is more ignorant
(and thus financially imprudent) and more numerous (and thus more
ravenous) than the bourgeoisie.
Having said that, in Pareto’s view the main defect of the various socialist
systems was that they ignored the indirect effects of their provisions which,
as Spencer had showed, “often far exceed” the direct effects.175 Pareto
divided the category of socialist systems into the following subclasses:
metaphysical systems (e.g. Plato’s Republic or Thomas More’s Utopia),which
were conceived with reference only to the objective to be pursued, neglect-
ing the question of whether the system and the proposed means of attain-
ing it were “compatible with the laws of psychology, physiology and
history”;176 religious and mystical systems, where people renounce their
selfish instincts “to ingratiate themselves with the divinity”;177 historical or

experimental socialist systems which, guided by the socialist interpretation
of political economy and of “the historical evolution of society”, aim to
entrust to the state “the economic tutelage of the weak” and the manage-
ment of production. Notable examples were the systems of Ferdinand
Lassalle, Karl Marx (“an indomitable spirit and profound thinker who was
able to attain the most profound ideals”178); of the chair socialists; of cer-
tain Christian socialists who were more statists than religious thinkers; of
Henry George and Benoît Malon.179
Pareto asserted that, if one took account of history, the fact of entrust-
ing any possible collective ownership of the means of production to the
government would give rise to “very serious consequences, and the popu-
lation would then be exploited more than it is at present”.180
On the 1st of May 1891, Pareto observed that the number of socialists
continued to increase not only in Italy, where the movement “is largely
imported”, but in all the major European countries, where “every worker
who thinks is socialist or in the process of becoming so”.181 The success of
socialism was limited only by the “the large number of splinter groups it
is divided into, all fighting one another ferociously”.182 However, it could
not be assumed that a socialist unification would never come about and
the multiplicity of socialist ideologies would not be an obstacle to this
happening “because history teaches us that it is not reason which leads
and moves the great masses of humanity, but rather emotion which takes
possession of them in the context of certain conditions and in an environ-
ment which is favourable”.183 Among the many contradictions of Italian
socialism, Pareto pointed out that between the avowed aversion to the
state and the proposal to expand its powers, even if the socialists specified
that it was a future workers’ state that they had in mind, attributing to it
the capacity to “resolve the social question” which the contemporary
bourgeois state lacked.184 Pareto wished that the socialists could explain
how the workers’ state could yield “good in place of [the] evil” which had
always accompanied state economic interventionism. In any case, Pareto
pointed out that “to fix the prices of merchandise and salaries … [and]
everything a country produces is a little complicated and rather delicate”
and also signalled the danger that, taking advantage of this regulation,
“crafty cohorts” might possess themselves of the “fruit of our labour”.185
214 F. Mornati
7.9 Early Reflections on Economic Theory

During his 20 years in management, the considerations Pareto left on eco-
nomic theory were infrequent and fragmentary, but not inexistent. In par-
ticular, there are traces of his study of theoretical passages in the works of
William Thornton, John Elliott Cairnes, Yves Guyot and Henry George.
In 1875 Pareto claimed to have been one of the people who in his
youth had “learnt the science” of economics by studying the first two
series of the Biblioteca dell’Economista.186 Referring to the “law of value”
he meant, following the thought of Francesco Ferrara (the first editor of
the Biblioetca dell’Economista), the “law of supply and demand in the
light of the cost of production of goods or their substitutes”, from which
it can be inferred that limiting the supply of a good will result in an
increase in its price, with the further implication that the total profit is
also “likely” to be reduced. Pareto, pointing out that Thornton had que-
ried the validity of this law when stating that the price is determined
solely by competition,187 responded by observing that cases where demand
is a discontinuous function of price do not disprove J. S. Mill’s assertion
that price is a function of the “relationship between supply and demand”.188
A dozen years later Pareto recalled “the singular clarity” of the interpre-
tation Cairnes had given to the theory of international trade in his Some
leading principles of political economy newly expounded,189 pointing to the
notion that any surplus in the balance of payments due to custom duties
would be cancelled out by a reduction in exports caused by an increase in
costs of production, whether determined by an increase in customs duties
themselves, or by an inflow of precious metals to compensate the residual
surplus (and heralding a revaluation of the country’s currency), or alter-
natively by the “drain of capital going in search of the artificial and exces-
sive profits on offer from the new tariffs”.190
Pareto was appreciative of the representation of “much of the data
through diagrams”191 in works like Yves Guyot’s The science of econom-
ics (Science économique). However, he considered Guyot’s proposition
that a country’s revenue was an increasing function of its fixed assets and
a decreasing function of its variable assets192 to be “too absolutist, as is the
case with almost all the simplistic laws that attempt to make extremely
complex phenomena manageable in political economy”, supplying a
number of counter-examples. Neither did he share Guyot’s dismissal of
rent, arguing that it exists not only for land “but also for many other
resources whose supply is limited”.193 In Pareto’s interpretation, rent
refers to profits which are higher than the average, the surplus resulting
from any limits placed on competition.194
In Pareto’s opinion, it was Gerolamo Boccardo who had demonstrated
“the veracity” of Ricardo’s theory of rent “in a manner” which seemed to him
“definitive”,195 supplementing it with the theory of natural monopolies.
7.10 Early Reflections on Sociology

In 1891 Pareto remarked that society in its contemporary form was the
result not of “the power of the government” but of “the inclinations of
the citizens … whether naturally emerging or whether acquired through
education”, as illustrated by Buckle in his “masterwork” (alluding to his
History of civilization in England).196 This claim represented the synthesis
of his scattered thoughts formulated over the preceding decade.
As early as 1875 Pareto had indicated his agreement with Darwin’s
notion that, just as the struggle for survival constituted one of the main
drivers of the evolution of animals from lower to higher forms, it was “no
less indispensable … for human society”.197
In 1875 Pareto had claimed, with Spencer, that study of the history of
human society showed that the development of organisms emerges from
the joining of their parts in a mutually interdependent relationship,
together with an increasing functional specialisation. Thus, individualism
and collectivism must proceed simultaneously because if the former pro-
gressed more rapidly than the latter the result would be a society of sav-
ages while the opposite situation would lead to a limited capacity for
originality and inventiveness, without which society could not advance,
as shown by the example of Chinese society. In Pareto’s view, contempo-
rary society in Europe was characterised by a collectivist tendency and a
resulting social homogenisation which could never lead to a renewed
trend towards social differentiation, which in turn would be desirable
insofar as it brought progress, until it had engendered a determined indi-
vidualistic reaction.198
216 F. Mornati
On the 14th of March 1881 Pareto gave a (to him) highly unsatisfac-
tory199 conference at the Circolo Filologico in Florence on the topic “On
scepticism regarding social evolution”. A journalist from the “Nazione”,200
after having observed that Pareto was renowned for the “orderliness” and
for the “clarity of his ideas” as well as for the “fluency and refinement of
his speaking”, informed his readers that the specific theme of the confer-
ence had been the contrast between the productiveness “of scientific
doubt”, which was a source of new research and discoveries, and the
harmfulness of that “vulgar doubt which, refusing to put its faith in any
theory, amounted to a pretext for doing nothing”. Pareto illustrated his
thesis by means of a comparison between the positions of Buckle and
Luzzatti. Buckle, having recalled that civilisation is influenced by a moral
element and an intellectual element, maintained that since abstract
morality had remained unchanged for centuries (while practical morality,
in the sense of men’s control over their actions, had improved), it was the
intellectual element, represented by scientific progress, in turn engen-
dered by scepticism, which had determined the advancement of civiliza-
tion. Luzzatti, on the other hand, believed that social progress was due to
morality. In this regard, Pareto, after observing that morality also depends
on social conditions, remarked that people, while constantly seeking to
improve the theories, must meanwhile also “support them through
belief ” and “work to give them success”. He gave numerous examples of
this, including the statement that even if it is not possible to characterise
the optimal form of government in general, Italy should embrace the
Savoy dynasty as embodying the values of the Risorgimento, hence consti-
tuting “a bulwark of our independence and of our liberty”.201 Generalising,
he opined that since any institution “is a mixture of good and bad”, it was
possible to evaluate it only after having carefully examined all its aspects.
Progress in social sciences was hindered precisely by the partial analysis of
institutions and by the expectation that those “we consider as good”
should have no negative aspects.202
At the close of the 1880s, Pareto expressed his opinion that civilised
peoples have more in common than is imagined, and the same causes
have the same effects for them all, so that one people’s experience can be
instructive for the others.203 Exploring these concepts further, Pareto
observed that economic and social conditions in northern Italy were simi-
lar to those in England, France or Germany, while conditions in the south

