1938: Italy

News Censorship.

During 1938 Italy, like the rest of the world, saw her international situation become increasingly tense. For this reason, any account of the year's events must to an unusual extent be devoted to foreign affairs; not that the internal affairs of Italy were in themselves lacking in significance, but they were conditioned to a great extent by the country's foreign policy. Furthermore, there are difficulties which the Fascist Government puts in the path of all outside observers who try to obtain accurate and full information about conditions in Italy and in the Italian colonies. The function of dispensing information and news about the country has come to be virtually monopolized by the Government; and the Government publishes, or permits to be published, only what it wants the world to know. For instance, official Italian statistics on many matters — especially those concerning finance — can no longer be regarded as representing the true situation. Mussolini himself is the authority for the statement that statistics must serve the purposes of the state.

Also, during 1938, the difficulties involved in following internal developments in Italy were increased by two Government measures. Under the terms of one of these. Italian journalists were forbidden to act as representatives of foreign newspapers. The other provided that the only agency permitted to give out news from the provinces was the official press bureau. The consequence of these new regulations was that the few foreign correspondents left in Italy had their functions virtually reduced to that of receiving official hand-outs from the Stefani Agency and from the official press bureaus of the ministries in Rome, with any attempt to circumvent this procedure likely to be punished by expulsion from the country.

Rome-Berlin Axis.

Ever since the dismemberment of the old Habsburg monarchy, one of the cornerstones of Italian foreign policy had been the preservation of an independent Austria as a buffer state between Germany and Italy. To this end, Mussolini had consistently supported the Austrian Government in its endeavors to preserve Austrian independence. In fact, he had sometimes been suspected of being more intransigent on that point than were the Austrians themselves. Italy's interest in keeping Germany, especially a rearmed and aggressive Germany, away from the Brenner Pass needs no explanation here. Centuries of history, going back to Roman times, provide instance after instance of the relative ease with which Germanic invaders have poured into the Italian Peninsula from the north. We are, therefore, justified in regarding the Anschluss, carried through in March 1938 without a shot being fired by Italy, as an historical fact of the highest significance.

What was the behavior of the Italian Government and the Italian people at the time of the Anschluss? We do not know what part Mussolini played in Chancellor Schuschnigg's downfall, or whether he foresaw the course events were going to take, and, if he did, whether he had in advance exacted from Hitler some promise of a quid pro quo in return for Italy's acquiescence. What we do know is that the reaction of the Italian press (which closely reflects the views of the Government) and of the Italian people (in so far as they were able to manifest their real feelings) was one of mingled surprise and resentment. The general public had not been allowed to believe that anything so drastic as a German military occupation of Austria was imminent. For instance, as late as March 11, the Ministry of Popular Culture had praised Schuschnigg's plebiscite proposal, while in general the press had nurtured the belief that all was not lost.

When the blow fell and Austria was no more, the explanations given in the Italian press as to Italy's attitude in this affair were lame and unconvincing. Officials refrained from making statements in view of the 'grave' situation. There was a general undertone of bitterness which found vent in the publication of rumors that Hitler's proposed visit to Italy might have to be canceled, and in editorials calling for the speeding up of negotiations with England with a view to settling Anglo-Italian differences in the Mediterranean. In spite of Hitler's personal assurances that he would 'never forget' Il Duce's acquiescent attitude, the latter very obviously felt — along with the rest of the world — that the Fascist Government had suffered a major diplomatic defeat, that it had lost a war without even fighting it. In his speech of March 16 before the Chamber of Deputies, Mussolini had no word of approval for his German colleague, as he had none of recrimination. Belatedly, the press announced that the Anschluss was a 'contribution to peace,' that it was 'a free expression of the will of the Austrian people,' and that it had resulted in a strengthening of the Rome-Berlin Axis. Clearly, there was nothing for the Fascist Government to do but make the best of a bad bargain; and so it did.

Unquestionably, however, the Axis had suffered a rude shock. Yet it survived. And as the months rolled by, and other crises were surmounted, it became increasingly solid. The Fascist Government made up its mind to accept the fact of German hegemony over the Danubian countries, though this by no means implied that the Italians intended to abandon all their Central European interests, lock, stock, and barrel. As will be pointed out below, Rome continued throughout the year to take a lively interest in Central and Balkan Europe. To offset her loss of prestige in the Danubian area since the Anschluss, Italy has concentrated her expansionist activities along the Mediterranean and in North Africa. In other words, she has returned, at least for the time being, to the region naturally best adapted for the exercise of her imperialist energy — a region, incidentally, where her aggressive designs bring her into direct conflict with France and Great Britain.

From May 3 to May 9 Hitler was in Italy on a state visit. Mussolini outdid himself to impress his guest with the strength of Italian military and naval power. Gigantic reviews were held — 190 ships maneuvered in the Bay of Naples, while the army and the air service displayed their might at Rome. The prestige of Italian arms has never been very high with the Germans, and Mussolini tried his best to convince Hitler of Italy's importance as a military and naval power. Italy had accepted the peaceful conquest of Austria and was prepared to see the Sudeten districts of Czechoslovakia go the same way. But Mussolini naturally felt that he was entitled to some countervailing victories. Otherwise he could not justify the Axis. Yet how could he obtain these victories without German assistance, — diplomatic and perhaps military, — and how could he induce the Germans to help him, unless he were so strong that they could not afford to have him as an enemy.?

