OCR Specification focus:
‘economic policy: the revaluation of the lira, agrarian policy; industrial policy.’
Introduction
Mussolini’s economic and industrial policies sought to project strength, restore national pride, and achieve Fascist autarky. They reflected ideological ambitions but often delivered mixed practical results.
Economic Policy Under Mussolini
The Revaluation of the Lira
One of Mussolini’s most symbolic economic decisions was the revaluation of the lira, announced in 1926 under the slogan “Quota 90”. This meant fixing the value of the lira at 90 to the British pound.
Aims of the Policy
Reinforce the image of economic stability and national prestige.
Curb inflation, which had risen after the First World War.
Attract foreign investment by strengthening confidence in Italian currency.
Consequences
Benefited importers and creditors, as goods from abroad became cheaper.
Damaged export industries, particularly textiles and engineering, as Italian goods became more expensive internationally.
Forced domestic producers to reduce costs, often by cutting wages, which declined by up to 20% in real terms.
Increased unemployment in certain sectors due to reduced competitiveness.
Agrarian Policy
Mussolini aimed to glorify the rural economy and reduce reliance on foreign imports through policies tied to Fascist ideology.
The Battle for Grain (1925)
This policy aimed to increase domestic wheat production and reduce dependence on imported grain.
The government:
Offered subsidies for farmers to grow wheat.
Promoted mechanisation and modern farming techniques.
Imposed tariffs on imported wheat to protect domestic production.
Impact
Wheat output increased significantly, especially in the Po Valley.
However, this came at the expense of other crops, such as olives and grapes, leading to reduced exports of traditional Italian produce.
Southern regions, less suited for wheat, were disadvantaged, reinforcing regional economic disparities.
The Battle for Land
Launched in 1928, this policy focused on reclaiming marshlands, such as the Pontine Marshes, for agriculture and settlement.
Created jobs through public works schemes.
Provided new farmland, although the overall agricultural gain was modest compared to costs.
Served as a propaganda success, showcasing Mussolini’s vision of a revitalised rural Italy.
Industrial Policy
Mussolini’s industrial policies aimed to modernise the economy while achieving autarky (economic self-sufficiency), especially after the Great Depression and growing international tensions in the 1930s.
Early Industrial Development
During the 1920s, the Fascist regime encouraged private enterprise within a corporatist framework, attempting to reconcile capitalist interests with state oversight.
Large industrialists, particularly in steel, shipbuilding, and chemicals, cooperated with the regime.
Strikes were banned, and corporate syndicates controlled labour relations, reducing conflict between employers and workers.
Response to the Great Depression
The global economic crisis of 1929 heavily impacted Italy, causing:
A fall in industrial output.
Collapse of major banks, such as Banca di Sconto.
Rising unemployment.
Government Intervention
The state intervened to stabilise the economy by:
Establishing the IMI (Istituto Mobiliare Italiano) in 1931 to provide long-term credit to industry.
Creating the IRI (Istituto per la Ricostruzione Industriale) in 1933 to take control of failing banks and industries, especially in steel, shipping, and electricity.
DEFINITION
IRI (Istituto per la Ricostruzione Industriale): A state holding company that managed and controlled large sectors of Italian industry after the 1930s economic crisis.
By the mid-1930s, the IRI owned a significant share of Italian heavy industry, marking a shift towards state capitalism. While this intervention saved key sectors, it increased state control over the economy, contradicting Mussolini’s earlier promises of limited government interference.
Autarky and Preparation for War
Following sanctions imposed after the Abyssinian War in 1935 and Italy’s alignment with Nazi Germany, Mussolini intensified efforts to make Italy economically independent.
Promoted synthetic substitutes for materials like rubber and oil.
Increased production of raw materials, including aluminium and coal, though Italy lacked sufficient natural resources.
Encouraged self-sufficiency in food through expansion of agricultural drives.
