When Mussolini came to power, he inherited a weak economic system. In summary, Italy had very few, and a limited supply of raw materials, there was an industrialising North with modernising agriculture, and a more backward South with large estates and mass poverty.
There was also limited literacy, and in addition to this there was a tradition of close industry – banks – state links.Mussolini’s aims were to basically resolve these problems, so to sum this up he wanted to consolidate the political system, make Italy economically self-sufficient, and to provide the economic base for military might. Additionally, Mussolini wanted a strong currency (Lira), he wanted to make Italy’s trade flourish, or in other words he wanted other countries to buy their goods from Italy, and he wanted Italy to import as little as possible and in doing so, make Italy a self-sufficient country. It has been argued, at one time or another, Mussolini probably plastered all his key economic policies in slogans on walls, here are some examples of what may have been used.”A great country, a great Lira.
” “Buy Italian. Italy can provide for all your needs.”In order for Mussolini’s economic objectives to be met, he believed, (as a dictator) that will power should be used as the driving force of a society which could overcome all obstacles and strengthen Italy’s economic system.
Subsequently, the Italian people were mobilised in a series of battles, and were encouraged to achieve their targets.”The Battle for the Lira” took place as an attempt to “fix” the Lira at 90 to the ï¿½, since it has been reaching 150 to the ï¿½. Also it aimed to reduce inflation, which was harming sectors of the middle class and some lower class, confirm the image of Fascism and in doing so bringing greater stability to Italy, and it was intended to show Italians and the world that the Lira, and hence Italy, was a mighty power.The actions that were taken to attempt to achieve these aims are as follows. Banks instituted tight controls on money supply, the economy deflated in order to drive up the value of the Lira, and a Quota 90 was achieved in 1927 when the Lira was returned to Gold standard and the exchange rate was fixed.
The effects of this “battle” were, it showed the authority of the regime, and it possibly boosted Italy’s prestige. Also it helped industries dependant upon imports, e.g.
chemicals, and it caused serious deflation. However, there were many disadvantages to this battle, which were, it harmed the economy by hitting exports, as now, Italian goods were more expensive abroad. It undermined smaller firms, which were taken over by larger ones, it made the government impose a 20% cut in wages, and the government was forced to devalue the Lira.”The Battle for Grain” occurred in order to boost the cereal production to make Italy self-sufficient in grain. It was intended to try and reduce the balance of trade deficit, to free Italy “from the slavery of foreign bread,” to make Italy less dependant on imports when war came, and finally to show the rest of the world that Italy was a major power.
The way in which Mussolini attempted to achieve these aims were, he firstly announced the battle in 1925 and as a result high tariffs were emplaced on imported grain. Secondly new marginal land was used to farm, this was land that was expensive to farm. And to finish, Mussolini issued government grants to farmers in order for them to buy machinery and fertilisers.The overall effects of these actions were that cereal production increased, it actually doubled from 1922 to 1929.
The amount of wheat that was imported fell by 75% between 1925-35. Italy became almost self-sufficient in cereals by 1940, however not in fertilisers. On the other hand however, there were some negative effects of this battle for grain, firstly it raised the cost of grain and bread in Italy, there was a decline in the quality of the Italian diet which could have been caused by the increase in the price of bread. In addition to this there was an increase in the amount of meat and eggs imported by Italy.
“The Battle of the Marshes” arose to make an effort to increase the land in Italy; this land would then be used for cereal production. In turn by reclaiming this land and clearing it, it would improve health conditions by reducing Malaria, it would also provide jobs for the Italian people, and it would show dynamic government action and therefore impress foreigners.The actions that took place during this battle were as follows. Laws were passed in 1923, 1928, and 1933 on the reclamation of land, which extended previous schemes, and private land owners were encouraged to co-operate with drainage schemes.The way in which these actions positively affected Italy, were, it created many jobs and improved public health conditions greatly, new towns were shaped which were called “Latina” and “Sabaudia” and they were set out as showpieces.
Also, the Pontine Marshes near Rome were fully drained. However, as seen in the other battles, there were some negative effects. These were, that between 1928 and 1938 only 80,000 hectares of land were reclaimed, which was in fact only 1/20 of the propaganda claim of 1/6 of the land of Italy.
The land that was reclaimed was mainly in the North, and therefore the South of Italy was neglected, and ambitious plans were blocked by southern landowners.The government also intervened in other key areas of the economy, namely these were Agriculture, Industry, Transport, Trade, and Taxation.Government intervention in agriculture was considerable, but apart from a shift to wheat production, Fascist policies failed to tackle basic problems like poverty and the backwardness of Southern agriculture. Fascism idealised the countryside as the source of the clean, virtuous life of peasantry.
