4. Twenty Years in Industry Management

Pareto to Emilia Peruzzi, 23rd April 1873, see Pareto (1984a, pp. 200–201).

The Società per le Strade Ferrate Romane was incorporated under law n° 2279 of 14th May 1865 which reorganised the regime for railway concessions, bringing together a number of private companies which had operated the principal interior and coastal lines of central Italy. The management of the company was catastrophic, with the result that the state, under the order of 17th November 1873, was obliged to intervene to save it from bankruptcy.

Pareto to Emilia Peruzzi, 1st September 1873, see Pareto (1984a, p. 268).

See Giacalone-Monaco (1963, pp. 542–543).

Pareto to Emilia Peruzzi, 14th August 1872, see Pareto (1984a, p. 28). On the position of the Italian railway engineer of the time, see Merger (1999).

Pareto to Ubaldino Peruzzi, 3rd October 1873, see Pareto (1981, p. 28). On the operations of Italian railway repair yards at the time, see Merger (2003).

Pareto to Emilia Peruzzi, 7th October 1872, see Pareto (1984a, p. 49).

Pareto to Emilia Peruzzi, 24th October 1873, ibid. p. 281.

Pareto to Emilia Peruzzi, 24th August and 1st September 1873, ibid. pp. 256, 268.

On Ubaldino Peruzzi (1822–1891), patriot, statesman, engineer and entrepreneur, and his cultured and philanthropic wife Emilia Peruzzi née Toscanelli (1827–1900), Pareto’s closest friends in Tuscany, see Bagnoli (1994).

Langer was convinced that 75 tons of lignite, combined with iron ore, could yield 13 tons of pig iron from which 9 tons of iron proper could be obtained: the fact that this lignite was available at low cost would thus permit production of iron at a highly competitive yet profitable price, see Busino (1977, p. 16). On the basis of these assumptions, Langer had forecast a gross annual profit of 560,000 lire against an investment of 3000,000 lire, see Fallani (1976, pp. 250–253). This project revealed itself to be excessively optimistic with regard to the underlying variables: the price and demand for iron (forecast too high); and the costs of production and of capital (forecast too low), see Busino (1977, pp. 18–19).

On Carlo Fenzi (1823–1881), patriot, banker, parliamentarian, see Fallani and Milana (1996).

The share capital was divided into 12,000 shares with a unit value of 500 lire: the Banca Fenzi held 2000 shares, the Banca Generale 4000 (founded in 1871 in Rome, this was the second-biggest investment bank in Italy, after Credito Mobiliare di Firenze, and was represented on the board by Moisé Valensin), while the Banca del Popolo di Firenze held 1995 (this bank was founded in 1865, and was represented on the board by Ubaldino Peruzzi, who was also its chairman), see Biagianti (1984, p. 22).

See Fallani (1976, p. 259).

See Chiosi (1973, p. 33). Pareto and Gigli were paid 3600 lire per annum plus 3% of any profits, Pareto to Antonio Allievi, 31st May 1880, Banca Popolare di Sondrio Vilfredo Pareto letter archive (henceforth BPS-la). Gigli’s successors in the 1880s were the Frenchman Clément Conti, Celso Capacci and Lorenzo Prodi. Under Gigli’s direction average production was 25,055 tons per annum (standard deviation 6509 tons), average yearly sales were 140,098 lire (standard deviation 69,090 lire) and the average yearly price per ton was 6.92 lire (standard deviation 1.97 lire). In the course of the 1880s average annual production rose to 61,883 tons (standard deviation 13,448 tons) but average annual sales fell to 70,796 lire (standard deviation 32,272 lire) due to a sharp drop in prices: in that time the average annual price fell to 3.85 lire per ton (standard deviation 1.69 lire), see Busino (1977, pp. 141–144).

Royal decree of 28th February 1877 approving the reduction in capital.

See Società per l’Industria del Ferro (1879, pp. 6–10).

Pareto to Antonio Allievi, 10th November 1879, BPS-la.

On the history of the Banca Generale, see (Confalonieri 1974) where the problems specifically noted were the bank’s modest growth due to its limited territorial expansion, ibid. pp. 278–279, 281, the high valuation in the balance sheet assigned to commercial credits compared to investments in securities, ibid. pp. 276–277 and the difficulty of rolling over its investments in industrial stock, ibid. p. 280.

Pareto to Antonio Allievi, 1st February 1880, BPS-la.

Pareto to Antonio Allievi, 7th February 1880, BPS-la.

