New Kind of State

The new Benito Mussolini, the Duce who has mastered Italian politics so thoroughly that his main interest now lies in turning the state into a business run efficiently by businessmen, pushed preparations last week to cut out what he has come to think of as Italy's political appendix, the Chamber of Deputies.

Whanging a big dinner bell, the Premier rang to order in Rome the National Council of Corporations, destined, most Italians assume, to supplant the Chamber. In Italy corporazioni ("corporations") are the higher groups which represent the basic Fascist syndicates of employers and employes. Every Italian, whatever his business, trade or profession, is represented by and must pay dues to the local syndicate of his occupation. He need not belong to the syndicate but he is bound by the bargains it makes respecting his wages and working hours or--if he is an employer--respecting the wages he must pay and the terms on which he must hire help (as are U. S. industrialists whether or not they have signed NRA codes). Strikes and lockouts are against Italian law, punished by heavy jail sentences on the theory that syndicates, like gentlemen, can and should adjust their differences without strife.

In adjusting differences and planning progress representatives of employer and employe syndicates which are organized in local and national federations sit with representatives of the state in the corporazioni which in turn are represented in the National Council of Corporations rung to order last week by Minister of Corporations Benito Mussolini with his dinner bell.

Promptly up popped that fiery Roman Syndicalist President Arturo di Marsanich of the National Confederation of Fascist Syndicates of Commerce. While Il Duce sat expressionless as stone, Signor Marsanich cried: "There is only one logical consequence of Fascist corporative policy: the Council of Corporations should absorb the Chamber of Deputies and become the sole legislative assembly. . . . Italy will then have an assembly of men qualified to legislate on economic matters as well as those qualified to legislate in the fields of ethics and politics!"

Arose the loudest hubbub in years at a meeting presided over by Il Duce. Every member of the Council seemed to have his own notion of how to proceed. Il Duce encouraged all to spout their ideas, only ringing his bell when the clamor grew too great. ''This meeting," said one of the Dictator's aides, "is the first of a series at which will be worked out the final economic organization of the Corporative State."

What this finality will mean to Italy, Signor Marsanich (who seemed to be sending up trial balloons last week for Premier Mussolini) stated thus: "In industry the corporations will have to assume economic functions--even to taking the place of private initiative and writing finis to the capitalistic regime as now conceived--creating the best conditions and the most work possible. . . . It is not necessary to confuse private initiative with private ownership! Private property cannot and should not be abolished! But in the great industries . . . I regard the corporazione as the organ which will control."

As a matter of cold fact many a corporazione already does many of the things which Signor Marsanich suggested that all corporazioni "will do." To some extent Il Duce is like a man who insists on driving an automobile while he is building it. The New Corporative State is not yet finished but much of it is functioning. In the meantime Benito Mussolini, with tireless energy, leaps into breaches when they appear. Last week he closed a mighty industrial breach, averted the bankruptcy and collapse of one of the four largest companies (not corporazione) in Italy, the Piedmont Hydroelectric Co.

A vast merger of power, light and telephone companies, La Societa Idroelettrica Piemontese was created in boom times with Insull optimism. Its shares, issued at 125 lire, climbed to 250, then, as Depression came, tobogganed. Few doubt that only Fascist control of Italian stock exchanges prevented them from selling publicly for perhaps ten lire or less. Roman newspapers spoke of their price as "under 20." Then II Duce intervened.

At one stroke last week he wrote off over 500,000,000 lire of S. I. P.'s nominal capital, cut the par value of each share from 125 lire to 50. Shareholders, far from displeased since the shares had been selling "under 20," met with enthusiasm last week, dispatched to the Premier a telegram of eulogy.

As part of his intervention Il Duce split S. I. P. into three electric companies: 1) Generation, 2) Distribution, 3) Telephones. No. 3, christened last week La Societa Torinese Servizi Tclefonici, could not recuperate, he decided, without new capital. Who should supply it? Dramatically the Premier presented to the Chamber of Deputies--the Chamber which may be "absorbed" by the National Council of Corporations--a bill under which 400,000,000 lire of bonds to refinance the telephone company will be guaranteed by the State. "In order to carry on the work of reconstruction which the world economic crisis has rendered necessary," II Duce declared, "it appears to be of special interest . . . to re-educate the investing public to participate directly by possession of shares in productive enterprises."

This "re-education"--re-creation of confidence among investors--Il Duce felt could best be achieved by having the State guarantee the bonds both as to capital and 4% interest, with the added feature that, should the telephone company earn more than 6%, half of such additional profit will be paid to the bondholders. "PREMIER MUSSOLINI is a corporation expert, "declared Rome's Giornale d'Italia* "He personally examined the S. I. P. and directed its reorganization."

Observers saw in the guaranteed bond issue a trend. The bonds will be issued through the Italian equivalent of the Hoover-Roosevelt R. F. C., the Istituto Ricostruzione Industrial created by II Duce early this year (TIME, Feb. 20). Other rescue parties, other guaranteed bond issues will undoubtedly follow, putting the State further and further into business. Simultaneously business will be put further and further into the State, as the National Council of Corporations supplants the Chamber of Deputies. Last week Dictator Mussolini loomed as the exponent of a synthesis different from but almost as sweeping as Dictator Stalin's. "It is my deep conviction," he declared, "that this Italian reform will be adopted by all nations having a developed economy. I think the Roosevelt experiment will have this epilog."

* Every Italian paper was recently instructed: first, to print the name of the Premier and the King in capitals; second, to omit the names of lesser official personages whenever possible, printing only their titles. Explained Achille Starace, National Fascist secretary: "The party has been made absolutely impersonal. The hierarchy . . . is composed of faithful Blackshirts who, at the change of the guard, present arms with the sense of duty fulfilled. . . ."

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