INTRODUCTION

During the first eight months of 1946, Italian economic policy bore the stamp of Professor Epicarmo Corbino, the dogmatic and combative treasury minister who took office in December 1945. Behind Corbino stood the prestige and support of Luigi Einaudi, famed economist and governor of the Bank of Italy. Together, they sought to remove the state from the economic arena and to bring market forces to bear on the problems of production, inflation, and structural disequilibrium. Few would deny that the linea Corbino produced disappointing results when measured against its stated objectives: the restoration of price stability, business confidence, and sustained investment. Yet few people played a more decisive role in early postwar events. Corbino's policies acted as a razor's edge that cut away the Italian coalition's facade of unity and exposed the weakness and internal contradictions of American policy in the process.

Even though the dismantling of controls in reaction to fascism had begun early in the occupation period, Paolo Baffi notes that Corbino undertook “with real zest” to complete the process. The war profits tax, surtax on stock transactions, and dividend limitations were eliminated and depreciation allowances increased. The currency conversion program had been postponed in January with communist agreement. Corbino also delayed an issue of government securities scheduled for February. These measures were designed to restore confidence and activate the moribund financial markets.

The measures succeeded, but with ironic side effects.