of Italy could be compared with those in Ireland, based on what he had
gleaned from contemporary writers of varying political persuasions.204
He then noted that social divisions were much greater in the south
than in the north, adding that the struggle between social classes in the
south had existed “from time immemorial” and had been less violent in
cases where the pains of the less-well-off were less severe, and “more
intense” where, as in Basilicata, “the human creature reduces itself to the
level of the beast”205 out of extreme poverty. In the same way, banditry
was “the natural consequence” of the oppression of the overlords, from
which some had tried to free themselves through force of arms, with the
brigands’ brutality being a result of the fact that they had always lived “in
a condition bordering upon that of the brutes”.206
In the same period, Pareto affirmed that “social phenomena are a direct
consequence of the economic conditions of the people and can be modi-
fied by changing these conditions”.207 Thus, if it were true that an agricul-
tural people had a “servile spirit” and if Italy were really to become an
agricultural nation following the removal of customs protection, then
Pareto would be a protectionist because he would “gladly [welcome] all
the economic problems deriving from protection in return for the supreme
possession of liberty”.208 Pareto stated additionally that he did not believe
that laissez-faire policies would provoke the death of Italian industry, even
if he did not know whether the survivors would be sufficient in number
“to safeguard the liberal social state in an industrial nation”. In the mean-
time, he would keep to “what was certain, i.e. the economic benefits of
free trade”, thinking it imprudent to “abandon this to chase after the social
advantages of protection which are so uncertain”.209
7.11 Early Reflections on Political Science

At the time of the move towards protectionism in 1887,210 Pareto stated
that those in power who had decided it were probably not lying when
they claimed not to have been influenced either by laissez-faire or by
protectionist ideas. The change appeared to him to have been introduced
simply to placate the parliamentary majority which was in favour of
218 F. Mornati
protectionism, and that a laissez-faire policy could equally readily have

been adopted had the majority been in favour of the protection of con-
sumers.211 Generally speaking, within the parliamentary regime,212 the
ministers (invariably persons possessing little character) did not follow
their own ideas but limited themselves to slavishly following “the errors
of the majority, whatever they be” in order to retain power.213 Pursuing
this argument, Pareto claimed that it was only “by legal fiction” that it is
supposed that the actions of parliamentary governments “are in perfect
accord with the conscious opinion” of the majority of citizens, while in
actual fact, in all probability, the latter do not share the aims really being
pursued by governments, who are able to impose them only by taking
advantage of the citizens’ indifference and of their ignorance.214 Pareto
was also convinced that “the government belongs … to the most capa-
ble” and that for this reason the bourgeoisie remained in power because,
notwithstanding its failings, it was “more capable than the people and
possesses qualities which the latter still lack”, in particular the cohesive-
ness between its members which contrasted with the fractured bickering
of the popular parties: “this is the chief reason why the people are
oppressed by the bourgeoisie”.215 Hence, even if no one should be asked
to renounce his own ideas, if people wished to do “something useful”,
they should try to find an agreement with others having similar interests,
or at least who do not abet common enemies as the Milanese socialists
had done, albeit in good faith, when they had helped to elect the govern-
ment’s candidates in the general election of 1890 instead of the radical
Felice Cavallotti, “the respected chief of the Extreme Left”.216
Pareto also considered it necessary to study the phenomenon of the
parties which, over and above their often misleading names, could be
divided into two categories. The first, represented in Italy by the demo-
crats, who gravitated towards American and particularly French political
institutions, consisted of those who believe in government by the people,
while the second, represented in Italy by moderates and conservatives,
who gravitated towards German political institutions, consisted of those
who believed that the people should be governed by an élite.217 Pareto
added that it was no coincidence if the people were never able to take
control directly, but only when they were guided “by people of higher
class” who had been “detached … from their party”. Actually, it is true
that workers do not have the time to acquire the competence in econom-
ics required to win elections.218 Hence, at the end of 1890 Pareto expressed
his view that the adoption of referenda on the Swiss model would improve
the “political education” of the Italian people and would provide an
incentive for participation in the electoral process, which Pareto imag-
ined as addressing issues of importance and clearly formulated.219
Investigating the Italian political context more in depth for the benefit
of his American readers, Pareto pointed out that in Southern Italy the
people were totally in thrall to the overlords who were therefore able to
direct local public affairs (political, judicial and financial) in their own
exclusive interest, particularly through their control of the municipalities.
One of the very few forms of opposition was represented by the popular
savings banks, which had come into existence out of private initiative and
which granted loans at “only” 10% p.a. in place of the 50% rate charged
by the bosses.220 Pareto reported that the overlords had also continued the
illegal practice begun by the aristocracy of appropriating communal land,
which was officially under collective ownership, in order to lease it out to
their friends at low cost and then to share the profits, and that when the
poor tried in their turn to occupy the land they were prevented from
doing so by the authorities.221 The national government itself defended
the southern overlords because they controlled it through the members of
parliament they themselves had brought to power. This led Pareto to add
that people who, even in good faith, called on the government to inter-
vene against the oppression of the southern population failed to see that
it was in fact the government which maintained this state of affairs, as was
perfectly clear to the people of the south, who consequently expressed
their nostalgia for the preceding Bourbon kingdom.222
In northern Italy, on the other hand, the bourgeoisie and the aristoc-
racy continued to be influential only in the countryside, whereas in the
towns they were losing ground. In Milan, Genoa and Turin the working
class already “thinks and feels” exactly like their counterparts in other
civilised countries.223 The first city to shake off the yoke of the nobles and
aristocrats was Milan, which was represented in the Lower House princi-
pally by deputies of the extreme Left. The fact that the only Milanese
member of parliament of the Right at the end of the 1880s was a man of
the calibre of Giuseppe Colombo (engineer, entrepreneur, professor at
220 F. Mornati
the Polytechnic and later minister) confirms Mill’s claim that “opposition
and struggle elevate the character of both parties”. In confirmation of
this, the cities where the bourgeoisie reigned supreme had elected “very
ignorant people of no value whatever”.
Pareto was of the view that for a parliamentary government “it is
enough to pull the wool over the nation’s eyes for a moment” in order to
win elections. Thus, for example, at the time of an economic crisis it will
avoid increasing the base rate for fear of losing votes, but ignoring the fact
that by doing so it prolongs that crisis.224 In any case, during the course
of the 1890 electoral campaign, Pareto deplored the fact that Crispi, after
having pursued free-spending policies for three years, sought to portray
himself as the champion of the very policy of reduction of public spend-
ing which had been one of the slogans of the radical opposition. Voters in
fact needed to decide between “the politics of the grandiose”, such as that
of Crispi, and “the politics of the modest” which alone could achieve a
reduction in public expenditure.225 Generally speaking, elections in Italy
were so “managed as to favour the Government in power at the
moment”,226 also taking advantage of the fact that the Latin peoples,
unlike the Anglo-Saxons, have “a deeply-rooted respect for authority”, a
sentiment which could perhaps have been attenuated in a republic but
was certainly reinforced by the monarchy and by the fact that, in the
absence of a habeas corpus227 law in Italy, anyone could be imprisoned on
government say-so.228
It was on the occasion of the same electoral campaign that Pareto
affirmed that “it is not reason which determines people’s opinions and
their actions [but] their interests and the influence of the environment
where they live”.229 Thus, Crispi had won the election by appealing “to
conservative sentiments” and by presenting himself as the defender of the
monarchy in the face of the Republican threat constituted by the radicals,
promising to re-stabilise the national budget through the reduction of
public expenditure alone, that is, without recourse to tax increases.
However, having won the elections, Crispi found himself unable to main-
tain the promise, since opposition from the monarchy had prevented him
from reducing the most important element of public expenditure, which
was military expenditure.230 In any case Crispi’s main difficulty was that
his parliamentary majority, while broad, consisted mainly of men who
had no respect for him personally and supported him only “because he
was in power and they need him, either for their private affairs or to
defend the Conservative party against the Radicals”. After the elections,
the Conservatives considered themselves safe and Crispi failed to under-
stand that his choice was either “to become the servant of that party, or to
abandon power”. Instead, Crispi thought he could “remain master of the
situation” by forming an alliance between the Right and certain elements
of the constitutional Left. This agreement failed, bringing down the gov-
ernment on the 31st of January 1891, due to Crispi’s unwillingness to
grant the Right the four ministers they had demanded.231
Notes
1. See Are (1963).
2. Pareto to Emilia Peruzzi, 3rd and 16th December 1875, see Pareto
(1984a, pp. 554, 556). Readers are reminded that Pareto had first-hand
knowledge of the subject from his previous experience as an employee
of the Romane and from his current position as director of the San
Giovanni ironworks (see Chap. 3 above).
3. See Pareto (1876a, pp. 92–94).
4. Ibid., pp. 94–96.
5. See Pareto (1876b, p. 104).
6. See Pareto (1876a, p. 96).
7. Ibid.
8. See Pareto (1876b, p. 104).
9. This free-trade society had been created in 1874 at Florence, on sugges-
tion by the well-known free-trade economist Francesco Ferrara, and it
had, as its journal, L’economista. Pareto was one of the first members of
the Adam Smith Society, see Pareto (1984b, pp. 406–407, 428). On
the intellectual biography of Francesco Ferrara (1810–1900), see Faucci
(1995).
10. L’economista, 12th March 1876, pp. 293–308; 19th March 1876,
pp. 325–337; 26th March 1876, pp. 357–382; 9th April 1876,
pp. 421–432; 23rd April 1876, pp. 485–504; 30th April 1876,
pp. 517–525; 14th May 1876, pp. 581–596.
11. On these events in general, see Berselli (1997, pp. 759–827). It is of
interest to note that Pareto reproached Minghetti for having radically
modified his positive attitude to ownership and private management of
railways, as expressed on the occasion of the railways debate of 1864,
222 F. Mornati
and for having justified this with the argument, which Pareto consid-
ered weak, that the monopolistic nature of the railways would discour-
age their being entrusted to private operators, see Pareto (1876c, p. 9).
Pareto, on the other hand, justified Peruzzi’s switch to the opposition
during the last Minghetti government as a praiseworthy liberal reaction
to the statesman from Bologna’s conversion to state control, ibid.,
pp. 16–17.
12. See Pareto (1876c, pp. 46–48).
13. Ibid., p. 47.
14. Ibid., pp. 48–49.
15. Pareto (1876c, pp. 19–20).
16. Ibid., p. 18.
17. Ibid., p. 20.
18. Ibid., p. 22.
19. Ibid., p. 21.
21. See Pareto (1876e, pp. 54–55).
22. See Pareto (1876f, p. 64).
23. See Pareto (1876e, p. 58).
24. See Pareto (1876e, p. 59).
25. See Pareto (1876g, p. 86).
26. See Pareto (1876f, p. 62).
27. See Pareto (1876g, p. 85).
28. Ibid., pp. 88–89.
29. Ibid., p. 87.
30. Ibid., p. 86 and see Pareto (1876h, p. 54) too.
31. See Pareto (1878, pp. 55–57).
32. See Pareto (1886, p. 207).
33. See Pareto (1887a, pp. 231–232).
34. Pareto to Francesco Papafava, 9th December 1888, See Pareto (1981,
p. 603).
35. Ibid.
36. On Alfredo Baccarini from Romagna (1826–1890), engineer, patriot,
member of Parliament, minister and exponent of the Cairoli (i.e. anti-
Depretis) grouping of the Historical Left, see Varni (1983) and Plazzi
and Varni (1993). Having clarified that the objective of all liberals
should be to achieve the maximum possible growth in national income
in order to facilitate the widest possible diffusion of “relative private
prosperity”, see Baccarini (1907, p. 115), Baccarini made the distinction
between absolute poverty, defined as a person’s involuntary inability to

