The Economic Content of the Lira after the Monetary Reform of 21 December 1927

1. Even though two years have passed since the Law of 21 December 1927, no. 2325 — commonly referred to as the stabilization decree, but more properly entitled ‘for the cessation of forced circulation and for the convertibility of Bank of Italy notes into gold’ — there are still a considerable number of ambiguities or clearly mistaken observations concerning the effects of the decree and the meaning or content of the present-day Italian lira. It is therefore not out of place to devote a little attention to these issues. One frequently hears mention of a ‘gold lira’, purported to be something different from the current Italian lira, almost as if the latter were not in its own right a gold lira. There are references to possible ‘improvements’ of the lira, almost as if the expression ‘improvements’ were not tantamount to raising in people’s minds the related prospect of ‘worsening’, and almost as if the current 1 to 19 exchange rate of the dollar against the lira were something ‘inferior to’ or different from the old rate of 1 to 5.18. The impression conveyed is that the latter alone was a ‘good’ or ‘permanent’ rate, the 1 to 19 rate being viewed as ‘a provisional lesser evil’ which must be put up with until something better can be obtained.