Zoom-Link: univienna.zoom.us/j/93163257550
Every economic historian is familiar with the English Financial Revolution. In this talk, I will discuss another, much less known financial revolution sweeping Italy in the nineteenth century and how this revolution was intertwined with Italian nation-building. In just a few decades, Italy passed from being divided into seven absolute monarchies to a unified country under a parliamentary regime; it accumulated massive debt, which almost put the new country’s existence in jeopardy, and it developed a vibrant banking system replacing the financial fabric of the Restoration. Wars of national unification, fiscal crises and struggles over the shaping of a central-banking system, however, caused tensions among regions and gave rise to a persistent narrative, that of Northern Italy profiting financially from unification at the expense of the South. Yet a careful scrutiny of primary sources together with a novel dataset on banking activity reveals a more complicated story. Piedmont-Sardinia, the country leading the unification process, was able to shoulder an increasing amount of debt for military purposes thanks to constitutional reform and financial innovation. By contrast, the South, despite its large resources, failed to evolve both politically and financially. By the time of unification, a financial North-South divide had already emerged, tilting the regional balance of power in favour of the North. Unification did provide more financial opportunities to the North but it also dramatically accelerated financial deepening in the South, strengthening its banking system while increasing competition with the North and stirring animosities between regions.