Italy gave birth to the Renaissance and was where modern Europe first began emerging from feudalism. Modern banking first emerged in Italy. Italian navigators played a major role in the European outreach by Portugal and Spain. Italy itself without an Atlantic coast did not share economically in that outreach. Religious conservatism and the Counter Reformatiion retarded the scientific inquiry that had begun as part of the Renaissance. Italy divided into minor states became a prize fought over by more powerful European powers emerging as unified nation states. This included the Austrians, French, and Spanish. Italy is one of the major European countries in terms of population, but was not unified until relative late (1860s). The unified country was a relatively poor country. At a time when national wealth was still significantly impacted by agriculture, the relatively poor agricultural land in many areas of Italy were unable to support the large Italian population. Southern Italy in particular was virtualy feudal. Northern Italy, in part because of the Austrian influence was more modern with a degree of industrialization. Italians migrated abroad to both South America (especially Argentina and Brazil) and the United States seeking jobs. Many Italians stayed in America, but larger numbers took their earnings home to buy land and small shops in their home communities. Mussolini and the Fascists set out to modernize Italy after World War I and obtain colonies. There were some suceesses, but Mussolini also led Italy into World War II and the country was devestated. European integration following the War brought led to the European Union bringing Italy fully into the 20th century. Italy has prospered as part of a united Italy. At first Italian workers went to Germany seeking jobs. Expanding Italian indidtry created jobs in Italy so Italians no longer had to seek jobs abroad. Socialists and Communists commanded widespread political support. As a result, Italy created a substantial welfare state with enormous entitlements. Unlike Germany and the northern European states, however, the Italian welfare state was created with little considerartion of the ability to pay out the commitments made. Now Italy faces the sane problem as many other European countries. The Government has promissed massive social welfare entitlements that are becoming increasingly difficult to finance and are impeading economic growth. Unlike the smaller states (Greece, Portugal, and Ireland), the financial commitments of the Government are enormous streaching the capability of the EU to finance a bailout. The fiscal position of Italian banks is also being questioned.
Surely Rome is the best known of all the ancient civilization, proding a grand heritage of aechitecture, art, law, literature, and much else. However rich Rome was, its economy was fairly simple. Rome was a largely agrarian, slave-based economy. Slavery was fundamental to the Roman economy. The major economic objective was feeding the vast number of Roman citizens and Legionaries who expanded and maintained the Empire. The Legions were also needed to obtain silver to finance the Empire and mines in Dacia ahd Spain were particularly important. Agriculture and trade were at the center of the Romn economy along with some small scale industrial production. Given the importnce of agriculture, agricultural technology affected the productivity of this key sector. Romans to a degree used a two crop rottion. Yields were, however, relatively low and necesitated vast number of slaves to gain substantial quantities. Farmers had a choice of donatong surplus crops to the government or pay a monetary tax. Thus both Republican and Imperial rulers had grain which could be used to cyrry yhe favor of the population.
The grain could be used for both free grain distribution and to feed the legions. The system did not, however incentevize farmers to improve productivity or expand output. A higher harvests meant greater taxes.
Roman citizens grew dependent on the free grain. It also meant that large numbers of Romans feed on the state, but did nothing to support or to create economic value. The need to secure grain providing provinces was one important, of many factors that would lead to the expansion and conquests of the Roman State.
Rome after gaining control of southern Italy, imposed their system of large estates worked by slave labor to produce grain. [Zamagni] Other important privinces included: Egypt, Sicily and Tunisia in North Africa.
A very large quantity volume of trade ensued. These areas were of vital importance in the production of grain to fed Rome. Grain was shipped directly to Ostia, the principal port of Rome. <! and penalties for disruption of the most direct route included deportation or execution. Once delivered to Ostia the grain was weighed, checked for quality, and then sent up the Tiber River on barges to Rome, where it would be repacked for distribution throughout the Empire.>
The staple crops grown by Roman republican farmers and on the great estates were the standard crops of the Mediterranean world. There were different grains, olives, and grapes. Olive oil and wine were not only important food stuffs were among the most important trade products. They were an important part of Rome's exports.
While the production and transportation of foods dominated the trading industry, there was also a vast exchange of other goods from all parts of Europe, Asia, and Africa. The prosperity of the Empire and many of it citizens generated a need for luxurious and exotic imports. Silks from China and the Far East, cotton and spices from India, Ivory and wild animals from Africa, vast amounts of mined metals from Spain and Britain, fossilized amber gems from Germany and slaves from all over the world discovered that all roads did indeed "lead to Rome."
