The war also left economic problems. The Liberals believed in production at any cost. Production at any cost meant the government putting money into the industrial production of arms for the war. After the war though, in the peacetime economy, this level of industrial production was not needed and this caused problems. This left Government in a lot of debt from the war and from the production at any cost. To pay the back this debt the Italian government decided to print more money as a short term fix. However, this led to inflation. The inflation affected the middle classes severely, wiping out their savings as well as causing problems for land owners who relied on rent. Real Wages also decreased. As many of the middle classes were factory workers, many of them were in trade unions. With the problems of inflation the unions would start demanding solutions to these problems and would turn to support any party that would offer the solutions that they wanted. As the Liberals were the cause of the problems and did not seem to be taking notice and thus doing very little to solve the problems many of the workers began to support the Socialists.
The rise of socialism was another factor to why the Liberal Government was brought to its knees by 1921. The Socialists had always posed a problem for the Liberal Government. With changes in the political system in 1919 along with the majority of men being able to vote as a reward from the war, the Socialists managed to gain more support, having a total of 156 seats in the November 1919 election. The socialist Party (PSI) was committed to revolution and dictatorship of the proletariat (the working class). The Socialists did not pose a direct threat to the Liberals due to their revolutionary ways. They could not be absorbed into the political system by Giolitti because of this. The Socialists supported the factory occupations and strikes as well as being supported by many of the trade unions. The support for these strikes and occupations did cause problems for the Liberals though, this is because many of the respectable middle classes were frightened by the occupations and the strikes and so turned away from the liberal system which seemed incapable of dealing with the problems.
The inability of the Liberals to take action was further highlighted with the situation in Fuime and the events that led to the rise of fascism. On the 10th of September 1919 Prime Minister Nitti signed The Treaty of St. Germain. In doing this the government had accepted that they would not be getting all the colonies which they were promised in the Treaty of London. Italy did not get Dalmatia because it was awarded to Yugoslavia due to President Woodrow Wilson’s 14 point program. Fuime was also given to Yugoslavia. The poet Gabriele D’Annunzio, supported by 2000 ex soldiers, began an occupation of Fuime in 1919. He called himself the Comandante and called Nitti the Cagoia which is loosely translated as coward. By June 1920 D’Annunzio was still in ruling Fuime which highlighted that radical actions can achieve results. Nitti’s government collapsed and was replaced by Giolitti. In November 1920 the Treaty of Rapallo was signed by both Italy and Yugoslavia. In this it confirmed Italian control of certain territories and some Dalmatian islands it also gave Fuime the status of a free city independent of Italy and Yugoslavia. This was a clever solution to the problem and therefore allowed Giolitti to attack Fuime. D’Annunzio surrendered when Giolitti moved against Fuime. But this event had showed how radicals actions can be successful and it also highlighted how indecisive the Liberals were
Many of the ways in which D’Annunzio had run Fuime were incorporated into the fascist regime. Fascism started out with the Fasci di Combattimento founded by Mussolini and was in support of a very left wing and very revolutionary program. The party had 870 members by December 1919 and was in the very early stages of the movement. De Popolo d’Italia was edited by Mussolini which spoke for discontent and extreme intervention. This managed to keep Mussolini in the limelight and helped to advertise fascism. Fascism was also helped by Squadrismo. This was the name of the movement in which squads run by fascist ex-army officers where formed in reaction to socialism and the socialist threat. They attacked leaders of socialism and in some cases forced them to drink large quantities of caster oil. This pro-active approach to dealing with socialism appealed to many as it was getting results even though it was violent. Because of this the movement gained support and with its revolutionary ideas and the policies of having an eight hour work day and other socialistic views it had a lot of appeal.
Therefore, many people began to support fascism be it from fear or from support for policies which come election time meant fewer votes for the Liberals.
As well as the Fascists and the Socialists, there was other political opposition which the Liberal Government faced. The Pope lifted his ban on Catholics being involved in politics and with that a group of Catholics founded their own political party called the Partito Popolare Itialiano (the popular party, PPI). This was a mixture of right and left wing Catholics with its main support coming from small peasant property owners and tenants of northern and north Italy. It was keen to gain the support from the southern peasantry and thus backed the peasant’s land and rent agitations. Although the party did not aim to back the interests of the church, it was led by a priest and had the majority of its supporters being catholic. In the 1919 election the PPI gained 101 of the seats. This was impressive as the Liberals only had 91 seats making the PPI one of the dominant political parties along with the PSI with 156 seats. This caused problems and reduced the Liberal Government’s power as they no longer had enough seats to run things effectively. This got worse by 1921 with the Liberals only getting 47 even though the total government votes went up from 36.9% in 1919 to 47.8% in 1921. The significance of this election was that over half the seats were occupied by Communist PPI and the PSI, and the government parties also had become more divided making it very difficult to form a stable government.
There were many things that brought the Liberals to their knees by 1921 but the most significant seemed to be the weakness and indecisiveness of the Liberal Government in the face of problems such as Fuime and the Socialist threats. It was due to their weakness in these situations that led to Italians looking for alternative parties that might actually do something, with Fuime demonstrating how radical action can work. Because there was a reason for people to be supporting other political parties due to the indecisiveness of the Liberals, this in turn reduced the stability of the Liberals within government because they were losing the majority of seats, and it was this which brought the Liberal Government to its knees by 1921.
