Hostname: page-component-78c5997874-lj6df Total loading time: 0 Render date: 2024-11-18T06:20:47.310Z Has data issue: false hasContentIssue false
  • English
  • Français

‘We can't pay’: how Italy dealt with war debts after World War I

Published online by Cambridge University Press:  14 March 2019

Marianna Astore  and
Michele Fratianni
Marianna Astore*
Affiliation:
Bocconi University and Università Politecnica delle Marche
Michele Fratianni
Affiliation:
Indiana University and Università Politecnica delle Marche
*
M. Astore (corresponding author), Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University, via Guglielmo Röntgen, 1, 20136 Milan, Italy; and Department of Economics and Social Sciences, Università Politecnica delle Marche, Piazzale Martelli 8, 60121 Ancona, Italy; email: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

The article deals with Italian inter-war debts against the background of the contentious international issue of war reparations that many Allied nations wanted to link to war debt repayments. Italy, having first achieved an extremely large haircut by restructuring US and UK debts in 1925-6, defaulted in 1934, after the Lausanne conference of 1932 failed to deliver war debt forgiveness. We construct a new series of Italian foreign debt from 1925 to 1934 that is consistent with the unfolding of relevant historical events. Starting in 1926, our values are much lower than the currently available foreign debt series. The reason is that the current series do not take into account the large haircut that Finance Minister Volpi extracted from the London debt accord of 1926. Then, beginning in 1932, the values of our series exceed the currently available series because we date the formal Italian exit of the US war debt to 1934, whereas the current series dates it to 1932, at Lausanne.

Keywords

Italyforeign debtdebt restructuringdefault

JEL classification

N24: Europe: 1913– H63: Debt • Debt Management • Sovereign Debt N44: Europe: 1913–
Type
Articles
Information
Financial History Review , Volume 26 , Issue 2 , August 2019 , pp. 197 - 222
Copyright
Copyright © European Association for Banking and Financial History e.V. 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Preliminary versions were presented at the Seminar series in Economics and Social Sciences, Università Politecnica delle Marche, Ancona, November 2016; 2nd Macroeconomic History Workshop, York, March 2018; Economic History Society Annual Conference, Keele University, April 2018; International Congress ‘Making peace’, Padua, November 2018; 4th LSE Interwar Economic History Workshop, London School of Economics, December 2018; and Seminar series in Economic History, University of Barcelona, December 2018. We would like to thank two anonymous reviewers for their insightful comments on the article and suggestions for improvement. We also thank Angelo Pace for sharing his and Maura Francese's foreign debt series and revealing the difficulties in constructing it; Giuseppe Della Torre for suggestions on the likely sources of foreign debt; Paolo Evangelisti, archivist with the Camera dei Deputati, for directing us to relevant documents on the Cassa Autonoma di Ammortamento dei Debiti di Guerra; and Francesco Chiapparino for raising relevant questions about our work.

References

Sources

Banca D'italia (1935). Adunanza generale ordinaria degli azionisti tenuta in Roma il giorno 30 marzo 1935-XIII. Rome: Tipografia della Banca d'Italia.Google Scholar
Carnegie Endowment For International Peace (1932). The Lausanne Agreement. The Text of the Final Act of the Lausanne Conference, July 9, 1932, and Texts Of Further Documents Related to the Settlement Reached at Lausanne, June 16 – July 9, 1932. New York.Google Scholar
Columbia Law Review.Google Scholar
Corriere Della Sera.Google Scholar
Direzione Generale della Cassa depositi e prestiti e degli istituti di Previdenza (various issues), Relazioni e rendiconti consuntivi presentati dal Direttore generale alla Commissione di vigilanza.Google Scholar
Documenti Diplomatici Italiani (DDI), 7th series: 1922–1935: vol. iv (1962); vol. xii (1987); vol. xiii (1989); vols. xv and xvi (1990). Rome: Istituto Poligrafico e Zecca dello Stato.Google Scholar
Documents on British Foreign Policy (DBFP), 2nd series: vol. v: 1933 (1956); vol. vi: 1933–1934 (1957). London. HMSO.Google Scholar
Florinsky, M. T. (1934). France and the war debts. Political Science Quarterly, 49(3), pp. 321–46.Google Scholar
Keynes, J. M. (1919). The Economic Consequences of the Peace. London: Macmillan.Google Scholar
Lippmann, W. (1933). The United States in World Affairs: An Account of American Foreign Relations, 1932. New York and London: Harper and Brothers.Google Scholar
Ministero dell'Economia e delle Finanze (various issues), Conto riassuntivo del Tesoro, Rome.Google Scholar
Ministero Delle Finanze (1938). Relazione sui servizi affidati alla direzione generale del Tesoro, 1° luglio 1925–30 giugno 1935. Rome: Istituto Poligrafico dello Stato.Google Scholar
Moulton, H. and Pasvolsky, L. (1932). War Debts and World Prosperity. Washington, DC: Kennikat Press.Google Scholar
Shepardson, W. H. and Scroggs, W. O. (1935). The United States in World Affairs: An Account of American Foreign Relations, 1934–1935. New York and London: Harper and Brothers.Google Scholar
La Stampa.Google Scholar
United States Treasury (1933). Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30 1933. Washington, DC.Google Scholar
United States Treasury (1935). Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30 1934. Washington, DC.Google Scholar

