Mediterranean hegemon

On the evening of March 13, Contini organized a meeting with Union Bank executives to ask how many liras had been exchanged.

The market price on the spot is 60 lire: 1 US dollar. Union Bank has purchased nearly 1 billion US dollars at an average price of 55, almost 55 billion lire. The time deposits of many commercial banks in the market have disappeared, and they can only rely on cash for turnover. In order to obtain necessary funds and revitalize depreciated assets, government bonds were sold off across the board, and the Italian stock market also fell sharply. Bonds were discounted by 30% most of the time. The stock market fell by 40% in a month, and all investors were scolding Contini, this surprised the American reporters who came to interview.

Someone wrote with gloating: "After this incident, the president may really realize that it is easy to criticize the government and management agencies, but it is extremely difficult when it is his own turn..."

Faced with such news, Contini dismissed it and said with a cold smile: "Very good, we can close the net! We will start sweeping the goods tomorrow and clear out all the remaining government bonds that are significantly lower than their face value... No Is it more than 20 billion in public debt? I’ll cover it all!”

That night, Mussolini couldn't sit still and called Contini again to remind him of the 45 lira: 1 dollar indicator. Contini assured him: "Leader, I will take action soon. You are optimistic." That’s it!”

On March 14, several banks suddenly noticed something was wrong. Someone in the market was clearing out government bonds in a big way, buying more than 1 billion or more than 2 billion at a time. The price of government bonds quickly started to rise from 40% off, and exceeded 30% off in just 2 days. , by March 17, it had returned to a 20% discount. The market stock was already very small, and even high-grade local debt and corporate debt were almost completely wiped out.

Just when they were wondering, on the 18th, explosive news came out. The central bank announced that it would increase the deposit margin by 5 percentage points to 15%. The payment date is still April 1. At the same time, the Foreign Exchange Management Center will increase the lira exchange rate from the current 60 :1 was directly raised to 54:1, and the United Bank opened foreign exchange.

All the bankers couldn't sit still and called Volpi frantically, asking him why he raised the margin by 5 percentage points in one go. Volpi was speechless. He could only say that this was an arrangement by the National Development and Reform Commission. The president believed that there were too many speculative funds in the market, which affected financial stability and caused risk instability. It must be stabilized by the central bank, and actual adjustments will be made as needed.

Small and medium-sized banks breathed a sigh of relief, but the management of large banks felt uneasy. Because of the sudden change in the market, customers suddenly increased their withdrawals to exchange foreign exchange. They had already sent out a large amount of money, and there was not much money left on their books. It was difficult to cope with this run pressure, let alone the impact of margin deposits, so they asked the central bank for help. The first person to make a request was the Bank of Sicily.

Volpi's reply the next day was as follows: "You still have more than 70 million US dollars and more than 10 million pounds in your bank account. These must be converted in full to cope with liquidity pressure before we can discuss the lending issue..."

The other party yelled: "Your Excellency, you are forcing things on others! You have just forcibly raised the exchange rate! This exchange rate cannot be maintained at all!"

"Then just wait...Whether it is the exchange rate that cannot be maintained or you cannot maintain it, let me say it first. The deposit deposit must be paid in full on April 1, otherwise business will be suspended for rectification and foreign exchange will be forced to be converted. Don't doubt the president's determination!"

Other banks also asked, and everyone got the same answer. Only one bank only had more than 10 million U.S. dollars in foreign exchange, and "reluctantly" exchanged it at a price of 52:1. Then the central bank did not hesitate to issue an additional 2 billion U.S. dollars. Lira funds supplement liquidity.

Now everyone understands that this is the president's plan to shut down the business: he first used foreign exchange to exchange for everyone's lira liquidity, and then used the deposit guarantee to force the bank to hand over foreign exchange and withdraw the speculative capital - no matter if he does not hand over, he will suspend business for rectification. .

