Myth, history and counter-history of the creation of an Italian national market

by Maria Stella Chiaruttini (European University Institute)

Risorgimento history and mythology have, from the very beginning, been a cornerstone of Italian nation building and are still informing public rhetoric and education. However, while their predominance in public discourse has decreased over the last few decades, stereotypical views of Italian unification have begun to be increasingly and vociferously called into question, especially in the South, by cultural associations and popular history writers. Opposing the nineteenth-century interpretation of the messianic role played by Piedmontese patriots and institutions in unifying the country, they highlight the shortcomings of Italian unification, advocating a ‘counter-history’ of the Risorgimento in which the South is portrayed as the hapless victim of ruthless colonizers.

This picture is most provocatively put forward in L’invenzione del Mezzogiorno by the journalist and political activist Nicola Zitara (Jaca Book, 2011). The book, based on secondary literature and addressing a non-academic audience in an extremely polemical style, traces back the origins of the North-South divide to the pillage of the South by a gang of Northern robber bankers. Though lacking in scientific rigor and fairness, it has the merit of addressing one of the – surprisingly – least studied aspects of the Italian ‘Southern question’, namely the financial one. It is indeed high time to open a historical debate on the financial divide still characteristic of today’s Italy. Even more importantly, the financial history of the Risorgimento can offer new insights into two major contemporary issues: economic regionalism, recently come to the forefront with Brexit and the Catalan crisis, and the nexus between finance and politics that emerges constantly in the ongoing EU crisis.

As part of a larger project on Italian financial integration during the Risorgimento, this research focusses on the early development of modern financial markets in the Kingdom of Sardinia and the Two Sicilies and their clash in the first years after Unification. On the basis of extensive archival research, it questions both the traditional view of Southern backwardness versus Northern progress and the revisionist stance praising the superiority of the old Southern system. Apart from the huge differences between the financial systems of the former Italian states, which make the very concept of a financial ‘North’ meaningless, this study shows the crucial role that political events played in shaping financial markets in the Two Sicilies and Piedmont-Sardinia, determining comparative advantages and disadvantages that would prove crucial after 1861.

Interestingly, both kingdoms faced sovereign default, although at different stages. The Two Sicilies came close to bankruptcy in the early nineteenth century, when public debt, already high due to the Napoleonic wars and the expensive restoration of the Bourbon dynasty, skyrocketed after the 1820 constitutional uprisings were crushed by a long and costly Austrian military occupation. From then on, the constant concern of the Bourbons was the repayment of foreign debt. To this end, they consistently implemented an austerity policy which, coupled with the political and financial troubles of 1848, delayed any major banking reforms for decades. At the same time, however, the Southern public national bank, the Bank of the Two Sicilies, managed a sophisticated cashless payment system countrywide that, although working less smoothly than is usually assumed, helped to finance public debt while ensuring monetary stability. Moreover, the role played by Southern business elites in consolidating a model of financial development which favoured Naples at the expense of the rest of the country should not be overlooked.

The rather primitive financial system of the Kingdom of Sardinia was, on the contrary, completely overhauled in less than one decade to sustain the war effort during the disastrous First War of Independence (1848–49), pay for war reparations and enable Prime Minister Cavour to pursue his expansionary policies. From 1848 on, the Piedmontese government found its closest ally in an initially modest bank of issue, the Bank of Genoa, later National Bank and forerunner of the Bank of Italy. Under Cavour’s leadership and with the support of a dynamic business elite, a complex credit system closely integrated with the international markets emerged – a system, however, plagued by large-scale speculation and dependent on both government support and foreign patronage.

The first few years after Unification were particularly traumatic for the South, although not unequivocally negative from the point of view of financial development. The region suffered heavily from monetary and credit disruptions due to warfare, the ever-increasing burden of Italian public debt with its corollary of note inconvertibility, and the decrease of its political and economic power within the new state. The expansion of the Piedmontese National Bank dealt a fatal blow to the Bank of Naples, as the Bourbons’ bank was renamed. At the same time, however, it encouraged the latter to update its business model and the provinces benefited from the creation of a branch network first by the National Bank and later by the Bank of Naples. However, banking competition also came at the cost of financial instability, since, due to bitter regional antagonism, Italy constantly swung between banking pluralism and de facto note monopoly until the early twentieth century. By analysing the feud between the National Bank and the Bank of Naples, this study also shows how the ‘constructed identity’ of the two banks was instrumental to the private interests of their respective business groups, giving rise to conflicting narratives still in currency today.