What Il Duce wanted from Germany was a military alliance, one that he could use to insure Franco's victory in Spain and to exact territorial and other concessions from France and Britain in the Mediterranean region and in Africa. Whether he was successful in extracting any such commitment from Hitler during the latter's Italian visit, we do not know. Mussolini's lukewarmness in supporting Hitler's campaign against Czechoslovakia during the summer months may indicate that he had not received as strong a German guarantee as he had anticipated.

In one respect, however, Hitler seems to have given a fair degree of satisfaction to Italian wishes. In the past, Nazi agitation had called for the return to 'Greater Germany' of the South Tyrol, with its predominantly German population; and after the Anschluss some of the radical Nazis, especially those in Vienna, proclaimed that the day of liberation for the oppressed South Tyroleans was at hand. To counteract this agitation, the Italian Government announced in April that Crown Prince Humbert would visit Bolzano in June. And then, to clear up this embarrassing and equivocal situation, Hitler declared, in his speech of May 7 at Rome: 'I . . . intend to recognize the natural frontiers that providence and history have patiently drawn for our two peoples.'

Hitler's return to Germany was shortly followed by the 'May crisis' over Czechoslovakia. Italy's support of Germany on this occasion lacked enthusiasm; only on May 26 did the Italian press come out whole-heartedly for the German point of view. During the summer Mussolini played a waiting game, not wanting to seem to fail his German friends, yet not wishing to do anything that might bring on a general war, which it was his interest to avoid just then. When the actual crisis came, in September, his principal concern was to prevent the Czechoslovak question from being settled without his participation and without regard to Hungarian and Polish demands. He and his press showered both Henlein and the Czechs with advice. On Sept. 14, in an unsigned letter to Viscount Runciman printed in his personal paper, the Popolo d'Italia, Mussolini suggested that all the peoples in Czechoslovakia, not merely the Sudeten Germans, be allowed to vote in the proposed plebiscite. Four days later, in his speech at Trieste, he said that, in the event of a general war, 'Italy's place is already chosen.' During the following days he delivered several more speeches in Venetia, the pacific or bellicose tenor of which depended on the situation at the moment. Mussolini was obviously determined not to increase the gravity of the crisis, but at the same time to give the Germans no occasion for impugning his fidelity to the Axis.

At the last moment (Sept. 28) Mussolini appears to have been largely responsible for persuading Hitler to postpone the invasion of Czechoslovakia and to call the Munich Conference. At this meeting Mussolini worked for a revival of his project of a Four-Power Pact (Italy, Germany, France, and Great Britain) and for an early ratification of the agreement he had made with England in April. The Italian people, though unaware of the full gravity of the situation, went delirious with joy when peace was saved, and Il Duce was given a triumphal welcome on his return to Rome. But this spell was soon dissipated, and it became only too clear that once again the showdown had been merely postponed.

The Munich settlement left Italy in a relatively weaker position, not only because of Germany's now practically undisputed mastery over Central Europe but because the improvement in Franco-German relations had given France added strength. Common sense therefore dictated that Italy, too, come to terms with France. But when efforts in this direction failed, Italy inaugurated a rabid anti-French campaign, one of the results of which was to make Italian foreign policy more than ever the result of German dictation. (See also GERMANY; CZECHOSLOVAKIA.)

Anglo-Italian Relations.

At the beginning of 1938, relations between England and Italy, which had been very bad during the Ethiopian War, were still far from cordial. Chief among the points of friction were their disagreement over the operation of 'non-intervention' in Spain and Britain's failure to recognize the Italian conquest of Ethiopia. The Nyon Conference of the previous year had supposedly put an end to 'piracy' in the Mediterranean. But on Jan. 31 a British ship was sunk by a 'Rebel' submarine, supplied — so the Loyalist Government charged — by the Italian Navy. On Feb. 4 another British ship was sunk, this time by planes, apparently from the Italian base in Majorca. France and England took a firm stand, and Italy was obliged to join them in giving orders to their fleets that any submerged submarine outside of territorial waters in the western Mediterranean was to be attacked without notice.

These events naturally made the path of Anglo-Italian appeasement no easier. Foreign Secretary Edea had always been opposed to Britain's giving Mussolini a bargain detrimental to long-range British interests. However, in February Mussolini decided that the imminence of the Anschluss should be offset by a hurried rapprochement with England. He is said even to have hoped to obtain British support for stopping the German march down the Danube. Be that as it may, his proposal for an understanding split the British Cabinet and led to the resignation of Eden and his Undersecretary, Lord Cranborne.