References

Asso, P. F. (1993). L'Italia e prestiti internazionali, 1919–1931. In Ricerche per la storia della Banca d'Italia, vol. iii: Finanza internazionale, vincolo esterno e cambi, 1919–1939. Rome and Bari: Laterza.Google Scholar
Asso, P. F. and de Cecco, M. (1994). Storia del Crediop: tra credito speciale e finanza pubblica, 1920–1960. Rome and Bari: Laterza.Google Scholar
Astore, M. (2014). Beneduce, l'Ince e l'evoluzione della politica valutaria italiana da Caporetto all'autarchia. Imprese e Storia, 41–2, pp. 35–58.Google Scholar
Baffigi, A. (2011). Italian national accounts: a project of Banca d'Italia, Istat, and University of Rome ‘Tor Vergata’. Economic History Working Papers, Banca d'Italia, no. 18.Google Scholar
Cottarelli, C. (2018). Il macigno: perché il debito pubblico ci schiaccia e come si fa a liberarsene. Milan: Feltrinelli.Google Scholar
de Cecco, M. (1993). L'Italia e il sistema finanziario internazionale 1919–1936. Rome and Bari: Laterza.Google Scholar
de Felice, R. (1968). Mussolini il fascista, vol. ii: L'organizzazione dello Stato fascista 1925–1929. Turin: Einaudi.Google Scholar
Dewitt, H. A. (1974). Hiram Johnson and early New Deal diplomacy, 1933–1934. California Historical Quarterly, 53(4), 377–86.Google Scholar
Eichengreen, B. (1987). Till debt do us part: the U.S. capital market and foreign lending, 1920–1955. NBER Working Paper, no. 2394.Google Scholar
Eichengreen, B. (1992). Golden Fetters: The Gold Standard and the Great Depression 1919–1939. Oxford: Oxford University Press.Google Scholar
Eichengreen, B. (2010). Lessons from the Marshall Plan. World Development Report 2011.Google Scholar
Eichengreen, B. and Irwin, D. A. (2010). The slide to protectionism in the Great Depression: who succumbed and why? Journal of Economic History, 70(4), pp. 871–97.Google Scholar
Eichengreen, B. and Sachs, J. (1985). Exchange rates and economic recovery in the 1930s. Journal of Economic History, 45, pp. 925–46.Google Scholar
Eurostat (2016). Manual on Government Deficit and Debt: Implementation of ESA 2010.Google Scholar
Francese, M. and Pace, A. (2008). Il debito pubblico italiano dall'Unità a oggi. Una ricostruzione della serie storica. Banca d'Italia – Questioni di Economia e Finanza, no. 31.Google Scholar
Fratianni, M. and Giri, F. (2017). The tale of two great crises. Journal of Economic Dynamics and Control, 81, pp. 5–31.Google Scholar
Fratianni, M. and Pattison, J. (2001). The Bank for International Settlements: an assessment of its role in international monetary and financial policy. Open Economies Review, 12, pp. 197–222.Google Scholar
Galofré-Vilà, G., Meissner, C. M., Mckee, M. and Stuckler, D. (2018), The economic consequences of the 1953 London Debt Agreement. European Review of Economic History, https://doi.org/10.1093/ereh/hey010Google Scholar
Grossman, H. I. and Van Huyck, J. B. (1988). Sovereign debt as a contingent claim: excusable default, repudiation, and reputation. American Economic Review, 78(5), pp. 1088–97.Google Scholar
Hirschman, A. (1987). Potenza nazionale e commercio estero. Gli anni trenta, l'Italia e la ricostruzione. Bologna: Il Mulino.Google Scholar
Jordà, O., Schularick, M. and Taylor, A. M. (2017). Macrofinancial history and the new business cycle facts. In Eichenbaum, M. and Parker, J. A. (eds.), NBER Macroeconomics Annual 2016, vol. 31. Chicago: University of Chicago Press.Google Scholar
