italian economic reconstruction and the marshall...

PIFO

Occasional Papers

Hrsg. vonAlexander Grasse

POLITISCHE ITALIEN-FORSCHUNG

INSTITUT FÜR POLITIKWISSENSCHAFT

No. 3/2009

Italian Economic Reconstruction and the Marshall Plan A ReassessmentRigas Raftopoulos

www.italienforschung.deISSN: 1866 - 7619

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PIFO Politische Italien-ForschungErscheinungsort: Gießen

Hrsg.: Prof. Dr. Alexander GrasseInstitut für Politikwissenschaft

Justus-Liebig-Universität GießenKarl-Glöckner-Str. 21 E

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ISSN: 1866 - 7619

Gießen, 2009© Alexander Grasse

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Italian Economic Reconstruction and the Marshall Plan. A Reassessment

PIFO Occasional Papers No. 3/2009 | Seite 3

Italian Economic Reconstruction and the Marshall Plan. A Reassessment1

Rigas Raftopoulos

ContentsPage

1. Introduction 52. Thefirstphaseofthereconstructionprocess(1943-1947) 73. The«Einaudiline»:featuresandinterpretations 144. EuropeanRecoveryProgram(ERP)inItaly 175. The«smallturningpoint»,«thirdstage»andperspectives 196. Conclusion 24Bibliography 26About the Author 29

1 ThispaperwaspresentedonSeptember2004at the conferenceheld inUtrecht (NL) in theframeworkofthefour-yearprojectoftheEuropeanScienceFoundation(ESF)titled“Occupation in Europe; the impact of national socialist and fascist rule (INSFO), 1938-1950”, Team 3,(Economics, team leadersRichardOvery-London,AliceTeichova-Cambridge,HeinKlemann-Utrecht),workshop4“Economic reconstruction in occupied Europe 1945-50”. Iwould like tothankfortheirusefulsuggestionsandadvicesProf.FrancescaSocrate,Prof.LeandraD‘Antone,Prof.MarcoRavaiolifromuniversity“LaSapienza”inRomeandProf.ProcopisPapastratisfromuniversityPanteioninAthensforhisrelentlesssupportandadvices,FrancescoSimula,ValerioMorsellaandGuidoBarcuccifortheirpreciousworkofproof-reading.



1. Introduction

The purpose of this essay is tomake a comparison among themost recentItalianhistoriographicalviewsregardingtheMarshallplanandmoreingeneraltheReconstructionperiod,keepingaschronologicalboundarytheearlyFifties.Thepresentessayattemptstofocusontheprincipalissueshistorianshaveputunderanalysis,byhighlightingsimilaritiesanddifferencestoshowunresolvedtrends in research.Asection followswhich isdevoted to thedescriptionoftheeconomic featuresof theERP (EuropeanRecoveryPlan) in Italy in thebroadest context of theReconstructionprocess involving the economic andsocialfabric.Moreover,adescriptionoftherelatedmodesofemploymentandtheItalianeconomicsectorsinvolvedintheplanalongwithfiguresisprovidedinthefollowingsection.Finally,atentativedescriptionoftheactualeffectsoftheERPontheeconomyismadeandsomeconclusionsaredrawn.

TheItalianhistoriographicaldebateregardingthepost-warReconstructionand the economic policies has undergone a substantial shift during the lastfifteenyears,whichmainly consists in the increasing success of a line thatbreakswiththetraditionalmanicheancontrastbetweentheideaofinterventionof the State and the idea of Liberalism. The fundamental contribution inthis direction comes from the studies of the economistFabrizioBarcawhoanalysestheshapingprocessofItaliancapitalismintheperiod1945-1962/63from the perspective of institutional assets, publicAdministration’smodus operandi, and the job, products and capitalsmarkets. InBarca’s analysis acentral role isplayedby theconceptof«extraordinary» compromisewhichqualifies the developing model of capitalism since the beginning of theReconstruction and in which both terms (extraordinary and compromise)assumespecificmeanings.TheinnovativebasicfeatureofthisinterpretationlaysinthemultiplicityofsubjectsinvolvedinthiscompromisewithrespecttothetraditionallecturethatjuxtaposedliberalistsandStateinterventionists.The main subjects of this emerging model of capitalism are, according toBarca,the“AutonomousPublicBoards”:theyarepublicinstitutionswhichareautonomousandseparatedfromthe“ordinary”publicadministration.Theseboardsaremarkedbyaprivate-laworganization,ahighqualitymanagementandareinchargeofallocationandmobilizationofsavingsaswellasoftheresponsibilityof strategic address in economic choices. It is important hereto underline the continuity of thismodelwith respect to the fascist period.TheAutonomousPublicBoardsaretheonlyresponsibleforthedetectionofcrucialprioritiesinItalianeconomicdevelopmentandalsoforthecollectionanddistributionofERPaidssincetheendof1944.Barcalocalizesattheend



of1949andduring1950whathecalls a«correctionof conduct» in Italianeconomic policies because of bad employment levels and growing socialunrestaboveallintheSouth(thesocalled“Mezzogiorno”).This«correction»ismarkedbythespeedingupofpublicinterventionintheeconomy.Fromthisspecificpointofview,anAutonomousPublicBoardiscreatedonceagaintocompensatethelackofStateintervention:thisboardistheCasmez(“CassaperilMezzogiorno”)(D’Antone1997)whichhasthetargetofbalancingSouthernItalybackwardnessalsousingERPaidsandWorldBankloans(Barca1997:3-115).

ThehistorianRolfPetrifacestheItalianReconstructionquestionintermsofthetriumphofanindustrializationstrategythathereferstoas«neomercantilist»,inthemediumtermbetweenthe‘30sandthe‘60s.Abreakthroughineconomicpoliciesispointedoutin1947,which,followingLuigiEinaudi’sguidelines,wasdevoted tobailingout the Italian currency fromahyperbolic inflation.Atthat timeEinaudiwasgovernoroftheBankofItaly.Petrifacesthenthequestion of the possible causes of the Communists’ behaviour during theperiodtheywereinthegovernment.TheydidnotsupportatechnocraticlineoftheeconomicplanningatallandthishastobeexplainedconsideringtheactualCommunists’priorities.Under thesecircumstances, the launchof theMarshallplanplayedakey-roleintheemersionofState-planninglinesinthewhole contextof thedecisionmakingprocess regardingeconomicpolicies.TheselinesarerepresentedbytheIRI’sStudyInstituteledbytheeconomistPasqualeSaraceno (IRI, Istituto per laRicostruzione Industriale).A secondcrucialmoment ispointedoutbyPetri in theeconomicconsumptionboomprovokedbytheKoreanwar.ThiswasrepresentedbythecorrectionoflineineconomicpoliciesforcedbysomecriticalAmericanjudgementsintheCountrystudyandatthesametimebythesimultaneoussocio-politicaldevelopmentsinItaly(Petri1997:313-419).

