According to Fashionissupreme, the beginning of the world war caught Italy in a situation of undoubted inferiority compared to other nations. In fact, it had not yet fully recovered from the losses suffered as a result of the Calabrian-Sicilian earthquake and the Libyan war (about 6 billion) and it had also missed that period of economic prosperity that almost all other states had enjoyed in 1909- 12 after the rapid solution of the general crisis of 1907, which in Italy, which occurred with a certain delay, had instead resulted in a prolonged phase of chaos and business depression. And although this gradual process of weakening that the Italian economy has been undergoing for over four years has been able in a certain way to soften the violence of the initial shock, however very strong, it is certain that the lack of flourishing finance and low private income (in addition to the poverty of raw materials, the scarcity of means of transport and the weak industrial equipment) had to aggravate the effort necessary to meet the new war requirements. The Italian taxpayer was in fact much more burdened than that of other states (just think that 1/5 of the national income was absorbed by taxes while, for example, in England the share reserved for the state was just 1/16) and the burden of public debt was already very heavy; the level of consumption was on the other hand very low, although with the economic improvement that took place after 1900 a gradual rise in the standard of living had begun in Italy too (Italy was almost alone in fact to still have a passive physiological balance). The rates of existing taxes were nonetheless tightened and new extraordinary taxes were introduced (tax on war profits, on assets, etc.) succeeding with these measures, as well as with the enlargement of the monopoly regime, to increase revenues of the budget from 2.5 milliards in 1913-14 to 9.7 milliards in 1918-19. The enormous increase in the tasks of the state, however, caused a much stronger increase in expenditure, which in the same years went from 2.7 to 32.5 billion; and the various businesses closed with ever-increasing deficits (overall from 1913-14 to 1918-19, 62.7 billion; note, however, that the amount of war expenses and dependent on the war up to 30 June 1919 was over 70 billions). The state was therefore forced to borrow abroad (as of June 30, 1919, 19.2 billion, contracted almost exclusively with England and the United States for the supply of the army and the country), to issue on the market internal consolidated and redeemable loans and multi-year treasury bills (the former, considerably exceeding the available savings and therefore being largely subscribed by banks, took on the typical figure of expansionist loans which translate into subtle inflation; the latter offered the banks a comfortable investment for the enormous amount of money that flowed back into their coffers as a consequence of the inflation itself), to issue state notes out of the blue and to authorize the issuance of bank notes on behalf of the state. As of June 30, 1919, the external and internal public debt, patrimonial and fluctuating (including advances in bank notes and the circulation of government notes) had thus reached 79.4 billion, from 14.8 billion that was at June 30, 1914, and the total bank and state circulation had risen, in the same period, from 2.7 to 14.5 billion, without a corresponding increase in reserves.
Nor could this state of affairs immediately cease with the cessation of hostilities, since the upheaval caused by the war in the economic life of the country had been too great and too many elements of uncertainty persisted in international relations to allow a rapid return to normality (in ending the June 30, 1919 the war period previously considered was taken into account precisely the inopportunity of dividing the financial year 1918-1919 into two phases, given the close analogy that runs from many points of view between the last months of the war and the first months after the armistice). Huge charges still weighed on the state budget and others were added, both for the liquidation of some war management (mainly those for maritime traffic and for food supplies and consumption), both for the need to provide for the satisfaction of public needs neglected in recent years; charges that ordinary income, although significantly increasing, certainly could not cope with. Meanwhile, an intense demand for consumption was rising everywhere as a reaction to the long abstinence, erroneous forecasting and inadequate perception of the monetary situation fueled a general sense of illusion and, not held back by a restrictive discount policy, it began after a brief phase of confidentiality. a period of business effervescence. Therefore, recourse to the inheritance and the issuing of tickets, both on behalf of the state and of commerce, did not stop. Inflation actually reached its peak (22 billion notes in circulation at the end of 1920) in this immediate postwar period, whose fundamental characteristics are precisely the decline of the purchasing power of the currency (it should also be remembered that in March 1919 the inter-allied agreements with which the changes had been artificially supported in the last times of the war had ceased) and the consequent progressive dissolution of economic organism, disguised as an apparent prosperity. The unjust redistribution of wealth and the instability of incomes, which always go hand in hand with inflation, meanwhile fomented the social disturbances and in particular the workers’ unrest, which gave rise to the growing unemployment (partly due to demobilization) and all this had to necessarily aggravate the difficult situation of the industry which was already feeling the discomfort of the exaggerated reckless expansion of the plants and the first symptoms of the next crisis.
