Institute for Industrial Reconstruction

The Istituto per la Ricostruzione Industriale (English: "Institute for Industrial Reconstruction"), best known by its acronym IRI, was an Italian public holding company established in 1933 by the Fascist regime to rescue, restructure and finance banks and private companies that went bankrupt during the Great Depression. After the Second World War, IRI played a pivotal role in the Italian economic miracle of the 1950s and 1960s. It was dissolved in 2000.

In 1930 the Great Depression affected the Italian financial sector, seriously disrupting credit lines and making it difficult for companies to obtain loans. The Fascist regime led by Benito Mussolini, fearing a credit crunch with subsequent mass dismissals and a wave of social unrest, started to take over the banks' stakes in large industrial companies (such as steel, weapons and chemicals). At the same time, Mussolini tried to inject capital into failing businesses. Although initially conceived as a temporary measure, IRI continued to operate throughout the period of the Fascist regime and well beyond. Although IRI was not intended to carry out real nationalizations, it became the de facto owner and operator of a large number of major banks and companies. By January 1934, the IRI reported that it controlled “48.5 percent of the share capital of Italy,” and a few months later acquired the capital of the banks themselves, prompting Mussolini to declare on May 26, 1934 to Italy’s Chamber of Deputies that “Three-fourths of Italian economy, industrial and agricultural, is in the hands of the state.” By 1939 the IRI and other government agencies “controlled over four-fifths of Italy’s shipping and shipbuilding, three-quarters of its pig iron production and almost half that of steel.” Political Historian Martin Blinkhorn noted that “This level of state intervention greatly surpassed that in Nazi Germany, giving Italy a public sector second only to that of Stalin’s Russia.”

After the war, the survival of the Institute was uncertain, as it had been created more as a temporary solution than to meet long-tem goals. But it proved difficult for the state to make the large investments needed for private companies that would only yield returns in the long term. So IRI retained the structure it had under fascism. Only after 1950 was IRI's function better defined: a new thrust was instigated by Oscar Sinigaglia, who, planning to increase the production capacity of the Italian steel industry, formed an alliance with private industry. This gave IRI the new role of developing the industrial infrastructure of the country, not by means of individual investments, but by an unwritten division of labour. Examples were the development of the steel industry and the telephone network and the construction of the Autostrada del Sole, which began in 1956.

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