FedericoRomerofocuseshisattentionontheUnitedStates’influenceinthebirthandconsolidationofrepublicanItalyandonitspost-wareconomicpolicies.Washington’saimsconcerningtheItalianeconomicdevelopmentsundergoaradicalchangeduringthefirstmonthsofthe1946followingtheirreversibleanti-Sovietbreakingoff.Washington’spolicy-makers’ inescapablegoalsarenowthestabilizationofthelira«evenattheexpenseofthepopulation»andtheReconstructiontakeoff.RomerounderlinesthatERPpoliticalconsequencesinItalyhavebeenmuchmorerelevantthanitsmereeconomiceffectssincetheyenabledChristiandemocraticparty(DC,DemocraziaCristiana)tofacekeypolitical electionson18thApril 1948with avital survivalmargin in asociallytorncountry,alsosubjecttoacriticizeddeflationarymeasure.During



1949 a partial change in Italian economic policies takes place but it is notto be intended in aKeynesian direction as desired by the ECA (EconomicCooperation Administration) mission. In fact, these measures were meantto provide capitals to industries in order for them to foster a new cycle ofindustrialization. According to Romero Marshall plan success in Italy isindisputable under the strategic profile. Although the plan application didnotcomplywiththesocialphilosophythatbindsgrowthandconsensusinaKeynesianway,itenabledoneofthemostvulnerablecountriesoftheWesternblocktoremainwithinit(Romero1994:231-289).

ThehistorianofEconomicsGiulioSapelliviewsMarshallplanfunctioninItalyintermsofan«exchange»betweenItalianrulingclassandUnitedStates:astrongcontrolwithanticommunistfunctionofItalywastradedwithaconsentforeconomicpoliciestodeviatefromKeynesianlines(i.e.openingtowardsexternalmarketsthroughexportationsandinternalmarketwidening).Startingfrom February 1947, after the communist exclusion from the government,Italian policy-makers launch a strong deflationary line and a tightening ofcreditinorderto«savethelira»,bythesemeansreassuringthemiddleclassandspeculators thatcapitalscouldbe“repatriated”withtheconsequenceofincreasingmonetary stocks. Side effects of this policywere a crash in theStockExchange,averticalincreaseofunemploymentandtheinterruptionofproductiveReconstruction.However,Italianrulingclasstargetsweremonetarystabilizationaswellasthemiddle-classsocialblockstabilityinordertogivecentralityandpoliticallegitimacytothosewhosawinBrettonWoodsandintheERPmorethanasimpleeconomicinstrument(Sapelli1997).

2. The first phase of the reconstruction process (1943-1947)

DuringthelastphasesofWorldWarII,AlliedMilitaryGovernment(AMG)maintasksinItalydidnotprovideforeconomicmeasuresbutconsistedintheprogressiverestitutionoflocalgovernmentcontroltoItalianauthoritiesplacedunderneath supervision by theAlliedControlCommission (ACC) (Romero1994:236-237).

Nevertheless, this strategy of indirect control had really negativeconsequences on the reorganization of Public Administration and on theeconomicrecoveryandendedinthequickwidespreadoffamine,blackmarketandinflation,thelastworsenedbylargeissueofalliedbanknotesnecessaryforAMGactivity(Romero1994:237).



GeneralBadoglio’sgovernments(July‘43–June‘44)conflictwithantifascistparties together with Anglo-american paralysis provoked by internaldisagreementsandlittleattentiontoawartheatrejudgedsecondary,ledintheendtothefailureoftheindirect control strategy(Romero1994:237).

Inthiscontextitisrelevanttodescribetheoverallprocessatthebaseoftheinflationarygrowthbecausetheneedofcurbingitwouldleadtothesocalled«deflationaryturningpoint»carriedoutbyLuigiEinaudi,governorofBankofItalyin1947.

In the two-year period, 1943-45, inflation developedmainly because offinancingmethodspracticedin the twooccupiedareasof thecountry.From31August 1943 until 30April 1945, total netmoney circulation increasedfrom115.7 to360.7billion liraswithan increaseof65%derivingfromtheNorthern area ofGerman occupation and of 31% provoked by the alreadymentioned alliedmilitary notes («amliras») issued to some degree withoutfinancial backing.AMG decision to fix the exchange rate at one dollar to100lira(against19pre-warliraexchange)worsenedinflationbyincreasingtroop’spurchasingpowerbeyondmeasureandthenexertingpressureonpricelevel.Thiswas,inshort,thecauseofaninflationaryspiralthat,exceptforamomentarylullin1946,wouldhavebeenstoppedduringthesecondhalfof1947throughmonetarysqueeze(Petri1997:325-326).

Themeasureofexchangingdevaluedcurrencywitha“heavier”onecouldhavereducedcirculatingmonetarymassanddebtbutneithersocialistFerruccioParri‘s government (June – November ‘45) nor first christian-democratgovernment ledbyAlcideDeGasperi (December ‘45– July ‘46) took thatmeasure.Furthermore,widespreadoppositiontothisoptionintotheBankofItalymadeitfadeonceandforall(Petri1997:325-326).

First signs of aWashington closer involvement in the process of Italianreconstructionwereevidentonthesummerof1944,buttheyconsistedbasicallyingenericsuggestionstowardspoliciesdevotedtoachieveeconomicwelfareontheroadofself-determinationinbuildingastabledemocraticsystem.Thispolicy, known as democratic recovery policy contributed, however, to theopeningofadialoguebetweenAMGandthenewbornandsole tradeunion(CGIL,ConfederazioneGeneraleItalianadelLavoro),dialoguethatenabled,inNorthern Italy, to refer toanauthoritativeand representative interlocutorwith which to defuse pressures towards social unrest and disintegration.Furthermore, allied authorities’desire fordialoguecontributed to resistancedisarmamentandtotransferenceofpowertotheGovernmentinRomewithoutresortingtoforce(Romero1994:239-240).



United States policy makers found it difficult to work out a clear line ofconducttofacereconstructiondifficultiesaftertheendofconflictandAMGdemobilisation.Italywasemergingfromthewarwithitseconomicfabricina tricky situation. Industry did not undergo severe damages during conflictwhich was fought mainly in the South where the core-base of industrialassetswasnotlocated.Itwasconcentratedinsteadintheso-called“industrialtriangle” Milano-Torino-Genova with branches in Emilia Romagna andVeneto.Inparticular,mechanicalengineeringandelectricindustry,followingthe increase inproductivityduring thewar,wereable tostartactivityagainat a level exceeding approximately 30% of the pre-war capacity. The ironandsteelindustryhadtorecoverwardamagesintheindustrialcomplexesofPiombinoandBagnoliandtheGermandismantlingofCorniglianocomplexnearGenova.Thetextileindustrydidnotundergoanyremarkabledamageandsocouldresumeproductionatfullrate.

Inspiteofthissituation,lookingatEuropeancontextitisclearthedelayindevelopmentofItalianindustrywithrespecttoFranceandGermanyeitherin termsofoccupationor,andaboveall, in termsofproduct.Thereal limitforItalianeconomywastherawmaterialsnarrowing,coalprincipally,aswellasinfrastructureandlinesofcommunicationsituation.Morethan80%ofthemerchantnavywasdestroyed,around40%ofrailwaytracksandbridgeswereoutoforderandbuildingassetsunderwentseriousdamages(Barca1997:4)(Petri1997:316).