Challenges
Italy’s limited natural resources made full autarky impossible.
Military expansion and wars in Ethiopia and Spain placed huge strains on the economy.
By the late 1930s, Italy faced severe balance of payments problems and rising budget deficits.
Industrial Expansion and Propaganda
The Fascist regime linked industrial development to propaganda successes:
Showcased modernisation projects, such as new motorways (Autostrade) and hydroelectric dams.
Promoted corporatism, a system where employers and workers were organised into state-supervised syndicates to avoid class conflict and present the image of a harmonious economy.
However, corporatism largely remained theoretical, as real economic decisions were still dominated by the state and large industrialists rather than genuine worker-employer collaboration.
FAQ
Mussolini viewed currency strength as a matter of national prestige. He wanted to show that Fascism could stabilise Italy and restore its status as a great power.
The policy was also intended to attract foreign investment and project the image of economic competence internationally. These political and ideological motives outweighed practical concerns about damage to export industries and employment.
The policy glorified the image of the self-sufficient peasant farmer, a cornerstone of Fascist propaganda, which celebrated rural values over urban socialism.
It supported Mussolini’s vision of autarky, reducing reliance on foreign imports and strengthening the nation’s independence in times of war.
The campaign also reinforced the idea of a unified national effort, as schools, newspapers, and youth groups were mobilised to promote wheat consumption.
Propaganda presented policies as national battles, framing economic initiatives as heroic efforts for Italy’s greatness.
Posters and slogans depicted farmers and workers as patriotic soldiers.
Public events showcased Mussolini at reclamation sites or wheat fields, reinforcing his image as a dynamic leader.
Newsreels glorified infrastructure projects like motorways, even when their practical impact was limited.
The Istituto per la Ricostruzione Industriale (IRI) marked a significant shift from limited state oversight to direct state control of major industries.
Initially created to rescue banks and industries after the 1929 crisis, the IRI ended up owning large parts of steel, shipping, and electricity sectors.
This contradicted earlier promises of corporatism, as real decision-making now rested with the state, not with joint employer-worker syndicates.
Despite intensive campaigns, Italy failed to achieve full autarky due to limited natural resources and growing military commitments.
While production of some raw materials and substitutes increased, Italy still relied on imports for essentials like oil and coal.
The drive for self-sufficiency placed a heavy burden on the economy, causing budget deficits, trade imbalances, and reduced living standards by the eve of the Second World War.
Practice Questions
Question 1 (2 marks)
What was the main aim of Mussolini’s “Quota 90” policy regarding the lira?
Question 1 (2 marks)
1 mark for identifying that the aim was to revalue the lira to a fixed rate of 90 to the pound
1 mark for explaining the purpose, such as to strengthen national prestige or curb inflation.
Example of full answer for 2 marks:
The main aim was to revalue the lira to 90 to the pound, in order to restore national prestige and show economic strength.
Question 2 (6 marks)
Explain two consequences of the Battle for Grain policy introduced by Mussolini in 1925.
Question 2 (6 marks)
Award up to 3 marks for each valid consequence explained (maximum 6 marks).
Possible points:
Increased wheat production (1 mark) with explanation that it reduced reliance on imports and promoted self-sufficiency (1 mark).
Damage to other agricultural sectors (1 mark) with explanation that olives and grapes were neglected, reducing exports of traditional Italian produce (1 mark).
Regional economic disparity (1 mark) with explanation that southern regions suffered because they were less suited to wheat cultivation (1 mark).
Level descriptors:
1–2 marks: Identifies consequences with little or no explanation.
3–4 marks: Identifies and explains one consequence in detail, or two with limited explanation.
5–6 marks: Explains two consequences in detail.
Example of full answer for 6 marks:
The Battle for Grain increased wheat production, reducing dependence on imported grain and promoting self-sufficiency. However, it damaged other crops like olives and grapes, reducing exports and harming traditional agricultural markets.