satisfy his or her primary needs, and relative poverty, defined as a per-
son’s inability to satisfy his or her non-essential needs. Absolute and
relative poverty must be countered respectively by the family and by
single individuals with the help of society which, in this regard, ibid.
pp. 86, 115, must set “the minimum limit for the proceeds of toil and
the maximum limit for the proceeds of speculation”. The former limit
constitutes an acknowledgement “that when mankind works he should
at least have the right to eat” which is defined precisely, ibid. p. 118, as
the minimum salary that the state could impose on public works con-
tractors to pay their piecework labourers, to be determined, “in full
awareness of the facts and with reliable criteria”, on the basis of an
analysis of the cost of labour which invariably contributes to the fixing
of bid prices in tenders. The maximum level of proceeds from specula-
tion, on the other hand, refers to speculative profits deriving from arbi-
trage on government (i.e. risk-free) bonds which, ibid. pp.119–120, if
it cannot be outlawed, can nevertheless be encumbered with a heavy tax
burden.
37. See Pareto (1886, pp. 202, 205).
38. Ibid., p. 196.
39. Ibid., p. 197. According to Pareto, in any case, “it is better for a country
to have a smaller number of citizens living comfortably than a larger
number [who are] destitute”, ibid., p. 203.
40. Pareto was referring, even if implicitly, to the third chapter of the sec-
ond part of J. E. Cairnes, Some fundamental principles of political econ-
omy newly explained (Alcuni principii fondamentali di economia politica
nuovamente esposti), translated from the English by Sidney Sonnino
and Carlo Fontanelli, Florence, Barbera 1877.
41. See Pareto (1886, pp. 201, 202). In this case, the strikes would only
accelerate the increase in salaries, which would take place in any case.
42. Ibid., p. 206.
p. 598).
44. Ibid.
45. Pareto, still general manager of the ironworks, did not thus consider
that the average output of work increased more than proportionally to
the reduction in hours, in absolute terms.
46. Ibid.
47. Ibid.
224 F. Mornati
48. Ibid. and Pareto to Francesco Papafava, 10th December 1888, ibid.,
p. 610.
49. Ibid. p. 608.
50. See George (1879) particularly book VIII.
p. 610).
52. Ibid. pp. 608, 610.
53. Ibid.
54. Pareto to Francesco Papafava, 4th and 10th December 1888, ibid.,
pp. 599, 610.
55. Pareto to Francesco Papafava, 9th December 1888, ibid., p. 604.
56. This refers to Pareto’s collaboration with the American anarchist peri-
odical “Liberty” (on the history and content of this publication see
McElroy (2003) which he interrupted only through lack of time, Pareto
to Francesco Papafava, 8th April 1889, see Pareto (1981, p. 633).
57. Pareto to Francesco Papafava, 26th January 1889, ibid., p. 629.
58. Ibid.
59. See Pareto (1888a, p. 16).
60. See Pareto (1890a, p. 660).
61. See Pareto (1891a, p. 416).
62. See Pareto (1878, p. 53). This view was explicitly reiterated by Pareto
many years later, see Pareto (1885, p. 305).
63. See Pareto (1888b, p. 277).
64. Pareto to Emilia Peruzzi, 7th May 1873, see Pareto (1984a), p. 203.
65. In consequence, referring to the harshness of Ferrara’s treatment of the
Italian chair socialists in his famous article “The German school of eco-
nomics in Italy (Il germanesimo economico in Italia).”, Nuova Antologia,
1874: 983–1018, Pareto observed that “when you have a few little sins
on your conscience as he does you could be a little less exacting towards
your opponents”.
66. A few years later Pareto observed that whereas in England, as a result of
the country’s free institutions, the aristocracy had been compelled to
accept Cobden’s Anti-Corn Law League, the Italian bourgeoisie would
never tolerate the establishment of a league against the tax on flour, see
Pareto (1888c, p. 28).
67. See Pareto (1878, p. 54).
68. Ibid., pp. 46–50, 56, 58.
69. Ibid., p. 55.
70. See Pareto (1885, p. 315).
71. Ibid., p. 314.