The ironworks of Mammiano (a village in the Apennines near Pistoia in the vicinity of San Marcello Pistoiese) was originally owned by the Fenzi family, and was sold by them, together with the nearby smaller ironworks of Sestajone, to the Società del Ferro on the 31st January 1873. This was undoubtedly a good deal for the Fenzis because they received 193,786 lire compared to only 100,000 lire paid up to the company at the time of its creation, (Busino 1977, pp. 26–27).

Pareto to Antonio Allievi, 9th February 1880, BPS-la.

See Sect. 4.3.2 below.

The ironworks had been founded in 1865 under the name of “Perseveranza” by Jacopo Bozza, see (Nesti 2010), who had sold it in 1875 to Credito Mobiliare, who had renamed it as it appears in the text.

See Sect. 4.3.2 below.

Pareto to Antonio Allievi, 3rd June 1880, BPS-la.

Pareto to Emilia Peruzzi, 13th February and 14th July 1880, see Pareto (1984b, pp. 82, 101).

Pareto to Antonio Allievi, 3rd August 1880, BPS-la.

See Busino (1977, p. 66).

Ibid., pp. 61, 67.

The production process at the San Giovanni ironworks can be summarised as follows: the lignite provided fuel both for the boilers (which produced the steam needed to convey the raw materials to be smelted into the ovens and to convey the molten iron into the rolling mills) and for the ovens where this raw material was smelted (these were, respectively, reheating furnaces using scrap, in particular disused railway line rails, and puddling furnaces using pig iron); in the rolling mills the molten iron was mechanically shaped into larger, medium or smaller products by means of special breakdown and finishing cylinders.

Pareto to Emilia Peruzzi, 21st September and 9th October 1874, see Pareto (1984a, pp. 410, 430, 434–435).

Pareto to Carlo Fenzi, 16th June 1874, see Pareto (1981, p. 39).

Pareto to Emilia Peruzzi, 4th and 16th June 1874, see Pareto (1984a, pp. 366, 371), and to Carlo Fenzi, 16th June 1874, see Pareto (1981, p. 39).

Pareto to Emilia Peruzzi, 16th June 1874, see Pareto (1984a, p. 372).

Pareto to Emilia Peruzzi, 17th June 1874, ibid., pp. 372–373.

Pareto to Emilia Peruzzi, 5th March 1875, ibid., p. 491). Pareto described to Fenzi the technical problems of the San Giovanni ironworks, comparing it to an ironworks in Staffordshire (UK): for the production of similar templates of small dimensions each plant made use of two furnaces for 12 hours each day; the English plant, from an input of 23.75 tons of scrap iron, obtained 22 tons of finished iron (consuming 0.25 tons of anthracite for every ton of finished iron) while San Giovanni, from an input of 7.647 tons of scrap iron, obtained 6.73 tons of finished iron, consuming over 2 tons of lignite for every ton of finished iron. Thus, considering that the heating power of lignite is less than half of that of anthracite, in San Giovanni, for every ton produced, a quantity of fuel was used which was four times greater than at the English plant, while the shrinkage (i.e. the percentage difference in weight between the input and the finished product) is also greater (13% at San Giovanni versus 8% in Staffordshire), Pareto to Carlo Fenzi, 1st March 1875, see Pareto (1981, pp. 97–100).

Who, against Langer’s instructions but with the authorisation of Peruzzi, had taken part in the shareholders’ meeting.

By request of Fenzi, who was dissatisfied with Langer’s management, see Fallani (1976, p. 270).

Pareto refused the offer of promotion to General Manager of the company on this occasion because he felt “able to do a good job … only on the technical side” as he was “not able to sell iron”, Pareto to Emilia Peruzzi, 6th January 1875, see Pareto (1984a, p. 481).

Pareto to Emilia Peruzzi, 11th June 1875, ibid., p. 514).

See Fallani (1976, p. 270).

Pareto to Emilia Peruzzi, 11th September 1875, see Pareto (1984a, p. 539).

See Fallani (1976, p. 260).

Pareto to Emilia Peruzzi, 18th November 1875, see Pareto (1984a, p. 551). Negotiations took place, however, with Credito Mobiliare, but failed due to the Banca del Popolo’s obstructionism, See Fallani (1976, pp. 266–267).