The full details of this episode are still lacking, but it appears that Eden was unwilling to accede to Mussolini's demand for an immediate agreement — some said it amounted to an ultimatum of 'now or never.' Eden later described it as a 'threat'; Cranborne, as 'blackmail.' The Italians were naturally jubilant at 'forcing out' the man who for them symbolized Britain's anti-Italian policy. Since the expected revolt in the Conservative Party did not materialize. Chamberlain and his new Foreign Secretary, Lord Halifax, were free to come to terms with Mussolini — which they did in the various Agreements and Declarations signed at Rome on April 16.

In these documents the two Governments sought to settle their differences in the Mediterranean, the Near East, and Africa. By her conquest of Ethiopi, Italy had become a major African Power, for whom the Suez Canal was a vital imperial highway. She and Britain were thus each in a position to cut the other's lifeline; Italy, by her control of the central Mediterranean; and Britain, by her control of the Suez Canal and the lower end of the Red Sea. Each therefore had a very direct interest in coming to terms with the other. (See also EGYPT.)

First of all, the two Powers reaffirmed previous assurances that they would respect the territorial status quo in the western Mediterranean. This declaration was re-enforced by a covering letter from Count Ciano to Lord Perth, pledging Italy to evacuate all Italian troops and war material from Spain on or before the termination of the civil war and assuring the British that 'the Italian Government has no territorial or political aims and seeks no privileged economic position in or with regard to either metropolitan Spain, the Balearic Islands, any of the Spanish possessions overseas, or the Spanish zone of Morocco . . .'

The rest of the stipulations concerned the Near East and the Red Sea region. They provided, among other things, for an exchange of military information: for the preservation of the status quo in southern Arabia; for a clarification of the status of several islands in the lower Red Sea; for the strict observation of the Constantinople Convention of 1888, 'which guarantees at all time for all Powers free use of the Suez Canal'; for the withdrawal of part of the Italian troops stationed in Libya; and for the settlement of various minor disputes in regard to Ethiopia. In Lord Perth's reply to Count Ciano's letter, the Italian Government was reminded that 'His Majesty's Government regards a settlement of the Spanish question as a prerequisite of entry into force of the agreement between the two Governments.' As for the Italians, they merely (Count Ciano's letter) adhered to the British 'formula for the proportional evacuation of foreign volunteers from Spain and pledge themselves to give practical and real application to such an evacuation at the moment and on the conditions which shall be determined by the Non-Intervention Committee on the basis of the above-mentioned formula.'

The House of Commons ratified the agreement on May 2. But, as we have just seen, the agreement was to come into force only when the Non-Intervention Committee had given effect to the British plan for the withdrawal of volunteers. This the Committee failed to do because of the opposition of France and Russia. Chamberlain tried to put pressure on France; but his policy was hampered by constant bombings of British and French ships in Spanish waters by Rebel planes, which in most cases were strongly suspected of being Italian. In June and early July it looked as though the agreement would fall through. The Italian Government plainly believed a Franco victory to be more important to her than the understanding with England. Nevertheless, as the summer wore on, the Italians became more and more restive at Britain's delay in ratifying the accord and urged with increasing importunity that the pact be put into effect after a mere 'token' withdrawal of volunteers. These hopes were chilled on Aug. 21 by Franco's refusal to accept the British withdrawal plan.

Only as a result of the Munich Conference in September was the pact finally put into force. Under a compromise arrangement, some 10,000 Italian troops were sent back to Italy. On Nov. 2 the Commons again approved the agreement (345 to 138), and 14 days later ratifications were exchanged. Yet within a fortnight a spokesman of the British Cabinet was admitting to the Commons that Franco was still receiving substantial help from Italy. In fact, the Barcelona authorities reported that 90,000 Italian troops were left in Spain; and later the Italians themselves admitted that at least four Italian divisions were actively engaged in the Rebel offensive that began shortly before Christmas. They also had admitted (Oct. 12) that 2,657 Italian 'volunteers' had been killed in Spain since the start of the civil war and that 8,858 had been wounded and 354 captured.

Yet in spite of this dark picture (lightened only by Italy's adhesion to the 1936 London Naval treaty), as the year closed Chamberlain and Halifax were preparing to go to Rome. Even the virulent Italian press campaign against France, unleashed in December, failed to alter their plans, though the Prime Minister did go so far as to say that the Anglo-Italian pact covered Tunisia, one of the objects of Fascist cupidity. (See also GREAT BRITAIN; CZECHOSLOVAKIA.)

Italo-French Affairs.

Italy's relations with France went from bad to worse during 1938. The points at issue between the two countries included such items as Rome's alleged support of Arab agitation in French North Africa, French obstruction of Italian use of the Djibouti-Addis Ababa Railway, France's failure to recognize the conquest of Ethiopia and to appoint an Ambassador to Rome, and, above all, their disagreement over 'non-intervention' in Spain. The British, after coming to terms with Mussolini in April, brought pressure on the French to do likewise. Negotiations were opened in Rome, but broke down by mid-May, the two parties being unable to see eye to eye on Spain. Mussolini insisted that France recognize Franco, close her border to supplies for the Loyalists, and in general sacrifice her own interests in order to further Fascist aims throughout the Mediterranean. When the French refused to do this, the Italians held war games along the Tunisian frontier. In August a passport war broke out between the two countries, and travel from one to the other almost ceased. At the same time the Italian press indulged in invectives at French expense, while the French army carried out maneuvers opposite Piedmont. In September France was reported to be putting the defenses of Djibouti in a state to resist a possible attack from Ethiopia.