72. Ibid., p. 306.
73. Ibid., p. 313.
74. Ibid., p. 491.
75. Ibid., p. 489.
76. Ibid., pp. 490–491.
77. Ibid., p. 491.
78. See Pareto (1887b, p. 2). On this question see Marongiu (1996,
pp. 272–310). Pareto to Francesco Papafava, 10th December 1888, see
Pareto (1981, p. 610) asserted that taxes on consumption, which he
thought had “reached the absolute limit” in Italy, were in part shifted
from “the poor”, that is, working people, to “the rich”, in terms of an
increase in cash salaries which amounted however to a burden for poor
people because it came down to a sum being advanced to the state and
then needing to be recovered from the employer; in other words indi-
rect taxes “oblige [the poor] to act as tax collector from the rich on
behalf of the government”.
79. See Pareto (1890b, 417–418).
80. Based on data he gathered himself, Pareto, ibid., pp. 420, 424–425
established that the total earnings of the Florentine family amounted to
2380 lire of which 1953 lire was spent on food and clothing, an esti-
mated 182 lire was paid to the state and 72 lire to the municipality in
indirect taxes, 89 lire to protected producers and 165 lire to the state,
10 lire to the provincial authorities and 47 to the municipal authorities
in direct taxes.
81. On the basis of data on earnings published by the English philanthro-
pist Miranda Hill and data on taxation supplied to Pareto by William
Carr Crofts, secretary of the British free-trade association Liberty and
Property League, Pareto, ibid., p. 425, stated that the annual expendi-
ture of the English family was 1915 francs and estimated that 24 francs
were paid in imperial taxes (government indirect taxes) and 60 francs
in local taxes (local direct taxes).
82. See Pareto (1890c, pp. 77–78).
83. Ibid., p. 79.
84. See Pareto (1890c, pp. 11–13).
p. 113).
86. See Pareto (1890d, p. 324).
226 F. Mornati
87. Ibid., pp. 325–326.

88. See Pantaleoni (1890, pp. 139–176). Using the method conceived by
the French statistician Alfred De Foville, Pantaleoni estimated probable
national private wealth for each year over the period from the 1872 fis-
cal year to the 1888–1889 fiscal year, increasing the values representing
inheritances or donations by a quarter (to allow for tax evasion) and
multiplying the figure thus obtained by the number of years, fixed at
36, the average duration of a generation. Pantaleoni, among his various
reflections, pointed out that if the interval in question were divided
into three periods of five years, the increase in wealth per capita between
the last five-year period (corresponding to the second half of the 1880s)
and the preceding one is less than the corresponding increase between
the second five-year period and the first, ibid., pp.156–158. On the
basis of an Italian population which was four fifths that of France, the
Italian-French ratio regarding private wealth, foreign trade and post
office savings deposits is still less than the demographic difference, sug-
gesting that “we are significantly poorer than our cousins”, ibid., p. 171.
On the biography of Maffeo Pantaleoni (1857–1924), economist, poli-
tician and important friend of Pareto, see Michelini (1998) and
Bellanca and Giocoli (1998).
89. See Pareto (1890f, pp. 329–330).
90. Ibid., p. 328.
91. See Pareto (1890g, p. 335).
92. See Pareto (1891b, p. 380).
93. See Pareto (1891c, 3, pp. 410, 412).
94. Letter to Francesco Papafava, 10th December 1888, see Pareto (1981,
p. 595). Readers will recall that Pareto, in keeping with his Malthusian
beliefs, had no children.
95. See Pareto (1886, p. 194, 212).
96. See Pareto (1888b, p. 285).
97. As demonstrated by the rapid recovery of populations in the wake of
wars or epidemics as well as by Darwin’s studies which, in Pareto’s view,
left no room for doubt regarding the tendency shown by human beings,
in what was certainly a “necessary condition” for their survival, to grow
more numerous “than warranted by available resources”, a tendency
which emerged “as soon as conditions were favourable”, ibid., p. 288.
98. Pareto to Francesco Papafava, 3rd December 1888, see Pareto (1981,
p. 595).
99. Ibid.
100. Ibid., p. 596.

101. Ibid., p. 610.
102. Ibid., p. 611.
103. See Pareto (1891b, p. 392).
pp. 122–124).
105. Held at the end of 1875, this convention addressed issues concerning
the negotiations for the renewal of the commercial treaty with France,
which the Florence-based society feared were influenced, on the Italian
side, by protectionist aims. Regarding these complex negotiations,
which culminated only on the 3rd of November 1881 with the renewal,
on a somewhat protectionist basis, and for ten years reduceable to six,
of the Italian-French commercial treaty originally stipulated on the
17th of January 1863, see Pecorari (1989).
106. See Pareto (1875, pp.38–39).
107. This duty was calculated as a certain amount in lire per unit imported.
108. This disparity would obviously penalise the national production of fin-
ished goods which customs protection was intended to promote.
109. This duty was calculated as a percentage applied to the price of imported
goods.
110. Ibid., pp. 39–40.
111. Ibid., p. 41.
112. See Pareto (1887a, pp. 218, 224).
113. See Pareto (1887a, p. 237).
114. See Pareto (1887b, p. 15) and Pareto (1887c, p. 239).
115. The treaty was not extended again, with the result that from the 1st of
March 1888 Italian-French trade was subjected to standard customs
duties, augmented by special rates (referred to as differential rights)
which Italy abolished from the 1st of January 1890 and France from
the 1st of February 1892; see Calderoni (1961, pp. 64–65, 69). Pareto
assigned the responsibility for this breakdown in relations to both
Italian and French protectionists; see Pareto (1889a, p. 174). For the
French view on this trade war, see Milza (1978); for the Italian view see
Del Vecchio (1979, pp. 231–449). For the prolonged after-effects this
affair had on Italo-French economic relations, see Gille (1967).
116. Atti della Reale Accademia economico-agraria dei Georgofili di Firenze,
XI, (1888): 92.
117. Ibid., pp. 96–97.
118. Ibid.
228 F. Mornati
119. Ibid., p. 103.

120. Ibid., pp. 105–106.
121. Ibid., p. 106.
122. Ibid.
123. See Pareto (1889a, p. 161).
124. See Pareto (1887b p. 1).
125. Pareto to Emilia Peruzzi, 17th November 1887, see Pareto (1984b,
p. 362).
126. See Pareto (1887b, pp. 2–3).
127. Ibid., pp. 4–5.
128. See Pareto (1889a, p. 161).
129. Ibid.
130. Ibid., pp. 171–172.
131. Ibid., p. 170.
132. Ibid., pp. 165–166, 168, 176.
133. See Pareto (1890h) and Pareto (1890i, 347).
134. See Pareto (1890h, p. 332).
135. See Pareto (1891c, pp. 410, 412).
136. Ibid., pp. 410–411 and see Pareto (1891d, p. 311).
137. See Pareto (1890b, p. 427).
138. Ibid., pp. 426–427.
139. Ibid., p. 427.
140. For the most recent research monographs on fiscal and monetary
aspects of Italian economic policy at the time, see Marongiu (1995),
Marongiu (1996) and Fratianni-Spinelli (p. 121–219).
141. Ibid., pp. 170–178. In this case, fiat money refers to the abolition of
the requirement for issuing banks to convert their notes into precious
metals, which had been introduced on the 1st of May 1866, nominally
in order to meet expenditure requirements for the third war of inde-
pendence, and which were paid to the Italian state by the Banca
Nazionale nel Regno d’Italia (the most important of the issuing banks).
142. Ibid., pp. 170–175.
143. To reduce the competitiveness of imported goods, which had increased
with the revaluation of the lira.
144. Pareto to Antonio Allievi, 18th November and 4th December 1880
BPS-la.
145. The minister identified this damage as being, respectively: fluctuations
in the value of paper money; the resulting higher base rate in Italy in
comparison to other countries; increased costs in regard to state
expenditure; increased interest payable in gold to foreign holders of

Italian public debt; the braking effect on the growth of tax proceeds
and the uncertainty attaching to the various items in the state balance
sheet; see Pareto (1880, pp. 63–65).
146. Ibid., p. 62.
147. According to Pareto, ibid., pp. 63–65, even gold, which would take up
the role of paper money in payments were the fiat money abolished, did
not have a perfectly stable value, although it certainly showed less vari-
ability than did paper money. The higher Italian base rate was, most of
all, the result of the structural problem of the lower availability of capi-
tal. The fiat money, by facilitating the increase of credit and hence of
commercial transactions, also increased the tax base. Variability in the
value of paper money was lower and so generated less uncertainty for
the public finances than did variability in prices for goods.
148. Ibid., pp. 67, 69 and see Pareto (1881, 77).
149. Instead, the issue was placed in Paris and in London.
150. See Pareto (1880, pp. 67–68).
151. Ibid., p. 68.
152. Ibid., pp. 68–69.
153. Ibid., p. 72.
154. Ibid.
155. See Pareto (1881, p. 75).
156. See Pareto (1880, p. 72).
157. Ibid., p. 73 and see Pareto (1881, p. 78).
158. See Pareto (1880 p. 73). Magliani’s bill was approved on the 7th of
April 1881. Following the successful issue of state bonds, the fiat money
was abolished (but only temporarily, as it turned out) on the 12th of
April 1883.
159. See Pareto (1881, p. 76).
160. Ibid., p. 75.
161. See Pareto (1885, p. 308).
162. See Pareto (1888b, p. 277).
163. Ibid., pp. 278–279.
164. See Pareto (1889b, p. 31).
165. Ibid.
166. See Pareto (1890j, p. 396).
167. See Pareto (1891b, p. 376).
168. Ibid., p. 376.
169. Ibid., pp. 376–377.
230 F. Mornati
170. Ibid., p. 389.