At the beginning of August 1875, Pareto had visited the ironworks and the mines in the area of Saint-Etienne (in the Loire region) where he reported having “found much to study and learn from”, Pareto to Emilia Peruzzi, 7th August 1875, see Pareto (1984a, p. 530). It is of interest to note that from that moment Pareto also turned to French companies for the supplies needed for the ironworks, notably Crozet-Fourneyon in Chambon Feugerolles (Loire department) for spare parts for the machines, Vial and Garras in Saint Julien en Jarez (Loire department) for bricks for the ovens and to Gadot in Voreppe (Isère department) for fire clay, Pareto to Crozet & Cie, 21st October 1875, Vial et Garras, 12th November 1875, Gadot, 23rd November 1875, BPS-la. As regards the increasingly critical supply of cylinders, Pareto initially turned to the Macina foundry in Florence, then contacted the Benini foundry in Florence and the Orlando steelworks in Livorno before finally opting for Creusot as having the lowest cost, Pareto to Macina, 25th November 1875, to the general management of the Società del Ferro, 15th February 1876, to Pietro Benini, 20th August 1876, to Luigi Orlando, 31st August and 21st September 1876, ibid.

Pareto to Emilia Peruzzi, 23rd and 27th July 1875, see Pareto (1984a, pp. 596–598).

Pareto to Carlo Fenzi, 8th August 1876, see Pareto (1981, p. 140) and to the general management of the Società del Ferro, 8th August 1876, BPS-la.

Pareto to the management of the Società del Ferro, 19th September 1876, ibid.

Pareto to Crozet, 21st March 1877, ibid.

Pareto to the management of the Società del Ferro, 21st June 1877, ibid.

Pareto to Carlo Fenzi, 6th September 1877, ibid.

Pareto to Carlo Fenzi, 29th July and 15th August 1876, see Pareto (1981, pp. 138, 143), and to the general management of the Società del Ferro, 23rd December 1876, BPS-la.

Pareto to Carlo Fenzi, 26th November 1877, ibid.

Pareto to the general management of the Società del Ferro, 26th November 1877, ibid.

Which thus would be obtainable by the ironworks at a price which would at worst be stable, whereas for the competitors using anthracite the price of fuel was variable, with disastrous consequences for them if it should increase, for example in case of war.

In November 1878, Pareto also tried to purchase rails in Germany, in Egypt and in India, Pareto to Emilia Peruzzi, 29th November 1878, see Pareto (1984b, p. 29).

Pareto to the general management of the Società del Ferro, 6th November 1876, BPS-la.

According to the balance sheet for the month of October 1876, the cost of production for a hundredweight of iron was 20.27 lire, made up as follows: 12.92 lire for the rails, 2.43 lire for fuel, 2.75 lire for wages, 2.17 lire for running costs and repairs. In regard to the fuel, sourced entirely from the Castelnuovo mines, Pareto estimates that the profit margin for the company (the surplus between the price charged to the ironworks and the cost of extracting the lignite) was at least 25%. If this were set aside, the cost of fuel would decrease to 1.82 lire and the price of a hundredweight of iron would therefore fall to 19.66 lire which was the true cost of the iron. The company could therefore sell the iron at 20 lire at San Giovanni and for 21 lire 30 in Rome, enough to beat the competition and to guarantee the future of the ironworks without the need to offer discounts, Pareto to the general management of the Società del Ferro, 20th December 1876, ibid.

Pareto to the general management of the Società del Ferro, 19th January 1877, ibid.

Pareto to Carlo Fenzi, 12th and 13th October 1874, see Pareto (1981, pp. 51, 53).

Pareto to Carlo Fenzi, 17th April 1874, ibid., pp. 32, 35.

Pareto to Carlo Fenzi, 10th December 1877, ibid.

Pareto to Louis Gagne, 23rd July 1876, ibid.

Pareto to Emilia Peruzzi, 10th April 1874, see Pareto (1984a, p. 338).

Pareto to Emilia Peruzzi, 9th June 1874, ibid., p. 368.

Pareto to Emilia Peruzzi, 8th April 1874, ibid., p. 337.

Pareto to Emilia Peruzzi, 11th April 1874, ibid., p. 341.

Ibid.

Pareto to Emilia Peruzzi, 10th July 1874, ibid., p. 384.

Pareto to Emilia Peruzzi, 22nd August 1874, ibid., p. 400.

Pareto to Emilia Peruzzi, 25th August 1874, ibid., p. 403.

Pareto to Giuseppe Cenni, 20th November 1879, BPS-la.

See Sects. 4.3.5 and 4.3.6 below.

See Pareto (1880, p. 72). However, years later, Pareto stated that, “having observed at first hand the diets of Italian and English workers”, this lower productivity is in fact due to inferior diet resulting from lower real salaries and caused by higher prices for bread in turn a consequence of higher direct taxes, Pareto to Luigi Bodio, 26th February 1891, see Pareto (2001, p. 16).