Kent, B. (1989). The Spoils of War: The Politics, Economics, and Diplomacy of Reparations 1918–1932. Oxford: Clarendon Press.Google Scholar
Kindleberger, C. P. (1984), A Financial History of Western Europe. London: George Allen & Unwin.Google Scholar
Kindleberger, C. P. (1989). Marshall Plan Days. London: Routledge.Google Scholar
Migone, G. G. (1980), Gli Stati Uniti e il fascismo. Alle origini dell'egemonia americana in Italia. Milan: Feltrinelli.Google Scholar
Ministero Del Tesoro (1988). Relazione del Direttore Generale alla Commissione Parlamentare di Vigilanza: il debito pubblico in Italia 1861–1987, vol. i. Rome.Google Scholar
Mistry, K. (2014). The United States, Italy and the Origins of Cold War: Waging Political Warfare, 1945–1950. Cambridge: Cambridge University Press.Google Scholar
Prévost, J. G. (2015). The long Great War of the Italian statisticians. Lettera Matematica, 3(1–2), pp. 63–71.Google Scholar
Prévost, J. G. and Beaud, J. P. (2012). Statistical expertise and the twilight of liberal Italy. In Prévost, J. P. and Beaud, J. P. (eds.), Statistics, Public Debate and The State, 1800–1945: A Social, Political and Intellectual History of Numbers. London: Pickering & Chatto.Google Scholar
Reinhart, C. M. and Trebesch, C. (2014). A distant mirror of debt, default, and relief. Munich Discussion Paper no. 2014-49.Google Scholar
Repaci, F. A. (1962). La finanza pubblica italiana nel secolo 1861–1960. Bologna: Zanichelli.Google Scholar
Ritschl, A. (2012). The German transfer problem, 1920–33: a sovereign debt perspective. European Review of History, 19(6), pp. 943–64.Google Scholar
Romano, S. (1997). Giuseppe Volpi: industria e finanza tra Giolitti e Mussolini. Venice: Marsilio Editore.Google Scholar
Salvemini, G. and Zamagni, V. (1993). Finanza pubblica e indebitamento tra le due guerre mondiali: il finanziamento del settore statale. In Banca d'Italia, Ricerche per la Storia della Banca d'Italia. Problemi di finanza pubblica tra le due guerre, 1919–1939, vol. ii. Bari: Laterza.Google Scholar
Schmitz, D. F. (1988). The United States and Fascist Italy, 1922–1940. Chapel Hill and London: University of North Carolina Press.Google Scholar
Self, R. (2006). Britain, America and the War Debt Controversy: The Economic Diplomacy of an Unspecial Relationship, 1917–1941. London: Routledge.Google Scholar
Self, R. (2007). Perception and posture in Anglo-American relations: the war debt controversy in the ‘Official Mind’, 1919–1940. International History Review, 29(2), pp. 282–312.Google Scholar
Spinelli, F. (1989). Dimensione, composizione, quotazioni e costo del debito pubblico interno dal 1861 al 1985, con una appendice sul debito estero. In Spinelli, F., Per la storia monetaria dell'Italia. Turin: Giappichelli Editore.Google Scholar
Temin, P. (1989). Lessons from the Great Depression. Cambridge, MA: MIT Press.Google Scholar
Toniolo, G. (1980). L'economia dell'Italia fascista. Bari: Laterza.Google Scholar
Toniolo, G., with the assistance of P. Clement (2005). Central Bank Cooperation at the Bank for International Settlements, 1930–1973. New York: Cambridge University Press.Google Scholar
Volpi di Misurata, G. (1929). Finanza fascista. Rome: Libreria del Littorio.Google Scholar