After the Munich Conference, efforts to bring Rome and Paris together were renewed. The French Government appointed M. Francois-Poncet as Ambassador to Italy. Conversations began in mid-November, but moved slowly. Friendly relations were not advanced by the cries of 'Tunisia' and 'Corsica' with which high Fascist officials greeted Count Ciano's reference, in his speech to the Chamber of Deputies on Nov. 30, to Italy's still unfulfilled aspirations. This naturally created a sensation, the more so as the press took up the cry, adding 'Djibouti' for good measure. Official disclaimers by the Fascist authorities to any responsibility for this campaign were not taken very seriously since the press and all other means of public expression in Italy were under complete Government control.

The French responded with street demonstrations, notably at Tunis where anti-Italian riots were staged by Europeans and Arabs alike. The Italian press said that Italy was 'ready to march against France.' Prime Minister Daladier replied that France would defend every last inch of her territory, and speeded up military preparations in French Somaliland and in the Mediterranean. One of Italy's demands was for greater participation in the control of the Suez Canal. The Company cut the tolls on Dec. 16, but this was far from fulfilling Italian demands. On Dec. 22 it was announced that Italy had repudiated the still unratified pact made between Mussolini and Laval in January 1935.

As the year closed, the situation was becoming steadily more tense. France refused to accept Italy's unilateral repudiation of the Laval agreement or to let Chamberlain act as mediator during his forthcoming trip to Rome. Daladier himself was preparing to visit Corsica and French North Africa, a move generally interpreted as an assurance that France would defend those areas to the last. Italy, for her part, was intensifying her press campaign against France and was threatening the latter with dire consequences if she sent any help to the Barcelona Government, sore-pressed by Franco's offensive against Catalonia — an offensive which had been made possible by men and material from Italy and Germany. Whether, from the German point of view, Italy had chosen an opportune moment for harrying France is doubtful. But Mussolini quite naturally felt that it was time that the southern end of the Axis reaped some of its advantages. (See also FRANCE.)

Central European Relations.

Italy's relations with Germany, England, France, and Spain constituted the most vital elements of her foreign policy during the past year. Other countries must not, however, be left out of consideration, especially those of Central Europe and the Balkans. Early in January 1938 a meeting of the Rome Protocol States (Italy, Austria, and Hungary) was held at Budapest, at which Count Ciano apparently sought to stem the ebb of Italian influence along the Danube, and perhaps even to postpone the Anschluss, but without success. This may in part have been due to Italy's simultaneous flirtation with Yugoslavia and Rumania, two of the Succession States on whose territory Hungary harbored Irredentist designs. The radical anti-Semitic Prime Minister of Rumania, Goga, was then seeking Italian goodwill by recognizing the annexation of Ethiopia. There was also talk of a treaty of friendship, from which Italy hoped to profit by increased imports of Rumanian oil. But Goga soon fell and when the Anschluss was effected a few weeks later, Italy had to adapt herself to a definitely minor rôle in the Danubian area.

After the Munich Conference Italy supported the demands of Hungary and Poland that they be given a common frontier at the expense of Czechoslovakia. However, in the 'Vienna Award' of Nov. 2 the German view was accepted, Hungary and Poland being kept apart by a thin slice of Czechoslovakia. In Yugoslavia the Italians maintained greater hopes, and it is possible that Hitler had tacitly recognized their priority there, as in Albania.

Relations with the United States.

Italy's relations with the United States during 1938 were cool. Negotiations for a trade treaty foundered on American refusal to regard Victor Emmanuel as Emperor of Ethiopia. In March the Fascist Government declined President Roosevelt's call for concerted action on behalf of German refugees. Indeed, Italy herself added to the number of these unfortunates by adopting a thorough-going anti-Semitic policy (see below). The press and certain high officials in both Italy and the United States frequently took occasion to criticize the institutions of the other.

Another source of friction lay in the American fear of Fascist penetration — political and economic — into Latin America. The several million inhabitants of Italian ancestry in South America, particularly in Brazil and Argentina, were regarded by some Americans as a danger to democratic institutions and to the maintenance of the Monroe Doctrine. Whatever justification there may have been in these fears, there were incontrovertible evidences that the Italian Government was taking an active interest in Latin America. In December, Italian and German journalists ('propaganda agents,' as some observers described them) arrived at Lima in advance of the Inter-American Conference and sought to undermine American influence. After the adjournment of the Conference, the Italian press pictured it as a defeat for the policy of the United States.

Attitude toward the Far East.

In the Far East Italy continued to give Japan diplomatic support — which Japan returned — in the hope that when the latter closed the Open Door in China, Italians would be allowed to share in the exploitation of the vast Chinese market.

Ethiopia.

It is not easy to report on the state of Ethiopia because very few non-Italians are allowed to enter that country, and those few are chosen for their sympathy toward the Fascist régime. The reports issued by the Italian Government are often at great variance with those of independent sources, such as the entourage of the former emperor. Haile Selassie, who throughout 1938 continued to reside in England.