See Pareto (1885a, p. 189).

See Pareto (1883a, pp. 144–145).

On these, see Strinati (2007, pp. 158–174).

See Pareto (1883a, p. 157).

Ibid., pp. 149–150.

Ibid., pp. 151–152, 156. Years later, Pareto noted that each year an Italian family (consisting of parents and one minor) consumed 778 kilos of bread, paying seven cents a kilo in customs duties and local taxation to a total of 54.46 lire. If a worker were able to avoid paying that sum, instead investing it from the age of 22 in a pension scheme, he would obtain from the age of 65 a yearly income as high as 835 lire, see Pareto (1890, p. 354). Thus Pareto, ibid., gives the following tongue-in-cheek advice to the government: “If … it really wants to help the workers”, to abolish the customs duties on grain and invest this money, in their interests, in a “good insurance company” so securing sustenance for those wretched folk when old age deprives them of the means to earn it through their work”.

See Pareto (1883b, pp. 165, 174, 179). The draft legislation was definitively blocked in the Senate and never became law, see Strinati (2007, p. 170).

To compensate employers for the new insurance obligations which the law would encourage (but not oblige) them to assume.

Because the burden of insurance payments would reduce profitability in industry, thus discouraging investment.

Pareto to Lorenzo Corsi, 1st July 1879, BPS-la.

See Busino (1977, pp. 58–59).

Pareto to Leopoldo Gigli, 9th May 1878, to Carlo Fenzi, 7th August 1878, see Pareto (1981, pp. 155, 163) and Busino (1977, p. 59).

See Società per l’industria del ferro (1879, p. 5).

Pareto to Ferdinando Nota, 16th April 1879, BPS-la.

Pareto was convinced of the extreme importance of the quality of the rails. In June 1877, which closed with a loss of 1734 lire, he asserts, in an interesting foretaste of the theory of general equilibrium, that a hypothetical improvement in the quality of the iron would bring about the following consequences: an increase in the quantity of iron produced from 408.5 tons to 518.8 tons, which, assuming a constant price of 205.7 lire per ton, would bring an increase in income from iron sales of 22,689 lire, an increase of 131.4 tons in the quantity of rails used (due to the increase of 110.3 tons in the quantity of iron produced multiplied by 1.191, representing the number of tons of rails needed to make a ton of iron) and, assuming a constant price for rails of 114 lire per ton, an increase of expenditure on rails of 14,980 lire and on labour costs of 453 lire for the handling of the increased production, transforming the above-mentioned loss (all other factors being equal) into a profit of 5522 lire. The passage from bad-quality rails to better-quality ones would thus bring the company a benefit of 7256 lire, which could otherwise be achieved (again, hypothetically) by reducing expenditure on rails by 9.7% (74,862 lire) or labour, repairs and other costs by 34% (21,242 lire). Pareto adds that this calculation of the advantage accruing from good-quality rails represents an underestimation because the use of good-quality raw materials would enhance San Giovanni iron’s reputation for good quality, making it easier to sell, and also saving on heat, Pareto to the general management of the Società del Ferro, 16th August 1877, ibid.

See Sect. 4.3.2 below.

Pareto to Ubaldino Peruzzi, 17th November 1883, see Pareto (1981, p. 289).

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 9th March 1889.

See Busino (1977, p. 72).

Ibid., p. 75.

Ibid., p. 66.

On Antonio Allievi (1824–1896), patriot, journalist, banker, see Cantarella (1997) and Decleva (1997).

See Busino (1977, p. 74).

Ibid., p. 103.

Ibid., p. 107.

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 12th February 1884.

Average annual production of iron was 11,446 metric tons (standard deviation 1720 metric tons), average annual sales of iron were 9548 metric tons (standard deviation 1585 metric tons), average annual stocks of iron were 3936 metric tons (standard deviation 1924 metric tons), See Busino (1977, pp. 90–91).

Ibid., pp. 96, 113.

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 13th May 1890.

Pareto to Ubaldino Peruzzi, 17th November 1883, see Pareto (1981, pp. 302–303).

Pareto to Ubaldino Peruzzi, 25th September 1884, ibid., p. 483.

On Giovanni Battista Favero (1832–1906), see Pozzato (1995).

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 27th August 1884.

Pareto to Ubaldino Peruzzi, 25th September 1884, see Pareto (1981, p. 484).

