When Benito Mussolini rose to power in 1921, he inherited a weak economic system.
Italy had a limited supply of raw materials, an industrializing North with modernizing agriculture, and a backward South with large estates and massive poverty. Benito Mussolini’s aims were to resolve these problems and to consolidate the political system to make Italy economically self-sufficient and provide the economic base for military power. Many of Mussolini’s policies appeared populist and successful at a superficial level. However, the poor state of the economy, the poor standard of living of the peasant population, and the inability of Mussolini to convert the population to Fascism demonstrates the ineffectiveness of the policies. In the years leading up to 1914 Italy was divided into the Industrial north and the Agricultural south.
The South had lots of land that was suitable for farming but it was very restricted by the climate and geography. (Move to Global war) The land that was available for farming were part of large estates. Because of the large estate owners owning almost all of the fertile farming land, the peasant farmers had very little land for farming and they were not able to produce as much as the large estate owners.
This caused for a large population of the peasant’s farmers to become really poor because they were not able to match the large production of the estate owners and because most of southern Italy consists of peasant farmers, it created a poor and unstable south. The north, on the other hand, was agriculturally more developed and had become more modernized due to the use of modern farming methods and the use of machinery.(move to Global war) The use of machinery allowed for the increase in industry and for a big difference between the North and the South. The Fiat Car Company had been established in 1899 and by 1913 they were exporting over 4,000 cars a year. (Move to Global war) The money being generated by the Fiat Car Company caused towns and cities to grow rapidly as they were in need of more and more workers. A large number of workers moving into the new towns and cities created a powerful class of rich industrializing and bankers along with a sizeable lower middle class.
With a growing high class and lower middle class within the North, there was no investment within the south. The First World War had a major impact on economic policies on Italy. The Liberal government had to borrow heavily from Britain and the United States to pay off the war debt. The National debt rose from 16 billion lire to 85 billion lire.
Banks continued to print money causing a rapid inflation. This caused prices to increase over 400% from 1915 -1918. (Move to global war) The inflation destroyed most of the middle-class savings, reduced rent income of many landowners, and the wages of many workers dropped 25%. Business owners had less money to pay their workers causing for lots of job losses, which created a high unemployment rate after the First World War.
Over 2.5 million Soldiers were demobilized deepening the economic division between the North and South. The large economic division was worsened by the North producing steel, chemicals, motor vehicles, rubber, and woolen to help the industries linked to war. Benito Mussolini launched a series of campaigns that he called “battles” to make Italy self-sufficient in food and raw material. This is because Benito Mussolini had no real interest in economics. His main concern was to make Italy rich and a great power.
The four main campaign “battles” were the Battle for Grain (1925), the Battle for Land (1926), the Battle for Lira (1926), and the Battle for Birth (1927). The battles were directed towards trying to overcome long-term poverty in southern Italy, but to do so Benito Mussolini needed to create more jobs. The Batagli de grao (battle of grain) or the Wheat Campaign was Benito Mussolini’s way to get Italian farmers to grow more cereals in 1925. There were three parts to this project. First, was to drain the marshes near Rome also known as the Battle of land. Second, was the use of chemical fertilizers to help increase wheat production. Third, grain was given priority over fruit and vegetable productions. This meant that farmers had to change their fields from vegetables and other crops to wheat.
By growing more cereals it would reduce Italy’s dependence on foreign imports. (Move to global war)This would help Italy because they would be becoming more self-sufficient because they are not depending or imported goods. The battle of grain was a hollow victory. Most of the land taken for grain production was unsuitable. The production of grain was low. Also, the price of bread increased causing production to increase but only at the expense of other crops such as olive oil, wine, and citrus fruits which were all important exports. Along with a decline in the number of cattle and sheep. Another policy of Benito Mussolini was the Battle for land in 1926 and it was considered a huge success for the amount of land reclaimed in the Pontine Marshes.
Pontine Marsh was a large mosquito-infested area of marsh which had defied development for two millennia and was located south of Rome. The Battle for land was an attempt to increase the amount of available farmland to create more land for farmers in the south. (Move to global war) This would help provide more land for peasant’s farmers so they would have a better life and would help bring stability back to the South. Swamps and marshes were drained and a network of small farms was established over a ten year time period. In that ten year time period, only 80,000 hectares of land were reclaimed which was only 1/20 of what propaganda claimed. The land reclaimed was a success in the sense that it created jobs and cleared malarial swamps like the Pontine Marshes, but the amount of land that was able to be reclaimed was very small. Some of the land reclaimed from the marshes were used to create new towns such as “Latina” and “Sabaudia” as well as building modern roads. This was a labor-intensive project and because of this large number of people were employed to help with the draining of the marshes and the building of infrastructure.
