Gianni Toniolo, the first volume, the «History of the Bank of Italy» – Corriere.it

On August 18, 1926 Benito Mussolini stopped in Pesaro during a trip to Riccione and harangued the crowd gathered in the town hall square. In reality a few, vague words. Reread with today’s sensitivity, surprisingly devoid of understandable arguments and points of reference. Nevertheless that brief speech from Pesaro it would have remained famous and would have ended up costing Italy about 400 tons of its gold reserves – at least two or three points of the gross domestic product – but above all long years of declining wages and salaries, more or less badly disguised unemployment and international humiliations.

Yet, in fact, in Pesaro’s speech Mussolini did not say much, even if with the usual empty emphasis: “We will conduct with the most strenuous decision the economic battle in defense of the lira and from this square to the whole civilized world I say that I will defend the lira to the last breath, to the death – declared the head of the government -. I will not inflict on this wonderful people of Italy the moral shame and economic catastrophe of the bankruptcy of the lira ». Then the threatening conclusion: “The Fascist regime is willing, from its leader to the last wingman, to impose all the necessary sacrifices.”

Start like this the myth of “quota 90”, the attempt – unfortunately successful – to bring the lira back into the Gold standard, the exchange system already in agony at the time, on an artificially high exchange rate for reasons of national pride. Luckily there is Gianni Toniolo, that with an extraordinary work of archiving and political and institutional recomposition gives us back today a lively and reasoned picture of that adventure. Toniolo is undoubtedly the greatest Italian economic historian and has just published the first volume of his for Il Mulino History of the Bank of Italy (1893-1943), which in reality is simply an economic history of the country in the European and international context, reconstructed through first-hand documents found in the archives: the very rich one of the Via Nazionale institute and those of Washington. The “quota 90” story is just one of the many that Toniolo reconstructs in fundamental and unpublished details.

Toniolo writes: “Mussolini suffered from the devaluation of the lira as the only blemish in a political and governmental management that he considered very successful.” Ten days before the Pesaro speech, the Duce wrote to his for this reason Minister of Finance Giuseppe Volpi, already then one of the greatest war criminals in the history of Italy as former governor of Libya of the first concentration camps, entrepreneur of the Sade of Venice who would have built the Vajont Dam and yet still today remembered by the Volpi Cup of the Venice Film Festival . But, in fact, Mussolini wrote to his minister: “Today the devaluation of the lira leaves the economic field: it is now a problem of psychology, therefore of will and faith”. Toniolo comments: “It was becoming a purely political problem.”

Already in 1923 John Maynard Keynes, who had rescued the fugitive Piero Sraffa from the pressures of fascism by welcoming him to Cambridge, had been ferociously sarcastic as to the duce’s fantasies of monetary magnitude: “The lira does not obey even a dictator nor can it be given castor oil for this”, had written. In fact, Italy was still deeply destabilized by the Great War, the currency was not ready to return to the Gold standard after the suspension of more than a decade earlier, while the phases of financial panic followed one another. Toniolo reconstructs how the stock market and lira collapses and the risks of bank runs in 1925 had worried Bonaldo Stringher, the Friulian economist of Jewish origin – non-fascist – who from the beginning of the century headed the Bank of Italy and was the first to have the title of governor in 1928. It matters little that Mussolini at that stage still enjoyed a certain credibility in the system international financial. In April 1925 the Duce receives a visit from Thomas Lamont, partner of JP Morgan, to whom he gives such a favorable impression that the banker will help Italy to obtain a loan in dollars, will hang the photo of the Duce with a dedication in his office on Wall Street and will reserve him benevolent advice to get his methods accepted abroad: “If Mr. Mussolini declared that the parliamentary regime has ended in Italy, this would constitute a shock for the Anglo-Saxons – affirms Lamont -. If, on the contrary, Mussolini explained that the old parliamentary forms have failed in Italy, generating chaos and inefficient governments and that therefore they had to be suspended and reformed, then the Anglo-Saxons would understand ».

However, they did not understand the markets or “international speculation” (as it was already said then). In 1926, even the House of Morgan was irritated by the sudden shake that Volpi made of Wall Street loans to try to shore up the lira. The Italian currency in spring and summer undergoes new collapses. Until the fatal speech of Pesaro, to which, however, the markets do not react precisely because it is so vacuous in the details. However, they arrive a few days later when, notes Toniolo, Mussolini “managed to give castor oil to the lira”.

Stringher and his men in the Bank of Italy, competent and unrelated to the regime, understood that the weakness of the exchange rate was due to the country’s trade deficit in foreign exchanges. They knew that trying to revalue the lira would only reduce exports even further. Mussolini and Volpi instead, as medieval curators who apply leeches, they thought that the fault of the weak lira lay in an excess of money in circulation. Two weeks later Pesaro the Duce wrote to Stringher proclaiming himself a “fanatic of deflationist politics” and ordering a credit squeeze, which in the following fifteen months would have collapsed in Italy by 43%.

It was only the beginning of the sacrifices that would have led to the tiring readmission of the lira to the Gold standard at “quota 90”, to be exact a change of 92.46 lire per pound. The international monetary system, already then an anachronism, would have collapsed anyway with the Great Depression of the 1930s which he helped unleash. Yet to support that change, the regime would have burned about three-quarters of its gold reserves (the 400 tons) in the following years and appealed to “gold for the country”.

Thanks to Gianni Toniolo for a work of extraordinary wealth, a sort of economic autobiography of the nation. And the governor Ignazio Visco for having facilitated and supported this project, which now continues with the second volume from 1943 to the present day.