The fear of a possible communist advancement in the country provokedbyeconomicandsocialsufferings,ledadmiralElleryStone,leaderofACC,to askWashington for a huge shipment of economic aids supported by theItalianembassyintheUS.On10July1945,undersecretarytoForeignAffairsWilliam Clayton informed the embassy in Rome to encourage the Italiangovernmenttodismantlebilateralcommercialagreementsandtradebarriersinordertoopenataglobaleconomywithoutobstacles.TheprincipaldifficultiesincarryingoutthoseguidelinesweretobefoundmainlyintheunwillingnessoftheUSduring1945tosendaid,foodandrawmaterialtoItalyandatthesametimeinfindingaclearandstrongpoliticalcounterparttoopenadialogueonreconstruction(Romero1994:239-240).

Intheperiodbetweenautumn1945andtheendof1946Washingtonleaders’attentiontowardsItalianissueswassolowthattheUSambassadorinRomehadnotbeenpresentforseveralmonths.However,newsignsofinvolvementaboutdemocraticstabilizationofthecountrycouldbeseenwiththecomingofthefirstDeGasperi‘sgovernment(December‘45).Thechristian-democratleaderfirmly tooksidewithAmericanaid topushreconstructionandon14



February1946ItaliangovernmentaskedExport-ImportBankforamoneyloanof$940million.ItwasanamountthatstronglyovervaluedItalianmonetaryneedthusarousingsuspicion.FurthermoreTreasuryDepartmentputoffanydecision regarding loans to Italy to thedefinitionofwar reparationand thesigningofthepeacetreaty(Romero1994:241-242).

Onastrictlyeconomiclevel, themainfeaturein1946wasthelaunchofUNRRAaidprogram(UnitedNationsReliefandRehabilitationAdministration)for Italy. Itwasmanagedby aUnitedNationmission that placed at Italy’sdisposalabout$450millionconsistingof foods, fuelandmedicineswhosesaleontheItalianmarketbroughttotheformationofthe«lirafund»thathadtobeused to start specificprojects of reconstruction, subjected toUNRRAmissionagreement.UNRRAmissionstaffwasmainlycomposedbyAmericanofficialssupportingaKeynesianemploymentofpublicspendinginorder toincreasedomesticconsumptionandinvestment.TheamountofUNRRAaidwasremarkablebeingequalto45%ofestimatedimportsforallof1946andto4.2%ofGrossnationalproduct(GNP)(Romero1994:241-242).

Italian historiographical debate stressed the importance of UNRRA aidunderthepointofviewofprimaryconsumptionandthebalanceofpayment.Nevertheless it underlined that in a context of public deficit andmonetarycrisis itwasunrealisticUNRRAKeynesianoptionalsoconsideringthelackofawell-establishedpoliticalinterlocutorabletoensureacoherenteconomicplanning.ItalianministerofTreasuryEpicarmoCorbinowasakeenopponenttopublicspendingwideningandhewasoften inconflictwithmissionstaffthus thwartinganypotentialKeynesian influenceofUNaid (Romero1994:243).

ArecentstudyfocusesUNRRAaidmeaningandfunction in Italy in thebroadercontextofERPaidandintheinterpretationoftheirabsoluteneedinItalianandEuropeanreconstruction.InordertoreplytothisquestionitisnotpossibletoignoretheimportanceandeffectsrelatedtoaidprogramsprecedingERPsuchasUNRRAbutalsothesocalledInterimAid(IA).InterimaidwasanadditionalaidprogramwhichwasurgedbyItalianandFrenchgovernmentsonSeptember1947duringWashingtonandParisnegotiations.Therationale,explainedbyForeignministersGeorgeBidaultandCarloSforza,wastheresultofrespectivetradegapcrisiswhichwouldnotenabletobuycommoditiessuchaswheatandcoal.SforzaandBidaultarguedthatinapossiblecontextoffoodscarcityitwasarealisticcommunist-ledpopularrevolt(Spagnolo2001:92-97).



Infact,thetruereasonbehindItaly’sdirectdemandtoRobertLovett,Marshall’sdeputy,wasnot foodworriesbut thedesire torestore industrialgrowthandmore generally to support the economy as a whole. This is quite clear inthe correspondence between the Italian ambassador inWashingtonAlbertoTarchianiandLovettinwhichItaliandiplomatmadealonglistofindustrialrawmaterialsfor$115.2million,morethan60%onoverallItaliandemand.ThegovernmentofRomedidnothaveatitsdisposalenoughdollarstopayimportsbeyond October 1947, imports that were requested by industrial demand.ThereforeInterimAid’sprincipalgoalwastowidenoperatingmarginsfortheCentral Bank letting at the same time the government breathe by avoidingthedifficultchoicebetweenanunpopularcutonfoodstuffandaslowdowninindustrialproduction.ThereforeIA’spoliticalrolewasdecisiveinenablingthestartofapoliticalstrategyotherwiseimpossible.DonatoMenichella,generaldirectoroftheBankofItalyunderlineditclearly,“Stabilization was made possible by Interim aid. Communists and political partieslinkedtothemwerestrong.InterimaidandMarshallplanperspectivemadeitpossibleto reachpricestabilityand,consequently, trust incurrency.Theseconditionshelpedprovoking theheaviestcommunistdefeatafter theendof thewar” (Spagnolo2001:93-97).

Menichellareferredtocommunistelectoraldefeaton18April1948thusbringingouranalysisonthestudyoftherelationshipsbetweeneconomicpoliciesandinternalandinternationalpoliticaldevelopments.Theperiodbetweensummer1946andlatespring1947ismarkedbydecisivedevelopmentsintheprocessofItalianreconstructiononwhichseveralItalianandinternationalfactorswereentangled. It is importanthere toshowinadvanceameaningfulconclusionsharedbymostofleadingItalianscholarsi.e.inthewholeprocessofeconomicpolicy definition during reconstruction Italian policy makers enjoyed widemarginsoffreedomandindependencefromexternalpressuresandspecificallyAmericanones(Sapelli1997:2).

Inmore general terms, the reconstruction processwas part of thewidershaping schemeof Italian capitalismafterSecondWorldWar.This processtook the shape of an «extraordinary compromise»: compromise becauseitwas the result ofmediation amongvery different ideas and interests thatcouldfindapointofagreementinonerenounceandonechoice.Theformerconsistedinnotcreatingthe«rulesofthegame»fortheordinaryfunctioningof job, capitals andgoodsmarkets aswell as of thePublicAdministration.Thechoice,incontinuitywithFascistperiod,consistedinthedecisiontoface



developmentmattersthroughtheextraordinarymeansofAutonomous Public Boards.Underthisperspectivethemeaningof«compromise»doesnotrefertotheintermediatenatureofitsownfeaturesratheritreferstotheiremergence,ineachspecificcase,thankstotheconvergenceorcrossedvetoesoftheinvolvedsubjects(Barca1997:11-23).1

