The Great Depression: Italy


Figure 1.--Italy like the rest of Europe was severly affected by the Depression. One interesting aspect of the Depression in Italy was that it does not appear to have weakened the regime. In the democracies, many turned to radical solutioins such as Communism and Fascism. Apparently in Italy the Fascists were able to use the aparatus of the police state to prevent any challenge to the regime. Here we see some country children near Florence. I think the photograph may depict food distribution. An Italian freader writes, "I think that the children were with the parents during their agricultural works, perhaps the threshing."

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.

Fascist Economic Policy

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.

Wall Street Crash (1929)

Since World I the United States had become the leading country in the world economy. The Wall Street Crash in America (October 1929) is seen as the immediate cause of the Great Depression. Even before the Crash, the stock market boom in the United Stastes had drawn investment capital from Europe. The Crash and the plummeting of business activity in America quckly affecte Europe. As a result of the imkportance of the American economy, the impact on Europe was substantial. The Crash sent shock waves throughout capital markets in Europe. The sharp decline in American imports soon affected European exporters and this impact quickly percolated through the European economies in genetral. The impact worsened when the United States instituted protectioinist measures restricting international trade. Other countries followed suit with similar measures.

Economic Decline

The protectionist measures implemented by the United States and other countries had a significant impact on Italy. One study suggests that these sanctions may have accounted for as much as half of the economic decline in Italy. [Perri and Quadrini] Wage rigities in the economy appear to have been another major factor. Italy was one of the countries affected by the Wall Stree Crash and decline of the American economy. Economic activity declined sharply. Unemployment followed suit and by 1931 had reached significant levels. Economic activity had recovered by 1937, but high rates of unemployment persesisted (table 1).

Table 1.--Italy. Economic activity and unemployment, 1929-37
……….....………..ACTIVITY….UNEMPLOYMENT
……………………1937=100 ……… 1,000s
  • 1929….....…….... 90 ………….....301
  • 1930….....…….... 85 ………….... 425
  • 1931….....…….... 77 ………….... 734
  • 1932 ….....……... 77 …………..1,006
  • 1933 ….....……... 82 …………. 1,019
  • 1934 …....…….... 80 ………….... 964
  • 1935 …...……..... 86 …………..... NA
  • 1936 …...……..... 86 …………..... NA
  • 1937 …...……... 100 …………..... 874
  • 1938 …...……... 100 …………..... 810
NA - Not available

Source:

Assessment

Most contend that the Fascist attemts to deal with =the Depression miscarried because of the authoritarian nature of the Fascist regime. Here it is often difficult to separate antipathy to Fascism from purely economic assessments. One reader suggests that the state bureaucracy was a problem.

Ethiopia (1935)

Mussolini as part of his efforts to build an Italian empire, invaded Wethiopia (1935). The Italians used used modern weapons again Ethiopian forces which were not even fully equipped with rifles. The Italians deployed artillery, machiner guns, armoured cars, air craft, amnd even used poison gas to attack a largely unarmed country. The Ethiopins had defeated an Italian Army in 1896 and Mussolini was determined to redeem what he saw as a blot on the national honor. Marshal Pietro Badoglio commanded the Italian invasion force. He extensevly used poison gas. The Italian invasion was widely condemned at the League of Nations by more than 50 other countries. The invasion gave rise to world-wide indignation, but nor military support for Ethiopia. Criticism was especially heated in Britain which, still thinking about World War I, people were truly shocked by Italy's use of poison-gas as well as deliberate bombing of Red Cross hospitals and ambulances--especially the British Red Cross Unit. [Waley] The British pushed in the League of Nations for scantions. The French played lip service, but were more interested in Italaian support for their efforts to limit Hitler. An oil embargo which might have affected the Italian war effort was not approved, provably for that reason. [Davidson, p. 130.] The Italians were condenmed by the League of Nations and then walked out of the organization. The League embargo affected the Italian economy, but it was not severe.

World War II (1940-43)

Mussolini's subsequent decession to join Germany in World War II (June 1940) poroved and unmitigated disaster. Italy was in no way prepared for a modern war against European adversaries. For Mussolini sitting back and watching Hitler's armies march over Europe finallu outwighed his caution. The potentisl spolis were just too enticing. This was not a carefully made decession of expers, this was Mussolini's own personal decession. Beyond the fact that Italy was unprepared, was the fact that Italy is a peninsular country, exposed to the British Royal Navy in a way that Germany, safefully buried in central Europe was not. The War begun with a substantial part of the Italian merchant marine being impounded in foreign ports. The Italian people who had not fully recovered from the Depression were plunged into poverty by the cost of the War and the military reverses which followed.

Sources


Davidson, Eugene. The Unmaking of Adolf Hitler (Univesity of Missouri: Columbia, 1996), 519p.

Perri, Fabrizio and Vincenzo Quadrini. "Italy: Trade Restrictions and Real Wage Rigidities", Review of Economic Dynamics (Janury 2002), 5:1, pp. 128-151.

Waley, Daniel. "British Public Opinion and the Abyssinian War 1935-6".






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Created: 9:36 PM 1/8/2005
Last updated: 9:36 PM 1/8/2005