The Bank of Italy goes to war: Financing fascist warfare, 1935–1943

The interplay between finance and warfare continues to raise questions for economic historians seeking to unravel the complexities of wartime economies. Among the various cases that illustrate this relationship, that of the role of the Bank of Italy during the Fascist era stands as an interesting subject of inquiry. Firstly, from 1935 to 1943, Italy, under Benito Mussolini's Fascist regime, embarked on a path of military conquest first in Africa, occupying Ethiopia, and then in Europe, attempting to expand into Greece and the Balkans during the Second World War. Secondly, the period from 1935 to 1943 in Italy has attracted little specific attention from economic historians, largely because its falls between two highly significant periods in Italy's economic history: on the one hand, it follows the upheaval of the Great Depression and the extensive nationalization of key sectors of the Italian economy during the early 1930s; on the other, it is overshadowed by post-war reconstruction and the ensuing economic boom, commonly called the “miracolo economico.” Starting from these considerations, this chapter explores the Bank of Italy's involvement in financing fascist warfare and the theoretical debate it generated, aiming to contribute to our understanding of the complex interplay between economic theory and the concrete forms in which wartime financing was implemented in this pivotal period in history.