The share of savings on this income – which, judged per head of resident, must take into account an increase in the population between 1938 and 1948 of about 6% – was around one seventh of the total: propensity to save that can be judged high, compared to a very modest average income and frugal and rigid consumption, but which does not ensure the share of investments deemed necessary to reduce the number of unemployed to tolerable and estimated “physiological” percentages. This appears to be the fundamental problem facing the leaders of Italian economic policy in what, after the assistance phase and after the stabilization phase, could be the most intensely productive phase of the current post-war period: its solution requires, not only a ” high propensity to save, but an injection of large amounts of foreign savings. At the same time, the country’s foreign policy will have to resolve the problem of a wider and more rational emigration.
By comparing the figures relating to the relevant budget expressed in billions of current lire with those expressed in billions of lire in 1938, it appears that state expenditures, greatly increased for war needs, reaching a figure almost equal to that of national income in 1941 -1942, then gradually contracted to a level equivalent to a quarter of the income itself, despite the fact that in their monetary expression they appear to be increasing. It also appears that actual revenues allowed the coverage of an increasingly smaller part of the total expenditure up to 1944-45 (the year in which they reached only one sixth) and then rose up to over two thirds in 1948-49 and to over four fifths in the forecast for 1949-50.
Characteristic of the financial statements of the immediate post-war period is the considerable deviation of the forecasts from the final results and therefore the continuous need to update and revise these forecasts due to the changing economic situation, the change in the value of the currency, due to unforeseen expenses of a social nature. A greater parallelism between income and expenses was favored starting from 1948 by art. 81 of the Constitution, according to which any law that imposes new expenses beyond those approved in the budget must establish the means to meet them.
According to TOP-MBA-UNIVERSITIES.COM, the periods of war and inflation have radically changed the composition of expenditure and that of revenues, giving particular emphasis in the former to military, reconstruction and personnel expenses, and instead strongly reducing the burden on public debt, by accentuating in the second the revenues for indirect taxpayers, whose collection system adapts more easily to the changed monetary standard, and by strongly contracting in proportion the revenues of the direct ones. An attempt is made to remedy these deviations with the budgetary policy of 1948-49 and 1949-50, while through a tax reform, currently under study, the aim is to bring the weight of direct tax revenues back to a more equitable ratio. A considerable effort is made to reduce the so-called exceptional expenses.
In the field of direct taxation, in the post-war period, numerous measures were adopted aimed at restoring to this category of taxes the greater consistency of which the rapid monetary devaluation had deprived them, while substantial innovations were introduced in the field of indirect taxation, revising the method of collection and rates of the general tax on entry, introducing new manufacturing taxes, modifying some customs duties, increasing the license fee rate, and finally adjusting the prices of monopoly goods. As for local finance, the introduction of an extraordinary progressive personal tax on the amount of unnecessary expenses is the most important innovation.
Cash management, in addition to the formation of large residual liabilities, has given rise to a large recourse to floating debt, which now represents three quarters of the total debt.
The total monetary circulation grew gradually and irregularly at a rate of 138% in 1943, 79% in 1944, 22% in 1945, 32% in 1946, 56% in 1947 and z2% in 1948, the year at the end. of which it reached 963 billion (equal to about 40 times the circulation of 1938), while the cost of living index is around 50 times. For the trend in circulation and reserves, see the table published on page 720 of this volume.
The exchange rate between the lira and the dollar, set at 100 by the Allies at the time of landing in Italy, gave rise to extensive illegal negotiations; neither the increase of 125% (February 1946), nor the revision of the foreign trade exchange rules (March 1946), which allowed the establishment of private currency accounts for 50% of the proceeds of exports, did not succeed in cutting it off. Instead, a duplicity of legal changes ensued, which not even the increase in the official ratio, brought to 350 lire to 1 dollar on 1 August 1947, was able to unify. Established, however, in November 1947, that the Italian Exchange Office would purchase dollars deriving from exports or other transactions (for the share that must be sold) at a price equal to the average of the free market prices of the month preceding that of the operation, the exchange rate of the export currency moved towards relative stability, oscillating throughout 1948 at around 575 lire per dollar. In November 1948 the Italian government undertook to maintain the official ratio of the lira to the pound sterling (initially set at 403, in February 1946 at 907 and in August 1947 at 1411) on the basis of that with the dollar, at the official exchange rate of 4, 03 dollars per pound.