The importance of industry and manufacturing was comparatively light to that of agriculture. The growth and influence of the Empire can not be underestimated, however. The largest industry in ancient Rome was mining, which provided the stones for the enormous building projects and metals for tools and the weapons that conquered the western world. Greece and northern Italy provided marble for the buildings that awed the ancients and modern people alike. Large quantities of gold and silver were mined in Spain to mint coins and create jewelry, while mines in Britain produced iron, lead and tin for weapons. Cities and towns throughout the empire established small-scale manufacturing plants which turned out hand-made pottery, glassware, weapons, tools, jewelry and textiles.
Extensive Trade routes were established on land and sea. The Roman roads are one lasting legacy of Roman domination and many are still in use today. While a benefit of a large network of roads was the transport of goods, their most significant purpose was the fast mobilization of the Legions.
Following in the wake of marching soldiers, vast numbers of goods were carried along these roads. Transporting goods by land was slow and expensive, however, as large loads in wagons and carriages were pulled by lumbering oxen. Large, slow shipments were vulnerable to raids and adverse weather so faster horse drawn loads were used, but they could only deliver lighter cargos. Caravans of camels or donkeys carried loaded baskets called panniers and some goods were hauled by slaves, providing cheap labor. Trade by land was only profitable if goods were going short distances or if the cargo was small, expensive luxury items.
Most large-volume, cumbersome goods, such as food, precious metals, stones and building supplies, were shipped by water. Numerous sea lanes provided cheap and easy access to all parts of the Mediterranean. The consolidation of the Roman navy under Augustus virtually wiped the threat of piracy out, but inclement weather, inaccurate charts and poor navigational equipment could still wreak havoc on a convoy. Still despite the dangers, there was no better way to move cargo than by ship.
Romans thrived off of its imports, and importers were among the wealthiest citizens of the Empire. The trading of goods for goods barter system was alive and well in the ancient world, but the Romans also used one of the world's most developed coinage systems. Coins of brass, bronze, copper, silver and gold in the Imperial system were minted and circulated under strict rules for weights, sizes, value and metal composition. The popularity and value of Roman coins became so great that they could be found as far east as India. Roman coins were greatly detailed and of high artisanship, and often were used as tools by the Emperors to circulate various forms of news and propaganda to the people and the world. In fact, numismatics (the study of ancient coins), is among the greatest sources of historical facts, events and living conditions as it relates to the Romans.
Did you know?
During the Roman Economy the metals used for commercial transactions were gold, silver and bronze. Roman Emperors was mainly interested in the production of precious metal coinages, while the Greek cities in the Roman East provided local markets with highly overvalued coins made of bronze.
The Roman Empire over time decveloped a huge urban population. This was especially true of Rome itself, but also included other important cities on the Peninsula. These populations were fed by large estates in the south worked with slave labor as well as massive imports. Small-scale industry and artisan activities developed in Rome and the other cities, but overall Rime was not very productive. Much of the population lived on the grain dole. The collapse of the Roman Empire (5th century AD) changed this economic dynamic. Urban populations collapsed and people had to go back to the land. The urban population was not very productive in the first plce. Along with the Empire, the distribution systems also collapsed. People had to grow their own food or be closer to food sources. This mean living in rural areas. As aesult, early medieval Italy became an overwhelmingly agrarian society. With the collapse of the Empire, the state authority imposing slavery also disappeared. Slaves abnd the fiormner urban popuklation became tenants. A few skilled specialist slaves still remained for a time. Italy was not, however, unlike France a rich farming area. Thus the economy dud not have the strength that it had during the Empire. As the medieval period continued, over time the European economy began to develop. And as this happened , Italy's geographic location acted ton bring about an economic recovery. The rise of Islam and subsequently the Ottoman Empire had isolated Europe from the East, but as the European economy developed and trade quickened. Europeans after the Crusades began demanding luxuries from the East arrivihng over the Silk Road and subsequently the Spice Route. And they largely had to come through Italy. Thus trade made the developing Italian city states rich byv the late-Meedieval period. And thus wealth led directly to the Renaisance.
Rent was paid in cash or kind to the curtes (estate center � "court") of the landlords.
Initially there was only agricultural "subsistence" [a strange word directly from Latin: subsistere, meaning, "to come to a stand" the sub- prefix (meaning "under") possibly meaning "under pressure". It's clear from usages that "subsistere" meant "to hold one's own under pressure" or "to survive -- but just barely".]
Rents in kind reflected what the peasants could grow for their own use: grains (rye, north; wheat center and south), grapes after the 8th century, olive oil in the center and south (Spanish imports having greatly declined due to loss of control of sea routes), hunting and gathering in the forests (much more extensive than how).
