28. ECONOMIC CONDITIONS IN ITALY. The fundamental traits of the mod ern economic conditions are similar in the prin cipal countries of Europe and America. Wher ever the returns from property are distinct from the returns from labor, wherever simple accu mulation is the source of industrial remuner ation; the more numerous class of laborers and persons in the employ of others are recom pensed with wages, for the most part not com mensurate with the productivity of the enter prise. In recent times wages have shown a tendency to rise to a greater or lesser degree above the amount required for bare physical subsistence; and the conditions of workmen have improved also in function of the growth and vigor of their unions and organized in sistence on more liberal compensation.
But if the general laws of distribution are uniform, the actual distribution varies in differ ent countries; because of the diversity in the primary economic conditions of the various classes; by reason of the number and relative importance of. the fractional parts into which the proprietary class is divided; because of the degree of density of the and other causes; all of which exercise a greater or lesser degree of influence on the entire social system. Hence, the economics of each nation have their special peculiarities resulting from their specific conditions. In considering these conditions as they exist in Italy, we must remember that as an organized political unit Italy has had less than half a century of existence, whilst as re gards the degree of cultivation of the land and country, she is economically ancient. But not until political unity had been obtained was there any considerable development of capital and an increase of industries in the various parts of Italy. The constitution of the new kingdom therefore marks an essential moment in Italian economic history. The accomplish ment of political unity which is the brilliant triumph of the past generation has also given a special direction to public finances, which ought to be subordinated to the particular needs of the new collective organization, and in har mony rather with the principle of productive taxation than with that of rates chosen in proportion to the individual revenues and wealth. In addition to this the new state assumed the debts and the deficit of the ex-states, which transmitted to her an onerous burden, about $450,000,000 of public debt, besides $20,000,000 of deficit. The excess of expenditure was aug
tnented by the expenses of war and of civil renovation r the consolidated debt continued to increase largely and the taxes by degrees made greater and more absolute demands on the wealth of the taxpayers. A persistent fight Was instituted against the deficit which, from $140,000,000 in 1866, decreased to less than $30,000,0003, and except for a rise in 1870 began sensibly to decline, and in 1875 became trans formed into surplus. Trusting too much to the natural increment of revenue and the per mament efficacy of transitory expedients, the government agreed to a disproportionate amount of, expenditure, and thus, after 10 years, a troublesome period occurred similar to the first, and in order to steer through this the government was obliged to practise the great est economy, to increase the rate of many taxes, to introduce fresh taxes, to prohibit in the future recourse to the consolidated debt.
This severe political action not only tended to re-establish the equilibrium of the budget, and to the making of advantageous and continuous surplus after 1896-97, but served to give a stability to the Italian budget that richer na tions may envy. In 1902-03 the budget showed a realized surplus of $19,800,000; in 1904-05, of above $9400,000, although an extraordinary but productive expenditure had to be met with the ordinary income. The prices of Italian public stocks in the last mentioned years were maintained above par, so that on 29 June 1906 the government could put into force the law whereby the 5 per cent Foss and 4 per cent net obligations for an entire sum of more than $1,600,000,000 of capital were converted into obligations bearing only 3.75 per cent interest and automatically transformable after 15 years into 3.50 per cent, thereby causing a saving to the government of many millions in interest charges. Banking conditions also improved notably, doubtless because in conformity with the provisions of the law of 1894, the reserve funds increased, whilst the industrial and com mercial expansion produced a greater demand for bills of credit.