Itispossibletopointoutfromthisgeneralparenthesisanelementusefulforourdiscussioni.e.Autonomous Public Boardskey-roleinthedrawingofa general plan for Italian industrial development,mainly theBank of ItalyandIRI(IstitutoperlaRicostruzioneIndustriale).Thisplanwasthesocalled«Saracenoplan»thatwasworkedoutonSeptember1947bytheCentrefortechnical-economicstudiesinsideIRIledbyPasqualeSaraceno.Itwasalong-termplan(1948-52)that,upgraded,wassubmittedtoOEEC(OrganizationforEuropeanEconomicCooperation)byministerofIndustryRobertoTremelloniinsummer1948inordertosupportItaly’sclaimtotakepartintheMarshallplan.AnevidentsignofchangeinAmericanperspectiveregardingeconomicpolicies to support Italywas clear since summer ‘46.The rationale of thisreappraisalliesbothinthegrowingstrainsinsideItalianeconomyandinthesocialandpoliticalcrisis that led to theclashbetween thecommunistpartyandministerofTreasuryCorbinowhosubmittedhisresignation.Underthosecircumstances,theUSembassyinRomeaswellastheUNRRAstaffagreedthatprincipal taskswerenowtherescueof the liraand theopenclashwithPCI.However, timesand formsof reconstructionwerenotcompatiblewithcontradictoryandineffectivepolicyofItaliangovernmentcomposedbothbytheLeftandtheliberals(Romero1994:244).

The Italian prime minister’s visit to Washington (5-14 January 1947)assumed a strong political meaning but brought scarce economic resultsshowing, however, a convergence between De Gasperi’s and Washingtonpolitical interests.Thedifference regardedonce again times andmodesnotyet correspondingbecauseof agap in the evolutionof Italian crisis andofEuropeancontextthatistosaytheUSforeignpolicyhorizon.Theprogressiveapproach between those two contexts was however nearer and nearer: onFebruary1947theItaliangovernmentsignedapeacetreatyandthefollowingmonth signed Lateran treaty with the Vatican. Those two important goals

1 The interests involved in this «extraordinary compromise» are, according to Barca, thefollowing: «nittian» option, radical liberalism, communist strategy, «social-christian» thought,diversifiedindustrialinterests,Washingtonoption.



closed, at the eyeof christian-democrats,meaningand institutionalneedofantifascistallianceinthegovernmentandatthesametimetheypointedoutnewtasksintherecoveryofentrepreneursandmiddleclasstrust.InordertoreachthosegoalsthetopplingofsocialalliancesandtheriftwiththeLeftwasnecessary(Romero1994:248).

Themostrecentandparalleldevelopmentsininternationalrelationswerepushingtowardsthatdirection:on12March1947theTrumandoctrinewasannouncedpointingoutthetransitiontotheageofColdWar.Italiandiplomacyimmediatelyproposed anunrealistic comparisonbetween Italian andGreekcrisisandasked foran immediatehuge loan toUSambassador inRome tostabilize thecountry. Inspiteof thiscall forhelp,ambassadorJamesDunn,while repeating American support and trust in De Gasperi, made it clearthat a substantial involvementwould come only after a clear sign towardspoliticalandeconomicstabilization.TheexpectedsigninWashingtoncameon13May1947with thegovernment crisis openedbyDeGasperi.On16and 20 May, Italian ambassador Tarchiani met several times in the StateDepartment Marshall himself in order to support De Gasperi’s initiativereceivingassurancesfromMarshallonthecompletesupporttoDeGasperi’santi-communisteffort.Onthefollowing31May,DeGasperilaunchedthefirstone-partyChristian-democrat government including five liberals. Five dayslater,MarshalldeliveredhishistoricalspeechinHarvardwithwhichtheUnitedStatesdeclaredtheirdesire toprovidefinancialsupportforanextraordinaryplanforEuropeangovernments.DeGasperi,withAmericanbacking,obtainedpoliticalcredibilityandeconomicfeasibilitytocarryouthispoliticalprojectofgainingthetrustofasocialcoalitionbasedonmiddleclassandentrepreneurs(Romero1988:371).HeplayedonItalianstrategicweaknessandopenedadistinctivestrategy of dependenceontheUnitedStatestoconsolidateinternalstabilityof«centrism»(Romero1994:250-251).

Summer1947wascharacterizedontheeconomiclevelbyahighinflationtogetherwiththesuspensionofconvertibilitywithsterling.Itwasnecessarytotakeseveremeasuresagainstinflation.Theybecameeffectivewiththesocalled «Einaudi line» (from the name of the then governor of theBank ofItaly): itconsistedinamonetarysqueezethatwasjudgednecessaryalsobyAmericanauthoritiesinordertostabilizecurrencywhilewaitingforERPaid.Scholars’ interpretation about Einaudi’s line is not unanimous. In the nextsectionwewillmakeacomparisonbetweenthemostrecentpositionstakenbyhistorians.



3. The «Einaudi line»: features and interpretations

LuigiEinaudi represented the realnovelty in theDCone-partygovernmentbeingatthesametimegovernoroftheBankofItaly,ministerofBudgetanddeputyprimeminister.On17July1947,aftertheexclusionoftheLeftfromthegovernment,BankofItaly’spowerswerestrengthenedthroughthecreationofanInterdepartmentalBoardforCreditandSaving(CICR)andbytheattributionofsupervisoryfunctionstotheCentralBankitself.EinaudirefusedtoapplyanyKeynesianmeasureleadingtodeficit spendingratheraimingtosavingandprivateinvestmentrestockingthroughbalancereadjustmentandcuttingstatesubsidiesonprices.Theso-called«Einaudiline»,aseveremonetarysqueezethat aimed to restore trust in currencyand tocurb inflation, is synonymouswithcapitaliststabilizationintraditionalhistoricalcriticism.Recentlyanewtrend in studies put forward a different interpretation of «Einaudi line» bycriticizingtheideathatthislineconsistedinthetriumphofastrictliberalism.Onthecontraryitisarguedthatthegapbetweendeclaredprinciplesandrealoutcomes:free-marketeconomypursuedbyEinaudisince1947-48wasplacedintheendunderState“guardianship”(Spagnolo2001:88).

Einaudi’sstepscannotbeinterpretedeitherasaturningpointorariftpointwithrespecttothepreviousperiodbecausetheyratherrepresentedtheendandnotthebeginningofaphaseofuncompromisingliberalisticexperimentation.The Economics historian Rolf Petri argues that the first two De Gasperi’sgovernmentswerecharacterizedbyaneconomicpackageregardingforeign-exchangemarketanddomesticmarketofaclearlyliberalisticdirection.Thelaunch of „Reconstruction loan“ onOctober 1946 explainedwith the needof improving the financial backing of huge public spending, resulted in anexcessiveincreaseofmoneydisposableforcreditinstitutionsthusworseningspeculationandstockpiling rather thanproductive investments (Petri1997).Theprincipalchangesobtainedbythe«Einaudiline»arethree:theopeningof a phasemarkedby economic stability preservedbymonetaryorthodoxyguarantors (i.e. Bank of Italy); the strengthening of state-interventionexpectations and the beginning of a newpolitical periodwith the breakingwiththeLeftandthebirthof«centrism».ThelaunchoftheMarshallplanandthepoliticaltriumphintheApril‘48electionsmadeitpossibleforthisnewpoliticalphasetocometrue.Essentially,Petridescribesthe«Einaudiline»asasetofmeasurescoherentwithanaddressof«liberal protectionism»ratherthanasapureliberalturningpoint(Petri1997:326-330).