Meat was fairly common on farmers' tables in the earlier period (mutton, beef, pork raised individually) but less common as specialist herders took over raising meat for the market -- but as meat consumption went down among farmers, more was sold to increasing urban populations. Animal "byproducts" -- leather, wool, tallow, glues became more available and industries using them rose in towns. Fruits and vegetables were first grown for individual use and later for markets.
Early land ownership: many tenants, some peasant owners. Acreages were small -- even big landowners owned hundreds or even thousands of small plots rather than one big farm. Big landowners often had their seats in cities and had local overseers -- often individual tenants or hired peasants.
Northern estates gradually became more organized -- there, unpaid labor on the demesne (land farmed by the owner rather than by the tenants) might also be required.
Estates could be huge and could produce salable surpluses.
Over time, estates were consolidated and larger landholdings became more common.
The papacy eventually was the main "Roman" landholder -- in quotes because papal estates, the result of donations (including the donation of Pepin) were far-flung, not just around Rome: papal estates in the far south were huge.
By the 12th century the papal estates were among the largest in Italy.
[This did not imply that the popes were among the richest -- many of the great families had other sources of income, especially trade, which the popes never had. Eventually, when the Popes were drawn from the great families -- starting in the late Medieval, when there were, for example, Orsini and Colonna popes -- papal and family fortunes became indistinguishable. Contrary to popular opinion, popes or papal families didn't increase their wealth by attaining the papacy -- it was usually the other way around. Having a pope in the family was costly.]
Money rents became more common as time went on, because there was a fair amount of cash floating around in trade and because new lands brought into cultivation "around the edges" gave tenants produce to sell for cash.
As time went on, the "aristocracy" consolidated their power, but note that you had to have some power (= wealth of some kind, gotten by whatever means) to become an aristocrat. The aristocracy was actually just a loose assemblage of the rich and powerful. Kings developed the same way. The very existence of a "Feudal System" is questionable -- not because it wasn't "Feudal" but because there was no "System" except as seen ex post facto.
In Italy, more than in the rest of Europe, there developed a "landed plutocracy" -- rich landowners who gradually consolidated large estates which were often run from urban offices by bureaucrats employed by the rich. Such "agribusiness" wasn't new, nor did it end with the medieval period. When other investment opportunities were available they put some money into that also, but the Italian economy was predominantly agricultural at least until the end of the 19th century.
As the aristocracy developed, peasants lost out -- land and sometimes even their freedom was lost. Kings (there were usually several regional "monarchs" often with "king" in their title) tried to protect the peasants. Because they feared that incentives for services to the "kingdoms" -- road and bridge maintenance, court and military service, etc., would disappear and that "royal" power would be lost to the nobility. That's just what happened.
Agrarian monarchies collapsed in the 10th century and individual fortified manors -- really castles in Italy -- became the rural power centers. Rural military families rose and military power was concentrated in their militias. The higher nobility -- counts, dukes, some of the old kings -- could maintain power only by making deals with the lower nobility and that only to the extent that they had militias of the their own.
[In northern Europe this same pattern lead to powerful castles with alliances that could put large military forces in the field and concentrate power. This was less true in Italy because concurrently the cities were developing as balancing power foci.]
2. Urban socio-economy
Most of the ancient Roman cities survived -- although populations declined dramatically. Rome went from 1.5 million in the 2nd and 3rd centuries down to perhaps 15 thousand at the middle of the 14th century. The transfer to Constantinople, barbarian depredations, supply problems, and plagues all contributed.
But in the early Middle Ages and until the 10th or 11th century, Rome was still a major European population center of 50 thousand (?) people. There was still nothing bigger in Europe, and even when the plagues of the 14th century dropped Rome's population to its lowest point, the same thing was happening elsewhere in Europe. Most of the time, Rome was Europe's biggest city.
Rome also had historical and religious prestige going for it. Charlemagne, the Ottonians, the Holy Romans, everybody came to Rome to claim the "Roman" imperial crown. Papal opinions -- and especially condemnations -- counted.
But some Roman cities failed, mostly up in the mountains and down by the sea. Some mountain cities existed only as resorts and needed central Roman military support to survive. Crossroads cities did survive, even up in the mountains. Similarly, there were coastal port towns, which lost their reasons for existence when imports declined whether due to lack of demand or due to loss of control of sea lanes.
Urban populations no longer filled the walls of the cities. In Rome, most of the population moved off the hills and down into the Campus Martius. People huddled together in what was the lowest and still the most pestilential section of town.
