529. Condition of Italy in the first half of the century.—Of the countries of southern Europe none has gained so rapidly as Italy in the latter part of the nineteenth century. The explanation, however, must be sought largely in the fact that none was sunk so low as Italy in the first part of the century. Conditions of an earlier period, described in the previous chapter on Italy, lasted far into recent times. Here is the description given by an English author, writing in 1878: “Before 1848, Italy, all except Piedmont, seemed hopelessly crushed. Austria, the Pope, and the Bourbons held her in their grasp. Even the comparatively native sovereigns of Tuscany had turned oppressor, and all Italy groaned like a man in the grasp of the torturer. Commerce languished, divergent fiscal laws and arbitrary raids on private wealth choked up the channels of intercourse between one part of the kingdom and another; without shipping, without manufactures or foreign trade of a solid kind, possessed of no political security, Italy was, thirty years ago, more insignificant in the eyes of neighboring nations than Greece or Spain is now.” In southern Italy the government was incompetent to perform the first of its public duties, the protection of its citizens. It could not withstand even the half-civilized corsairs of Tripoli, who pillaged the Neapolitan ships, and finally, long after the United States had shown the proper way to deal with such pirates, bought from them a disgraceful peace.

530. Lack of political and commercial union.—The peninsula was divided among seven independent states, so stratified as to cut the natural lines of trade, and to prevent effectually the development of any national commercial life. Of these states six had the protective tariffs characteristic of the prohibitive period, and toll stations existed even inside the frontiers. A Milan manufacturer, shipping silks to Florence (about 1840), had to pass eight customs stations in 150 miles; a merchant on his way from Bologna to Lucca was stopped at seven stations in the stretch of about 125 miles. Commerce would have been in desperate straits except that all but two of the states touched the sea, and hence could find some opening for trade. It is noteworthy, however, that the leading commercial city of Italy in this period was one which many people now would be puzzled to place on the map, Leghorn. It owed its commercial importance, not to the advantages of situation or to the productive resources of surrounding territory; it stood, about 1900, sixth in the list of Italian ports, and had but a fraction of the trade going to Naples or Genoa. It gained its prosperity at this time simply by “the comparative security and freedom” which foreigners found there, and which they were denied in other parts of Italy.

531. Establishment of Italian unity.—The example of Germany, in extricating herself from a somewhat similar situation by the formation of customs unions, made, naturally, an impression in Italy, and led in 1847 to an attempt there to form a similar union. The attempt was paralyzed by the opposition of Austria, who saw in it a blow aimed at her political influence in the peninsula. The Italian states, unlike the German, could secure commercial union only as a result of national unity, not as a means of preparation for it. National unity was in preparation, nevertheless, in the brain of a great statesman, Cavour, and was obtained through his far-sighted plans and the cooperation of the king whom he served, Victor Emanuel, ruler of Piedmont. In the few years following 1859 a real kingdom of Italy was established, and the country, which for nearly fifteen hundred years had formed the prey of rival powers, became at last a power herself, worthy to rank with the other great states of Europe. The old barriers to internal trade disappeared, and the whole country accepted the customs tariff of Piedmont, which was extremely liberal. Rarely, if ever, in the history of commerce, have changes of such sweeping importance taken place so quickly. The tariff of the Kingdom of the Two Sicilies, to choose an extreme example, which levied a duty of over $2,500 on a centner of silk goods, gave place to a tariff of United Italy, in which the corresponding duty reached a minimum of $10.

532. Survey of Italian commerce since 1860.—The effect on commerce of this great political upheaval was instantaneous. Contrasting the two years, 1859 and 1861, we find that in this brief interval the value of imports into Italy more than doubled. It will be convenient to insert here figures giving the total value (exports plus imports) of the special trade of Italy, at ten year intervals from 1860 to 1910. Reduced to dollars and given in round figures of millions they are as follows: 130, 320, 440, 440, 590, 1,020. The reader will note that trade grew at a rapid rate from 1860 to 1870, and more slowly to 1880. Then came a stoppage; in some years there was an actual decline, and the value of exports was considerably less at the end of the decade than at its beginning. There was a recovery in the ten years closing in 1900, and a rapid advance thereafter. The figures show, however, that Italian commerce advanced but slowly in the latter part of the century, and a study of conditions at its close would show that Italy had a commerce then far from commensurate with the country’s large population. The average share of each Italian in the annual movement of commerce was much less than that falling to the inhabitants of most of the other states of Europe. Among the great states only Spain and Russia ranked lower, in this respect.