Themain reasonbehind thegapbetweendeclaredeconomicprinciplesandpoliticalpracticeistobefoundprincipallyinthedevelopmentofnegotiationsconnectedtoMarshallplan.TherelationshipsbetweentheplanandEinaudi’smeasureexplainwhythelatterwasappliedintwophases.Inthefirstphase,EinaudiandDonatoMenichella,governor’srighthandmanandlatersuccessor,aimedatthecreationofinstitutionalbasestocurbinflationwhilewaitingforthearrivalofERPaid.Theyworkedprincipallytocurbcreditforcompaniesandtothenewdivisionofpowerintheeconomicfield:thegovernment(i.e.Christian-democraticparty)wasresponsibleforthecontroloncreditsystemthrough theministry ofTreasurywhile theBank of Italywas in charge ofmonetarystabilitythroughthenewbornCICR(Spagnolo2001:88).

Thesecondphaseofthemeasure(22August–lateSeptember‘47)beganafter the sterling crisis and during the Paris conference thus starting themonetarystabilizationthroughdevaluationandfixingexchangerate.InordertoapproachconvertibilitywithUScurrency,governmentdevaluedcurrencyfrom225to350liraperdollar(ascomparedto600liraintheparallelbankingmarket)andsince28Novembertheexchangeratewasbroughttoaround575liraperdollar.Spirallingpricesof importsandadropinexportpricesweretheimmediateeffectsofEinaudi’smeasure(Spagnolo2001:89).Itmustbeunderlined,withregardstoexport,thatEinaudi’smeasureconsistedalsoinanumberofinitiativestakenbytheministerofForeignTradeCesareMerzagoradevotedtocurrencydevaluation(inaEuropeancontextcharacterizedbythelack of currency convertibility and transferability including sterling) whileothercountrieschosetoovervaluetheirowncurrencies.Merzagora’schoiceaimedtomassivelyfosterexportsandledItalytohaveacreditbalancewithherEuropeancommercialpartners,whichwasasignificantadvantageforexportersbutnotasmuchfortheState.Indeed,Italianpublicadministration,inreturnforthedepartureofgoods,receivedcurrencynotconvertible,nottransferable(and overvalued) and then useless outside that very bilateral agreement.Government policy was characterized by monetary devaluation, bilateraltrade,supporttofirmsandproductivesector,accordingtoMerzagora’sslogan«wehavebeenabletoaidourselves».Thiskindofpolicywouldgoonduring1948togetherwitha„cautious“useofERPaid(Gualtieri1998:859-863).Theneedtorestorethebalanceofpaymentsandtorecoverpublicspendingwaslargelyoutofgovernmentcontrolrequiringadecreaseinimportsandagrowthinexports.Keynesiantheoriesofincreasingdemandthroughpublicspending



werenotenforceable,atleastinsuchacontext.Einaudi’seconomicpackagelackedanyprogramforindustriesaswellasanytypeofsocialcompensationforwage-earnersthusassuminghighlyconservativefeatures(Spagnolo2001:89-92).

In similar vein, Giulio Sapelli’s interpretation is clear: Einaudi’sdesignationtoministerofBudget,“aministerialpostcreatedad hoctoenablemiddleclassandspeculators’supporters leader to take the leadershipof thecountry’seconomicpolicy[..]”(Sapelli1997:28),wasthesignofantifascistgovernment coalition’s end. Consequences of Einaudi’s measures are thealreadymentioneddropinoveralldemand,thefollowingdropofpricesandthestopofinflationaryspiralbutalsounemploymentincreaseandproductivereconstructionparalysis.Politicaltasksofthiseconomicpackagewasmiddleclassreassuranceaboutsavingdebasementaswellasspeculators thatcouldrepatriatetheircapitalscontributingtotheincreaseofmonetaryreserves.ThosereservescouldthereforeaddtoERPfund,thelatternecessarytopayimports.Thesocialalliancebasedonmiddleclassandonwhichthegovernmentwerelying,couldgainconfidenceandatthesametimemonetarystabilizationwasobtained(Spagnolo2001:88-92).

The clear christian-democrats election success on 18 April 1948 wasinfluenced also by a massive propaganda campaign organized by the USwithanti-communist functionandcharacterizedbyplacing in themiddleofthe political struggle the imminent arrival ofMarshall plan aid.During thelastweeksoftheelectioncampaign,StatesecretaryGeorgeMarshallmadeitpubliclyclearthatERPaidforItalywouldhavebeencancellediftheItaliancommunist party (PCI, Partito Comunista Italiano) had won the election.ElectionsuccessforDeGasperi,ononesiderepresentedoneofthefirstmajorachievementsofUS strategy of containment, on theother it reassessedDCdependencefromUnitedStates inconcurrencewithweakresult for liberalsandsocialdemocrats.SubstantialdifferencesbetweenRomeandWashingtonpoliciestoreacheconomicstabilizationwouldemergesoonbehindcommonanti-communist commitment.After 18April 1948 and in concurrencewithERPeffectivestart,AmericanauthoritiesbegantoexertstrongerandstrongerpressuresonItaliangovernmentthroughambassadorDunninordertoallowthegovernmentuseofcounterpartfundstoincreaseproductiveinvestmentsandabsorbunemployment,afterthealreadyobtainedcurrencystabilization.BankofItalyandministerofTreasurybehaviourhowever,clungtoreconstructionpoliciesofbudgetdeficitandbalanceofpayment,contributinginthisveintokeepproductiongrowthslowandtokeepmanningleveldown(Romero1994:262).



4. European Recovery Program (ERP) in Italy

Recently, a periodization of ERP aid in Italy has been proposed consistingoftwophaseswhichfollowedoneanotherbetweenthesecondhalfof1949and1950.Theprincipaldifferencebetweenthemisrelatedtoimpactofaidson the economyand toECApressures on Italiangovernment: afirst phasemarked by substantial ineffectiveness is followed by a phase characterizedby strong quantitative influence on public budget and by American staffpressures towards a Keynesian use of available funds. This chronologicalmodelofdescribingERPisconfirmedbythecomparisonbetweenthechangein composition of imported goods, stockpiling of counterpart fund and itsstrategicusagedecidedbyItaliangovernment.Furthermore,fromMay1949ECAwasobligedtosubstantiallymodifydeliveryproceduresbecauseofdelaysandineffectivenessintheirabsorptionbyinvolvedEuropeancountries.WithregardstothecompositionofimportedgoodsinItaly,since1950prevalencewasevidentintheshareofindustrialequipmentandrawmaterialswithrespecttofoodstuffsthatcomposedmainimportedgoodsinthefirstERPphase(1948-49)(Spagnolo2001:133-136).

In the two-yearperiod1948-50ERPaidsellingbyItalianadministrationdidnotsubstantiallyinfluencebalanceofpaymentsbutinthefollowingperiodthingsweredifferent:militaryaidsoverlappedstockpiledreservesthusmakingthe counterpart fund contribute decisively in increasing the low income.Counterpartfundcomposedaround16%ofincomein1950-51,yearofERPhighestimpactonItalianbalance,whileremaininghigherthan5%untilERPend(Spagnolo2001:137-138,146).