See below Sect. 4.3.6. On the history of the Tardy-Benech business in Savona, set up in 1861 and going into bankruptcy in 1892 after having been the biggest Italian iron and steel company in the early 1880s before the creation of Terni, see Penner (2010, pp. 11–64), and Leonardi (1956, p. 623). On the Genoese entrepreneur Armando Raggio, whose metallurgical interests were centred on the ironworks at Sestri Ponente, see Doria (2008a, p. 325) and Doria (2008b, pp. 31–32),

Pareto to Emilia Peruzzi, 18th September 1884, see Pareto (1984b, p. 277), to Ubaldino Peruzzi, 25th September 1884, see Pareto (1981, p. 517).

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 25th September 1884.

See below Sect. 4.3.5.

Short-selling is a speculative transaction which consists in selling stocks one does not currently possess, in the knowledge that they can subsequently be purchased before the delivery date at a lower price than that agreed for the sale.

See Busino (1977, p. 100).

A proportion of the loss amounting to 45,385 lire was charged to the balance sheet for 1889, 79,168 lire to that for 1890 and 119,557 lire for 1891, ibid.

Pareto to Ubaldino Peruzzi, 9th June 1890, see Pareto (1981, pp. 647–648). This contract provided for Pareto to receive an annual emolument of 8000 lire plus the same sum in case of termination by the company, in return for a commitment to contribute “to the company’s smooth technical operations”, responding to any technical queries from Allievi and inspecting the company’s plants.

Pareto to Emilia Peruzzi, 16th May 1890, see Pareto (1984b, p. 450).

Pareto to Francesco Papafava, 16th January 1892, see Pareto (1989, p. 150).

Pareto to Maffeo Pantaleoni, 26th January 1892, see Pareto (1984c, p. 167).

See below Chap. 6.

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 14th January 1887.

Ibid., meeting of 17th April 1889.

Ibid., meeting of 8th March 1890.

Evidently, the sales price in this period did not follow the expected trend.

Ibid., meeting of 2nd May 1890.

Ibid., meeting of 12th May 1890.

Ibid.

Pareto was replaced by his subordinate Arturo Luzzatto (1861–1945) who directed the company for the following 30 years, see Biagianti (1984, pp. 153–411).

Pareto to Clemens, 11th May 1880, to Porra, 21st May 1880, BPS-la.

Pareto specifies that “the medium-sized train yields an output which I believe no other rolling mill in Italy can match … while as for the puddling, it continues to go well and this I consider to be our best hope for the future”, Società delle Ferriere Italiane – minutes, board of directors’ meeting, 19th November 1883.

Due to the crisis affecting the industry in England and to the “extraordinarily low railway tariffs following the opening of the Gotthard tunnel (in 1882) which allow outsiders to transport iron from Westphalia to the market in Milan at very low cost”, ibid., meetings of 21st and 24th April 1883.

Ibid., meeting of 19th July 1883.

Ibid., meeting of 12th February 1884.

Ibid., meeting of 5th September 1883.

Ibid., meeting of 19th November 1883.

Ibid., meeting of 5th January 1884.

Ibid., meeting of 10th May 1884.

Ibid., meeting of 15th May 1885.

Letter to Antonio Allievi of 18th October 1885, BPS-la.

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 19th November 1886.

Ibid., meeting of 9th March 1887.

Ibid., meeting of 11th July 1887.

Ibid., meeting of 9th March 1889.

Ibid., meeting of 19th March 1890.

Pareto to John Batt, 30th August 1883, see Pareto (1981, p. 252).

Pareto to Clemens, 11th May 1880, BPS-la.

Ibid.

Pareto to John Batt, 30th August 1883, see Pareto (1981, pp. 251–252). The manager’s remuneration would thus correspond to the difference between the amount paid to him by the company and the amount spent by him on wages.

Pareto to John Batt, 8th September 1883, ibid., p. 255.

Pareto to Ubaldino Peruzzi, 17th November 1883, ibid., pp. 293–294.

Società delle Ferriere Italiane – minutes, board of directors’ meeting, 5th September 1883.

Ibid., meeting of 13th September 1883.

Ibid., meeting of 19th November 1883.

Ibid., meeting of 10th May 1884.

Marzucchi, one of the managers fired by Pareto, had been a personal friend as fellow students at the School of Specialisation where he had qualified in 1869, Pareto to Ubaldino Peruzzi, 17th November 1883, see Pareto (1981, p. 296).

Ibid., meeting of 12th October 1885.

Ibid., meeting of 19th February 1886.

Ibid., meeting of 19th November 1886.

