A history of commerce

by Clive Day

This survey suggests the topics which demand discussion in the following sections. We must know the reasons for the rapid development of Italian commerce till about 1880, and for the check to progress after that date; we want an explanation of the comparatively slight share which the average Italian has had in the world’s commerce.

533. Development of agriculture and commerce after 1860.—When Italy secured national unity, about 1860, the country was almost purely agricultural. The ordinary trades, of course, were exercised to satisfy local needs, and the silk manufacture had not altogether perished, but, to use the phrase of a modern writer, though there were industries in Italy there was no Italian industry. Restrictive taxes and tariffs had prevented the development of any considerable manufacture. When, therefore, comparative freedom of trade was introduced, the people made full use of the opportunity to purchase the cheap wares of the factory industry of other countries; they imported manufactures in increasing amount, and paid for them by exporting their surplus agricultural products. The railroad system, which grew from 800 to 5,000 miles in the period 1860-1880, gave greatly improved facilities for the marketing of wares, and affected distinctly the course of foreign trade; the proportion of commerce carried on across the land frontier rose in this period from a third to nearly a half of the total.

534. Increase of customs duties; protection; tariff war.—The Italians realized at once the benefits of the movement which led to national unity, but ever since they have been carrying its burdens. The expense of the national movement was enormous, especially in view of the poverty of the country; it weighted the government with debt, and required a constant increase in taxes. The treasury, reaching out in every direction for money, and forced to some fiscal devices which seem now positively iniquitous, did not spare commerce. Duties were raised from time to time, and a general revision of the tariff in 1878, while it reformed some old abuses, tended still to raise the general level of duties, and introduced a distinct element of protection. The revised tariff, however, did not go far enough to satisfy the demands either of the treasury or of the protectionists, and was altered again in 1887. Commerce labored henceforth under high revenue duties, under increased duties designed to protect Italian manufactures, and, furthermore, under new or increased duties on agricultural products.

One disastrous result of the new tariff appeared quickly in the outbreak of a tariff war between Italy and France. France had been Italy’s best customer, taking at one time nearly half of her total exports and furnishing about a quarter of her imports. Trouble between the two countries had, however, been brewing for years; they were following different lines in foreign politics, and the protectionists on both sides of the frontier viewed with jealousy a commerce which stimulated the development of international rather than national industries. The tariff of 1887 called forth a reply in kind from France; this was met by a rejoinder from Italy; and so the duties grew rapidly on either side, and had soon reduced the commerce between the countries to a small part of its former dimensions. The most important export industries of Italy (wine, raw silk, fruits, live stock, eggs) suffered severely, and many producers were absolutely ruined.

535. Italian agriculture; poverty of the people.—The course of tariff policy explains, in large part, the check which Italian commerce had experienced in the last decades of the century. Reasons why this commerce was so small in proportion to the population will appear as we review now some features of the Italian productive organization.

Few of the large states of Europe showed so large a proportion of the people engaged in agriculture, so small a proportion in manufactures, as were found in modern Italy. Considerably more than half the people lived directly from the land. Not only did Italy show backwardness in this respect; the character of Italian agriculture was itself backward. The land was worked largely “on shares,” a system which does not encourage improvement or stimulate efficiency. A government commission reported in 1881 that production depended almost entirely on mere labor, and that capital and intelligence contributed only a minimum. Antiquated implements and wasteful and careless methods of treating the crop, went far to nullify the natural advantages of soil and climate. When we consider that, of the small surplus which the agriculturist obtained, the government demanded a good share for taxes, we can understand why the mass of the people were wretchedly poor, and must content themselves with a bare living. It is worth noting that about 1900 the consumption of sugar in Italy was only about six pounds per head, less, even, than in Turkey, while in most European countries people consumed from 20 to 50 pounds or even more. Salt itself was a luxury, which was heavily taxed. The protective tariff appeared to extend favors to farmers as well as to manufacturers, but the people who gained by it were chiefly the great landlords, while the mass of the people simply paid more for bread because of it.

536. Manufactures.—As agriculture was the strongest branch of production in Italy, it was bound to suffer more than any other from the protective tariff. Italian agriculturists did not need protection for most of their products, and they did need the chance to market their products in free exchange for industrial wares imported from abroad. We have now to see what success the Italian tariff had in building up the native industry on which the people were forced, in large part, to rely.

Italian manufactures, in 1880, had scarcely advanced beyond the meager beginnings which we found in 1860. Nearly all conditions were adverse. Capital was scanty. Of important raw materials the country lacked all but silk and hemp. Coal, the mainstay of modern manufacturing, had to be imported at an expense which nearly doubled its price. Most serious, perhaps, of all difficulties was the lack of a class of industrial leaders, men of technical knowledge and business energy. We may take as typical the case of a macaroni manufacturer in Naples, who declined some important foreign orders, for no other reason than that he had, as it was, enough business to make both ends meet, and saw no reason for adding a new worry to life. The single important advantage which Italian manufacturers enjoyed was that of cheap labor. The government was lax in its factory legislation, and allowed employers to secure their labor supply from women and children, at an extremely low rate.

The great development, therefore, which Italian manufacturers have shown in the last decades of the century has been due not to any natural fitness of the country, but solely to the tariff, which has raised prices paid by consumers enough to counterbalance natural disadvantages, and to attract men into manufacturing industry. The artificial character of Italian manufactures is shown strikingly by the fact that at the very close of the century not one of the protected manufactures was strong enough to contribute in any considerable degree to the exports of the country.

537. Shipping; colonies.—Some of the most unfortunate features of Italian policy seem to have been the result of national vanity, of the desire on the part of Italians, now that they had made for themselves a great state, to make their state resemble the other great powers in all respects. This feeling was certainly responsible in part for their determination to build up a system of national manufactures, regardless of expense. It led them to profuse expenditures for the encouragement of shipping, which resulted, indeed, in a growth of the merchant marine, but created in it merely a costly luxury. The Italian navigation companies charged high freight rates, and included in their fleets many antiquated vessels.