Withthoseremarks,weturnnowourattentiontotheanalysisofeconomicpoliciescarriedoutbycentristgovernmentswithrespecttoERPaid.Thestrongconnectionbetweenthosepoliciesanddomestictaskofpolitical consolidation willbepointedout.Aswehavealreadystressed,theItaliangovernmentandtheBankofItalypursuedeconomicpoliciesdevotedtorecoverpublicbudgetinordertocurbinflationandreachmonetarystabilityevenafterthe18AprilelectoralsuccessandincontrastwithECAadvice.Thechoiceofsqueezingpublicexpenditureandatthesametimenon-raisingtaxwasnecessarytostabilizesocialallianceatthebaseofDCgovernment.Thegovernments’viewsontaxeswereexplainedclearlybytheministerofTreasuryGiuseppePellaonMarch‘48,duringaconferenceorganizedby theConfederationof Italian Industry(Confindustria) titled “Italian industrial economyandEuropeancooperationprogramswithparticularregardtoEuropeanRecoveryProgram”.Accordingto Pella, theMarshall plan counterpart fund could feed public expenditure



without inflation as long as itwas addressed towardsgrowthof productionandproductivity(Spagnolo2001:174-175).Inthiscontext,counterpartfundfunctionwas invaluable as they suffice, since1950-51, to determinepublicinvestmentpolicy(Spagnolo2001:145-148).2AmongtheAmericaninitiativesintheERPcontext,itisalsopresentanactioninthetradeunionfield.Onthelevelofpropaganda,theAmericantradeunionistsinECAstaffsucceededintransmittingtoItalytheimageofERPaidasapromiseofhigherwelfareanddemocracyatapopularlevelandinlegitimatingMarshallplantowardspublicopinionasaprojectofdiffusionofanewerandmoreprosperousway of life (Ellwood1985).3

Inspiteofthissuccess,Americantradeunionistsfailedintransmittingtheirmodelof settlementof the social conflict to Italy.4Tobemoreprecise, thisfailurewasdouble:ononeside,Italianchoicesintheconductionofeconomywere different, as already stressed, from those desired by trade unionistssupportingtheNewDeal.Italianchoicesremainedindeedlinkedandrootedoninternalnationaldynamics.Ontheotherside,thecontractualisticandnon-politicalmodel of industrial relations promoted by the ERP in Europe andinwhich tradeunionswouldhaveplayeda leadingrole in thenegotiations,nevertookplace.Onthecontrary,Italianunionsfacedalongperiodofdeclinedistantfromthatroleofmajorsupporterofthedevelopmentintheframeworkof neo-corporatism desired by new dealers unionists in the ECA (Romero1988:367-369).

Theneedforaboostineconomywasmovingforwardlittlebylittleinsidegovernment alliance and entrepreneurs while at the same time (December1948)ECAthreatenedtocutaidsforItalyin1948-49from$601millionto$ 583million because of high increase in Italianmonetary reserves during

2 According to Chiarella Esposito, Pella could follow undisturbed his policies of monetarystabilizationprincipally thanks to the internaldivisionsand thechaoticsituation in thevariouslevelsofECA.Thisconditionwasprovokedby theECAstaff’s incapability tounderstand theItalianrealityinwhichitwasnecessarytogainpoliticalalliancesratherthantorelyontechnicalandadministrativesolutionstoachieveeconomicdevelopment.(Esposito1994)3 The massive American propaganda operation in Italy began on summer 1948 with theInformationprogrammeoftheERPledbyitsInformationDivisionheadedbyAndrewBerding.BetweenJune1948andtheendof1950,$537239.30millionwerespenttofulfilpropagandisticaims,themostwithdrawnfromcounterpartfundsofERPaid.4 American trade unions participation to international political initiatives promoted by USadministrationsin thepost-warperiodcanbeexplainedconsideringtheglobalcharacterof theAmerican intervention in Europe in the reconstruction period. The America effort entwinedeconomic,political,socialandculturalelements.Inparticular,theneedtoinvolveunionsinthisglobaleffortwasbornfromthecrucialgoalofdefusingthesocialconflictthusdeprivingitofitsclassaspect.



the last threemonths of 1948. The conflict between different developmentstrategies for Italy conceived by centrist government and by ECA came tolightonFebruary1949withthepresentationtoAmericanCongressoftheERPfirst-year report presented byECA president PaulHoffman.The “Hoffmanreport”containedsomeenclosedstudiesregardingeachcountryinvolvedinthe plan, the so called Country studies.Country studyon Italy expressed aseverecriticismwithregardtonationaldevelopmentprogramswithreferencestolong-termplan,theafore-mentioned“Saracenoplan”:excessivemonetarystockpiling, lack of an investment coordinated plan and appropriate use ofStateinterventiontofightunemploymentandastrongprotectionism(Spagnolo2001:207,217).

Asaresultinthefirsthalfof1949,ECAleadershipinWashingtonthreatenedan$85millioncutonERPsecondyearaid(after$50millioncutsinthefirstyear)incaseItalyhadnotstartedanindustrialbasedgrowthplanand,toshowitsfirmstand,ECAinterruptedallocationoflirafundsuntilJuly‘49.

The dispute emerged with Country study between Italy and the UnitedStateswasoneoftheconcurrentfactorswhichcontributedtowardsachangeinItalianinvestmentpolicy.Themostrecentstudieshavedefineditas1949«small turning point».Thenextsection isdedicated todescribe this furtherstepinpostwareconomicreconstruction.

5. The «small turning point», «third stage» and perspectives5

Theexpression«third stage»pointsout thatperiodof economicand socialreformswhichhadbegunwiththe«small turning point»betweentheendof1949and1950andissocalledbecauseitfollowedthestagesofreconstruction andstabilization.Recentstudiesagreedinoutliningsomeinnovativefeaturesin economic policies compared to the previous period’s but they sharecomplementarytraitsthusnotallowingspeakingofaclearbreak.Thetasksofmonetarystabilizationandoftherebuildingofgoldreserves,fulfilledwithin1949,enabledindeedtoseteconomicpoliciesofdevelopmentfortheperiod1950-51,representedbythreekeymeasures:liberalizationofthetrade,revisionoftheprotectionistpoliciesinfavourofadecreaseoftaxesonforeigngoodsandfinallyindustrializationofthecountry(Fauri1998:224-225).Inorder toshed lighton thispoint it isuseful to refer to that interpretationwhichdescribes this changeasa«correctionofconduct».At thebeginning

5 In Italian historical literature «piccola svolta» and «terzo tempo» are the expressions heretranslatedwith«smallturningpoint»and«thirdstage».



(Autumn‘48)this«correction»concernedtheuseofERPaidtobuyindustrialequipmentandlater,in1950,ittooktheshapeofaboostofpublicinterventionineconomy(Barca1997:31).

ThisboostwasrepresentedbythedecisiontoallocateERPfundsinsuchsectorsasironandsteelindustry,mechanicalengineeringindustry,carindustry,chemicalindustryandinprogramsforunderdevelopedareasbytheinstrumentofAutonomous Public Boards. Southern Italy Development Fund(CassaperilMezzogiorno,Casmez)wascreated toenable theState to start a ten-yearproject for the development of Southern Italy (D’Antone 1995: 17-64). In1950,distributionofcounterpartfundswasaddressedtoindustry(28.1%)andtransports(20.7%)aswellasagriculture(14.3%)andpublicworks(25.1%)(Romero1994:264).