Pontine Marsh was the only marsh that was successfully drained. Despite only draining one marsh, Benito Mussolini viewed the draining as a huge success and as a way to impress visitors and tourist. The Battle of land was monitored by the undersecretary of the Ministry of Agriculture Arrigo Serpieri. Arrigo Serpieri wanted to help with the draining of the swamps and marshes because he to provide sufficient land to accommodate a new class of small peasant proprietors in large remote unpopulated areas as he was opposed to the creation of a rural proletariat.
Arrigo promoted forms of land tenure in which the workers received a total or partial payment for his service and part of what he produced. (state Control) The Battle of Lira started on 18 August 1926 when Benito Mussolini gave a speech in the city of Pesaro announcing the start of the battle. In this speech, Benito Mussolini imposed Quota Novanta or Quota 90 in which he would make the conversion rate of the Lira to 90 Lira to the British Pound Sterling. The business class argued that it should be 120 Lira to the British Pound Sterling because they thought it was overvalued, but Mussolini know that if it were to become 120 Lira to the British Pound Sterling it would cause more stress on Italy economically. (Fascist Italy) To further their aims, the government prohibited the Bank of Naples and the Bank of Sicily to issue banknotes, which dated back during the unification of the Italian peninsula. By 1927, the exchange rate between the Italian Lira and the British Pound Sterling was 92 Lira to every British Pound Sterling. This meant that the aims of the Quota Novanta were achieved.
The battle of Lira also helped Italy to restore some of its purchasing power. In order for Benito Mussolini to restore the Lira’s value abroad and to increase the value in Italy, he had to revalue the Lira which he did with the help of Quota Novanta. This helped Italy’s trade by making imported goods cheaper which helped in Italy’s heavy industries. It allowed for Italy to continue importing coal and iron for shipbuilding and armaments. (Learning site)These industries provided a basis for expanded rearment industry. Tariffs on items that were undesirable allowed for Italy to keep their prices high and restricted demand which protected Benito Mussolini’s Battle for grain policy. The Deflationary policy followed in the wake of Benito Mussolini’s Quota Novanta. The Deflationary policy was the pegging of the exchange rate of the Lira to 90 Lira to the British Pound Sterling and as low as 153 Lire to the British Pound Sterling.
The Deflationary policy was favored by sections of the middle class that were on fixed incomes, such as public employees. It worked to their financial advantage and started to help restore traditional social status which had worsened since the First World War. (State Control) The Deflationary policy caused damage to the exporting industries and too small and middle-sized firms. The deflation policy along with the Quota Novanta and American lending banks forced the reorganization of industry in the direction of concentration and rationalization and the accompaniment of the lower class. The lower class served to strengthen the support of the fascist rule, but because of the decline of exports Italian workers were given wages cuts to match the new value of Lira. The wage cuts caused unemployment to increase because Italian goods became more expensive. (Move to global war)The wages cut up to as much as 50% and because of this the working class paid dearly and did not amount to the social revolution that Fascism had promised rather the consolidation of the old ruling class and its traditional view of labor relations.
Quota Novanta had a disastrous effect on agriculture and was reinforced by the economically nonsensical battle for wheat. Prices fell and the value of land was cut by an average of 40 to 50% within five years. (State Control) Depopulation was having a negative effect as well in the economy of areas such as the North-eastern Mountains or the central Apennines which were unable to sustain the drop of price on animal products combined with the steep rise in the price of cereals. The inability of the industry to absorb this manpower meant that many drifted back to the areas where they came from, but they were trapped because of the new restrictions on mobility.
(State Control)The Battle for Birth was launched in 1927 and was designed to increase the population from 40 million to 60 million by the year 1950.(access history) It also aimed for every Italian family to have a standard of twelve children. There were several reasons for the battle of birth.
First was economic reasons. A large population would allow for local industries to flourish within Italy. A second reason was military. With more Italian boys, it meant that there were more soldiers to fight in future wars.
Thirdly was politically. Benito Mussolini did not like contraceptives and abortions because he was a conservative far right person which was supported by the Catholic Church. (access history) Benito Mussolini’s views caused for arguments on the separation of Church and State. Government policies were set in place to secure the success of the battle of birth. Bachelors were taxed much higher in order to force them into marriage as a way to create more children. Taxations for bachelors where so high that it generated around 230 million Liras in the year 1939.
Wedding ceremonies were still very expensive so the government began to issue marriage loans to couples. For the couple to repay the loan they must give birth to children. Families would be given an exemptions if they had six or more children. To ensure that more children were being born divorce was banned and in 1926 abortion and contraception were also banned. The battle of Birth was a nightmare for feminist. The fascist government only saw women as mother and not as workers. Overall most of Benito Mussolini’s economic battles were not successful because they were consistently fought. The battle of grain was not as impressive as the harvest amount claimed by the Fascist-controlled media.