This survey suggests the topics which demand discussion in the following sections. We must know the reasons for the rapid development of Italian commerce till about 1880, and for the check to progress after that date; we want an explanation of the comparatively slight share which the average Italian has had in the world’s commerce.

533. Development of agriculture and commerce after 1860.—When Italy secured national unity, about 1860, the country was almost purely agricultural. The ordinary trades, of course, were exercised to satisfy local needs, and the silk manufacture had not altogether perished, but, to use the phrase of a modern writer, though there were industries in Italy there was no Italian industry. Restrictive taxes and tariffs had prevented the development of any considerable manufacture. When, therefore, comparative freedom of trade was introduced, the people made full use of the opportunity to purchase the cheap wares of the factory industry of other countries; they imported manufactures in increasing amount, and paid for them by exporting their surplus agricultural products. The railroad system, which grew from 800 to 5,000 miles in the period 1860-1880, gave greatly improved facilities for the marketing of wares, and affected distinctly the course of foreign trade; the proportion of commerce carried on across the land frontier rose in this period from a third to nearly a half of the total.

534. Increase of customs duties; protection; tariff war.—The Italians realized at once the benefits of the movement which led to national unity, but ever since they have been carrying its burdens. The expense of the national movement was enormous, especially in view of the poverty of the country; it weighted the government with debt, and required a constant increase in taxes. The treasury, reaching out in every direction for money, and forced to some fiscal devices which seem now positively iniquitous, did not spare commerce. Duties were raised from time to time, and a general revision of the tariff in 1878, while it reformed some old abuses, tended still to raise the general level of duties, and introduced a distinct element of protection. The revised tariff, however, did not go far enough to satisfy the demands either of the treasury or of the protectionists, and was altered again in 1887. Commerce labored henceforth under high revenue duties, under increased duties designed to protect Italian manufactures, and, furthermore, under new or increased duties on agricultural products.

One disastrous result of the new tariff appeared quickly in the outbreak of a tariff war between Italy and France. France had been Italy’s best customer, taking at one time nearly half of her total exports and furnishing about a quarter of her imports. Trouble between the two countries had, however, been brewing for years; they were following different lines in foreign politics, and the protectionists on both sides of the frontier viewed with jealousy a commerce which stimulated the development of international rather than national industries. The tariff of 1887 called forth a reply in kind from France; this was met by a rejoinder from Italy; and so the duties grew rapidly on either side, and had soon reduced the commerce between the countries to a small part of its former dimensions. The most important export industries of Italy (wine, raw silk, fruits, live stock, eggs) suffered severely, and many producers were absolutely ruined.

535. Italian agriculture; poverty of the people.—The course of tariff policy explains, in large part, the check which Italian commerce had experienced in the last decades of the century. Reasons why this commerce was so small in proportion to the population will appear as we review now some features of the Italian productive organization.

Few of the large states of Europe showed so large a proportion of the people engaged in agriculture, so small a proportion in manufactures, as were found in modern Italy. Considerably more than half the people lived directly from the land. Not only did Italy show backwardness in this respect; the character of Italian agriculture was itself backward. The land was worked largely “on shares,” a system which does not encourage improvement or stimulate efficiency. A government commission reported in 1881 that production depended almost entirely on mere labor, and that capital and intelligence contributed only a minimum. Antiquated implements and wasteful and careless methods of treating the crop, went far to nullify the natural advantages of soil and climate. When we consider that, of the small surplus which the agriculturist obtained, the government demanded a good share for taxes, we can understand why the mass of the people were wretchedly poor, and must content themselves with a bare living. It is worth noting that about 1900 the consumption of sugar in Italy was only about six pounds per head, less, even, than in Turkey, while in most European countries people consumed from 20 to 50 pounds or even more. Salt itself was a luxury, which was heavily taxed. The protective tariff appeared to extend favors to farmers as well as to manufacturers, but the people who gained by it were chiefly the great landlords, while the mass of the people simply paid more for bread because of it.