Ibid., meeting of 8th June 1886.

Ibid., meetings of 16th January and 9th March 1889.

Pareto to Antonio Allievi, 8th May 1879, BPS-la.

Pareto to Angelo Sinigaglia, 11th January 1884, see Pareto (1981, p. 341).

Pareto to Jacopo Bozza, 28th August 1878, BPS-la. The terms of the Palermo deal, per hundredweight of iron, were the following: the price per hundredweight, net of commission and collection expenses, was 17.935 lire and the Banca Generale’s share was 5.3%, amounting to around 1 lira. If the rails cost 9 lire a hundredweight and 1.12 hundredweight of these was needed to make 1 hundredweight of iron, the latter should be paid 10.08 lire. Bozza’s return would thus be only 6.85 lire. The deal would become more remunerative if the rails could be bought for less than 9 lire, with the bank and Bozza splitting the saving 50–50, ibid.

Pareto to Antonio Allievi, 8th May 1879, ibid.

Pareto to Raffaele Jona, 2nd May 1879, ibid.

Pareto to Antonio Allievi, 27th May 1879, ibid.

Pareto to Antonio Allievi, 1st June 1879, ibid.

Ibid.

Pareto to unidentified recipient, 30th September 1879, to Antonio Allievi, 3rd October 1879, ibid.

Pareto to Antonio Allievi, 2nd December 1879, ibid.

See Nesti (2010, p. 543).

Pareto to Ubaldino Peruzzi, 17th November 1883, see Pareto (1981, p. 303).

Pareto to Angelo Sinigaglia, 11th January 1884, ibid., pp. 340–341.

Società delle Ferriere Italiane –board of directors’ meeting, 19th November 1883.

Ibid., meeting of 18th March 1884.

Ibid., meeting of 9th July 1884.

See below Sect. 4.3.6.

See Fagioli (2007a, p. 63). The aim of this mountain railway was that of reducing the transportation costs of Mammiano ironworks.

Pareto to Cipriano Turri, 13th and 15th December 1882, Turri-Pistoia Collection (T-PC).

Pareto to Cipriano Turri, 21st January 1883, ibid., and see Fagioli (2007a, p. 63).

Ibid., pp. 71–73. The Pracchia-Mammiano railway line was opened only in 1926, ibid., p. 75.

Società delle Ferriere Italiane – board of directors’ meeting, 19th March 1883.

Ibid., meeting of 18th March 1884.

Ibid., meeting of 28th August 1884.

Ibid., meeting of 25th September 1884.

Ibid., meeting of 20th August 1885.

Ibid., meeting of 19th February 1886.

Ibid., meeting of 12th May 1886.

Ibid., meeting of 9th July 1886.

Ibid., meeting of 17th September 1886.

Ibid., meeting of 14th January 1887.

Ibid., meeting of 9th March 1887.

Ibid., meeting of 24th April 1888.

Ibid., meeting of 27th August 1889.

Pareto to Cipriano Turri, 12th September 1889, (T-PC).

Cipriano Turri to Pareto, 13th September 1889, ibid.

Pareto to Cipriano Turri, 21st September 1889, BPS-la.

Società delle Ferriere Italiane –board of directors’ meeting, 15th April 1890. In the end Turri took the lease on the ironworks in 1892, buying it in 1894 and converting it into a leading Italian producer of copper; see Fagioli (2007b, p. 21).

Pareto to Antonio Allievi, 20th June 1885, BPS-la.

Costantini and Fossi, having lost their position as agents following the creation of the consortium between the company, Raggio and Tardy (see below Sect. 4.3.6), conceived the idea of building their own ironworks on the coast in the region of Ancona, offering the general management to Pareto. The latter had initially thought of offering these ex-agents the Mammiano plant which, once it had been transferred to the coast, could have provided competition to Raggio and Tardy, Società delle Ferriere Italiane – meeting of 17th November 1884.

Pareto to Antonio Allievi, 18th October 1885, BPS-la.

Società delle Ferriere Italiane – meeting of 12th October 1885.

Ibid., meeting of 19th February 1886.

Ibid., meeting of 14th April 1886.

Ibid., meeting of 6th July 1886.

Ibid.

The choice of Rogoredo was initially also a way to “wait more patiently” on events in Torre Annunziata, ibid., meeting of 24th April 1888.

See Busino (1977, p. 87).

Società delle Ferriere Italiane – meeting of 11th July 1887.

Ibid., meeting of 3rd September 1887.

Ibid., meeting of 26th November 1887.

Ibid., meeting of 24th April 1888.