The battle was successful in doubling cereal production by 1939, but while grain production increased the cost of production also increased. Domestically produced grain was more expensive than imported grain. This made grain more expensive and cause the price of bread and pasta to increase, which affected low-income Italians because grain-based breads and pastas were a huge part of their diet. Also, Italy had to import all of the olive oil for the cereal and fruit and wine exports dropped. Along with this, the government’s involvement caused consequences. The massive state spending and subsidies created economic inefficiencies and an increase in government debt. The battle for land was only effective in reclaiming the Pontine Marsh and creating jobs for the unemployed. The battle of Lira resulted in the decline of exports and an increase in unemployment due to the prices of Italian exports in the International market increasing and with slow exports, industries had to cut wages causing unemployment to rise, which caused the national income to decrease.
The Battle of Birth was overall a failure. The population grew as people were living longer, but the birth rate went down between 1927 and 1934. Benito Mussolini’s battles caused as many problems as they had solved which were increased by the effects of the Great Depression. The Great Depression had a big impact on Italian economics during 1931-1937. Benito Mussolini began to favor some state interventions by encouraging job-sharing schemes. By 1922 the unemployment rate rose to over two million.
30% of laboring jobs in agriculture were lost and many women were forced to give up their jobs to men who had come back from the First World War and were looking for jobs to support their families. Benito Mussolini had to give up earlier claims that the regime had improved the living standards of the Working class. In 1931 Benito Mussolini was forced to use public money to prevent the collapse of the banks and industries that were hit during the depression. In 1933 Istituto per la Ricostruzione Industriale or as it is better known as the Institute of Industrial Reconstruction (IRI) and Istituto Mobiliare Italiano (Industrial Finance Institute; IMI) was formed. (ITALY) The Institute of Industrial Reconstruction and the Industrial Finance Institute were set up to bail out failing firms and to provide capital for new industrial investment, along with providing trained manages for financial supervision.
The firms were not nationalized. Instead, they operated as private companies with private shareholders. By 1929 the IRI was a massive state company that controlled many industries including most of the iron and steel industries, merchant shipping, the electrical industry, and the telephone systems. The Great Depression also led Benito Mussolini to increase the push towards fascist autarchy. Fascism became strong after 1935 when the member- countries of the League of Nations imposed some economic sanctions on Italy following its invasion of Abyssinia. Benito Mussolini began to involve Italy in more military adventures and wars as he pushed for autarchy because of the problems that it caused. By 1940 industry production had increased by 9%. (Move to global war) Industry began to overtake agriculture as the largest proportion of GNP for the first time in Italian history.
The fascist economic policies were not significant on the modernization of the economy or even the increased levels of productivity. Because of this Italy was much slower recovering from the depression than most of the other European states. Benito Mussolini wanted fascism to be in every aspect of Italian society, but he was not prepared to force it through policies that might make him unpopular. The church was one area of Italian life where Benito Mussolini was very careful.
Benito Mussolini was anti-religious, but he realized the value of good relations with the bishop of Rome. He restored Catholic education in schools and increased government pay to the priests, which won the confidence of the Pope. In the terms of relations with the church, Benito Mussolini’s greatest achievement was part of the Lateran Pacts of 1929 called the Lateran Treaty which would later be incorporated into the Constitution of Italy. The Lateran Treaty was signed on February 11, 1929, and it ended the conflict that existed in Italy over Church and state. The pact consisted of treaties that set up Vatican City as a tiny independent state within Rome with the Pope as the head of state. The pact had a financial settlement, in which Italy gave the Church compensation for the land it lost when Italy was unified in 1870, along with receiving a billion Lire in state bonds.
The religious settlement established Catholicism as the State religion in Italy and accepted the survival of the Church administrative and religious structure independent of a state institution. It also stated that Italy recognized the Vatican as an independent state and that Papacy would recognize the state of Italy with Rome as its capital. (Lateran Treaty) The Treaty restored relations between the Catholic Church and the Italian States. In doing this Benito Mussolini secured a wider acceptance of his rule because he was reinforced by supporting the repressive legislation.
The Lateran Treaties gave a huge boost to Mussolini’s image and popularity. When attempting to achieve his aims of a stronger economy with a disciplined population that was ready for war, Benito Mussolini needed a way to transform Italy’s economic policies. Benito Mussolini focused his policies on industry and agriculture along with fixings industrial north which was more developed than the South which was less developed and had high levels of illiteracy due to the limitation and lack of raw materials in the south. Benito Mussolini faced some hurdles during the transformation of the economy such as the First World War and the Great Depression which did not help him at all.
It can be argued that may of Benito Mussolini’s economic policies, could be seen as a success for Italy’s economy. Benito Mussolini did create many jobs through public work schemes and through the Battle of Land. He made Italy self-sufficient in some areas such as grain production through the Battle of Grain.
However many of his policies failed and Italy never made a dramatic progress with the economy.