Mussolini’s ruralisation campaign was intended to reverse the drift to the cities by restricting migration and investing funds to help establish a prosperous land owning peasantry, nevertheless life remained hard and the flight from the countryside continued. As mentioned earlier the government tried to help agriculture prosper, by emplacing tariffs on imported grain, giving grants to farmers for fertilisers and machinery, and also they make an effort to spread scientific knowledge. Despite this however, small farmers were hit by the world slump, and in the South, the Government’s close ties to the landowners restricted major agrarian reform, in addition to this yields remained low, and there was a 20% drop in cattle and sheep farming.When the government got involved in Italy’s industry, most industry benefited from supportive government policies, and the growth of large firms and cartels continued.
Newer industries such as the chemical and synthetic industry, grew particularly well.Government assistance tended to be geared more towards preserving existing structure rather than encouraging efficient reorganisation.There was clear progress in transport but prestige projects, not necessarily the most economically vital were stressed. Motorways were built and 5000 kilometres of railway were electrified, however despite this many local roads were left untouched. The railways did run on time though and this was used to the Fascists advantage as it showed the “Fascist efficiency.”Mussolini sought after a country that was self-sufficient, however foreign policy entanglements increasingly affected the direction and nature of Italy’s trade in the 1930’s.
Imports were now controlled by quotas from 1935, and there were attempts to restrict imports in order to establish autarky. Government agencies were put in place to control trade which were, the Institute of Foreign Exchange, and the Ministry of Currency Exchange.Initially the wealthy benefited from Mussolini’s tax policies but as time went on and the state intervened more and more in the economy and attempted to build up it’s war machine, taxation became increasingly heavier and more wide spread. So this meant that in the 1920’s the wealthy had their taxes reduced, but the mass of the population had their taxes raised, and in then in the 1930’s the wealthy had their taxes raised and so did the mass of the population, so in effect everyone was getting taxed heavily.The Corporative Sate or Mussolini’s “third way” was the feature of Italy which he was most proud to boast about. The developing structure of the corporative state protected Italians from the slump which was devastating other countries, and as the rest of the world seemed trapped in a battle between Capitalism and Socialism, Italy was presented as an internally unified nation where everyone’s interests were protected.
The stability of post-war Europe seemed to be insecurely balanced against the background of the tension between Capitalism and Socialism. Fascists believed they had the answer in promoting the national interest above sectional interests, they wanted a society where all people involved in economic activity could work together in the interests of the Nation (Italy), for example both the workers and the employers working together.They believed that in the end this would bring the best for everyone.The concept of the corporative state was not totally new, it brought together a variety of existing ideas and practices about the organisation of production and finally an elaborate structure was built on the corporative principle.
This final structure worked like this:The national interest was represented by a Ministry of Corporations and Party Officials, the employers were represented by themselves, and the workers were represented by Fascist syndicate representatives. The corporation represented all those engaged in a particular area of activity, employers and workers were equally represented and as well as this experts acted as advisers and there were also three Fascist members present. They were all supervised and watched over by the Minister of corporations (Mussolini) who had to approve representatives of workers and employers.As with any system there are strengths and weaknesses, and this was no exception, the two key weaknesses of this system were, that representation within corporations was unbalanced, meaning that employers represented themselves whereas the workers were represented by Fascist party members. The second key weakness is that the corporations simply discussed issues, while Mussolini got the final say and made the real decisions.
Mussolini claimed that the “Third Way” was a new synthesis, and that the corporative state would reconcile conflicting interests, and in addition to this it would unite all the people to produce for the nation.However really, what was going on was the exploitation of workers, a vast bureaucracy was created, often duplicating government agencies, and finally there was a grave burden on the economy.So in conclusion Mussolini’s economic polices did not do an awful lot for Italy, however it must be noted that Mussolini created many jobs through public works schemes, and through battles such as the “Battle of the Marshes,” and he made Italy self-sufficient in some areas such as Wheat production, and in addition to this he made slight progresses in transport, in that he had motorways built and 5000 kilometres of railway were electrified. However on the whole many of his policies failed and Italy never really made any dramatic progress with the economy, the corporative state exploited workers and they had no way or opportunity of representing themselves, so in that respect the systems that Mussolini introduced were unfair.