Several bankers called Mussolini and asked him to stop this dangerous practice. Mussolini responded coldly: "Those who ignore the authority of the central management and the authority of the National Development and Reform Commission must be punished, otherwise they will be fascists." Where is the majesty of Di?”

On March 20, the exchange rate suddenly increased to 50:1, and the entire Italian crowd became even more commotion. Now there are two completely different scenes. One group of people took advantage of the increase in the exchange rate to rush to exchange foreign exchange, while others hurriedly exchanged foreign exchange. Because they need lira for consumption but the foreign exchange on hand is constantly depreciating, it is like holding a hot potato and being unable to move forward.

On the same day, several big tycoons who organized speculation held an emergency meeting to discuss how to deal with it. At the meeting, several people expressed their opinions and had different opinions on the market outlook. Some said that United Bank could not sustain this situation, while others said that this time it was dangerous... But everyone We have clearly seen Contini's method. He first exchanged the central bank's foreign exchange for a batch of lira, then exchanged the foreign exchange for lira, and then used the deposit margin to reduce the liquidity of the lira. This is such a situation now. After all, Did Union Bank run out of foreign exchange first or did speculators' lira positions fail to withstand liquidation?

The Rothschild family bet nearly US$800 million this time and encouraged everyone: "Don't be afraid. No matter how big the United Group is, it is just a consortium. Can it compete with everyone?"

"But the lira borrowed will mature next month, and the Bank of Italy has said that it will not continue to re-lend. Even if it is re-lended, it cannot give us so many positions. We still have a lot of bonds and stocks pledged there..."

"Don't be afraid, everyone, this is the end of little Ciano's crossbow. How much liquidity does Lira have? Can he run out of energy? Time is on our side!"

They don't actually know how much liquidity the lira has. In fact, the lira issued in the entire Italy is only more than 200 billion. After deducting what must be used for circulation, only a little over half can do their best to speculate, and the top level is 4-5 billion. Although United Group just had a loan of 3 billion U.S. dollars, I heard that it has used more than 500 million U.S. dollars in the United States, and it still has to pay a lot of follow-up payments and interest. If you think about it, it will only be 2 billion U.S. dollars, and there is still a long way to go before the liquidity is drained. There's still a way to go.

A representative of the Meir Consortium said: "Even if he has the ability to drain it, he will not do it, because once the liquidity dries up, we will naturally suffer losses. Will Italy be better off? Their normal economy does not need lira lubrication? "

Volpi was also worried about liquidity. Although the foreign exchange rate was rising, there were problems with lira liquidity, and many normal company operations were hindered. He approached Contini again with anxiety: "The exchange rate is basically OK now. It’s said to be stable, but what about the liquidity?”

"Then replenish liquidity." Contini smiled, "Have you forgotten the batch of treasury bills I prepared in February? I recovered the lira and treasury bonds from the market, and then I can issue treasury bills."

"oh……"

On March 21, 30 billion treasury bills were issued. The treasury bills and lira were equal in circulation. The only difference is that they must be cashed out after 4 months and cannot be exchanged for foreign exchange. However, they can be used to offset taxes and public utility payments. The first batch of recipients They are government departments and the United Group. The former is used to pay the upfront payment for building schools, roads, and railways, and the latter is used to pay undue payments in advance. Many economists criticized the idea of ​​having two currencies and sneered at this. But strangely, there were many companies that accepted treasury bills. They laughed at these intellectuals hiding in the ivory tower as being pedantic - they had completely lost their minds by reading books.

Of course, the payment capacity of treasury bills is not as good as the lira, but in the past, advance funds were required to undertake government projects. Now at least to start work, advance funds are no longer required. Everyone can get a check that cannot be withdrawn but is liquid - as long as it can be liquid, The money needed for the project can be paid out, and the entire economy can become active. Are you willing to get a treasury bill that is certain to be received in 4 months, or are you willing to wait 4 months to settle the money that may not be received. Industrialists don't care about two currencies, as long as they can pay and pay taxes - call it lira or treasury bills...