There seems to be no doubt that at the end of 1938 there were still unsubdued areas in Ethiopia — in the southwest and even on the plateau near Addis Ababa. According to apparently well-informed articles appearing in the Manchester Guardian Weekly during the fall, guerrilla warfare was being carried on in Shoa by a local chieftain who had under him some 10,000 troops and controlled an area of 3,000 square miles. The Fascist Government was said to be keeping under arms in its new East African Empire a force of 100,000 Italians and 100,000 natives, supplied with 300 planes and 10,000 trucks. This army, it might be pointed out, has served not only as a police force to 'pacify' the country but as a standing threat against British and French interests in East Africa and the Middle East. Its presence near the Red Sea no doubt explains Britain's willingness to come to terms in that region, as it did in April.

The Italians pushed ahead, during 1938, with their road-building program, the completion of which was an indispensable prerequisite to the country's pacification. In addition, various other public and military works were under way, absorbing 55,000 Italian laborers. Very little progress was made in the direction of Italian immigration into Ethiopia. A few settlers were sent out and located in the Harar and Chercher regions. Preparations were reported to be under way for receiving 15,000 settlers; but, as far as can be learned, very few of these have actually left Italy. It will be recalled that one of the motives given by the Fascist Government for the conquest of Ethiopia was the necessity of finding an outlet for the overcrowded population of the homeland. Thus its failure to make much headway in placing Italian peasants on the Ethiopian land calls for explanation.

The reasons are not far to seek. The still unpacified character of much of the country has made it unsafe to send out peaceful tillers of the soil, even with guns slung over their shoulders. Further, there was little capital available for the exploitation of the new empire — and without capital nothing could be done. Immense sums had to be spent on roads, bridges, housing, drainage, water supply, sanitation, hospitals, and factories, before the land could be made habitable for European immigrants. Italy herself has never been a reservoir of capital; and in recent years what little she possessed has been spent on armaments, on the war in Spain, and other unproductive activities. Little money has therefore been left for the development of Ethiopia.

Foreign money has not so far been attracted to Ethiopia. Capital from Italy's Axis friends, Germany and Japan, would naturally be more welcome than that from France, Britain, or the United States. But unfortunately for Italy, her political associates are, like herself, without vast money resources. The Fascist Government has been hoping to attract British capital, but without success. The high taxes and capital levies which the Italian Government has had to impose on property in recent years to fill its depleted treasury, and the various restrictions under which all private concerns are obliged to operate under the Corporative State, do not seem to induce foreign capitalists to invest their money in Italian enterprises, least of all in turbulent Ethiopia.

Economic conditions in the new empire reflected the uncertainty of political conditions. The conquest had dislocated trade and production. After the fall of Haile Selassie, the natives adopted passive resistance over wide areas of the occupied zones; they refused to cultivate more than enough soil to provide for their own subsistence; or to sell their products in the market towns in exchange for the Italian currency with which the Fascist authorities sought to replace the old Ethiopian coinage based on the Maria Theresa thaler. Exports fell off, and imports rose. Foodstuffs had to be brought in, though Ethiopia is largely an agricultural country. On various occasions the food situation in Addis Ababa was reported as precarious, due to the native boycott of the local markets and to the difficulties experienced in getting imported supplies up to the plateau from the coast. The roads from Massaua and Assab are long; traffic on them is subject to delays and 'bandit' raids; and transportation over them is therefore expensive. The railroad up from Djibouti is poorly equipped to handle increased amounts of freight, though some reports denied that it was being used to its full capacity. The French, who controlled the majority of the shares in the company and in whose territory lay the sea terminus of the line, showed few signs of wishing to improve the railroad's facilities. Indeed, in September it was reported that they had prohibited oil, trucks, and foodstuffs from going to Ethiopia via Djibouti. This measure was accompanied by others which were introduced to make French Somaliland less vulnerable to a possible Italian attack. The Italians responded with counter-orders aimed at diverting traffic away from Djibouti to Italian-controlled ports. By December the Fascist press was openly demanding that France cede Djibouti to Italy.

From the beginning of the Italian occupation, Ethiopian trade has been subject to an infinite number of vexatious regulations. All sorts of state controls have been set up — boards, commissions, government and quasi-government monopolies, etc. — each with its own personnel and rules. The object of these bodies has been to organize Ethiopian production and trade in such a way as best to contribute to Italy's endeavor to become economically self-supporting. The net achievement of this increasingly complex bureaucracy has been to strangle trade. An example of the results of trying to fit Ethiopia into the Italian autarchic pattern was the decree which forbade the colony to send Italy more than one third as many hides as it sold elsewhere. This measure was ostensibly drawn up in order that Italy might obtain more foreign exchange; but in the end the result was that Ethiopia sold fewer hides, while in Italy the price of leather rose.

Experiments in cotton cultivation were reported to have encouraged the Government to believe that in a few years Ethiopia could raise enough fiber to release Italy from her dependence on foreign supplies. But the development of cotton growing, like every other form of progress, depended on the introduction of capital and the preservation of general world peace.

