Introduction

This chapter deals with the evolution of Italian monetary policy during the period from the political unification of the country to the eve of the First World War. Particular attention is given to the evolution of the legislation governing the activities of banks of issue, the monetary system, and the monetary relations with the rest of the world. As a result, the core of this chapter deals with the motivating factors and the practical repercussions of important new legislation passed in 1866, 1868, 1874, 1880, and 1893. We also emphasise the model of monetary policy adopted by the most important banks of issue in the country.

In view of the length of the period analysed, we shall deal separately with the two sub-periods 1861–96 and 1897–1913, in the hope that this demarcation will facilitate the reading of this chapter. Of course, we could have divided the period differently. Initially, in fact, we had considered 1893, the year when the Bank of Italy was formed, as the dividing line between the two sub-periods; but, as will be readily evident later, we have subsequently concluded that 1893 was not a significant year with respect to structural changes in monetary policy, nor did it bring specific new ideas with regard to real variables and the business cycle.