Italy Economy and Finance from 1954 to 1959 3

In the sector of economic relations with foreign countries, exports, especially for developments in the second half, recorded an increase of 12% in value and of about 20% in quantity, against increases of 4 and 9% respectively on the side. of imports. As a result, the trade deficit in the balance of payments was reduced from 373 to 125 million dollars and the part of imports covered by exports went from 87 to 95 per cent. Thanks to the consistently high contribution of the sector of services and remittances of emigrants and to the further inflow of capital from abroad in the short and long term, gross foreign currency holdings increased by another 991 million dollars, eventually reaching year the 3 billion dollars.

With the strengthening of the currency situation and following the commitments made by Italy at the international level, the liberation of exchanges and currency movements made further progress. At the end of 1958, with the declaration of convertibility of the lira, the almost complete elimination of the limitations regarding the area of ​​spendability of the lira held by non-residents, as well as the currency requirements for residents, was ordered. In the customs sector, starting from January 1959, the first reduction of duties of 10% envisaged by the Agreement establishing the European Common Market for goods coming from Community countries (subsequently extended for many goods to all origins) was implemented and the first increase in quotas to the extent of 20%. Another 20 per cent, increase in quotas took place in January 1960. In May 1959, the liberalization share of imports from the dollar area was raised to 85 per cent. A further step towards trade liberalization was carried out in January 1960 with the publication of new import tables from the various currency areas, involving further liberations from the dollar area and third countries. In February 1960 the new gold parity of the lira was fixed at 703.297396 lire per fine gram, on the basis of the gold parity of the dollar and the exchange rate of 625 lire per dollar.

Like the previous year, 1959 was also characterized by great liquidity on the money and financial market, due to the further strong increase in the Bank of Italy’s foreign exchange items. Liquidity was reflected in the increase in savings deposits and bank current accounts, which was in the order of 17%, and in an increase in deposits through the financial market. In relation to the recovery of productive activity, bank loans in favor of the economy increased by more than double that of 1958. There was also a considerable increase in loans through the financial market, a large part of which flowed to the State, through subscriptions for ordinary treasury bills (470 billion, against 292 in 1958) and the 1966 seven-year treasury bills (300 billion), issued in July 1959 to allow the implementation of a public investment program for anti-cyclical purposes. Also during 1959 there was an increase in the prices of securities, which in the sector of shares exceeded 60%, as a consequence of the almost constant prevalence of demand, partly of foreign origin. The yield on the shares fell from 4.7 to 3%; that of government bonds from 5.7 to 5.4% and that of bonds from 6.2 to 5.5%.

According to, the progress made and the structural changes that have taken place over the six-year period can be summarized in the following figures: national income presented, in real terms, an average annual rate of increase of 5.3%, slightly higher than that assumed in the Vanoni scheme; in the industrial production sector there was an average increase of 7.8% per year, with a maximum of 10.5% in the auxiliary materials sector and a minimum of 5.7% in the consumer goods sector; in agriculture there was an increase of 2% per year; the participation of the various branches of activity in the formation of the net product at factor cost went from 26 to 19% for agriculture; 39 to 41% for industry and 35 to 40% for tertiary activities.

In the price sector, the wholesale price index stood in December 1959 at a level slightly below (0.7%) only the average of 1953. The slight decrease was due to the prices of industrial products, which fell by 2 %, while those of agricultural products recorded an increase of 4%. Between the same periods, consumer prices increased by 15% and the cost of living index increased by 20%, mainly due to the higher spending on housing, which almost tripled due to the gradual release of rents, and of the increases occurred in the food (+ 13%) and miscellaneous expenses (+ 16%) chapters. In the wage field, real wages of agricultural workers exceeded the levels of 1938 and 1953 respectively by 66 and 14 per cent,

The development of foreign trade over the six-year period is documented by a quantitative increase of 95% in exports and 37% in imports. Imports in 1959 concerned 18% of foodstuffs, 57% of raw materials and industrial semi-finished products and 25% of finished industrial products. Compared to 1953 there is a slight shift in favor of industrial finished products. In turn, exports consisted of 19% of foodstuffs, 25% of raw materials and industrial semi-finished products and 56% of finished industrial products. This indicates that, in comparison with 1953, the participation of foodstuffs has significantly decreased and, to a lesser extent, that of raw materials and industrial semi-finished products, to the full advantage of industrial finished products.

Regarding the geographical distribution, between 1953 and 1959, there was a sharp increase in trade flows, in both directions, with the countries of the Common Market and Eastern Europe and in our exports to the countries of the hemisphere. western. On the other hand, our trade with the sterling area and our supplies in the dollar area decreased significantly in a relative sense. In 1959, the Common Market countries supplied 28% of imports and absorbed 29% of exports. The holdings of the other commercial areas were respectively the following: small free trade area, 18 and 22%; western hemisphere, 19 and 22%; non-participating sterling area, 15 and 5%; Eastern Europe, 5 and 4%, other countries, 15 and 18%.

In the monetary and banking sector, total means of payment reached, on average in 1959, 5,900 billion, equal to 140 times the level of 1938, against a 111-fold increase in national income. The increases were 100 times for legal tender, 95 for money orders and checks and 185 for bank current accounts. Savings deposits with credit companies, especially following the favorable trend of the last two years, multiplied by 138; those at the post office have increased by only 64 times. On the lending side, the development coefficients are equal to 155 for credit companies, 194 for industrial and public works credit institutions, 97 for real estate credit institutions and 142 for agricultural credit institutions.

The state budget recorded a further improvement. Between 1953-54 and 1958-59, actual revenues showed an increase of 62%, reaching 3,249 billion and expenses increased by 44%, reaching 3,361 billion; in turn, the part of the expenses covered by the revenues went from 86% to 97%. The sharp increase in revenue was mainly due to the development of ordinary direct taxes and customs and consumption taxes, while the proceeds from indirect business taxes and monopolies, lotto and lotteries recorded more moderate increases, and American aid revenues were have come to an end completely. Out of 100 lire of revenue, 20 were provided by direct taxes, 34 by taxes and indirect business taxes, 23 by customs and consumption taxes, 14 from monopolies, lotto and lotteries and 9 from other taxes. On the expenditure side, the greatest increases occurred in the public education sector, in expenditure for local finance and in those of a social nature, in costs of an economic and productive nature and in various charges. Expenditure on internal and international security and on public debt interest showed much more moderate increases, while the burden on political prices fell by half. Out of 100 lire spent, 27 concerned social charges (including public education), 22 safety, 21 economic and productive charges, 7 interest to be paid for public debt, 7 local finance and the remaining 16 lire charges of various kinds. Over the six-year period, the financing of budget deficits led to an increase in the internal public debt of almost 2,100 billion. At the end of 1959 this debt amounted to 5,647 billion, marking a 40-fold increase compared to 1938; 61% of it consisted of floating debt.

Italy Economy and Finance from 1954 to 1959 3