It had been anticipated that Mussolini's proclamation of himself as the Protector of Islam, made during his latest trip to Libya, plus the numerous political and religious concessions accorded the Moslem populations of Ethiopia, would secure there active Mohammedan cooperation in the consolidation of the Italian régime. Since the old Abyssinian ruling class was Christian, it had never enjoyed the complete loyalty of the Mohammedan peoples and their rulers in the eastern and southern parts of the empire. Yet, in spite of Fascist blandishments, it was evident that this policy of 'divide et impera' was not proving a success during 1938. This was particularly annoying to the military authorities, who had looked forward to creating a native army out of the followers of Islam.

Lack of zeal for the Italian imperium on the part of the natives — Moslem, Christian, or pagan — may in part have been due to the Government's policy, accentuated during 1938, of segregating the races. Stringent regulations were issued against intermarriage or miscegenation between Italians and Ethiopians. The cities that were being built, or projected, in Ethiopia were laid out so that the European and native quarters were separate from each other. Even social intercourse between the two 'races' was carefully circumscribed. This policy was adopted, so the responsible authorities explained, as a protection of the white race and was but part of a larger program for racial purity which included the anti-Semitic measures promulgated in Italy during the second half of the year.

The Ethiopian question came before the 101st session of the League of Nations Council that met early in May. The Ethiopian delegation was allowed to sit in the Council, for which purpose Haile Selassie came to Geneva. Here he received an ovation from the Swiss people, if not from the delegates. Lord Halifax adopted a pro-Italian line, against which the former Emperor made a brave and biting speech. On May 12 the President of the Council, Vilhelms Munters, Foreign Minister of Latvia, concluded discussion of Ethiopia's plight by deciding that each member nation of the League was free to do about it as it saw fit. Before the close of 1938, most nations had granted de jure recognition to Italy's annexation of Ethiopia. (See also ETHIOPIA.)

Libya.

Libya continued during 1938 to receive considerable attention from the home government and from the outside world. In January it was revealed that a new army corps had been created there, and it was intimated that the corps would remain in North Africa until Britain (and Egypt) came to terms with Italy. The détente in Anglo-Italian relations, climaxed by the agreement of April 16, was marked by a gradual decrease in the size of the Italian garrison in Libya, at least along the Egyptian frontier. But since relations with France did not undergo a similar improvement, the Italian army did not hesitate, in the late spring, to hold maneuvers along the Tunisian border of Libya — in the presence of King Victor Emmanuel. When, in December, the Fascist Government decided, by means of a violent press campaign, to extract concessions from France in Tunisia (where over half the European population was of Italian ancestry) and elsewhere, warlike preparations were intensified in Libya.

During 1938 it was Libya, rather than Ethiopia, that received considerable numbers of Italian colonists. At the end of October, 1,800 peasant families (circ. 18,000 people) sailed from various ports in the mother country to establish themselves in new homes on Italy's 'Fourth Shore.' This was the first contingent of a great body of 80,000 settlers which the Fascist Government intended to transfer to Libya by 1941. Removal to North Africa did not represent for the Italian peasant as much of a change in environment as migration to Ethiopia, nor was the expense involved anywhere near as great. The main question therefore has been: To how many Italians can the ungrateful soil and climate of Libya give decent living? That the Fascist Government expected Libya soon to have an essentially Italian character was indicated by a decree, approved by the Cabinet on December 16, making it an integral part of Italy. (See also. LIBYA.)

Dodecanese.

From the Dodecanese — Italy's seldom-mentioned 'colony' (or 'possession,' as it is more properly called) — there is little to report. The islands were administered by another Quadrumvir, Count De Vecchi di Val Cismon. The policy of trying to Italianize the preponderant Greek population was continued — by strong-arm methods, according to Dodecanesian émigrés in the United States. From the mainland opposite the Dodecanese, the Turkish Republic continued to look askance at the expansion and fortification of Italian naval bases so close to its shores.

Anti-Semitism.

The most spectacular Italian domestic development during the year was the anti-Semitic campaign. Italy was one of the last countries in Europe in which one would have expected an attack on the Jews, for their proportion in the total population was roughly as one in a thousand. (An official census in August reported 70,000 in the country.) Nor did the Jews exercise such economic or political power as to make them dangerous to the state. A number of Jews had attained high positions in the civil and armed services and, although some of the leaders among the anti-Fascist exiles in France and elsewhere were Jewish, the loyalty of the Jewish community as a whole in Italy had never been brought into serious question. Mussolini himself had more than once testified to this. Nor was there any widespread anti-Semitic feeling among the Italian people. Indeed, the Government's campaign against the Jews in 1938 surprised, and in many cases chagrined, the Italian public.

Early in the year there were indications that the Jews might be in for trouble. In February an anti-Jewish paper made its appearance in Rome. An official spokesman gave assurances that there would be no persecution, yet added that it might become necessary to keep Jewish activities 'proportionate to the numerical importance of their communities.' In March came Mussolini's refusal to accept President Roosevelt's invitation to join in taking care of refugees from Germany. During the following months, one after another among the Jews holding important business or Governmental positions 'resigned.'