Most cities maintained an urban economic identity -- town records were kept and indicated that trades and crafts persisted. As the "landed aristocracy" was concentrated in the cities, there was a market for luxury goods. Trades, especially building trades, also did well as the nobles vied with each other in building urban churches. Some goods that were imported during the Roman Empire were mad locally in the cities. The evidence for pottery is best, but possibly only because pottery outlasts most other manufactures -- potsherds are almost indestructible.
[Our own "indestructibles" may include plastics and aluminum and glass beer containers, but vitreous pottery will still be right in there with the rest. Can you guess what our most durable manufacture is, according to archeologists? David McCauley's Motel of the Mysteries provides the answer.]
Italy's classical cities were not based on commerce (although they were somewhat dependent on commerce) so the breakdown of classical commerce didn't threaten their existence (just their feasible size). The slow revival of trade after about 750 did help cities to start to grow back to their former size. They always were and would remain later as nodes at intersections of river and road networks that, by the high Middle Ages, were again commercial trade routs.
Coastal cities became trade centers and, before the beginning of the Renaissance, they became international trade and naval powers. Venice and Genoa and to a lesser extent Pisa, were among the strongest and ultimately became masters of the reviving Mediterranean trade. Naval alliances, with major "Italian" participation ultimately swept away the Saracen pirates -- in fact replacing them and becoming looters of other peoples shorelines. Remember, the Venetians carried off most of the wealth f sacked Constantinople and still proudly display it in and around St. Mark's cathedral.
3. Late Middle Ages:
In the late Middle Ages, the 12th and 13th centuries, Genoa, Pisa, and Venice were all international powers. Rome maintained its prestigious position but could never project military power. [Nonetheless, some Roman families, particularly the Colonna, bought their way into the naval coalition that defeated the Saracens.]
Population rose rapidly in Italian cities and the countryside as wealth and food production increased. Some population experts also attribute the population rise to the general immunity to locally circulating diseases [-- a situation that changed when the plague arrived from the east in the 14th century. But even before the arrival of the plague, population plunged due to famine in the early 14th century, caused by drought and exhaustion of crop land.]
In the 13th century prosperity increased dramatically both in the maritime cities and in cloth industry centers, especially woolen textiles in Tuscany. Venice dominated eastward trade, especially after the 4th crusade (1204) and Genoa, eclipsing Pisa, dominated the Western Mediterranean and trade into Provence. In the second half of the 13th century, Florence gained influence in the Kingdom of Sicily due to its close ties with the Angevins and the Papacy. By the end of the 13th century, the first urban residential "Palazzos" -- small, but still Palazzos -- started to pop up in Italian cities.
There was also enough excess wealth to build new municipal buildings, like the Palazzo Senatorio, built over the top of the ancient Tabularium, in Rome. Big new churches were built in the cities, especially for the Franciscans and Dominicans, and Assisi became Italy's biggest religious tourist attraction.
The Tabularium/Palazzo Senatorio building played a part in many Roman developments. The Tabularium had been built as the national archives of ancient Rome over an archaic temple of Veiovis (later identified with, but not identical with Jove). In the Middle ages it was first fortified as a residential compound by the Corsi family. When the Roman Free Commune was established in 1143 the Corsi "Palace" became the seat of the Senators and local magistracy. By 1299 it had been aggrandized by the addition of a loggia by Pope Boniface 8. Petrarch was crowned as Rome's first Poet Laureate since the end of the Empire in the council chamber in 1341. In 1354, on the steps leading up to the loggia, Petrarch's prot�g�, Cola di Rienzo, was torn to pieces by the mob that had formerly supported him. (More on them in later units -- for now, suffice it to say that some historians list those two events as ending the Roman middle ages and starting the Renaissance.
As mentioned above, there were agricultural and health crises in the 14th century, but even then, despite these setbacks, northern and central Italian trade, manufacture and venture capitalism recovered rapidly -- in fact, population declined (after the rapid gains of the two previous centuries) leaving resources to be shared out among fewer people. Individual artisans, tradesmen, even urban laborers and rural peasants got richer after the plague because they more easily could sell their products and labor in a shortage economy.
Economic developments in southern Italy were much slower [and many modern Italians will tell you that the south is still today in the Middle Ages: "They have cars, but look how they drive!"]
In Rome, the disabitato shrunk slowly moving first to the east of Via del Corso in the Campo Marzio (no longer the "Campus Matrius" as "Italian" replaced Latin) and then into other areas around the tower-fortresses of the rich families. [But there were still farms inside the Aurelian Walls until the Post Resorgimento building boom of the 1880's.]