171. Ibid., p. 395.
172. Ibid., p. 389.
173. Ibid., p. 393.
pp. 617–620).
175. See Pareto (1891b, pp. 390–391, 395).
176. Ibid., p. 391.
177. Ibid., p. 395.
178. Ibid., p. 401.
179. Ibid., p. 398.
180. Ibid., p. 409.
181. See Pareto (1891a, p. 420).
182. Ibid., p. 412.
183. Ibid., p. 413.
184. Ibid., p. 414.
185. Ibid., p. 415.
186. See Pareto (1877, p. 78). These famous two series, comprising 26 vol-
umes in all, were published under the direction of Francesco Ferrara
from 1850 to 1869. Further evidence regarding Pareto’s early reading
with regard to the foundations of political economy is to be found in
his comment that if Bastiat “is possibly somewhat lacking in depth, at
least he had the merit of setting out a crystal-clear analysis of the prin-
ciples of political economy”; see Pareto (1885, p. 308).
187. See Pareto (1875, pp. 37–38). In June 1875, Pareto had begun his
study of Thornton’s book On labour: its claims and its rights, its present
and possible future, in a contemporary Italian translation (Del lavoro:
delle sue pretese e dei suoi diritti, del suo presente e del suo futuro possibile,
Florence: Barbera, 1875) by his friends Sidney Sonnino and Carlo
Fontanelli. Pareto wished to take the opportunity to compare Thornton’s
and Mill’s theories on value, proposing (but without following it up)
that if he found “something new to say”, he would write about it in
L’Economista, Pareto to Emilia Peruzzi 17th and 18th June 1875, see
Pareto (1984a, pp. 515–516). In particular, in this Thornton’s work
(second book, passim), the plausibility of J. S. Mill’s version of the law
of supply and demand (whereby an equilibrium market price is set
which varies in accordance with variations in supply and/or demand),
is challenged by the argument that the market price, and not necessar-
ily the equilibrium price, is determined by competition (again, is not
further defined) between buyers and sellers at a level between the maxi-
mum price the buyers are willing to pay and minimum price demanded
by sellers. On the role of competition in the determination of market
prices, Thornton claimed that if the pressure to buy is greater than the
pressure to sell, competition between sellers is eliminated and they can
charge buyers a price approaching the maximum, while if the pressure
to sell is greater than the pressure to buy, competition between buyers
is eliminated and they can impose on the sellers a price approaching the
minimum.
188. See Pareto (1875, pp. 38–39).
189. See Pareto (1887a, p. 221) and Pareto to Francesco Papafava, 19th
September 1889, see Pareto (1981, p. 642).
190. See Pareto (1887a, pp. 221–224).
191. Ibid.
192. Ibid., pp. 282–283.
193. Ibid., p. 284.
194. Ibid., p. 285.
195. Ibid., p. 285. Boccardo, see Boccardo (1879, pp. 229, 232–234)
claimed that, in general, the rent (not only from land) constituted the
return for a natural monopoly exploited by the beneficiary to achieve
innovations which would be impossible without privileges, which
themselves, while beneficial for humanity, limited the actual rent.
196. See Pareto (1891b, p. 393).
197. Pareto to Emilia Peruzzi 2nd June 1875, see Pareto (1984a, p. 513).
198. See Pareto (1876c, p. 19).
199. Pareto to Emilia Peruzzi 18th March 1881, see Pareto (1984b, p. 136).
200. Felice Ambrosi, “The Philological Society.” La Nazione, 22nd March 1881.
201. Many years later, see Pareto (1891b, p. 388), Pareto noted the strength
of the tendency in the human mind “to create and worship fetishes”
such as the monarchy or universal suffrage, the latter with its associated
belief that “the majority view is always the one most closely approach-
ing the truth”. Pareto countered that “there is no error that has not at
some time been believed by the majority of men”.
202. Ibid., p. 377.
203. See Pareto (1888d, p. 15).
204. Among whom Enrico Pani Rossi, Pasquale Turiello, Pasquale Villari, all
considered as moderates, Leopoldo Franchetti, considered a centrist,
Jesse White Mario and Carlo Dotto De’ Dauli, denominated members
of the “advanced” party, see Pareto (1889b), p. 30.
232 F. Mornati
205. Ibid., pp.31–32.

206. Ibid., p. 34.
207. See Pareto (1889c, p. 297).
208. See Pareto (1889d, p. 301).
209. Ibid., pp. 301–302.
210. The earliest sources for Pareto’s thinking on Italian politics were the
volumes published at the end of the 1880s by Luigi Zini, the scholar
and politician from the region of Emilia (On the criteria and methods of
government of the Left [Dei criteri e dei modi di governo della sinistra]), by
Pasquale Turiello the Napolitan academic (Government and governed in
Italy [Governo e governati in Italia]) and by the scholar and former min-
ister Stefano Jacini from Lombardy (Thoughts on Italian politics [Pensieri
sulla politica italiana]), which were read by Pareto with interest despite
his “position being as far removed as can be imagined from that of the
moderates” to which the latter claimed allegiance, Pareto to Emilia
Peruzzi 16th October 1888, 26th June and 4th July 1889, see Pareto
(1884b, pp. 386, 405–406).
211. See Pareto (1887b, p. 1).
212. At the beginning of 1891 Pareto declared, see Pareto (1891b, p. 409),
that “limiting the power of parliaments” was the problem upon whose
“solution further progress in our society depends”.
213. In Pareto’s view it is very difficult to determine to what extent a politi-
cian sacrifices a nation’s interests to his own, conceding that on occa-
sion the politician “believes he is acting for the interest of his country”
while in reality he is only taking advantage of circumstances “to increase
his own fortune or his power”, see Pareto (1884d, p. 17).
214. See Pareto (1887b, p. 18).
215. Ibid.
216. See Pareto (1889e, p. 36).
217. See Pareto (1888d, pp. 18–19). In his early political commentaries,
Pareto did not take into consideration the form of government (mon-
archy or republic) because “to economists as to many other sociologists
it appears of little moment”; see Pareto (1890d, p. 11).
p. 620).
219. See Pareto (1890k).
220. See Pareto (1889b, p. 32).
221. Ibid., p. 33.
222. Ibid.
223. Ibid., p. 36.

224. See Pareto (1890j, p. 394).
225. See Pareto (1890l, pp. 350–351).
226. See Pareto (1890m, p. 83).
227. That is, the right accorded to a person being arrested to have immediate
recourse to a judge in order to determine the effective legality of the
arrest.
228. Ibid.
229. See Pareto (1890n, p. 420).
230. See Pareto (1891e, p. 40).
231. Ibid., p. 41.
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238 F. Mornati
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———. 1890j. Letter from Italy (Lettre d’Italie). Journal des Économistes, IL, 6:
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Epilogue
Drawing on all of Pareto’s writings, in this volume we have reconstructed

over four decades of his biography from his birth to the key moment of
his encounters in the summer of 1891 with Pantaleoni’s Principi di econo-
mia pura and with the works of Walras.
We began with a detailed excursus on the little-known biography of
Vilfredo’s father Raffaele Pareto, giving prominence to the significant and
constructive shared intellectual links he developed with his son, particularly
with regard to their common passion for mathematics and engineering.
We then enlarged on Vilfredo’s school and (more particularly) univer-
sity education, making use of documents previously neglected in the field
of Pareto studies, and, having chronicled his excellent university record,
we sought to describe in some detail the content of those studies which
later was to be most important in underpinning his research in the fields
of economics and sociology, that is, calculus and theoretical mechanics.
More specifically, we saw how Vilfredo was exposed to an interpretation
of calculus based on rigour, together with the need to avoid the introduc-
tion of esoteric elements in the starting assumptions which underlay the
various lines of reasoning. We continued by retracing the manner in
which the fundamental concept of equilibrium in theoretical mechanics
was presented to him.