In July, the Government brought the campaign out into the open with the publication of a report, prepared for the Ministry of Popular Culture, which set forth ten propositions regarding 'race.' The general purport of this manifesto was that the Jews were an inferior race, that they could not be assimilated, and that steps should be taken to protect the Italians from racial defilement. This report was at first regarded as the vaporing of a few misguided professors. But Party hierarchs were soon praising it, and in August positive measures began to be taken against the Jews. The first to suffer were foreign Jews, who, on Aug. 3, were excluded from all Italian schools. On Sept. 1, all Jews who had settled in Italy since 1919 (estimated at 15,000) were given six months in which to leave the country, even those who had become Italian citizens.

Then came the turn of the native-born Italian Jews. On Sept. 2, all universities and schools in Italy were closed to them, too. Other decrees followed. For instance, on Oct. 6 the Fascist Grand Council prohibited Italians from marrying 'non-Aryans.' On Nov. 10, it was decided that no Jew could be employed by the Government, the Fascist Party, local administrative bodies, labor syndicates, public or semi-public bodies of any kind, private institutions partly supported by the state, industrial and commercial enterprises in which the state furnished one half the capital, or banks of nation-wide importance. Within two weeks it was reported that 15,000 Jews — nearly all who had jobs — had been discharged. The Government also seized large amounts of Jewish property, in return for which 4 per cent bonds were to be given. Some observers estimated that the sums thus obtained by the Government might reach five or six billion lire.

Step by step, Italian Jewry was being segregated and forced back into the ghetto. There was a proposal that some of the Jews be removed to Ethiopia, though nothing concrete had been accomplished in this direction by the end of the year. The plight of the Jews in Italy, though less publicized than that of those in Germany, was becoming desperate, and panic among them was widespread.

What occasioned this attack on the Jews? A desire to please the Nazi end of the Axis? A wish to punish international Jewry for its responsibility in imposing sanctions during the Ethiopian War and for closing the world's money markets to Italy? Both of these charges were frequently made by Fascists. The necessity of creating jobs for ardent young Fascists by throwing out the Jews? An attempt to balance Italy's badly unbalanced budget by expropriating Jewish property? Or was it merely another of those stunts by which Mussolini diverted public attention from bad economic and social conditions? It was probably a combination of all these motives, with the economic one uppermost. The question then arose: What group was Mussolini going to attack next? Indications were that it was to be the bourgeoisie, against whom the more radical Fascists were fulminating at the end of the year.

Pope Pius XI and Racism.

The Italian 'racist' policy promptly brought the Government into collision with the Pope. Ever since the Concordat of 1929, His Holiness had alternately praised and scolded Mussolini. Since the anti-Semitic decrees went counter to the teachings of the Church, they brought from the Pope denunciations similar to those which he had for some time been directing against the Nazis. In fact, so strained were the relations between the Vatican and Germany that the Pope left for his summer residence at Castel Gandolfo much earlier than usual in order not to be in Rome during Hitler's visit. On July 15, Pope Pius denounced 'excessive nationalism' in no uncertain terms. Later during the month he returned to the charge more than once, condemning all racial doctrines as un-Christian and asking the Italian Government why it was imitating Germany. On July 30, Mussolini defied the Church and threatened to dissolve Catholic Action on the grounds that it was engaged in politics. Fascist leaders predicted that the nation's youth would desert the Church on the racial issue.

However, on Aug. 20, it was announced that the Fascists had reached an agreement with Catholic Action in which the latter promised to confine itself to spiritual and religious affairs — a reaffirmation of the September 1931 agreement. The next day the Pope again scored super-nationalism; and when the decrees forbidding mixed marriages between Italians and 'non-Aryans' were issued, he protested to both Mussolini and the King. In his Christmas Eve address to the Cardinals, he again deplored the Fascist attacks on the Concordat of 1929 and against Catholic Action. Clearly, the Church and the State were in active disagreement on 'racism.'

Economics.

Throughout the year Italy lived under an ever-tightening war economy. The nation's best energies were consumed in fighting existing wars (in Ethiopia and Spain) or in preparing for the more general conflict that seemed looming on the horizon. Greater and greater sacrifices were made to achieve self-sufficiency — no easy task in a country so poor in natural resources as Italy. Exports were expanded and imports cut (during the first eight months of 1938 they dropped, 1,545,504,000 lire below the figure for the same period in 1937). Fats and old iron were requisitioned; low-grade coal mines were exploited, as at Carbonia in Sardinia; electricity generated by water power was more rapidly substituted for imported coal (Italy was still importing up around 12,000,000 tons and producing only 1,500,000 tons); efforts were made to produce cotton, coffee, meat, etc., in Ethiopia — with what success we have seen — (Ethiopia is not even self-sufficient in wheat); local bauxite was used to make aluminum with which to replace copper; grain culture — the 'Battle of the Wheat' — was intensified; and these are but a few of the devices, most of them uneconomic, to which resort was had.

