Quota 90
Encyclopedia
The Quota 90 was a controversial revaluation
of the lira
undertaken by Mussolini
, announced on August 18, 1926 at a speech in Pesaro
, pegging
the exchange rate
to 92.46 lira against the Pound sterling
(19 lira against the US Dollar
) by December 1927, which had been the prevailing market rate when Mussolini took power in 1922.
The Quota has been described as the "most controversial measure undertaken by [Mussolini's] government before 1929," despite the general consensus that some revaluation was necessary among Italian bankers and industrialists. Minister of Finance Giuseppe Volpi
—who preferred a rate of 120 or 125 against the pound—considered the quota a drastic overvaluation. Many historians regard the Quota as motivated by Mussolini's desire to "exert his will" rather than economic rationality, as a "political decision", or as a "proof of force" against industrialists. In response to requests from Volpi and industrialists to reconsider the Quota, Mussolini threatened even lower rates.
An August 8, 1926 letter from Mussolini to Volpi claimed that "the fate of the regime is tied to the lira."
The revaluation led to a massive increase in mergers in 1928 and 1929, beginning a process of industrial consolidation which culminated in 1932 with .88% of corporations (144) controlling 51.7% of corporate capital.
The Quota was accompanied by industrial and agricultural wage reductions in 1927, which overcompensated for the reduction in prices, decreasing the real wage
and thus the purchasing power
of most Italians; unemployment
also rose, especially in the agricultural South.
Revaluation
Revaluation means a rise of a price of goods or products. This term is specially used as revaluation of a currency, where it means a rise of currency to the relation with a foreign currency in a fixed exchange rate. In floating exchange rate correct term would be appreciation. The antonym of...
of the lira
Italian lira
The lira was the currency of Italy between 1861 and 2002. Between 1999 and 2002, the Italian lira was officially a “national subunit” of the euro...
undertaken by Mussolini
Benito Mussolini
Benito Amilcare Andrea Mussolini was an Italian politician who led the National Fascist Party and is credited with being one of the key figures in the creation of Fascism....
, announced on August 18, 1926 at a speech in Pesaro
Pesaro
Pesaro is a town and comune in the Italian region of the Marche, capital of the Pesaro e Urbino province, on the Adriatic. According to the 2007 census, its population was 92,206....
, pegging
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...
the exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
to 92.46 lira against the Pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
(19 lira against the US Dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
) by December 1927, which had been the prevailing market rate when Mussolini took power in 1922.
The Quota has been described as the "most controversial measure undertaken by [Mussolini's] government before 1929," despite the general consensus that some revaluation was necessary among Italian bankers and industrialists. Minister of Finance Giuseppe Volpi
Giuseppe Volpi
Giuseppe Volpi, 1st Count of Misurata was an Italian businessman and politician....
—who preferred a rate of 120 or 125 against the pound—considered the quota a drastic overvaluation. Many historians regard the Quota as motivated by Mussolini's desire to "exert his will" rather than economic rationality, as a "political decision", or as a "proof of force" against industrialists. In response to requests from Volpi and industrialists to reconsider the Quota, Mussolini threatened even lower rates.
An August 8, 1926 letter from Mussolini to Volpi claimed that "the fate of the regime is tied to the lira."
The revaluation led to a massive increase in mergers in 1928 and 1929, beginning a process of industrial consolidation which culminated in 1932 with .88% of corporations (144) controlling 51.7% of corporate capital.
The Quota was accompanied by industrial and agricultural wage reductions in 1927, which overcompensated for the reduction in prices, decreasing the real wage
Real wage
The term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages. Real wages provide a clearer representation of an individual's wages....
and thus the purchasing power
Purchasing power
Purchasing power is the number of goods/services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing...
of most Italians; unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
also rose, especially in the agricultural South.