History of Economic Thought, https://doi.org/10.1007/978-3-319-92549-3
242 Epilogue
We then looked in detail at the 20 years Pareto spent at the head of one
of the most important large industrial groups in Italy, seeking particularly
to identify the ways in which he applied his engineering expertise. Of the
seven years spent managing the ironworks of San Giovanni Valdarno on
behalf of the Società per l’Industria del Ferro, we recorded the ongoing
and repeated choices he made with a view to optimising the performance
of the ironworks, improving the quality and increasing the quantity of
iron produced through a diligent commitment to enhancing the effi-
ciency of ovens, rolling mills and workforce, as well as the quality of the
fuel and raw materials.
Over the following decade spent at the headquarters of the Società
delle Ferriere Italiane, we retraced Pareto’s ceaseless efforts to improve
productivity at San Giovanni (together with the other ironworks under
his responsibility) and the relations of hostility, but also of collusion, with
other ironworks operating in Italy. Likewise, we examined his criticism of
government decisions with regard to railway tariffs and of the country’s
turn to protectionism in 1887, both decisive factors for the company’s
profitability.
In the limited free time left to him Pareto engaged in ongoing reflec-
tions on liberal ideology, which he embraced not only in the context of
economics but also in regard to politics, religion and ethics. He also
thought deeply about problems in scientific methodology which had ear-
lier drawn his attention at the time of his university studies and which he
pursued in the 1870s and 1880s through his reading of John Stuart Mill
and of Gustave de Molinari. These liberal inclinations also emerged in
the form of political engagement, with Pareto standing unsuccessfully as
a candidate in the general election of 1882 (as we saw in detail), before
gravitating towards a form of radical liberalism whose anti-colonialism
and anti-militarism had constituted the initial attraction for him.
His political passion, his methodological precision, his competence in
mathematics and his experience in management are reflected in his occa-
sional journalistic endeavours, amateur in nature but nevertheless where
can already be perceived many of the themes in economics, in sociology
and in political analysis which were to re-emerge in a more profound,
unified and theoretically complete form in his later time as a university
professor. Here we refer specifically to his opposition to protectionism
Epilogue
243
and to high levels of taxation, his championing of birth control and his
critical interest in socialism, alongside his early considerations on eco-
nomic, social and political theory.
Every author is first and foremost and above all a human being, with
all the complex and subtle interrelations that exist between the works
and the life. This is evidently true also in relation to Pareto, who is gener-
ally known only for the Paretian optimum and for the law of the distri-
bution of income. The detailed reconstruction of his education and life
prior to his arrival in Lausanne allows a picture to emerge of Pareto the
academic which is more profound and truthful. Hence, when in the next
two volumes we turn to a similarly detailed account of his complex sci-
entific thought, we will be able to do this in full cognizance of his intel-
lectual and existential background which will allow us to better appreciate
the originality of his thinking and also the true significance of a theoreti-
cal patrimony which has frequently been distorted by intellectual ideas
originating in post-Paretian contexts.
Index1
A B
Allievi, Antonio, 54, 64, 65, 68, Baccarini, Alfredo, 194, 222n36
70–72, 75, 84, 86, 90, 91, 93, Bagehot, Walter, 128
97–100, 103, 105n15, Bakounine, Alessandra (Dina),
105n18, 105n20, 105n21, 25n29, 26n29
106n23, 106n27, 106n29, Bakounine, Modesto, 25n29
111n98, 112n118, 113n141, Bakunin, Michail, 139
114n164, 114n167, 114n172, Bastiat, Frédéric, 151n72, 210,
119n287, 119n290, 208 230n186
Alpe, Vittorio, 204 Bastogi, Michelangelo, 164, 165,
Ambrosi, Felice, 231n200 168–170
Amedei, Michele, 179n32 Batt, John, 113n150
Antonucci, Alceste, 28n86 Bellanca, Nicola, 226n88
Are, Giuseppe, 221n1 Benech, Stefano, 60, 112n111
Arnaudon, Giangiacomo, Benini, Pietro, 108n47
33, 41n17 Benvenuti, Gino, 41n17
Auberger, 81 Berselli, Aldo, 221n11
Note: Page numbers followed by ‘n’ refers to notes.

1

History of Economic Thought, https://doi.org/10.1007/978-3-319-92549-3
246 Index
Biagianti, Ivo, 105n13, 113n130, Cantarella, Eva, 111n98

118n263 Capacci, Celso, 105n15
Bianchi, Celestino, 178n4 Capecchi, Danilo, 44n51
Bicci, Augusto, 169, 170, 178n13, Carlo, Dotto de’ Dauli, 231n204
178n15, 178n23, 180n54 Carocci, Giampiero, 182n98
Boccardo, Gerolamo, 215, 231n195 Carpi, Leone, 189
Bodio, Luigi, 109n76, 182n106 Casati, Gabrio, 40n2
Boidi, Giuseppe, 33 Cauchy, Augustin, 36, 37
Borgnini, Secondo, 119n293 Cavalleri, Edmondo, 33
Borio, Giuseppe, 35 Cavallero, Agostino, 35, 43n42
Borkenau, Franz, 16, 23 Cavallotti, Felice, 177, 218
Borsarelli, Pietro Antonio, 33 Ceccarelli, Giovanni, 178n19
Boselli, Paolo, 189 Cenni, Giuseppe, 88, 116n231
Bottazzini, Umberto, 45n67, 45n68 Ceradini, Cesare, 70
Bousquet, Georges Henri, 17 Cerruti, Luigi, 42n28
Bozza, Jacopo, 78–80, 106n25, Cerutti, Attilio, 165, 167
114n166 Cheysson, Émile, 153n92
Breda, Vincenzo Stefano, 95, 100, Chiosi, Rodolfo, 105n15
118n276 Ciardi, Giovanni, 163–165, 167–171
Bright, John, 129 Cioni, Gerolamo, 164, 169
Brin, Benedetto, 103 Cirio, Francesco, 98, 99
Brioschi, Francesco, 76 Clemenceau, Georges, 176
Bruno, Giuseppe, 33, 41n13 Clemens, 113n31, 113n148
Buckle, Henry Thomas, 201, 215, 216 Colapietra, Raffaele, 182n107
Bugnion, Edouard, 25n26 Colombo, Giuseppe, 219
Bugnion, Marguerite, 25n26 Comte, Auguste, 128
Busino, Giovanni, 3 Confalonieri, Antonio, 65, 105n19
Conte, Lorenzo, 42n27
Conti, Clément, 105n15
C Conti, Fulvio, 178n10
Cairnes, John Elliott, 195, 214, Corsi, Lorenzo, 63
223n40 Costantini, 72, 84, 116n203
Caldera, Pietro, 33 Cottrau, Alfredo, 90, 207
Calderoni, Ugo, 227n115 Cressati, Claudio, 153n100
Camici, Giovanni, 163–165, 169, 170 Crispi, Francesco, 177, 207, 220, 221
Campanella, Federico, 164, 169 Crofts, William Carr, 225n81
Campeggi, Ermogene, 132 Crozet-Fourneyron, 58, 107n47
Campini, Livia, 167 Curioni, Giovanni, 33, 35, 43n43,
Canevazzi, Antonio, 17 45n63
Index
247
D Fenzi, Carlo, 53, 56–58, 60, 63,

D’Alterio, Daniele, 183n117 106n22, 106–107n38, 108n49,
Darcy, Henri, 19 108n54, 145, 162, 167
Darwin, Charles, 138, 201, 215, Ferrara, Francesco, 190, 197, 221n9,
226n97 224n65, 230n186
De Foville, Alfred, 226n88 Ferraresi, Alessandra, 42n31
De’Rossi, Giulio, 179n29 Ferrati, Camillo, 35
Decleva, Enrico, 111n98 Ferry, Jules, 176
Del Vecchio, Edoardo, 227n115 Finocchietti, Francesco, 166,
Delfino, Giovanni, 33 179n39
Della Torre, Giovanni Fisher, Irving, 40n6
Battista, 24n4 Fontanelli, Carlo, 130, 133, 149n17,
Depretis, Agostino, 97, 150n35, 150n24, 197, 205, 223n40,
164, 167 230n187
Devillard, 52 Forti, Beniamino, 167
Di Modica, Gaetano, 43n46 Fossi, Giorgio, 72, 84, 116n203
Doria, Giorgio, 112n111 Foucrier, Marie, 17
Draper, John William, 201 Franchetti, Leopoldo, 231n204
Droop, Henry, 133 Franchini, Camillo, 17
Dumas, Alexandre (fils), 136 Fratianni, Michele, 228n140
Dutard, 77 Friedländer, Ettore, 208
Frosali, Narciso, 80
Fucini, Renato, 168
E
Eccettuato, Alfredo, 27n62
Ellena, Vittorio, 101, 206 G
Erba, Bartolomeo, 38, 46n78 Gadot, 107n47, 108n47
Gagne, Louis, 60
Galante, Garrone Alessandro,
F 182n107, 183n113
Faà di Bruno, Francesco, 35 Garibaldi, Giuseppe, 162
Fagioli, Simone, 115n181, 115n183, Garras, 107n47, 108n47
115n201 Gastaldi, Bartolomeo, 35, 43n45
Fallani, Luigi, 104n11, 105n12, Gauss, Carl Friedrich, 37
105n14, 107n40, 107n43, Genala, Francesco, 130, 133, 162,
107n45, 107n46 164, 190
Faucci, Riccardo, 221n9 Genocchi, Angelo, 35,
Favero, Giovanni Battista, 66, 67, 37–39, 45n63, 45n66,
70, 75, 81, 92 45n70, 45n75
248 Index
George, Henry, 139, 153n91, 196, L

