Economic context in Italy before the establishment of fascism

Italy was very far from being a great country in terms of economy even in the years before 1914. The First World War was only the sparkle of an economic crisis that had been in danger for very long before.

In the interwar period, between 1918 and 1922, Italy had five different governments, all incapable of taking the right decision that the time and situation required. Until Mussolini and the Fascist regime took the power.

But the economic facts that lead to the establishment of fascism are too important to be ignored, because a happy, well-living, economically stable society wouldn’t admit a dictatorship that easily.

But the First World War did make things worse. Before, Italy had a fake but stable economy, based on strong loans obtained from the United States, the tax system was an actual mess, and the banks were in crisis. Right after the Great War, Italy was devastated in every aspect.

The living cost increased immensely, causing the value of the lire to drop until it was only worth one fifth of the American dollar. Besides the concerning monetary devaluation, a public debt to the United States, and an internal shortage, Italy didn’t have an organized budget, nor a well-planned economic solution to the crisis.

But that wasn’t it, in October of 1929; the American economy suffered the Wall Street Crush. Since the United States had become the leading country in economy, this event affected investments of the entire European Continent, causing the Great Depression almost immediately.

America took action right away, turning into a protectionist economy and applying the “beggar-thy-neighbor” policy, which meant that no more loads would be giving and the commerce would be left apart, as every country tried to alleviate their crisis making the economical problems of other countries worse.

An example of the Italian crisis was the serious unemployment the country was undergoing, reaching significant levels that didn’t improve until late 1937.

Internationally, trade decreased in 30 percent after the imposing of these policies. Western leading countries cut back harshly on the purchase of resources and other merchandises, causing the price of coffee, cotton, rubber, tin, and other raw materials to dropped 40 percent. The collapse in this particular possessions and agricultural commodity prices led to social unrest, making it easier for a totalitarian regime to take over, by promising to find a way out the catastrophe.

The measures taken by the United States’ economic department had a significant impact on Italy, and are said to be responsible of at least half the Italian economic deficit.

Written by: Analucia Castagnino