The self-sufficiency policy required close Government control over the country's economic machinery, one result of which was the further squeezing out of the little business man in favor of the large producer. The most prosperous industries, largely in the North, were those which are connected with armaments.

Under the war economy, living standards slumped. Prices had risen 15 to 20 per cent since the 'realignment' of the lira. The Ministry of Corporations tried to peg prices, — which, by March 1938, were back to the 1929 level, — but with only relative success. Only rents and public utility rates could be easily controlled. A serious drought in the spring caused anxiety about the grain crop and led to excessive slaughtering of cattle. It also caused factories in northern Italy to shut down for lack of power. The Government decreed that the bread eaten by the masses be adulterated 20 per cent with corn and other substitutes. This made it virtually unpalatable, and there were widespread complaints. Wheat was imported in heavy quantities (the London Times estimated that 500,000 tons would have to be bought abroad). By the end of June the crops were reported to be doing better, and the adulteration of bread was cut to 10 per cent. On Sept. 10, the Permanent Wheat Committee reported that the year's production of wheat had been 8,082,000 metric tons (just below the record figure of 8,125,000 tons for 1933), and that the average yield per acre was 23.9 bu., a new high. It was announced that though this was sufficient for all Italian needs, the 10 per cent adulteration would continue in order to build up the war reserve. (See also WORLD ECONOMICS.)

Finance.

Fascist finance is one of the major mysteries — or rather mystifications — of contemporary Europe. The Government seldom lifts the veil on its financial state; and, when it does, one is not sure that the picture presented is accurate. The Grand Council reported on March 15 that the gold reserve equaled 4,028,300,000 lire, while the note issue in circulation stood at 16,520,000,000 lire. The 10 per cent capital levy imposed on stock companies and real estate in the fall of 1937 had not yielded as much as had been anticipated — only about 3,000,000,000 lire. On November 7, the Council of Ministries approved a levy (reported to be 7 per cent) on the capital of privately-owned industrial and commercial concerns, by which it was hoped to collect 1,200,000,000 lire. These concerns had not been subject to the 1937 assessment.

Finance Minister Thaon di Revel's report on the Government's financial condition, given in the Chamber of Deputies on May 18, was highly significant. It revealed that during the three and three-quarters years ending April 1, 1938, the Government had incurred an extraordinary expenditure (apart from the ordinary budget allotments) of 36,000,000,000 lire. This vast sum had been spent on the conquest of Ethiopia, on the first stages of developing the new empire and on rearmament. Revel predicted that for the year 1938-39 the ordinary budget would just balance, but that the extraordinary outlay would be near 9,000,000,000 lire. In other words, 'balancing' the budget is entirely a trick performed on paper.

What is much more difficult than 'balancing the budget' is for the Government actually to get its hands on the taxpayer's hard cash. That new taxes were in store — though one might well wonder what was left to tax — was evident in the budget for 1939-40 approved by the Cabinet on December 14. It was estimated that revenues would drop slightly (from 25,072,000,000 lire to 24,561,000,000), while ordinary expenditures would rise (from 25,035,000,000 lire to 29,316,000,000), leaving a deficit of 4,755,000,000 lire. What the extraordinary expenditures would be was not stated.

Army and Navy.

Rearmament costs explain this sharp rise in expenditure.

In addition, another 1,750,000,000 were set aside for defense if required. Military expenditures thus were calculated to absorb over one-third of the state's income. How long the nation's economic structure would hold up under this strain was a question being asked with increasing anxiety by the Italian people.

It is quite impossible to gain more than an approximate idea of the state of effectiveness attained by the Fascist war machine. On March 30, Mussolini declared that he had between 8 and 9 million men well-equipped and ready to fight. Foreign observers rejected this as braggadocio and pointed out also that the conduct of the Italian units in Spain left much to be desired. Just how many Italian troops were in Spain, in Libya, in Ethiopia, and in the homeland at any given moment was impossible to say. Classes or specialist groups were constantly being mobilized and demobilized, and troops were being shifted from place to place with such frequency that the foreign military attachés themselves were quite confused. After the Czechoslovak crisis had passed, Count Ciano announced that Italy had at that time secretly carried through an extensive mobilization.

As for the Italian Navy, Fascist sources gave the following figures concerning its strength as of October 1: 4 capital ships built or being refitted, and 4 under construction; 7 heavy and 12 light cruisers built, and 12 light but very speedy ones on the ways; 63 destroyers and 32 torpedo boats; more than 100 submarines. In point of tonnage Italy had; overage, 47,965; underage, 412,703; in construction, 167,128; and projected, 51,380. In November it was announced that Italy was planning to build, between 1938 and 1942, 7 fast passenger and freight boats and 37 cargo vessels aggregating 250,000 gross tons. In time of war these vessels would be used as naval auxiliaries.

Culture.

Concerning culture — literature, the arts, the theater, music, etc., — there is nothing of importance to record. In a totalitarian dictatorship under a war economy, there exists no suitable milieu for the creative human spirit. On March 1, Gabriele D'Annunzio died at his villa above Lake Garda; but he had long ceased to be more than a reminder that a generation ago Italy still produced creators of art, literature and general culture. See also FASCISM.