Ibid., meeting of 13th September 1888.

Ibid., meeting of 27th August 1889.

Ibid., meeting of 28th January 1890.

Ibid., meeting of 14th May 1890.

Pareto to Antonio Allievi, 27th May 1879, BPS-la.

Ibid.

Pareto to the firm Armando Raggio, 15th May, 1879, ibid.

Pareto to Ferdinando Nota, 16th April 1879, ibid.

Pareto to Ferdinando Nota, 18th April and 3rd May 1879, ibid.

See below Sect. 4.3.6.

Pareto to Armando Raggio, 6th February 1889, ibid.

Ibid.

Società delle Ferriere Italiane – meeting of 5th September 1883.

Ibid., meeting of 19th September 1883.

Pareto to Giuseppe Cenni, 2nd October 1883, see Pareto (1981, pp. 264–265).

Pareto to Giuseppe Tardy, 15th November 1883, to Giuseppe Cenni 15th November 1883, ibid., pp. 286–287.

Pareto to Giuseppe Tardy, 10th December 1883, ibid., p. 316.

Pareto to Antonio Allievi, 27th May 1879, ibid.

In 1886 the ironworks of Liguria and Tuscany produced 60% of the national output, see Leonardi (1956, p. 622).

Pareto to Antonio Allievi, 28th May 1879, BPS-la.

Pareto to Antonio Allievi, 1st June 1879, to Francesco Marzucchi, 21st September 1879, ibid.

Pareto to Giuseppe Cenni, 1st November 1879, ibid.

Pareto to Antonio Allievi, 2nd February 1880, ibid.

Pareto to Antonio Allievi, 17th November 1880, ibid.

Pareto to Antonio Allievi, 11th January 1884, see Pareto (1981, p. 343).

Pareto to Antonio Allievi, 27th February 1880, BPS-la.

Pareto to Giuseppe Cenni, 2nd February 1884, see Pareto (1981, p. 357).

Pareto to Antonio Allievi, 11th March 1884, ibid. p. 377.

Pareto to Antonio Alievi, 17th August 1884, ibid., pp. 467–468.

Società delle Ferriere Italiane – minutes of the meeting of 28th August 1884.

Ibid., meeting of 25th September 1884.

Ibid., meeting of 27th August 1884.

Pareto to Antonio Allievi, 23rd October 1884, in Pareto, Letters 1860–1890, pp. 521–522, see Biagianti (1984, p. 221).

Società delle Ferriere Italiane – minutes of the meeting of 25th September 1884.

Due to the reduction in production.

Ibid., meeting of 17th November 1884.

Pareto to Antonio Allievi, 20th June 1885, BPS-la., and see Biagianti (1984, p. 221).

Società delle Ferriere Italiane – minutes of the meeting of 8th January 1885.

Pareto to Antonio Allievi, 20th June 1885, BPS-la.

Società delle Ferriere Italiane – minutes of the meeting of 19th November 1886.

Ibid., meeting of 16th May 1887.

Ibid., meeting of 11th July 1887.

Ibid., meeting of 3rd September 1887.

Ibid., meeting of 13th September 1888.

Ibid., meeting of 17th April 1889.

See Biagianti (1984, p. 178). In fact, the Regia in the 1860s and 1870s had exported as much as 84.5% of its output, see Lungonelli (1991, p. 7).

Pareto to Antonio Allievi, 9th October 1880, BPS-la.

Pareto to Antonio Allievi, 12th October 1880, ibid.

Ibid.

For similar projects at that time, see Lungonelli (1997, p. 10).

Pareto to Antonio Allievi, 5th and 18th December 1880, BPS-la.

See Busino (1977, p. 150).

Società delle Ferriere Italiane – minutes of the meeting of 19th July 1883.

Ibid., meetings of 11th June and 19th July 1883.

Pareto to Antonio Allievi, 10th August 1883, see Pareto (1981, pp. 238–239).

See Biagianti (1984, p. 184).

See Lungonelli (1997, p. 12).

Under the new contract, the amount payable to the state for each metric ton of ore exported fell from 5.25 lire to 4.5 lire while the maximum quantity exportable each year fell from 200,000 to 180,000 metric tons, ibid., p. 11.

Pareto, see Pareto (1888, p. 26), states that while the Terni steelworks were built officially to produce armour plating for the ships of the Italian navy, “the real purpose” involved was to “carry on a speculation at the expenses of the country”, where the government showed clear favouritism for Breda, who was its political supporter.

