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The Depression
Main Effects
- Withdrawal of US investments.
- Farmers were hit badly with the collapsing grain prices.
- Unemployment went up to two million.
- Wages fell.
- Industry was also badly affected by the fall in demand.
Government Action
- IMI set up to help banks
- The IRI (Institute to Reconstruct Industry) was also set up.
- This held the shares of firms to protect them.
- It acted mainly as a hospital for ailing firms rather than trying to do anything drastic.
- The amount of hours in a working day was reduced.
- More public works introduced.
- This meant that people worked (no unemployment), and earned money, buying cars etc. as there are lots of roads now (so businesses are fine), and they spent this money with tax (so Government is OK). A + B + C = Everyone is happy!
- Extension of welfare.
- Ban on emigration lifted.
- Government encouraged price fixing and cartels (groups) by imposing wage cuts.
Main features of the IRI
- Took over industrial shares held by banks and other companies, so fewer firms went under.
- By 1939 it controlled 75% of Pig Iron production, 45% steel and 20% overall economy.
- Bypassed the corporate state
- Did not attempt to make radical or ambitious changes in industry etc., instead reorganizing industry to make it more efficient. If they had, people would have lost jobs etc., and that would have meant no tax coming in for the Government.
Significance
- Mussolini’s Government remained strong throughout the depression, unlike other countries. This meant more support for Mussolini, both at home and abroad.
- There was minimal interest in Italy despite wage cuts and unemployment.
- IRI demonstrated pragmatic nature of economic policy e.g. increasing Government invention (communist!!) and irrelevance of Corporativism.
- Unemployment in Italy was lower than the rest of Europe, as was the decline in the GNP – in Italy it was only 6%, whereas in Europe it was averaging at 7%.
Comments
These notes are aimed at Edexcel A Level history students for Unit 4 on Mussolini.
Originally written by Forgotmetea on TSR Forums.
