Mussolini’s economic

aims

To transform the Italian economy.(Different from

To maintain and increase his power(propaganda) USA , UK and USSR)

Corporate state(Seen as a complete solution

for the troublesome economic relations after the
Agreed towards De Stefani’s Laissez- world war -1 ),the ideas was widely embraced.
faire policies to win the support of the
industrialist.

Battle for the Lira", to portray Italy as

a strong country. AUTARKY(1935)

Agriculture (Battle for Grain)

 Limited
government
De Stefani’s spending
policies
Helped to
reduce inflation

Reduced state
intervention Industrial tax
Policies that favored the levied during the
WW1 was
Industrialist. Telephone reduced or
industry was abandoned
privatized
Vidin Palace
Pact(1925)
The following These early concessions had
Banned year strikes were secured the industrialists
Socialist and also outlawed. loyalty to the regime.
Catholic trade
unions.
 Battle for the Lira
• Poor harvest in 1924 matched with the decline in the International value of the lira to 150 lire to a British pound and both
contributed to worrying price inflation.
WHY? • Mussolini believed that a strong lira demonstrated a strong ITALY

• Italian lira was revalued to set a new exchange rate of 90 lire to a British pound
• Free market policy was abandoned and the state constantly intervened to regulate the economy
• Mainly by, introducing tariffs on imports to protect the value of the lira and also favored the state sectors from foreign competition.
IMPLEMENTAION

• It hit Italy’s export trade by making imports cheaper, for example textile industries went into depression and Fiat was exporting fewer cars in 1930 than it
did in early 1920s.
• Benefited heavy industries such as steel and chemicals, which relied on imports for raw materials and these industries provided the basis for and
expanded rearmament industry(they did not have tariffs)
• Tariff on undesirable imports such as consumer goods and foodstuffs kept their price high ,restricting demand.
• In terms of propaganda success, the revaluation was seen as a way on restricting government spending which gained him the admiration of the Italian and
IMPACTS the foreign bankers.
• It was presented to the Italian people as part of a battle for economic survival.
• Fascist propaganda was deployed to convince the workers that the over valuation meant that they had to accept wage-cuts to bring wages to the value of
the current lira
• This resulted in Wages falling more than prices and decline in living standards.
 Corporate State: theory
• The theory behind the corporate state was that the production of goods and services would be organized by corporation in which both
employer and employees will be represented. Firms would be in private hands but would be regulated by the state to ensure that the
production of goods was according to the national interest. To pursue this state and fascist party official were represented in the
corporations. It was expected that the corporate state would promote good labor relations, that would avoid traditional class conflict
THEORY
between the workers and management.

• 1923:The Palazzo Chigi pact, set up a commission to oversee the formation of a corporate state
• 1925:The vidoni place pact stated that the confinduatria would only negotiate with the Fascist Trade union controlled by the
Labor corporation.
• From 1926 to 1928:Alfredo Rocco a early proponent of syndicalism set up a legislature for the establishment of the
corporate state
• 1926:Rocco Law set up 16 separate syndicates of employers ands employees that covered major areas of the economy,
headed by the ministry of corporations
IMPLEMENMTATION
• 1927 to 1928:Fascist tightened their control over corporations and setting up employee insurance and benefits and the
number of corporations increase by 22.
• 1934: National council of corporations was set up with Mussolini as the head, it took control over the corporations and
oversaw its running

• Wage rates were negotiated and was generally kept down.

• 1939:Corprate system became a basis of the Italian political and economic life as it replaced the chamber of deputies worth the chamber of fasces and
corporations which only had elected representatives from the Fascist party

Therefore as initially panned , the corporate state which Mussolini envisaged was eventually set up .
 Corporate state, a mirage
– The corporations were reduced to more of an advisory capacity, mainly over labor issues with no control over the
industrial undertakings.
– Large industrialist and landowners were suspicious of the new system therefore they did not give any backings. They
were allowed to keep their own corporation therefore they had ignored the Fascist corporations .
– The employers were largely disillusioned as they had expected representatives from their own kind , instead they
had to negotiate with the representatives from the the Fascist ministry of corporations.
– In reality , the corporation had worked against the employees by keeping their wages lower than expected
– Moreover if there was a dispute between the the workers and the employers, the labor court would always favor the
employers, thus showing an inequality towards the laborers
– The tendency of the state to ignore the corporations became even more marked in the late 1930 when the
economic priority became self-sufficiency.
– As a result of this state contracts,subsidies,and directives took on a greater economic significance, the state officials
prefer to deal directly with the big industrialsist.At the level of national policy the corporations simply became
spectators of the new direction taken by the economy.
Depression in Italy :THE MOST TELLING EXAMPLE OF THE FASCIST
GOVERNMENTS WILLINGNESS TO INTERVENE IN THE ECONOMIC MATTERS.

