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Rh bishops and priests to the concession of state exequatur and placet. Article 17 maintained the independence of the ecclesiastical jurisdiction in spiritual and disciplinary matters, but reserved for the state the exclusive right to carry out coercive measures.

On the 12th of July 1871, Articles 268, 269 and 270 of the Italian Penal Code were so modified as to make ecclesiastics liable to imprisonment for periods varying from six months to five years, and to fines from 1000 to 3000 lire, for spoken or written attacks against the laws of the state, or for the fomentation of disorder. An encyclical of Pius IX. to the bishops of the Catholic Church on the 15th of May 1871 repudiated the Law of Guarantees, and summoned Catholic princes to co-operate in restoring the temporal power. Practically, therefore, the law has remained a one-sided enactment, by which Italy considers herself bound, and of which she has always observed the spirit, even though the exigencies of self-defence may have led in some minor respects to non-observance of the letter. The annuity payable to the pope has, for instance, been made subject to quinquennial prescription, so that in the event of tardy recognition of the law the Vatican could at no time claim payment of more than five years’ annuity with interest.

For a few months after the occupation of Rome pressing questions incidental to a new change of capital and to the administration of a new domain distracted public attention from the real condition of Italian affairs. The rise of the Tiber and the flooding of Rome in December 1870 (tactfully used by Victor Emmanuel as an opportunity for a first visit to the new capital) illustrated the imperative necessity of reorganizing the drainage of the city and of constructing the Tiber embankment. In spite of pressure from the French government, which desired Italy to maintain Florence as the political and to regard Rome merely as the moral capital of the realm, the government offices and both legislative chambers were transferred in 1871 to the Eternal City. Early in the year the crown prince Humbert with the Princess Margherita took up their residence in the Quirinal Palace, which, in view of the Vatican refusal to deliver up the keys, had to be opened by force. Eight monasteries were expropriated to make room for the chief state departments, pending the construction of more suitable edifices. The growth of Clerical influence in France engendered a belief that Italy would soon have to defend with the sword her newly-won unity, while the tremendous lesson of the Franco-Prussian War convinced the military authorities of the need for thorough military reform. General Ricotti Magnani, minister of war, therefore framed an Army Reform Bill designed to bring the Italian army as nearly as possible up to the Prussian standard. Sella, minister of finance, notwithstanding the sorry plight of the Italian exchequer, readily granted the means for the reform. “We must arm,” he said, “since we have overturned the papal throne,” and he pointed to France as the quarter from which attack was most likely to come.

Though perhaps less desperate than during the previous decade, the condition of Italian finance was precarious indeed. With taxation screwed up to breaking point on personal and real estate, on all forms of commercial and industrial activity, and on salt, flour and other necessaries of life; with a

deficit of £8,500,000 for the current year, and the prospect of a further aggregate deficit of £12,000,000 during the next quinquennium, Sella’s heroic struggle against national bankruptcy was still far from a successful termination. He chiefly had borne the brunt and won the laurels of the unprecedented fight against deficit in which Italy had been involved since 1862. As finance minister in the Rattazzi cabinet of that year he had been confronted with a public debt of nearly £120,000,000, and with an immediate deficit of nearly £18,000,000. In 1864, as minister in the La Marmora cabinet, he had again to face an excess of expenditure over income amounting to more than £14,600,000. By the seizure and sale of Church lands, by the sale of state railways, by “economy to the bone” and on one supreme occasion by an appeal to taxpayers to advance a year’s quota of the land-tax, he had met the most pressing engagements of that troublous period. The king was persuaded to forgo one-fifth of his civil list, ministers and the higher civil servants were required to relinquish a portion of their meagre salaries, but, in spite of all, Sella had found himself in 1865 compelled to propose the most hated of fiscal burdens—a grist tax on cereals. This tax (macinato) had long been known in Italy. Vexatious methods of assessment and collection had made it so unpopular that the Italian government in 1859–1860 had thought it expedient to abolish it throughout the realm. Sella hoped by the application of a mechanical meter both to obviate the odium attaching to former methods of collection and to avoid the maintenance of an army of inspectors and tax-gatherers, whose stipends had formerly eaten up most of the proceeds of the impost. Before proposing the reintroduction of the tax, Sella and his friend Ferrara improved and made exhaustive experiments with the meter. The result of their efforts was laid before parliament in one of the most monumental and most painstaking preambles ever prefixed to a bill. Sella, nevertheless, fell before the storm of opposition which his scheme aroused. Scialoja, who succeeded him, was obliged to adopt a similar proposal, but parliament again proved refractory. Ferrara, successor of Scialoja, met a like fate; but Count Cambray-Digny, finance minister in the Menabrea cabinet of 1868–1869, driven to find means to cover a deficit aggravated by the interest on the Venetian debt, succeeded, with Sella’s help, in forcing a Grist Tax Bill through parliament, though in a form of which Sella could not entirely approve. When, on the 1st of January 1869, the new tax came into force, nearly half the flour-mills in Italy ceased work. In many districts the government was obliged to open mills on its own account. Inspectors and tax-gatherers did their work under police protection, and in several parts of the country riots had to be suppressed manu militari. At first the net revenue from the impost was less than £1,100,000; but under Sella’s firm administration (1869–1873), and in consequence of improvements gradually introduced by him, the net return ultimately exceeded £3,200,000. The parliamentary opposition to the impost, which the Left denounced as “the tax on hunger,” was largely factitious. Few, except the open partisans of national bankruptcy, doubted its necessity; yet so strong was the current of feeling worked up for party purposes by opponents of the measure, that Sella’s achievement in having by its means saved the financial situation of Italy deserves to rank among the most noteworthy performances of modern parliamentary statesmanship.

Under the stress of the appalling financial conditions represented by chronic deficit, crushing taxation, the heavy expenditure necessary for the consolidation of the kingdom, the reform of the army and the interest on the pontifical debt, Sella, on the 11th of December 1871, exposed to parliament the financial situation in all its nakedness. He recognized that considerable improvement had already taken place. Revenue from taxation had risen in a decade from £7,000,000 to £20,200,000; profit on state monopolies had increased from £7,000,000 to £9,400,000; exports had grown to exceed imports; income from the working of telegraphs had tripled itself; railways had been extended from 2200 to 6200 kilometres, and the annual travelling public had augmented from 15,000,000 to 25,000,000 persons. The serious feature of the situation lay less in the income than in the “intangible” expenditure, namely, the vast sums required for interest on the various forms of public debt and for pensions. Within ten years this category of outlay had increased from £8,000,000 to £28,800,000. During the same period the assumption of the Venetian and Roman debts, losses on the issue of loans and the accumulation of annual deficits, had caused public indebtedness to rise from £92,000,000 to £328,000,000, no less than £100,000,000 of the latter sum having been sacrificed in premiums and commissions to bankers and underwriters of loans. By economies and new taxes Sella had reduced the deficit to less than £2,000,000 in 1871, but for 1872 he found himself confronted with a total expenditure of £8,000,000 in excess of revenue. He therefore proposed to make over the treasury service to the state banks, to increase the forced currency, to raise the stamp and registration duties and