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The modern financial system of the Western world originated with the Crusades and the early banks and financial intuitions of the city states in northern Italy. They were a major factor in the Renaissance and the quickening of the European economy in the high-medieval era. The modern term 'bank' is of Italian origins. The northern Italian city states as well as southern Italy were over run by the Spanish, French, and Austrian empires as well as the growth of the Papal states. Italy was finally was unified by the principality of Savoy (Sardinia-Piedmont) under the Italian Kingdom (1860s). We do not yet have much information on the Italian financial sector at this time. In terms of population, Italy was one of the major European sates, but because of the poverty of the almost feudal south it was the weakest of the major nations. Socialist ideas became very important in Italy. One policy reform in Italy was the creation of the Istituto Nazionale delle Assicurazioni (INA, National Insurance Institute). It was an Italian public institution creating a state life insurance monopoly. It was created by government decree (1912). 【Potito】 The INA was one of the first Italian institutions involve the expansiionn of intervention. As a result, it was the prototype for future Italian agencies. 【Melis, p. 167.】 Italy did not have the financial strength to create a state financed old age pension program. INA provided a system to provide a degree of financial security to workers. It allowed existing insurance companies to continue operating and service their clientele for a time, but envisioned a state-owned monopoly within a decade. Italy like the other European nations were weakened economically by World War I (1914-18). There was run-away inflation, massive debts, and a severe recession. The result was high unemployment, food shortages, strikes, and other economic turmoil. The period is known as Biennio Rosso (Two Red Years). This led Mussolini's Fascist dictatorship (1923). The Fascist take over of Italy changed the role of the INA (1923). The fascists allowed the private insurers to continue operating. We are not entirely sure how INA operated during the Fascist era. Mussolini was initially a socialist, but abandoned the Marxist theory of class struggle for class collaboration--essentially replacing capitalist competition with Fascist cooperation. It was the essence of the Corporate State. Italy was not as severely impacted by the Great Depression (1930s) as the other major European powers, but it was affected. The Istituto per la Ricostruzione Industriale (IRI, Institute for Industrial Reconstruction) was established rescue, restructure and finance banks and private companies affected by the Depression (1933). Important New Dealers in America looked at the Fascist approach with considerable sympathy. Fascist Italy achieved the highest level of state ownership of any economy other than the Soviet Union. 【Blinkhorn, p.35.】 NAZI Germany achieved a similar level of state control although retaning a superficial level of private ownership. What did not occur in Fascist Italy was a major industrial expansion. Mussolini impressed with NAZI military successes brought Italy into World War II (1940), but Italy did not have the industrial strength to be a major combatant. Italy as a result was devastated. After World War II, the IRI was important in the Italian Economic Miracle (1950s-60s).
Blinkhorn, Martin. Mussolini and Fascist Italy 2nd edition (New York: Routledge, 1994).
Melis, G. "La Cultura dell’Efficienza nell’Amministrazione Italiana Dopo la Prima Guerra Mondiale," In: P. Armani, (ed.), Alberto Beneduce e i Problemi dell'Economia Italiana del suo Tempo (Edindustria: Roma, 1985), pp. 161-73)..
Potito, Serena. (2017). L'INA: Gli anni del monopolio (1912–1923). (Milan: Angeli, 2017).
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