In the central and northern countryside, sharecropping gradually replaced tenancy, but there were also more freeholders in the later years. New rural technologies and methods were also developed in response to population growth, and an upward spiral began -- population that had been limited by agricultural production and lack of food imports now was the engine behind more production and renewed imports. A new "heavy" plow pulled by teams of oxen allowed deeper plowing, which brought nutrients to the surface. "Intensive farming" meant more crops growing on fewer fields, which should have allowed crop-rotation and more fallow fields. But population outstripped production and the fallow fields more and more marginal lands were all forced into production. (This was, in fact, the pattern in most of temperate Europe at this time.) This was all OK until agricultural conditions changed.
The Medieval Warm Period and the Little Ice Age: Yes, Mother Nature took a hand. The increases in agricultural production in the 12th and 13th centuries were partially caused by what is now known as the "long term pattern" of the North Atlantic Oscillation -- we are more familiar with its Pacific analog which is associated with El Nino fluctuations. What it boils down to is that it was warmer than usual in the 12th and 13th centuries and that also meant much more moisture for Europe as warm air flowed inland from the Atlantic. But some trip point was reached in the second quarter of the 14th century and the pattern reversed: cooler drier air covered Europe and what is now known as the Little Ice Age ensued. Meteorologists say that it lasted until about 1900. What we are experiencing now -- what the ecologists call Global Warming -- is an upward swing toward "normalcy." This all appears to be driven by long term Solar cycles. Note that the direst predictions of the ecology industry are probably true -- it's only when they put too much emphasis on the effects of human activity that they go off track. [Coastal flooding is a good example of the real effects of "Global Warming" effects. The Netherlands were under water through most of the Medieval Warm Period as were large areas around the Chesapeake Basin -- the latter, by the way, formed by the arrival of a mile-wide rock from space called the Chesapeake Bolide about 35 million years ago]. We could do another whole course on the long term Solar cycles, the Atlantic and Pacific oscillations, the Japan Current and the Gulf Stream, sea and land tides, etc. -- maybe some day.
At the same time, reduced population meant less food was needed so field could lie fallow more often. After the population reductions caused by recurring plague outbreaks, the rural peasantry cold no longer be held in their "home" estates -- they had bargaining power because they could simply decamp and sell their labor to another estate or move into town where labor was also scarce. Smaller rural populations also meant that some landowners, including the papacy were forced to lease their land to farmers at low rates and for long terms if they wanted any income at all for their lands.
In a later unit, we'll talk more about the opportunities that arose as a consequence of the agricultural collapse caused by climate change, overstressing the land during the Medieval Warm Period, and plague induced population reductions.
Italy gave birth to the Renaissance and was where modern Europe first began emerging from feudalism. The trade in Easern goods demanded by the countries of northern Europe was a primary factor in the development of the Renaissance. Historians and economists have a range of opinions about the inception of the Renaissance. [Malanima] A critical point of disagreement is the terrible Black Death plagues tht swept Europe (14th century). All sources agree that the quickening of commerce in Europe greatly benefited the city states of Italy. Italian city states like Venuce abd Genoa capable of projecting naval power became enormously rich.
Modern banking first emerged in Italy.
The ecomomy of Italy had been emensly aided by geograpy. Trade routes from the East China, Indiua, and Africa) fed into Europe through the Mediterranean. The silk road led to the Black Sea. And because sea transit was imeasuarably more efficient tranaportation than land transit, the rest of trbsit was by sea. Thesame dynamuc was ar oklay withIndia abd Africa. Abd because Italy juts out into the Mediterarranean it was the natural terminus. The northern cities profited the most, becuse they were closer to the rest of Europe. But all this changed when Vasco de Gama rounded the Cape of Good Hope and opened the oceanic routes to the East (1498). This fundamentally changed notbonky Eurooean, but world economics. The ecomoic vitality of Europe changed from the south and Mediterannean to the northern and western countries that profited from the both the matitime trade eith the East and colonization of the Americas. Italian navigators played a major role in the European outreach by Portugal and Spain. Italy itself without an Atlantic coast did not share economically in that outreach as trade and the locus of wealth shifted west abnd north. Trade with the East shifted first to Portugal and Spain and then to the more northerly powers (England, France, and the Netherlands). As a result, cut off from this trade and increasingly dependent on the agrarian ouput from poor soils, the economy of Italy began a long decline. A factor here was new crops. The crop that Eurioeans wanted was wheat and other grains which were used for bread, a major part of the diet. Whear was developed in the Niddle East with a sunny, rather dry climate. In all of Eyrioe, Italy and Spaon were the closest to that climate. Norther Europe had a kess sunnt and wetter climate. This means that that crop yields were lower and there were ever crop failures. At a time that agticulture was the mainstay of the economy, this meant that it was Italy that was realtively more productive. The introduction of the Ma href="/eco/agr/agr-pot.html">Andean potato to European agriculture changed this relationship. Now norther European farmers could harvest crops with higher yields and sustain larger populations. Northern Europe could feed lather pipulations, the Italians had diffivulty meaning that economic conditions declined.