213, 214 Labanca, Nicola, 181n82
Gerli, 89, 90 Laboulaye, Edouard, 134
Giacalone-Monaco, Tommaso, Lamé, Gabriel, 36
28n67, 104n4 Lanaro, Giorgio, 154n120
Giacardi, Livia, 45n75 Langer, Luigi, 53, 56, 59, 60, 63,
Gigli, Leopoldo, 53, 105n15, 104n11, 107n39, 107n40, 145
110n88 Lassalle, Ferdinand, 213
Gille, Bertrand, 227n115 Lazzeri, Claudia, 180n52
Giocoli, Nicola, 226n88 Leardi, Clara, 21, 27n61, 27n62,
Gissi, Alessandra, 46n84 28n64, 41n17
Giustiniani, Teresa, 24n2 Leonardi, Silvio, 112n111, 117n234
Gladstone, William, 129 Letourneau, Charles, 212
Gliozzi, Mario, 41n17 Limiti, Giuliana, 40n1
Govi, Gilberto, 35, 42n31 Linaker, Arturo, 25n26, 26n29
Grossi, Ulrico, 164, 169 Lolli, Luigi, 33
Guerrazzi, Nicola, 164, 169 Louis-Philippe d’Orleans, 17
Guyot, Yves, 26n33, 139, Luchini, Odoardo, 130, 131
153n87, 214 Lungonelli, Michele, 118n263,
118n267, 118n274, 118n277
Luzzatti, Luigi, 203, 206, 216
H Luzzatto, Arturo, 77, 113n130
Hare, Thomas, 133
Hervilly de, 19
Herzen, Alexander, 139 M
Hill, Miranda, 225n81 Machart, Charles, 19
Houel, Jules, 45n75 Macina, 108n47
Maffi, Antonio, 177, 183n117
Magliani, Agostino, 61, 208–210,
J 229n158
Jacini, Stefano, 232n210 Malatesta, Alberto, 178n16, 178n17,
Jannet, Claude, 153n92 178n18
Jéhan, de Johannis Arturo, 205 Malon, Benoît, 213
Jona, Raffaele, 114n168 Malthus, Robert, 201
Manassei, Arturo, 76, 77
Mangili, 89, 90
K Mani, Giuseppe, 77, 81, 82
Kronecker, Leopold, 37 Marchini, Angelo, 35, 42n29
Index
249
Marini, Leopoldo, 164 N

Marongiu, Gianni, 225n78, 228n140 Navale, Maria Teresa, 42n29
Martelli-Bolognini, Ippolito, Navier, Claude, 36
163, 179n33 Naville, Ernest, 136
Martini, Giovanni Battista, 164 Negrotto, Elisa Insena, 25n27
Marx, Karl, 11, 143, 213 Nesti, Angelo, 106n25, 114n174
Marzucchi, Francesco, 76, 77, Nobili, Ferdinando, 198
114n157, 117n236 Nobili, Niccolò, 162
Matteucci, Carlo, 34, 41n19 Nota, Ferdinando, 87, 110n90,
Mauret-Cribellier, Valérie, 27n35, 116n223, 116n224
27n36, 27n39, 27n43
Mazzini, Giuseppe, 16, 17, 164
McElroy, Wendy, 224n56 O
Merati, Angelo, 86 Orlandini, Evaristo, 164, 167,
Merger, Michèle, 104n5, 104n6 178n20
Métenier, Gilbert, 17 Orlando, Luigi, 108n47
Métenier, Marie, 17 Orsini, Alessandro, 26n29
Michel, Ersilio, 44n47
Michelini, Luca, 226n88
Michelis, 77 P
Michelozzi, Ugo, 179n32 Paleocapa, Pietro, 22
Migliavacca, Angelo, 67, 88, 92 Pallavicino, Camillo, 132
Milana, Lucia, 105n12 Pallavicino, Trivulzio Giorgio, 131,
Mill, John Stuart, 4, 127, 140–144, 132, 150n33
148n1, 242 Pallini, Luciano, 149n19
Milza, Pierre, 227n115 Pani Rossi, Enrico, 231n204
Minghetti, Marco, 135, 149n15, Pantaleoni, Maffeo, 25n26,
151n58, 151n61, 154n138, 40n6, 112n121, 200,
221–222n11 226n88, 241
Mogavero, Valeria, 121n323 Papafava, Francesco, 25n22, 26n29,
Moleschott, Jacob, 39 103, 112n120, 152n72, 153n88,
Molinari, Gustave de, 4, 127, 139–144, 153n89, 153n100, 155n153,
154n122, 174, 194, 242 155n161, 173, 181n88, 182n96,
Moneta, Teodoro, 41n17, 175, 182n101, 182n110, 222n34,
182n100, 183n115, 183n120 223n43, 224n48, 224n51,
Montaldo, Silvano, 41n11 224n54, 224n55, 224n56,
Montale, Bianca, 24n11, 164, 170 224n57, 225n78, 225n85,
Morello, Nadia, 43n45 226n94, 226n98, 230n174,
Mornati, Fiorenzo, 149n19, 153n87 231n189, 232n218
Mya, Pietro, 35, 44n49 Pareto, Angiola, 16
250 Index
Pareto, Aurelia, 16, 18 154n133, 154n140, 154n142,

Pareto, Carolina, 16 154n143, 155n144, 155n145,
Pareto, Cristina, 18, 25n23, 26n29 155n147, 162, 176, 178n1,
Pareto, Damaso, 16, 17, 24n14 178n2, 178n3, 178n6, 178n7,
Pareto, Domenico, 16, 18, 22, 178n8, 178n12, 178n20,
40n10, 41n16, 41n17, 41n23 178n24, 179n26, 179n29,
Pareto, Emilia, 16 179n31, 179n36, 179n37,
Pareto, Giovanni Benedetto, 16 179n39, 179n41, 180n50,
Pareto, Marina, 16 180n52, 180n53, 180n56,
Pareto, Raffaele, 2, 15–24, 25n17, 180n58, 180n59, 180n60,
25n21, 32, 40n10, 41n16, 180n61, 181n83, 181n85,
114n168, 241 181n87, 182n108, 182n109,
Parodi, Lorenzo, 110n86 190, 221n2, 224n64,
Pecorari, Paolo, 225n85 228n125, 230n187, 231n197,
Penner, Marco, 112n111 231n199, 232n210
Pereire, Isaac, 119n286 Peruzzi, Ubaldino, 53, 64, 69,
Peruzzi, Emilia, 18, 25n23, 26n29, 104n6, 104n10, 105n13,
60, 68, 104n1, 104n3, 104n5, 111n93, 111n106, 111n107,
104n7, 104n8, 104n9, 112n110, 112n112, 112n118,
104n10, 106n28, 106n33, 114n152, 114n157, 115n175,
106n35, 106n36, 106n37, 120n317, 130, 133, 163,
106n38, 107n41, 107n42, 178n11, 178n12, 179n35,
107n44, 107n46, 107n47, 179n36, 181n62
108n48, 108n58, 109n66, Pesenti, Serena, 24n9
109n67, 109n68, 109n69, Petri, 87, 88
109n71, 109n72, 109n73, Peyrone, Michele, 35, 42n28
112n112, 112n119, 119n293, Pezzia, Giovanni, 35, 44n48
132, 135, 136, 148n2, Piretti, Maria Serena, 149n16,
149n13, 149n14, 149n17, 150n21, 178n14
149n18, 149n20, 150n35, Plato, 212
150n36, 150n37, 150n39, Plazzi, Mirella, 222n36
150n40, 150n41, 150n43, Plutarch, 136
150n45, 150n46, 151n47, Poisson, Simon, 36
151n49, 151n50, 151n51, Ponsard, Auguste, 82
151n52, 151n53, 151n63, Ponsard, Felice, 80, 82
151n65, 151n66, 151n67, Porra, 113n131
151n68, 151n69, 151n71, Pozzato, Enzo, 111n108
151n72, 153n96, 153n97, Pressensé, Edmond de, 134
154n119, 154n121, 154n130, Promis, Carlo, 35, 43n44
Index
251
R Sella, Quintino, 22, 163,

