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Lesson for Reds. The first results of the new devaluation program looked good. When Italy cut back the value of the lira before (last week was the third time since the liberation), domestic prices went up. Last week, they dropped. In Rome, housewives found that poultry, olive oil and sugar prices were down 20 to 50%; meat which had cost up to 900 lira a week before could be bought for under 500. Farmers, who had refused to sell their products when the lira was becoming more worthless every day, now hastened to unload as it increased in real value.
Nevertheless, some businessmen worried over the long-range dangers of the program. In making loans to businesses through the Fondo Industrie Mecaniche, there was grave danger that the government might gain control of so many companies that Free-Trader Einaudi would find he had no course but to set up a state-controlled economy. In this same fashion, Mussolini's state-run holding company (Istituto di Ricostruzione Industriale) had gained control of an enormous part of the economy.
But these distant dangers are less fearsome to Italian businessmen than the current dangers of uncontrolled inflation. And the first results have been enough to give them hope that Italy—if provided with U.S. raw materials—may finally have a program that will cure her sick economy. The final success of the program will depend on the skill with which the De Gasperi government can combat the rule-or-ruin tactics of the Communists (see FOREIGN NEWS). But the program's first success last week was measured by the energy, bordering on fury, with which the Communists were trying to disrupt an economy which was showing the first dangerous signs of recovery.