FINANCIAL AND INDUSTRIAL OUTLOOK OF ITALY 5 1
1894, the crucial year of the period of depression. Now they are quoted at par and even above. A remarkable fact, in con- nection with the rise in the price of our state bonds, is the pro- gressive concentration of our debt in Italian hands. The number of bonds placed abroad is continuously diminishing. This evi- dently adds to the encouraging character of the situation, since the possession of a large share of the national debt by foreigners is always to be looked upon as an element of weakness and a possible source of danger. The gradual nationalization of our foreign debt, however, could not be regarded as an expression of reluctance on the part of foreign capital to consider our bonds as a safe investment. This is disproved by the remark- able decrease in the rate of exchange a fact that can only mean confidence in the soundness of our circulation. The exchange had reached as high a rate as 15.95 per cent, in 1893. It has now fallen to about 2 per cent, and is bound to drop still further, since the condition of the circulation is constantly improving. We have, first, a continuous reduction of the state currency. The silver coin (i and 2 francs), which had been replaced by paper in 1894, is now again in circulation. We have also a progressive increase in the metallic reserve of the treasury ; while, on the other hand, there is a steady improve- ment in the condition of the three national banks controlling the circulation, namely, the Bank of Italy, the Bank of Naples, and the Bank of Sicily. The reserve held by these banks a few years ago was equal only to one-third of their circulating paper. It is now as high as 50 per cent. Hand in hand with the increase in the reserve goes the liquidation of the heavy loans on real estate, which had so badly crippled the action of our banks, and were due to hasty and immature plans of city improvements. In 1894 these assets of difficult realization, known as "bills of stone" (cambiali di pietra), amounted to 637,000,000 francs. In October, 1901, the dead load had been reduced to 367,000,000. This work of purification of the port- folios of our great banks still actively continues.
Thus, to sum up, the characteristic features of the financial situation of Italy, at the present moment, are :