Italian public expenditure strategy, far from following main KeynesiantasksupheldbyECA(aggregatedemandsupport,startofawidespreadwelfaresystemandaboveallgrowthinworkers’employmentandwageratestodefeatcommunist threat),aimedtotargetaidstoheavyindustryandtoclientelismwelfarethatwonoverthesupportofbothnorthernentrepreneursandsouthernnotables.The tasks thatECAexpected the Italian government to undertakewithintheframeworkofthesocalledProductivity Drivewereonlyfulfilledon a microeconomic level by acquiring new plants and machinery and byintroducingneworganizationalmodels.Thesectors thatbenefited fromthisrationalization process through technological transfer were the mechanicalengineering industries such as Fiat, Alfa Romeo, Lancia, Innocenti, andPiaggio.TheselattertwoimportedbytheERPcompletesuppliesfortracking,moulding,assemblingandweldingthescootersLambrettaandVespa.BytheERP,thepowersupplyindustryboughtfacilitiesfordrilling,boring,oilcracking,methanecrackingandmassification.Moreover,theevidenttechnologicalgaptheelectricityandelectro-mechanical industriessufferedfromsince theendofthewar,wascaughtupbythepurchaseofhugeAmericanturbogenerators(otherwise unavailable in Italy) and the consolidation of direct connectionbetweenErcoleMarelliandWestinghouse(D’Attorre1985a:74-76).

The iron and steel industry benefited fromERP aid in a crucialway. Inparticular, it is enlightening to describe the troubled events related to bothCorniglianoplant,nearGenoa,andECAadministrationsbehavioursat theirdifferentlevels,localandcentral.Corniglianoplantreceivedforitsbuilding$26.3millionofERPaid,the80%oftheoverallamount,thatistosay$32million,reservedtotheFinsidergroup(subsetofthestateagencyIRIdevotedtothesteelandironcontrol),about50%ofthewholeallocationforthissector.Itmaybestatedthat“[...]theGenoanplantdominatedthesceneofthepost-



warsteelinvestment[beingalso]oneofthemajorindustrialundertakingsnotonlyinItalybutinthewholeEurope”(Ranieri1996:188).

Post-warnationalsteelandironindustryfollowedthedevelopmentdirectiveslaiddownbythe«Sinigagliaplan».However,theplanmettheperplexityandtheoppositionofECAinWashingtonandaboveallofLangdonSimons,ECAironandsteelsectionchief.SimonsdeemedindeedexcessivetheFinsidercallforfundsbecauseoverdimensionedinfrontoftheneedsandthecapabilitiesofanindustrialsectorassmallastheItalianone.Simonscouldcountonthesupportofprominent subjects in theprivate steel and iron industry suchasFalck.

TheoutbreakoftheKoreanwarseemedtobeaturningpointfromadoubleperspective.Oneemphasizesthesubmittalofallthejobordersforindustrialmachinery apt for war to the authorization, beyond ECA-MSA (EconomicCooperationAdministration–MutualSecurityAdministration),ofthenewlyformedNationalProductionAuthority,slowingdownthedeliverytimesandincreasingprices.Thissituationprovoked thediplomatic interventionofDeGasperionJune1951,whoforebodedseriousnegativeconsequencesontheDCgovernment incase theCorniglianoplantwouldnot startoperating.Somostofthesupplieswasdeliveredwithintheendof1952.Theotherperspectiveunderlines that the issue of manufacturing capacity that Simons presumedexcessiveintheItalianestimatewasdroppedbyECAinWashingtonsincetheoutbreakoftheKoreanwarbecause“[...]alreadyinApril1950Simons,visitingtheplant,wantedtobereassuredaboutCorniglianocapacitytosomedayreachtheproduction levelofonemillion[tonsof rawsteel]”(Ranieri1996:184-185).

The so-called depressed areas and in particular the Mezzogiorno wereimportant recipients of ERP aid as mentioned before with regard to theinstitutionof theCassaper ilMezzogiorno.ThecaseofSicilyshowssomecentral themes and behaviours adopted by ECA administration and by theItaliangovernmentatbothcentral and local level.The roleand importanceoftheannouncedAmericanaidtoEuropeweremainlyinterpretedinpoliticalratherthaneconomicperspectiveinItalyuntilthekeyelectionofApril1948.Sicily, althoughwith some disruptive elements of the social fabric such asmafiaandbrigandage,wasanimatedbyinnovativeculturalinitiativesaimedattheeconomicandcivilrepriseoftheislandandthosefoundfurtherstrengthfrom the very announcement of a long-term plan of economic aid. Duringthe two-year period 1947-48, among the different positions and proposalsregarding industrialization and reactivation of the pre-war manufacturingassets,thepragmaticlineupheldbymembersoflocalandcentralgovernment



suchasScelba,FerrariAggradi,andDeGasperihimself,prevailed.Thislineconsistedofcontingentratherthanlong-termplannedmeasures(severalsmallcreditfacilitiesgrantedveryslowlyandwithdiscretionarycriteria),suchastheTognilawforincentivestoestablishmanufacturingplansintheSouthandtheSicilianregionallawthatabolishedtheregistrationofsecuritiesofnewlysetupcompanies.Moreover,themonetarysqueezedictatedbytheEinaudiline(preceding the two aforementionedmeasures) strongly reduced their range.TheEinaudianmeasurespenalizedmuchmoretheSouththantheNorthofthecountryinviewoftheproductionrecoveryeventhoughsmallcriticismcamefrom themost influential economiccircles and from thepressof the islandbecausethesemeasuresdefendedsavingsandfixedestateincomes(D’Attorre1986:6-8).

The distinctiveness of the Sicilian case lay in the massive action ofpropaganda and pressure on the Department of state exerted by the Italo-AmericanCommitteethatwasbornon1941thankstotheinitiativeofsomeAFL(AmericanFederationofLabour)members.OnMarch1948,theCommitteesenta report toWashington inwhich itwasstressed thecentralposition, inthecontextof the“problemaItalia”,of the“questionemeridionale” inanti-communistfunction.Inthisveinanimmediateagrarianreformwassupportedto stop communist progress in the Southern countryside. Substantially “thecommitmentoftheCommitteeintheelectionofApril[1948]cementedastablelinkbetweenItalo-Americancirclesandislandrulingclasscharacterizedbythewell-knownillegalaspects,destinedtogoonduringthewholeperiodoftheMarshallplan”(D’Attorre1986:9).

OnMay1948theDepartmentofstatesenttoSicilyamission,onItalianplea,whosefinalreport,markedbyanevidentNewDealspirit,wascentredontheneedforamainlyagriculturaldevelopment.Onthewhole,theMcCall-Tomlinsonreport(bythenamesofthetwomissionleaders)overshadowedtheproblemof industrialization (with theexceptionof themining industry thatattractedAmericaninterestintheERPcontext),overestimatedtheeffectivenessof„technical“answers toconsolidatedeconomicandsocialbottlenecksandat thesame time it insistedon the roleofprivate initiative,although itwasnotquitesufficientforthatreality.IntheECAactioninItalyitispossibletorecognizemanyof thosegoals,eventhoughtheydidnotfindapprovalasawholeinthecentrallevelofECAinWashingtonandintheDepartmentofstate(whileanti-communismsteadilyremainedasmainpoliticaltask)(D’Attorre1986:9-10).