Religious conservatism and the Counter Reformatiion retarded the scientific inquiry that had begun as part of the Renaissance. Italy divided into minor states became a prize fought over by more powerful European powers emerging as unified nation states. This included the Austrians, French, and Spanish.
Italy is one of the major European countries in terms of population, but was not unified until relative late (1860s). The North (Piedmont) absorbed the southern Kingsom of Naples, a Bourbon monarchy, after a short and relatively bloodless wary Garibaldi--the Risorgimento. Piedmontese primeminister Camillo Cavour is often seen as the architect of Italian unification. He achieved unification in part by bribing southern generals. Cavour is said to have remarked, "Gentlemen, if we had done for ourselves what we have done for Italy, what great scoundrels we should be." Unified Italy was a relatively poor country, compared to the countries of northern Europe. National wealth was still significantly affected by agriculture, although
industrial development was remaking the European ecinomy. The relatively poor agricultural land in many areas of Italy were unable to support the large Italian population. Southern Italy in particular was virtualy feudal. Northern Italy, in part because of the Austrian influence was more modern with a degree of industrialization. Unification instead of improving the economy of the south, made conditions worse. A large-scale peasant rebellion to the Piedmont takeover was highly destructive (1860-61). The South was already the poorest part of Italy (in percapita terms). the Northwest�triangle (Turin, Milan, and Genoa) exoerenced a period of rapid growth
and industrialization, lurching ahead of the rest of the country, especially the south (1880s). The south only fell further behind the rest of the country. This dichtomy was not reversed by Mussolini and the Fascists. According to one economic historian, the southern economy hit rock bottom after World War II. [Zamagni]
By the time the southern economy was at its lowest point, the northern output per person was three times that of the south. The post-War policies of Italy, especially European unification helped to transform the South although this would take some time.
Zamagni argues that this is less a story about what went wrong in the South than about what went right in the Northwest. But boy, did a lot go wrong for the South.
At unification, Naples was the most industrialized city in Italy, due to the protectionist policies of southern Italy's Bourbon monarchs. The new government, attentive to the interests of the commercial farmers of the North, Italy's richest farming region, adopted a free-trade policy, ruining the South's emergent steel and locomotive makers. Thirty years later, however, as industrialization accelerated in the North, the Kingdom of Italy turned protectionist�too late to help Naples-based companies, but just in time to raise the prices of manufactured goods to southern consumers.
The "liberal" Italian governments of 1860-1920 (sometimes led by southern prime ministers) did intermittently try to address the problems of the South. The Fascist regime that took power in 1922, based as it was on the support of northern landowners and industrialists, did not do even so much as that.
Yet from Zamagni's economic point of view, the South lost ground after 1860 less by deliberate design and much more by the fundamental non-complementarity of the northern and southern economies.
For example: Southern agriculture needed to make a transition from cereal production to higher-value, more labor-intense crops such as fresh fruit and vegetables. But the pre-World War II North, although richer than the South, was not rich enough to buy such costly products as that.
For example again: the North did not produce sufficient investment capital to develop the South�yet post-Unification financial policies acted to exclude foreign capital from all Italy, both from the Northwest where it was needed less, and from the South, where it was needed more.
Only with the beginning of the European unification and the advent of U.S. Marshall Plan aid did the South begin to regain old lost ground�and then only after millions of southerners had chosen emigration to the United States, Canada, Argentina, or the richer countries of Europe.
Zamagni's final verdict however is that the South's problems were probably inescapable. The South was poor because it had always been poor, dating back probably to when the
Italy in the 19th century was one of the poorest countries in Europe. While the industrial revolution began to change northern Italy, economic conditions were still almost feudal in southern Italy and Sicily. The difference between northern and southern Italy was that northern Italy had been goverened by the Austrians (and the French for a brief era during the French Revolution). Southern Italy was ruled by the Spanisgh Hapsburgs. Poor agragrian practices and the land and climate also affected crop yields in southern Italy. Italian emmigration began in the north. Many of these early immigrants went to neighboring European countries and to South America, especially Argentina, Brazil, and Uruguay. Later emigration began in even greater numbers from the south. Italians in the second half of the 19th century began a mass exodus to countries with more promising economic opportunites. Southern Italy was almost entirely an agricultural economy, but crop yields were low and few peasants owned land. The primary destination was the United States, but thwere was also emigration to South America (especially Argentina and Brazil). The subression of the peaant rebellion in the south was a factor here. Naples became the gateway to the America. Many Italians stayed in America, but larger numbers took their earnings home to buy land and small shops in their home communities. Many emigrants and boased of their success, which generated even more emigration. The Italian Government also promoted emmigration, seeing it as a way of improving economic conditions. Emigration was only one response to the economic conditions and over population. The other was colonization.