536. Manufactures.—As agriculture was the strongest branch of production in Italy, it was bound to suffer more than any other from the protective tariff. Italian agriculturists did not need protection for most of their products, and they did need the chance to market their products in free exchange for industrial wares imported from abroad. We have now to see what success the Italian tariff had in building up the native industry on which the people were forced, in large part, to rely.

Italian manufactures, in 1880, had scarcely advanced beyond the meager beginnings which we found in 1860. Nearly all conditions were adverse. Capital was scanty. Of important raw materials the country lacked all but silk and hemp. Coal, the mainstay of modern manufacturing, had to be imported at an expense which nearly doubled its price. Most serious, perhaps, of all difficulties was the lack of a class of industrial leaders, men of technical knowledge and business energy. We may take as typical the case of a macaroni manufacturer in Naples, who declined some important foreign orders, for no other reason than that he had, as it was, enough business to make both ends meet, and saw no reason for adding a new worry to life. The single important advantage which Italian manufacturers enjoyed was that of cheap labor. The government was lax in its factory legislation, and allowed employers to secure their labor supply from women and children, at an extremely low rate.

The great development, therefore, which Italian manufacturers have shown in the last decades of the century has been due not to any natural fitness of the country, but solely to the tariff, which has raised prices paid by consumers enough to counterbalance natural disadvantages, and to attract men into manufacturing industry. The artificial character of Italian manufactures is shown strikingly by the fact that at the very close of the century not one of the protected manufactures was strong enough to contribute in any considerable degree to the exports of the country.

537. Shipping; colonies.—Some of the most unfortunate features of Italian policy seem to have been the result of national vanity, of the desire on the part of Italians, now that they had made for themselves a great state, to make their state resemble the other great powers in all respects. This feeling was certainly responsible in part for their determination to build up a system of national manufactures, regardless of expense. It led them to profuse expenditures for the encouragement of shipping, which resulted, indeed, in a growth of the merchant marine, but created in it merely a costly luxury. The Italian navigation companies charged high freight rates, and included in their fleets many antiquated vessels.

The instinct of imitation, finally, led the Italians to follow the lead of other powers in colonial expansion. They did not escape the colonial fever prevalent in the eighties, and spent money and lives lavishly, in the attempt to build up a dominion on the African side of the Red Sea. Their attempt ended in disastrous failure (Adowa, 1896), and popular opposition to such enterprises grew so strong that the government did not dare to carry out a later project for the establishment of an Italian station on the coast of China (San Mun, 1899).

538. Recent progress of Italy.—The preceding sections have been avowedly critical in tone, and are designed to make clear the great gap which separates Italy from the leaders in the world’s industry and commerce. It is important, however, that the reader should distinguish Italy, on the other side, from such backward countries as Spain and Portugal. Though Italy was poor it was not so poor as they, and it offered vastly richer promises for the future. In the closing years of the century it showed marked advances in many lines. Italian agriculturists awakened to the possibilities of their profession; they showed an eagerness to improve their methods, and by various forms of association and cooperation they scored great advances. The exports of dairy and poultry products doubled in about ten years, and became more important than the export of wine. Italian manufacturers secured now from natives the technical assistance for which they formerly depended entirely on foreigners. They emancipated themselves, in part, from coal, by their skilful management of water power, and have come to enjoy a high reputation for electrical appliances for the transmission of power and other purposes. The tariff has been made more liberal by treaties with other states and by a reconciliation with France; and commerce in the period before 1914 gave evidence of the capacity for healthy growth.