Between1949and1950ECAadministrationpoliciesinItalyunderwentaradicalchangeinwhichtheSouthern“recipe”basedonthecentralityoftheagriculturaldevelopmentwasreplacedbyastrongpressuretowardsindustrialization.Inparticular,theKoreanwarmodifiedtheinternationalsituationconvincingECAoftheneedtodirectlymobilizeAmericanprivatecapitalstowardsItaly.Inthiscontext,Sicilythankstoitsmineralandoilresourcescouldstartaprocessofindustrialization.TheKoreanjuncturedrewnewattentionfortheUnitedStatesontheproblemofstrategicrawmaterialsandSiciliansulphurandoilattractedECAinterest.ItsubsequentlyendorsedtheuseoflargeamountsofERPfundsdevotedtothediggingoutofsulphur.ERPfundscontributed,forwhatregardsoil,tothefulfilmentofitsexploitationinSicily.Americanpressureskeptpacewithit,inordertopushtheItaliangovernmenttomodifythelawof1927thatregulatetheexploitationofmineralresourcessoastoreserveamorefavourabletreatmenttothosefirmsengagedinthedrillings.AregionalSicilianlawthattookinaccountAmericanexpectationswaspromulgatedonMarch1950thuspaving thewayon the island tomultinationalcorporationsuchasGulfandAngloIranian(D’Attorre1986:24-32).

AccordingtoECAfiguresSicilybenefitedfromimportsongrantaccountprincipallycomposedbywheat,flourandpenicillinratherthanrawmaterialsfor industry,while the loansassigned toSicilian industriesamounted to the3.5%oftheavailableallocationwithaclearprevalenceforelectricindustries.Sicily received, forwhat regards the lira fund, 26.6 billion liras, about 4%of thewholecounterpart fund,anamountsince then judged toosmall foraregion that counted 10%of the overall Italian population.The 45%of thisfigurewasaddressedtopublicworks,privatebuildingandreconstructionoftouristfacilities.TheassessmentoftheECA-MSAactivityontheislandattheconclusionofthatexperiencewassubstantiallynegativebecausetheeconomictasks set in advance were only marginally fulfilled, as the parliamentaryinquiriesonpoverty,unemploymentandworkers’ livingstandardsrevealed.Nevertheless, a concrete achievement in anti-communist stance was foundby social stabilization through charging entrenched local institutions of themanagement of the continuous flow ofAmerican resources in the form ofallocationofcreditsandofdistributionofgoods.Inthissamevein,thecaseofFederconsorziisparadigmaticbecausethisnetworkofagriculturalconsortia,heritageoftheFascistperiod,wasnotonlyleftuntouchedbutevenpermittedtofreelymanageboththeallocationofcerealstoSicily(outofanydemocraticcontrol)and,aboveall,ofAmericangrantstobuymachineryforagriculture(129millionliras)(D’Attorre1986:32-35).



6. Conclusion

InthisfinalsectionIwilltrytoproposeananswertothemainquestionthatarisesamongleadingscholarswhiledebatingabouttherelationshipbetweenItalian reconstructionprocessand theMarshallplan:was theMarshallplannecessaryforindustrialandeconomicrecoveryofItaly?Itakemycuefromtheanswertothatquestionwhich,inthepost-warperiod,wasgivenbyLuigiEinaudi,liberaleconomistandamongthefirstresponsiblefortheshapingofItalianeconomicpolicy.Hebelieved(andwithhimthewholeItalianliberalalignment) thatAmericanaidswerenotnecessary for Italy;on thecontrarythey introduced a bias inmarket by continuing and even increasing dollardeficitinthebalanceofpayment(Spagnolo2001:137-138).

Einaudi’sdisagreementwasprovokedfirstofallbyideologicalfactorsanditdidnottakeintoaccountBrettonWoodspoliticalimperativeofstabilization,theneedtomanageGermanindustrialpowerandpopularpressureforwealthredistribution. The Marshall plan, while introducing a bias in market andbalancesofpaymentofinvolvedcountries,enabledtoavoidcutinconsumptionand to negotiate the paths of reconstruction. It is in this verymeaning thatAmericaneconomicbackingwasfundamental:byshieldingEuropeanpoliticalsystems(theItalianoneinthefirstplace)frommarketsideeffectsavoidingtheinstabilityofthefirstpostwarperiod(Spagnolo2001:138-139).

On strictly macroeconomic level figures of ERP aid point out a notnegligibleroleforItaly:intheperiod1948-52goodsandservicesforaround$1.500millioncametoItaly,equaltoabout11%ofthewholeMarshallplan–importantfiguresbutnotdecisive. Inall theinvolvedcountries(Germanyaswell)productivereflationhadalreadystartedbeforeERPaidarrived.TheMarshallplancrucialroleaswellasallthepreviousaidprograms,(UNRRAandInterimAid)wastobefoundonthe political levelratherthanontheeconomic one.InItaly,economicreflationhadalreadybegunbutERPaidguaranteedadecisivemargintocentristgovernments.AmarginthatallowedDCtoavoidthedangerofaradicalizationinsocialconflictaboveallduring1948,adelicateperiodofpolitical consolidation(Romero1994:260).

American aids allowed involved countries to avoid cuts in consumptionandtonegotiatetheprocessofreconstructionandItaliangovernment,thoughdeveloping orthodox and non-expansivemonetary policies, could stockpilepreciousreservesforimportsaboveallduring1951-53(Spagnolo2001:138).



Marshall plan anti-communist meaning in Italy was not unfolded throughECAmission supported social philosophy devoted to combine growth andconsumption,productivityandworkingclassintegrationineconomicwelfare.It was rather unfolded through political and economic strengthening ofanticommunistsocialallianceunderChristian-democraticleadership.Theuseof«extraordinary»meansof Autonomous Public BoardsaimedtoallocateERPresourceseithertowardspublicandprivateindustrialentitiesenjoyinghighestnegotiatingpower(Fiat,Finsider,Edison)or towardsunderdevelopedareas,first of all the South of Italy, the so calledMezzogiorno, throughSouthern Italy Development Fund(CassaperilMezzogiorno,Casmez)(Romero1994:264-265).



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About the Author

RigasRaftopoulos,*1974,PhDcandidatein“ModernHistory”attheuniversityofTeramo(Italy),departmentof“StoriaeCriticadellaPolitica”inco-tutelagewithuniversityPanteionofAthens(Greece)departmentof“PolitikiEpistimikai Istoria”.May,2004Graduatedat theuniversityofRome“LaSapienza”withthethesis“LadittaturadeicolonnelliinGrecia(1967-1974).LaresistenzadelPAKnellepaginedellasuarivistaGrecia”.Mainfieldsofinterest:historyofPoliticsandEconomics,InternationalandComparativeHistory.

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