American World War I food aid Italy Figure 1.--This photo was taken in Avellino (a town near Naples in the south) during World War I. It shows peoples liming up to receive American-supplied food, probably soup and bred. (Notice the pots and pales for the soup.) The War was fought in the north, but southern Italy was still affected because so many men were conscripted. The word covered by the flag could be "Cucina" (kitchen). So the whole sign would be: Croce Rossa Americana / Cucina economica (American Red Cross / Cheap kitchen). This could be an inexpensive (or more likely free) food distribution center. We do not yet have details on the American food assistance program in Italy. Italy was still a poor country when it entered World War I. The Government receoived commitments from Britain and France for financial assistance and military equipment. The demands of the War, however, dwarfed the Allied aid. Italy was a still largely agricultural country and Italian farms were not very productive. The poor economic conditions is is why large numbers of Italians were forced to emigrate. (Itallians were one of the major immigrant groups coming to America in the late-19th and early-20th century.) The weak Italian economy was severely stressed by the War. One major problem was that men were the primary family bread wearners. When the Government called up the serves and expanded conscription, this left many families without incomes. To make matters worse, the diversion of agricultural laborers to the Army, affected farm ptodiction. As a result, food prices rose. Inflation became a very serious problem. If the father was killed or badly injured the family was imppverished. Stipeds to soldiers were very low. Middle and Upper class families could generally make do. Poor families which barely survived in the best of times found themselves in very difficult circumstances. Food aid from America was very important in preventing malnutrition. The Italian attitude toward the war was very different than the other beligerant countries. There was nothing like the wave of patriotism that swept over the other beligerants when the War broke out or in America when the United States entered the War. Italy was bitterly divided and the heavy losses only deepned the division in public opinion. The divisions in civilian society were reflected in the Army that Italy fielded for the War. Many Italian peasants and workers saw the state as a represive institution. There were serious disorders in major cities. Anti-war disturbances paralized Milan (May 1917). Bread riots broke out in working-class neighborhoods (August 1917). Army troops took 4 days to quell the riots An estimated 50 demonstrators and 10 soldiers were killed. The war was also unpopular among the men concripted for the War. Not only did many of the conscripts have no commitment to the War, but their provisionn and care was inadequate. Almost one million workers in arms and munitions factories were subjected to military discipline. Nearly 0.5 million Italians resited conscription in one way or another and another 0.3 million committed acts of indiscipline during their military service and this does not count the 0.3 million who actually deserted. By the end of the War, an estimated 1 million Italians faced military tribunals. A post-War amnesty prevented wide-scale juduicial action.
Mussolini and the Fascists set out to modernize Italy after World War I and obtain colonies. There were some sucesses, but the overall economy did not make major progress. Mussolini's economic vision sshowing his Socialist origins was the Corporate State--essentially a managed ecconomy with extensive central planning. Some in America were impressed, seeking a Depression era alternative to free market capitalism. Little by little, Mussolini nationalized major industries. His policies kept unemployment down, but they also meant that Italian companies did not become competutive, paying taxes and creating high paying jobs.
Mussolini in the end led led Italy into World War II. The country did not have the industrial capacity to wage modern war. The country and its economy was devestated as the Allies landed in the south and drove the Germans north. the German Army retreated out of northern Italy, Fascism came to an inglorious end. Mussolini and his mistress were captured by partisans fighters. They were shot and hung upside down. Hitler saw the images shortly before shooting himself. The amount of currency in circulation rose 18 times (1938-45). Strict price controls prevented the expansion of the money supply price cfromn causing infltion. manifested in higher prices.
The economic doctrine of the Corporate State (Stato Corporativo) was formulated in the Labor Charter (Carta del Lavoro) was approved by the Fascist Great Council on April 21, 1927. The most important economist that collaborated with the Fascist regime was Alberto Beneduce (1877-1944). He was born in Caserta, near Naples, As a young man he joined the Socialist Party and became a deputy in Parliament. After 1922 he strictly collaborate with the Regime, but never joined the Fascist Party. He guided the Italian economy from 1926 and in the time of the Great Depression. Beneduce's concept of the Corporate State was influential among American New Dealers. That influence can best be seen in the National Recovery Act (NRA). The NRA blue eagle was seen in stores and businesses throughout the United States in the early years of the New Deal. The NRA was, however, struck down by the Supreme Court. Historians and ecomists differ about the Fascism corporate experience. Most contend that the experience miscarried because of the authoritarian nature of the Fascist regime. Here it is often difficult to separate antipathy to Fascism from purely economic assessments. We are unsure about unemolyment and industrial production trends in the 1930s. One reader suggests that the state bureaucracy was a problem. Mussolini invasion of Ethiopia (1935) brought about an international embargo, but not all countries complied. Mussolini's subsequent decession to join Germany in World War II (June 1940) oroved and unmitigated disaster. The Italian people who had not fulkly recovered from the Depression were plunged into poverty by the cost of the War and the military reverses which followed.
