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Some aspects of the Italian economy from 1870 to 1950

We are pleased to publish this article, which Mr Alberto Pirelli dictated for the “European Exporter”

 

1870: the year of the consecration of the Unification of Italy and the proclamation of Rome as its Capital. In the 40 years that followed there was a gradual settling and growth in a climate of almost uninterrupted global peace, but then another 40 years of war, economic and social crises, and political experiments that left a tragically negative balance. These errors and misfortunes did not impede new progress in economic fields, even in the second period, if we examine the overall picture. A chart of economic development in Italy over those 80 years shows strong overall growth, with some brief and sometimes sharp drops, more than compensated for however by the general positive trend.

The starting point was very low and could not have been otherwise after centuries of the country’s partitioning under foreign domination and oppressive sovereigns little prone towards elevating the material and spiritual life of their people. All of this had followed a kind of national settling, which was achieved in eleven years (1859-1870): a primordial agricultural system, an almost inexistent industry hindered by scarcity of national resources; few schools, few railways, few hospitals, almost no aqueducts; in general, poor quality of life; scarce productivity and lack of savings and capital for economic development; illiteracy in some regions at 85%.

[…] To understand the characteristics of Italy’s national economy in its early phase, we must examine some data about its population: approximately 26 million in 1870, and about 46 million in 1950, taking into account also 5 million permanent emigrants. Today, over 300 people per square kilometre of arable land, a density four times that of France and greater than that of Germany and the United Kingdom, thus yielding 0.73 hectares of territorial surface per inhabitant, one of the lowest rates in Europe and about half the average for the continent, excluding Russia.

We can easily understand why Italian agriculture, notwithstanding its intensification, was not able to absorb the increase in population of the last 80 years. This population increase found an outlet not only in emigration but also in the public and private service sectors, in commerce, banking and above all in industry, but a large portion still remain unemployed. In this 80-year period the number of people working in the industrial sector increased from 1.5 million to almost 7 million, transforming Italy from a predominantly agricultural economy into a powerful industrialised nation.

 

Causes of difficulty
This evolution was certainly not easy. The indisputable lack of raw materials and energy resources in the country (mitigated by hydroelectric resources and more recently, by the discovery of methane gas in the Valle Padana), as well as an albeit relative lack of capital, was exacerbated as Italy was undergoing its industrialisation when other countries had already gone through theirs. They had already gone through their “growing pains”; indeed, some of them had even created colonial empires; they already dominated world trade with their commerce, their banking and insurance systems, and their merchant navies. They already had the advantage of developed industries in other countries, the existence of local complementary industries, the availability of semi-elaborated products, well-equipped research laboratories and trained skilled workers. Despite these initial difficulties, it is calculated that the volume of Italian industrial production increased tenfold in this 80-year period, a little more than the world average. Some large industrial groups were developed, but small and medium-sized enterprises prevailed.

[…] This 80-year long period was characterised in Italy by an increase in salaries both in the industrial and agricultural sectors, leading to a general improvement in living standards for the entire population. Gradual technological progress and organisation of labour mitigated the effect of increasing labour costs on overall costs, but the labour-attributable costs were greater than in other countries. Italy was no longer a nation of low-cost labour, and despite great differences between regions and categories, if we consider also additional legal and administrative costs today, labour costs in major industries such as machinery, rubber, etc. in North Italy are similar to current levels in other industrialised countries such as Great Britain and in Belgium, and in some cases even greater.

The workforce – when not impeded by trade union action – is dedicated and can be rapidly trained. Indeed, this virtue has been evident in past decades with the contribution of Italian workers who emigrated, particularly from regions where industry was absent; these emigrant workers have contributed to the production of their new countries, demonstrating their industriousness, capacity to work and their ability to progress in suitable conditions.

From the above succinct summary, and leaving aside important sectors such as finance and transport, we can perceive the great importance of international cooperation for Italy: inflow of foreign capital; facilitations for Italian exports; acceptance of emigrants. Much has been done on the first point, especially by United States within its new remit of international responsibility. Too little has been done for the other two issues in a world particularly concerned with the problems of post-war reconstruction, but also dominated by national egoism which affects many areas of interest.

 

Desire to work
In conclusion, I would like to make some observations on these most recent years in our Country. Like a film, the memories of events accumulate and follow on from each other with such rapidity that it is difficult to focus on even recent memories. Those who have memories of the condition of many Italian regions following the Second World War, cannot help but see the progress that has been made in a positive light: many industrial plants damaged or destroyed, houses, bridges, and railway stations too; olive groves, vineyards, and citrus orchards barren; electricity generation unproductive for nine tenths of capacity or in disrepair; 90% of our merchant navy inactive, along with the better part of our railway stock and automobile fleet; gold reserves depleted; livestock, raw materials and finished products also lacking. Many barns and stables empty, kitchen cupboards bare, shop and industrial warehouses empty. Living conditions miserable: the hearth without heat, kitchens without gas, bread without salt, children without milk, old people without blankets, hospitals without medicines. This was the sad reality. It was because of the vitality and desire of the Italian people to rally together, and the timely intervention of foreign countries such as Canada, Switzerland and in particular, the United States, that Italy was able to raise itself from this abyss.

In the ruins left by the catastrophe that Italy and many other countries had gone through, reconstruction according to ideal schemes also meant reinforcing the walls, repairing the roofs, and fixing the shutters of old buildings. The inheritance of the war left us with much reconstruction, and long-term policy planning was hindered by emergency contingency measures. Today, the Italians take pride in this reconstruction, in their success in rebuilding its economic sector and the consequent reorganisation of the social and political structure of the Country.

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