2y ago

The Fascists expected their invasion of Ethiopia to be quick & easy; they were wrong, & it cost them heavily

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Radical Mercantilism and Fascist Italy’s East African Empire | Business History Review | Cambridge Core

Radical Mercantilism and Fascist Italy’s East African Empire - Volume 98 Issue 1

To salvage the bond market and raise revenue, in 1936 the régime offered to convert the Redeemable Bond—purchased at L. 80 with a nominal value of L. 100 but now valued at only L. 68 on the market—into a new bond of L. 100 nominal value, if the bondholder paid L. 15 in cash. With little alternative, most bondholders accepted the conversion, generating six billion lire net.⁷⁶ While these bonds generated some revenue, they mostly allowed the state to monopolize savings capital and control inflation.⁷⁷
Raising capital by restricting liquidity and suppressing consumption also led to wage compression among workers, as economic historians Vera Zamagni, Maria Gómez‐León, and Giacomo Gabbuti demonstrated; the wages of industrial workers, in particular, declined or stagnated, even as industry flourished.⁷⁸ Workers’ well‐being, measured by any metric, fell substantially throughout the 1930s. For example, the number of under‐nourished Italians grew from one in five in 1922 to one in three by 1938.⁷⁹
As working‐class tables grew more spartan, the property owners remained relatively unmolested.⁸⁰ After 1936, Thaon di Revel studied various tax reforms to target the wealthy, but few were successfully introduced, such as a 10% withholding tax on the coupons of all private bearing securities and other taxes to limit the distribution of dividends.
More serious reforms failed. Property owners decried the October 1936 special property tax as a “forced loan,” pressuring the régime to modify the measure to allow property holders to borrow the taxed amount from the bank, in effect, using the tax as cover for further money creation.⁸¹ Consequently, the régime continued to rely primarily on indirect taxes, which disproportionately affected working‐class consumers and increased inequality.⁸²
By creating money, soaking up liquidity, and suppressing consumption, the régime financed military operations and multi‐million‐lire public contracts to [Fascist] industrial firms, especially those in IRI’s portfolio, to supply and support the invading armies.
The largest civil expense was road construction, which represented some 81% of public expenditure on civil projects (ca. 8,075 million lire).⁸³ Most of the work was done by Italy’s premier road construction company, Puricelli. By 1936, the firm had been taken over by IRI and its leader, Piero Puricelli, was replaced with a man of IRI’s choice, suggesting it was more closely controlled than other firms in IRI’s portfolio.⁸⁴
According to economic historian Gian Luca Podestà, Puricelli obtained 1.3 billion lire in public contracts to build roads in AOI between 1936 and 1940, putting the company in the black by 1939.⁸⁵ By February 1939, the Italians had built or reinforced an estimated 3,352 km of road in AOI.⁸⁶
All sorts of enterprises popped up to supply and service the advancing [Fascist] military apparatus and the construction sites across the Horn. One of the largest was trucking, as everyone and everything had to be trucked from the low‐lying Italian Red Sea ports to the Ethiopian high plains.
Mid‐sized trucking companies, like Gondrand Transports, saw the imperial project as a chance to make themselves a globally significant firm. Even very small companies like Gotti S.p.A. of Massa Lombardo, a company with only eight trucks, jumped at the opportunities offered by the imperial market flush with public money.⁸⁷
The booming battlefront economy pulled Italy’s under‐ and unemployed workers to AOI. An estimated 330,000 Italian soldiers and militiamen, together with 100,000 militarized Italian workers, were in East Africa by late‐Spring 1936.⁸⁸ Many furloughed soldiers stayed. An estimated 102,548 Italians migrated to AOI in 1936 alone.⁸⁹
By June 1937, an estimated 63,530 Italians were employed as roadworkers, alongside 43,720 “native” workers, and 10,680 Yemeni and Sudanese workers.⁹⁰ Unskilled Italian workers could expect to make about ten times the daily wage of an equivalent African worker (ca. 1934–1936) and about twice what they earned in Italy. The differences were even greater for Italian skilled workers and professionals, who had ample opportunities as African workers were summarily removed from skilled positions and excluded from most forms of skilled work.⁹¹

This seems like a good spot to stop the excerpt, but there are a few more paragraphs that I wish to quote as they feel particularly relevant given recent events.