Italy like much of Wesrtern Europe after the difficult immediate post-War years experienced an economic boom, often described as an economic miracle. The most famous of these ecionomic miracles was the one in Germany. But the same occurred in the Low Countries and France as well. The one major exceoption was Britain.
Mussolini and the Germans left a devestated country in their wake. Government officials faced an enormous challenge. Italy did not have important natural resources such as coal and iron. Its agricultural land not very productive. The trahnsportation system was destoyed in the War. Huge numbers of houses and apartment buildings were destroyed. Inflation quickly became a problem. The Banca d'Italia issue large summs of paper money. There also was a reaction to the removal of Fascist era wage and price control.
Italy did not choose carry out a currency as was done in West Germany (causing the Soviets to blockade West Berlin) to create a hard currency. Italian monetary authorities decided to tmpen down inflation by restricting bank lending They imposed a 25 percent reserve ratio on the banks. This absorbed the excess liquidity of the banking system. The Government prohibited Treasury borrowing from the Central Bank without specific authorization.
The new Italian Government inherited from the Fascist Government large industrial concens thathad been nationalized as part of Mussolin's Corporate State policies. As a result, the state oened the following assetts:
shipbuilding (80 percent), oig iron (60 percent), railroad rolling stock (40 percent), and other industrial holdings. The L'Instituto per la Ricostruzione (IRI) operated as a holding company for these nationalized state enterprises. The company had initially been created to protect the interest of depositors in failing banks. The Government refocused operations to deal with communications, electricity, shipping, shipbuilding, steel and engineering. The Government used IRI to prevent failing state-owned business from laying off workers and adding to the unemployment problem (late-1940s).
European integration was an important part of the Italian and wider European success story. heUnited States tied Marshall Plan aid to regional cooperation (1948). This and the Frabco-Germnan raprochment set in motion an integration process. Regional integration beginning with the European Coal and Steel Community (1951) and leading ultimately to the European Union finally brought Italy into the 20th century, including southern Italy. Italy prospered as part of a united Europe. The first real benefit was creating good paying jobs for Italian workers. Many Italian workers went to West Germany where the Economic Miracle first took hold. The money they sent home became a major impetus in jump starting the Italian economy, including industrial expansion that created jobs in Italy itself. At first Italian compaies had the advantage of relatively low wage rates. Italian companies also benefitted from access to a greatly enlarged market whichb included far more affluent consumers than the Italian market offered. Italy had aubstantial population, but large numbers of opeople, particulkarly in the south, lived largely outside the money economy. Another huge assett was that the American military guantee through NATO allowed Italy to limit military spending.
The rapid development of the Italian economy after World War II was a major success story. It probably saved Italy from turning to the Communists and following Eastern Europe into the Soviet Empire. The immediate post-War economic reconstruction was followed by spectacular economic growth (1950-63). Increases in the gross domestic product (GDP) totaled an impressive 5.9 percent annually, peaking at aphenomenal 8.3 percent (1961). Italians refer to the 1958-63 period as Italy�s Economic Miracle with phenomenal industrial exoansion. The growth in Italian industrial output peaked at over 10 percent annually at this time. Only Japan and West Germany reported higher numbers. And Italy experience practically full employment, very unusual in Italian economic history.
Socialists and Communists commanded widespread political support. As a result, Italy created a substantial welfare state with enormous entitlements. Unlike Germany and the northern European states, however, the Italian welfare state was created with little considerartion of the ability to pay out the commitments made. Now Italy faces the sane problem as many other European countries. The Government has promissed massive social welfare entitlements that are becoming increasingly difficult to finance and are impeading economic growth. Unlike the smaller states (Greece, Portugal, and Ireland), the financial commitments of the Government are enormous streaching the capability of the EU to finance a bailout. The fiscal position of Italian banks is also being questioned.
Malanima, Paolo. "The Italian Renaissance Economy". (1250-1600)*
Zamagni. Vera. Economic History of Italy 1860-1990
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