Raggio, Armando, 67, 73, 79–81, 188, 189
84, 85, 87–95, 97, 98, Sensini, Guido, 25n24, 45n75
112n111, 116n203 Sertorio, Carlo, 24n1
Reggio, Giacomo, 24n3 Sheibner, Charles, 80
Reggio, Tommaso, 24n3 Signorelli, Bruno, 43n43
Régis, Jeanne, 26n29 Sinigaglia, Angelo, 72, 114n165
Ricasoli, Bettino, 163 Sobrero, Ascanio, 35, 43n46
Richelmy, Prospero, 35, 43n41 Sonnino, Sidney, 133, 150n24,
Ricotti, Cesare, 173 223n40, 230n187
Ridolfi, Luigi, 76, 77, 182n98 Sostegno, Carlo Alfieri di,
Ridolfi, Ridolfo, 76, 77 175, 182n98
Riva, Luigi, 85, 182n100 Spada, Alessandro, 92
Robilant, Carlo Felice di, 173 Spencer, Herbert, 128, 138,
Roero, Clara Silvia, 41n13, 42n33 142, 143, 154n119,
Ronzoni, Domenico Flavio, 182n100 154n120, 174,
Rosai, Enrico, 171 201, 212, 215
Rosellini, Ferdinando Pio, 41n17 Spinelli, Franco, 228n140
Roster, Giorgio, 149n18 Spinola, Aurelia, 16
Rubini, Giulio, 100, 120n306 Spinola, Enrichetta, 24n1
Ruta, Giuseppe, 44n51 Spinola, Vincenzo, 24n6
Staglieno, Marcello, 24n9
Strinati, Valerio, 109n79, 110n83
S
Sacheri, Giovanni, 23
Saint-Venant, Adhémar de, 36 T
Sautter, Arthur, 26n29 Tardy, Giuseppe, 60, 67, 73, 79,
Savoia, Carlo Alberto di, 180n57 84, 87–92, 94, 95, 97, 98,
Scala, Albertina, 25n27 116n203
Scala, Beatrice, 25n26 Tasca, Luisa, 151n64
Scala, Francesco (detto Franz), Tassara, 93
25n27 Thornton, William, 193, 214,
Scala, Gasparo, 18 230–231n187
Scala, Maria Aurelia, 25n27 Tocqueville, Alexis de, 139
Scala, Raffaele, 25n26 Toscanelli, Giuseppe,
Scala, Raffaella, 25n27 104n10, 190
Schiff, Ugo, 60 Trélat, Ulysse, 19
Schwarzenberg, Filippo, 63 Turiello, Pasquale, 231n204, 232n210
252 Index
Turri, Cipriano, 80, 82, 83, Villani, Francesco, 165, 168, 169
115n182, 115n183, 115n198, Villari, Paquale, 231n204
115n201, 165, 178n26 Viola, Carlo, 45n64
Turri, Giulio, 80, 115n182 Volterra, Vito, 38
U W
Urbinati, Nadia, 148n1, 150n31, Walras, Léon, 6, 7, 241
151n64, 151n68 Wartelle, Jean-Claude, 153n87
Weierstrass, Karl, 37
White Mario, Jesse, 231n204
V
Valensin, Moisé, 63
Varni, Angelo, 222n36 Z
Vial, 107n47 Zini, Luigi, 232n210

Vilfredo Pareto: An Intellectual Biography: From Science To Liberty (1848-1891)

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Vilfredo Pareto: An Intellectual Biography: From Science To Liberty (1848-1891)

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VILFREDO PARETO:

PALGRAVE STUDIES IN THE

More information about this series at

Palgrave Studies in the History of Economic Thought

Library of Congress Control Number: 2018943448

© The Editor(s) (if applicable) and The Author(s) 2018

Cover credit: INTERFOTO / Alamy Stock Photo

Printed on acid-free paper

2 An Outline of the Life of Raffaele Pareto 15

3 Vilfredo’s School and University Education 31

4 Twenty Years in Industry Management 51

5 A Multifaceted Liberalism and a Positive Methodology 127

Nowadays, for economists, as well as for the majority of historians of

© The Author(s) 2018 1

The organisation of the results of this wide-ranging research into three

His defeat, although initially accepted with stoicism, convinced Pareto

The volume opens with a chapter reconstructing as accurately as pos-

account of Pareto’s views on the ongoing economic crisis in Italy (which

sociologist Ammon. Brief summaries of Pareto’s ideas on the calculation

Another factor which militated in favour of Pareto’s decision to dedi-

As for Systèmes socialistes, based on the critical study of a very wide-­

the politicians, yielding an interesting perspective on many of Pareto’s

In the first section of this chapter, drawing on documentation brought

© The Author(s) 2018 15

This chapter will allow us to dismiss the popular but completely

rank, deserted in France for fear of being arrested13 as his brother

(north-central France).36 On the 10th of June 1848 Ulysse Trélat, Minister

North American markets. However, the port of Genoa, as things stood,

Raffaele was then appointed, as of the 1st of July 1862, First-level

physical sciences (especially in meteorology), Raffaele concludes that in

2.5 The Influence of Raffaele on Vilfredo

marry will be beneficial if it gives him “more strength for working”,

34. See Pareto (1839, pp. 8, 15).

63. See Pareto (1860).

This chapter consists of an original and documented study of Pareto’s

© The Author(s) 2018 31

3.1 School Studies

and a chemistry department (all of two years’ duration) together with a

3.2 University Studies

the degree course in mathematics, obtaining the following marks in the

dissertations.53 Pareto began this thesis, which related almost completely

Historians of mathematics have not failed to underline the epistemo-

principle allows the reduction of the investigation of the movement of a

11. On the history of the Institute (known as the Germano Sommeiller

25. Historical archive of the University of Turin, register of enrolments in

47. On Giuseppe Borio (1812.1887), see Michel (1930).

Cerruti, Luigi. 1999. Michele Peyrone. In The faculty of physical, mathematical

———. 1999b. Giuseppe Bartolomeo Erba. In The faculty of physical, mathe-

Pareto, Vilfredo. 1866. Applications of the axonometric projection (Applicazioni

dall’epistolario), ed. Alberto Conte and Livia Giacardi, 11–29. Turin:

The most familiar facet of Pareto’s biography prior to his period in

© The Author(s) 2018 51

However, in the autumn of 1872 Pareto complained about changes

4.2 Experiences with the Società

Table 4.1 Annual results for Year Lire

Pareto’s first management experience was characterised by annual

ironworks,29 Pareto suggested the bank compete with Fenzi’s attempt to

4.2.1 Initial Assessments of the Corporate Crisis

4.2.2 The Partial Renovation of the Ironworks

In the summer of 1876,47 Pareto visited ironworks in Belgium (at Liège

of September he came out in support of the 85,000 lire option because it

Pareto also proposed an aggressive pricing policy.

4.2.4 The Workforce

2 An Outline of the Life of Raffaele Pareto 15

3 Vilfredo’s School and University Education 31

4 Twenty Years in Industry Management 51

5 A Multifaceted Liberalism and a Positive Methodology 127

As for Systèmes socialistes, based on the critical study of a very wide-

2.5 The Influence of Raffaele on Vilfredo

3.1 School Studies

3.2 University Studies

4.2 Experiences with the Società

4.2.1 Initial Assessments of the Corporate Crisis

4.2.2 The Partial Renovation of the Ironworks

4.2.4 The Workforce

c ustomers’ demands [, which] does not endear him to clients”109), or of

4.3.1 The San Giovanni Ironworks in the 1880s

4.3.3 The Difficulties of Managing Mammiano

4.3.5 The Purchase of Rails

4.3.6 Collusive Agreements

4.3.7 An Unprofitable Venture on the Island of Elba

4.3.8 The Railway Tariffs

5.1 Political Liberalism

5.2 Religious Liberalism

5.4 Economic Liberalism

5.6 On Scientific Method

5.7 Scientific Debate