[A]s the war dragged on, Guarneri and Thaon di Revel grew increasingly concerned about Italy’s reserves and Italy’s difficulty accessing foreign markets.¹⁰⁰ In October 1936, Guarneri and Thaon di Revel convinced Mussolini to devalue the lira under the guise of pegging it to the floating dollar. This devaluation of more than 40% would enable Italy to continue buying and selling on foreign markets.¹⁰¹
Guarneri privately urged Mussolini to be cautious with the treasury reserves—as the liberal government had been—because Italy would need them to rejoin the global capitalist market.¹⁰² Extending the Italian economy so far was a colossal risk.
And it did not pay off.
The war was neither lightning‐fast nor conclusive. The [Fascists] confronted a much stronger and more enduring resistance than they had anticipated. By early 1937, the [Fascists] occupied only the main cities of Ethiopia and some of the hinterlands. The countryside was a stronghold for the Ethiopian resistance, which grew only stronger in response to the régime’s brutal attacks on the civilian population. The regions around Gondar, Lake Tana, and Addis Ababa were in continuous revolt (see Fig. 2).¹⁰³
Not only did the war last longer than expected, but the cost ballooned. While more research is needed to establish exact expenditures, even Podestà’s conservative estimates show the régime far exceeded the estimated 2,400 million lire per year in expenditures (Table 1).¹⁰⁴
Maione, in contrast, estimates [that] the [Fascists] spent in total 57,303 million lire (1935–40).¹⁰⁵ By most estimates, the occupation and colonization of AOI amounted to about 25% of all public expenditure and between 10–12% of national income.¹⁰⁶
The war was the most important factor in increasing these expenses. Roads were also costly, especially because the hastily built roads needed constant repairs.¹⁰⁷ Moreover, [the Kingdom of] Italy had to use its reserves to buy war matériel, including petroleum, and pay taxes and service fees at Djibouti in French Somaliland and the British‐controlled Suez.¹⁰⁸ And it was precisely here—the weakest point in the Italian economy—that the League of Nations’ economic sanctions hit the hardest.¹⁰⁹
While sanctions eased in 1936 and European powers had largely accepted [Fascist] Italy’s claims to Ethiopia by 1937, Ethiopians continued to resist [Fascism].¹¹¹ As a result, agricultural output in the Horn of Africa diminished substantially due to the ongoing conflict, land seizures and failed agricultural experiments, and the number of Africans abandoning agriculture for wage work.¹¹²

(Emphasis added in all cases.)

Click here for events that happened today (October 2).

1847: Paul von Hindenburg, conservative who helped promote the NSDAP to institutional power, was born.1934: Helsinki signed the ‘Agreement concerning Payments in connection with Goods Transactions between the Two Countries’ in Berlin.1935: Benito Mussolini announced amid a large gathering of ministers, state secretaries and specially selected foreign dignitaries that war with Ethiopia was imminent.1938: Alexandru Averescu, profascist Romanian, dropped dead.1939: Friedrich Ruge received a clasp to his Iron Cross 1st Class medal, and Luftwaffe Friegerkorps X under the command of General Hans Geissler formed at Hamburg. The Korps would specialise in anti‐shipping operations.1940: Berlin ordered Hans Frank and other Axis officials in occupied Poland to keep the standard of living low and to deprive the Polish population of education, for the Poles were now nothing but lowly labourers for the Fascist bourgeoisie. Additionally, Berlin ordered that the Polish gentry be exterminated. Apart from that, a Ju 88 bomber became lost in the darkness during an early morning reconnaissance mission and landed at Brightlingsea, Essex, England at 0630 hours before falling into Allied captivity. During the day, the Luftwaffe launched six raids of Bf 109 and Bf 110 fighters and fighter‐bombers against London and Kent in southern England; only one of the raids contained bombers. The Axis lost five bombers and five Bf 109 aircraft. Overnight, the Axis bombed London, Manchester, and Newcastle.1941: The remainder of Armeegruppe Mitte launched Operation Typhoon, the attack on Moscow. Meanwhile, Panzergruppe 2 under General Guderian became split into two pincers at Sevsk, Russia; the northern pincer moved toward Bryansk while the northeastern pincer moved toward Orel. After sundown, Axis bombers attacked the Tyneside and Tees‐side areas in northern England (massacring fifty humans, destroying 250 buildings, and severely damaging shipbuilding and repairing facilities at South Shields) and the Dover area in southeastern England (slaughtering ten folk).

As well, Axis submarine U‐94 chased and attacked Allied tanker San Florentino west of Ireland over a course of six hours, sinking her at 0552 hours; twenty‐three folk died but thirty‐five lived. Two and a half hundred miles east of Iceland at 0652 hours, Axis submarine U‐562 sank the Allied catapult‐armed merchant ship Empire Wave, ending twenty‐nine lives but leaving thirty‐one alive. At 0709 hours, west of Ireland, Axis submarine U‐575 sank the Netherlandish merchant ship Tuva, killing somebody (but leaving thirty‐four alive). Finally, the third Messerschmitt Me 163A rocket‐powered prototype flightcraft, piloted by Heini Dittmar, achieved an unofficial world speed record of 623.85 mph.1942: Z35 launched at the DeSchiMAG shipyard in Bremen, and Heinrich Prinz zu Sayn‐Wittgenstein received the Knight’s Cross of the Iron Cross.1943: Berlin issued orders to deport Danish Jews to concentration camps. On the other hand, the Ar 234V‐2 jet bomber suffered a fire in its wing and crashed at Rheine Airfield north of Munster, killing test pilot Flugkapitän Selle.1944: The Wehrmacht terminated the Warsaw Uprising after sixty‐three days of fighting largely due to its enemy’s want of food and ammunition. Although the Axis occupation forces suffered sixteen thousand dead, it still massacred 15,200 insurgents and 200,000 civilians, and it devastated many buildings in the fighting. Likewise, Friedrich Christiansen ordered a raid on the village of Putten, Gelderland, the Netherlands as retaliation for the murder of his subordinate Leutnant Sommers by resistance fighters. The Axis subsequently executed many civilians and deported 661 men to labor camps. In Lapland, General Lothar Rendulic ordered the Axis’s 20th Mountain Army to open hostilities against the Finnish III Army Corps.