• Large number of companies collapsed

• Car production fell by 50%
• Unemployment rose by 2 million in 1933
IMPACTS • Banks money tied up in long term loans for the industries

• Introduced public works scheme ,like building of motorways and hydroelectric power which put the unemployed back to work. This
was important because it increased the money in circulation which stimulated demand and created jobs.
• To prevent bank failure, through the Institute Mobilize Italian (IMF) and the Institute for Industrial Reconstruction(IRI) the government
ACTION bought the industrial securities deposited with bank as security for loans and went on to buy bank shares as well.
TAKEN • Thus ,the Italian state became the major shareholder of the most prominent Italian companies and the IRI took over the new
responsibility of the banks to give loans to the industries.

• This revolution in Italian finance saved many small firms and individuals from ruin which was a sharp contrast to other democratic
neighbors
• The banking system although state owned was less vulnerable than before.
• For the rest of the period ,the government continued its active role in the economy through the ownership of business ,trade policy
and import duties but the economy still remained in private hands and the government worked along with large firms
RESULTS • Many of the shares obtained by the IRI were later sold in order to o0fset the organization cost.
• Despite this the IRI had build some dominant interest in some of the country large enterprise including the terni steelworks,Ansaldo
shipbuilding works and the l’Italia and Adriatica shipping lines.
 The Change of AIM towards AUTARKY

• Foreign policy had became increasingly more adventurous from 1930s , he believed that a war in Europe or in Africa was inevitable
• The economic sanction imposed on Italy during the invasion of Abyssinia in 1935 had led to the league of nation imposing economic
sanction which banned trade of certain goods like steel, grain and textile. This proven to him that he cannot rely on imports.
WHY?
• Encouraged heavy industries such as steel,chemichals and shipbuilding by placing large contracts. State control was expanded to a level
that 80%of shipbuilding and 50% of steel production was directed by the government.
• They encouraged firms to combine together into cartels and allowed the emergence of monopolies. For example Fiat dominated car
manufacturing ,Pirelli dominated rubber and Montecatini dominated the chemical industry
HOW? • Sought self sufficiency in food supplies, basically grain

• Exports took a low priority

• Living standard of industrial worker and peasants were generally lower that from 1920sw
• Massive government deficits for example,1/2 of the government spending during 1930 was on military goods which totaled unto 21 billion lira each year.
IMPACTS
Limits of Autarky

Huge sums of money

Iron ore ,Steel was spend on
and coal still had rearmament and also
to be imported in had to fund expensive
huge amounts. military adventure in
Spain and Africa
leading to further
financial difficulties

To keep up the
Subsidies and promotion
popularity the
of monopolies and cartel
government
distorted normal working
refused to
of the market and normal
increase
taxation. consumer had to pay
higher prices leading
further decline in standard
of living.
Agriculture
• Wanted to achieve self sufficiency
• Wanted to increase his appeal towards the public through large project and dramatic gestures
• Wanted to create an idealized rural Italy based on society of independent, prosperous peasant farmers.
AIMS

• Battle for Grain, was to reduce the volume foreign wheat imports ,which were subjected to high import duties
• The policy benefitted the large grain farmers of the Po Valley in the North.
• The state provided storage facilities and marketing agencies as well as training courses and publicity campaigns in new production methods.
• New areas of land was brought into for wheat production
How

• TOTAL WHEAT P[RODUCTION DOUBLED THAN IT WAS DURING THE PRE FASCIST ERA AND 40% HISHER THAN 1920S LEVEL.
• WHEAT IMPORTS HAD DWINDLED
• Italian yield were low and cost were high compared to France
IMPACTS • Production of olive and wine declined which had to be imported.
The Battle for Land

• IN 1928, ‘Mussolini LAW’ OUTLINED THE REGIMES POLICY ON LAND RECLAMETION

WHY?

• Drainage programs proved to be very successful .E.g. the Pontine Marsh scheme by 1935 provided land for settlement this provided good propaganda
opportunity
• Land reclamation provided work for the unemployed and large subsidies for land owner who administrated the scheme
EFFECTS

• The primary purpose was to revive rural Italy by altering the pattern of Landowning for the benefits of small farmers, however the fascist regime failed to
achieve it.
• 10,000 peasant families we re-settled on reclaimed land and increased the five for wheat production in these areas
Effects on
farmers