Economy of Italy Under Fascism - Firmer Intervention

Firmer Intervention

The lira continued to decline into 1926. It can be argued that this was not a bad thing for Italy - cheaper and more competitive exports, dearer imports. Politically however the declining lira was disliked; Mussolini apparently saw it as "a virility issue", the decline was an attack on his prestige. In the Pesaro Speech of August 18, 1926, he began the "Battle for the Lira". Mussolini made a number of strong pronouncements and set his position of returning the lira to its 1922 level, "Quota 90." This policy was implemented through an extended deflation of the economy; the country rejoined the gold standard, money supply was reduced and interest rates raised. This produced a sharp recession, which Mussolini took up as a sign of his assertion of power over "troublesome elements" - a slap to both capitalist speculators and trade unions.

On a wider scale the Fascist economic policy pushed the country towards the "corporative state", an effort which lasted well into the war. The idea was to create a national community where the interests of all parts of the economy were integrated into a class-transcending unity. Some see the move to corporatism in two phases. first the workers were brought to heel over 1925-27. Initially the non-fascist trade unions and later (less forcefully) the fascist trade unions were eliminated. This was a difficult stage - the trade unions were a significant component of Italian fascism, from its radical syndicalist roots, and they were also a major force in Italian industry. The changes were embodied in two key developments. The Pact of the Vidoni Palace in 1925 brought the fascist trade unions and major industries together, creating an agreement for the industrialists to only recognise certain unions and so marginalise the non-fascist and socialist trade unions. The Syndical Laws of 1926 (sometimes called the Rocco Laws, after Alfredo Rocco) took this agreement a step further; in each industrial sector there could be only one trade union and employers organisation. Only these unions could negotiate agreements, with the government acting as an 'umpire'. The laws made both strikes and lock-outs illegal and took the final step of outlawing non-fascist trade unions.