Mussolini’s economic policies

Upon his rise to power Mussolini proclaimed that Italy would finally be made ‘great’ by the power of fascism, enacting numerous policies such the ‘Battle of the Marshes’ in an attempt to improve Italy’s industry, agriculture, the economic situation in monetary and employment terms, as well as creating new transport/trade links to bolster Italy’s overall economy. These policies were often minor successes, such as the Battle for Grain which did push Italy towards some self-sufficiency required for the fascist war economy.

Realistically however, Italy’s financial and state of resources ensured that Mussolini’s economic policies in these key sectors remained a general failure. One key sector which Mussolini targeted was the Italian industry, one of Mussolini’s biggest successes. Situated mainly in northern Italy, the industry played a large role in bolstering the Italian economy; initially this was presented a success. The Mussolini government took a relatively laissez-faire approach, with limited corporation taxes in order to encourage growth of larger firms.

This presented one of Mussolini’s biggest successes; he had taken power as Italy was in the midst of the ‘economic miracle’, and despite limited resources this approach spurred growth of new industries such as the industries in chemicals, synthetic fibres as well as the important electricity supply, which was vital for continued industrial growth. 1925 saw the official legislation outlawing trade unions, which was met with much support by industrialists and factory owners alike; banning trade unions ensured an incentive for corporations to continue to grow.

With the worldwide economic downturn beginning in 1929, Mussolini’s government responded by creating the IRI (Institute for Industrial Reconstruction) which saw greater government intervention, taking over shares in industries held by failing banks in an attempt to reorganise the failing industries. This was another major success, with the IRI eventually authorised to take over failing private industries and eventually being responsible for 90% of Italy’s ship building industry by 1939.

However, the success of industrial policies was limited by Italy’s pre-existing state of economy; growth remained limited especially when compared to other European nations, one example being that Germany’s 1940 pig iron output at 50 million tonnes far exceeded Italy’s output of less than 5 million tonnes. The depression also eventually forced large wage cuts, and the outlawing of trade unions helped little with worker morale.

Overall, the industrial sector presents one of Mussolini’s biggest successes in economic policy, only hampered by the worldwide depression; Mussolini did have numerous successes especially when compared to the prior weak economic state of Italy. Agriculture remained another key aspect of Italy’s economy, and became increasingly important as Mussolini enacted the policy of autarky, self-sufficiency for the war effort. Initially, like the industrial policies this was a minor success, with the north increasing wheat yields by 50% more wheat per acre of land.

The policy of autarky within the agricultural sector seemed to be heading towards a success, with Italy becoming almost entirely self-sufficient in cereal stocks by 1940; wheat imports fell by 75% in the years 1925-35, and to encourage consumption of Italian produce tariffs were levied on imported grain from 1926 onwards. Further economic policies included the Battle of the Marshes, which aimed to drain marsh land in order to be made suitable for farming.

Another positive side effect this had was on public health, as draining the marshes helped curb the spread of diseases such as malaria, commonplace in southern Italy as well as in an attempt to revive the agricultural sector in the south. However, these initial successes were quickly shadowed by the economic depression, with yields in the south remaining extremely low, and a 20% fall in livestock farming. This failure were further aggravated as southerners left the crumbling south in an attempt to seek work in the north; 1.

5 million people moved to the north as southern wages were cut by up to 40%. Ultimately Mussolini failed to succeed in agricultural autarky, and despite initial successes the latter failures were much more significant, with large droves of farmers failing to find work even when moving up north; the Battle of the Marshes also failed to meet government targets, only claiming a twentieth of the official government target. In comparison to the advancements made in the industrial sector, agricultural success was a far cry from the targets set by Mussolini.

The economic status of Italy was also another government objective; Mussolini aimed to increase the value of the Lira in the ‘Battle for the Lira’. This was only a minor success as while Mussolini managed to peg the value of the Lira at 90 Lira to the pound, gaining some prestige within the Italian public and foreign banks, the immediate knock-on effect was significant; exports fell significantly as prices increased for foreign buyers, and unemployment eventually trebled by 1928.

This single policy led to the largest car manufacturer Fiat to cut down exports of Italian cars, clearly showing the failure of Mussolini’s policies in regard to currency. Italy’s balance of payments problem continued to worsen steadily, and foreign policies including the invasion of Abyssinia failed to help; the ‘spoils of war’ were limited and following the intervention in Spain Italy had a budget deficit of 28 billion Lira in 1939, compared to just 2 billion in 1934.

To follow up with the revaluing of the Lira, Mussolini also placed import tariffs which only served to increase prices of foreign goods, and the standard of living decreased significantly. By the latter stages, the policy of autarky had failed: Italy was relying largely on Germany for coal imports in the early stages of WWII, and the war economy Mussolini had envisioned was non-existent.

Under Mussolini’s economic management, Italy’s economic status was effectively left to crumble as Mussolini continued his assertive foreign policy which simply could not be supported by the industrial or agriculture of Italy – the country had not succeeded in achieving autarky which was essential for Mussolini’s plans for war. Mussolini’s policy was relatively straightforward at first: oversee the growth of the industrial and agricultural sectors, as well as the eventual target for autarky in preparation for WWII.

Initially this was a minor success, with industries benefiting from the laissez-faire approach and limited taxation, as well as the ‘Battle of the Marshes’ which saw agricultural production increase somewhat. However, all these improvements were eventually overshadowed by the fact that Mussolini had failed to deal effectively with the growing problem of inflation and stagnation in growth caused by the Depression, while still attempting to pursue a war economy similar to Germany’s.

In comparison to other European countries, Germany especially, Italy made little progress overall in terms of economic stability, with the North-South divide still a prominent issue. Mussolini had, in effect, failed to achieve his own initial targets and his policies were therefore mostly unsuccessful, especially when taking into account comparisons to other European countries.