Evening star., 1935-10-27


During the last five years every
Italian budget has had from 18 to
25 per cent chronic deficit. During
the 193435 fiscal year it rose to 33 per
cent-touching 6,819,000, 900 lire. The
treasury says-by heavy sacriflceS-it
will be able to balance the ordinary
budget in l936-37. The costs Of the
African adventure will be extra. They
have been estimated at 10000 ,000,0 900
lire In August the Ethiopian ex-
peditionary force took 100000 lire
day to finance; in September, when
hostilities began and the troops began
to burn up powder, etc, they were
estimated at nearer 25,000000 lire per
day roughly S3,500,000)
How is MuSsolini going to raise this
sum?
First: A short-term loan of T.
0O0,0O0,000 to be forced upon the
banks, life insurance companies, etc.
has been authorized. 1t will carry in
terest at per cent
Second. The public. which now
holds $4,000 100000 worth of 31a per
cent state bonds. has been ordered
to convert these into new 5 per cent
state bonds. For every 100-lire bond
converted the holder will have to pay
an additional Is lire. Officials esti-
mate the treasury will obtain about
5000 100000 ready cash through this
maneuver-if it is successful
Thirdly: The Italian people have
around 1885 100000 deposited in
banks as savings accounts. MuSsolini
holds that the wealth of the people be-
long to the government if it needs it.
BY seizing these deposits he can pro-
long the African war three years If
necessary. And the people can do
nothing about it. Italy is Dictator
ship and Mussolini's word is law
There is also report current, which
Italian bankers ridicule privately, that
II Duce has hidden gold reserve"
which he has amassed over the last
II years for just such an emergency
as the present one. A fabulous, TO-
mantle war chest. But to date no
foreign firms have extended credit
against it. With credit drying up the
Italians are in very difficult situa-
tlon-a situation more dangerous than
any League sanctions thus far imposed
Mussolini must import at least 10
key raw materials, copper, iron, fuel
oil, tin, rubber, manganese, zinc, lead
and wool. To get these he must pay
cash.
Financial Embargo.
Only Germany, Japan and the
United States-and perhaps Brazil
are not bound by the League economic
sanctions. Washington slapped on an
embargo of war materials even before
the League acted. The financial en-
barge, imposed voluntarily by British
and American bankers, has been on for
three months already. England. as far
back as August practically ceased steel
and iron exports to Italy. Only 995
tons was sold that month. Coal ex-
ports from Britain also have practi-
cally ceased, making the Italian navy
dependent upon Polish, German and
French coal.
The NaziS are said to have entered
into a trade agreement whereby they
will sell war materials to Italy against
70 per cent cash payment, 25 per cent
credit and so per cent payment in
goods. Poland is under contract to
pay for two large ocean liners in coal.
Persia and Russia are selling heavy
consignments of petroleum for which
the FaScists have set aside 337, 600, 900
lire gold. These oil supplies are to
constitute reserve" Russia also
has been exporting large quantities of
wheat to Italy.
While, internally, business is BOOM
ing" in Italy the prosperity is en-
tirely artificial. Unemployment is
said to have dropped from 100000 to
$4,000. But this is due to thousands
of idle being incorporated in the army
and labor corps sent to Eritrea and
Somaliland. There are also 10000
men under arms in Italy itself. The
institution of the 40-hour week also
mas absorbed many unemployed in
factories. But wages have fallen 20
per cent, while food prices, etc., have
risen IS per cent. Production in
1934-35 is reported to have been 6 per
cent higher than 1928-chiefy due to
the demand for war materials. Here
again Italy's situation resembles that
of Nazi Germany, where the arma-
ments industry is fiourishing.
The Italian public already is be-
ginning to feel the pinch of new taxes.
Collection of all income taxes is being
pressed and lower salaries are now
included. Railroad and transporta-
tion rates have been boosted and high
tariffs imposed on all luxuries. The
tariff has been removed on raw ma
terials necessary for munitions.
Hope for Trade Abroad.
If the economic sanctions become
effective the Italians hope to get the
necessary raw materials from nom
League states. Last year 80 per cent
of Italy's imports came from Germany
and the United States. Those two
countries took 81 per cent of Italian
exports. England took II per cent
and the gold bloc-France, Holland,
Belgium, Switzerland and Poland
around %. per cent. Experts estimate,
however, that an alright blockade of
League members will cost Italy about
73 per cent of her trade.
The blockade will also be costly for
the Leaguers. Yugoslavia sells 25 per
cent of her exports to Italy normally.
England exports goods valued at $45,-
100000 annually to Italy and buys
almost as much in return from the
FascistS. France can get along with
out Italian trade and also anticipates
repatriating some 100000 Italian la
borers now employed in France,
thereby reducing her unemployment
drastically. Switzerland, likewise,
could profit by such a move.
As things are developing it will not
L.,