539. Spain.—Spain, with an area much larger than that of Italy, and with a population more than half as large, had in 1912 a commerce less than half that of the Italian. The fault lay not with the country, which in mineral resources is perhaps the richest in Europe, and which under the skilful agriculture of the Moors was made to bloom like a garden, but with the people who have neglected or misused their opportunities. Spain furnishes a striking example of the evil that bad politics can work in economic development. The personal absolutism of the period before 1800 has been shaken off in the nineteenth century, but experiments in constitutional government under monarchs of various families and even under a republic, have not succeeded in bettering conditions greatly. The mass of the people remained ignorant, and most of their leaders were inefficient and corrupt. There can be no wholesome economic life under these conditions. Shrewd politicians used economic enterprises merely as a means to draw money from the public treasury or from the pockets of consumers, while the investor or worker without political influence was deterred from enterprise by the heavy taxes which were heaped upon him.

540. Spanish commerce in the first half of the century.—A partial reform of the Spanish colonial system toward the close of the eighteenth century led to a growth of trade with the colonies, so that it formed, if the figures can be trusted, a considerable part of the total Spanish commerce, which was small at best. The promise of commercial development inside the Spanish Empire was of short duration. While Spain was still harassed by the Napoleonic wars, revolutions began among the Spanish colonies on the American continent; and as soon as they had achieved their independence they used it to trade with states like England rather than with the country which had asked so much of them and could offer them so little. The commerce of Spain with other countries was hampered by the Spanish commercial policy, which an Englishman of the time called “one of the most pernicious and restrictive of all the systems of trading exclusion.” Duties were levied both on imports and on exports, and included not only rates of 50 to 100 per cent but also many absolute prohibitions. Spanish commerce would have been starved out of existence if the government which set these rules had not, by its inefficiency and corruption, furnished the means of evading them. A veritable army, including, it is said, 300,000 persons, of whom one third were armed, found its chief occupation in smuggling; Spanish manufacturers maintained factories only to mask the sale of contraband goods, and even members of the government engaged in the contraband trade.

541. Recent commerce of Spain.—The turning-point in the recent history of Spanish commerce came about the middle of the century, when the worst abuses of the old tariff were shorn off. The reform was followed by a rapid increase in the country’s trade, which grew to more than fourfold in the forty years following. Especially noteworthy was the increase in this period of the importation of the implements and raw materials of industry (coal, machinery, textile fibers, etc.), showing that Spain was at last beginning to seek a place for herself among modern commercial nations. Such indications of progress must not, however, blind our eyes to the fact that it was attained by a colonial and commercial policy which retained many of the old restrictive features. The loss of the remaining important colonies to the United States in the war of 1898 was a severe blow to Spanish industries, and they have been supported since then by a protective tariff which bore heavily on many producers as well as on all the consumers in Spain. The considerable development in mining (iron, copper, quicksilver, etc.) has been due to foreign energy and capital, and the native Spaniards offered as exports to other countries little more than dessert for their dinner tables: wine, fruit, nuts, and raisins. It is noteworthy and significant that Spain suffered seriously from the competition of California in the sale of fruit in Europe; this most perishable of wares, in which a nearby country ought to control the market without effort, was packed and transported in such a slovenly fashion by the Spaniards that a people 6,000 miles distant could excel them in the quality they offered to the consumer in Paris or London. In the period from 1890 to 1910 the figures showing the value of Spanish commerce remained almost stationary.

542. Portugal.—In all the respects which concern a student of recent commerce Portugal is but a miniature of Spain, with the faults of Spain exaggerated rather than lessened by the weakness and smaller size of the country. “It is scarcely credible, but it is nevertheless a fact, that agriculture is nearly in the same condition as it was some hundreds of years since”; these words of an English author would apply now nearly as well as when they were written in 1843. Few of the inhabitants were engaged in occupations other than agriculture; rich mines remained unworked, and manufacturing has remained insignificant throughout the century. After 1850 it could still be said of the Portuguese that “their entire faith is reposed in protectionism, monopolies, restrictions, and high duties.” Portuguese trade, nearly ruined already, received a further blow by the separation of Brazil about 1820; and though considerable colonial possessions in Africa and the East were retained, the Portuguese have shown no capacity to base on them commerce of any importance. By exports, of which wine and cork were the most important, the Portuguese were able to satisfy their most pressing necessities; but the backwardness of commerce can be seen when it is realized that the trade of this country, approximately equal in population to the Netherlands, was in 1911 less than one twentieth of Dutch trade.

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