See Lungonelli (1997, p. 12). Obviously. In the 1881–1882 financial year, part of the stock was also exported.

Pareto to Francesco Genala, 23rd April 1880, see Pareto (1981, pp. 176–177).

Ibid., pp. 182–183.

Ibid., p. 184.

Ibid., pp. 185–186.

Ibid., pp. 186–187.

Ibid., p. 189.

Ibid., p. 190.

Ibid., pp. 193–195. Pareto’s fears, as is known, turned out to be unfounded as the two Italian railway networks were granted in 1885 to the two largest private national railway companies—the Meridionali (which received the Adriatic network) and the new Società Italiana per le Strade Ferrate del Mediterraneo (which received the Tyrrhenian network).

See Busino (1977, pp. 174, 176). In his review of Isaac Pereire’s book The railways question, see Pareto (1881), Pareto underlined the French financier’s proposal to eliminate the duties on imports of iron and machinery in order to promote the construction of new railways, and to compensate the increased profits thus obtained by the railway companies by reducing tariffs, particularly for the transport of coal and pig iron.

Pareto to Antonio Allievi, 9th December 1883, see Pareto (1981, p. 315).

Pareto to Giuseppe Cenni, 30th January 1884, ibid., p. 354.

Società delle Ferriere Italiane – minutes of the meeting of 14th May 1884.

Pareto to Antonio Allievi, 10th June 1884, see Pareto (1981, p. 422).

Società delle Ferriere Italiane – minutes of the meeting of 9th July 1884.

Ibid., meeting of 8th January 1885.

Ibid., meeting of 17th April 1885. The 1885 conventions, whose conception Pareto attributed to the engineer Secondo Borgnini (general manager of the Meridionali) who had become “omnipotent in Italy”, were deplored by Pareto also because they allowed for a “form of government participation… that impedes the free circulation of traffic”, Pareto to Emilia Peruzzi, 30th August 1885, see Pareto (1984b, p. 384).

See Peruzzi (1885, pp. 1–32).

See Pareto (1885b, p. 65).

Ibid., pp. 67, 69.

Ibid., pp. 67, 68.

Ibid., p. 69.

Società delle Ferriere Italiane – minutes of the meeting of 10th December 1885.

See Biagianti (1984, p. 197, note 146).

See Busino (1977, p. 161).

Pareto to Giulio Rubini, 13th and 31st January 1881, see Pareto (1981, pp. 217–220).

See Busino (1977, pp. 161–164).

Società delle Ferriere Italiane – minutes of the meeting of 19th February 1886.

Ibid., meeting of 14th April 1886.

Among the many responses to the questionnaire circulated by the commission in relation to its proposed reform of duties, those of the Società di letture e conversazioni scientifiche di Genova (Genoa Society for Scientific Readings and Debates) and of Rubini (mentioned above) are of interest. The Genoa club demanded, like Pareto, “special low tariffs” for transportation by rail of raw materials and finished products of the metal industry and was against the imposition of duties on pig iron, partly so as not to handicap the puddling technology “now developing here too”, and partly because production of pig iron in Italy was too costly and could not continue for very long in view of the modest quantities of ore from Elba which could be used for the purpose; see Ellena (1886b, p. 30). On the contrary Rubini, having stated his conviction that “true iron industry [can] be none other than that involving minerals and pig irons, which alone can satisfy all requirements of consumption”, proposed, in agreement with the “principal firms in Italy active in the iron and steel industry” but clearly not with Pareto’s company, the imposition of duties on pig iron, scrap and on finished products, expressing his trust that Italian iron ore deposits “would be sufficient to meet the bulk of our needs for a long period”, ibid., pp. 6–8, 10–12, 50–52.

See Ellena (1886a, pp. 363–365).

Ibid., p. 363.

Ibid., p. 365.

Ibid.

Ibid.

Broken down as follows: 1.75 metric t. of ore at 10 lire per ton cost 17.50 lire; 1.10 metric t. of carbon coke at 35 per ton cost 38.50 lire; the flux cost 2.50 lire; salaries and maintenance cost 7.50 lire; overheads amounted to 6 lire, ibid., p. 367.

Ibid.

Ibid.

Ibid., pp. 379–380.

See Pareto (1887a, p. 225).

Pareto to Ubaldino Peruzzi, 9th March 1887, see Pareto (1981, p. 572).

Società delle Ferriere Italiane – minutes of the meeting of 9th March 1887.

Ibid.

Ibid.

See Biagianti (1984, p. 197, note 146).

See Pareto (1887b).

Pareto to Francesco Papafava, 9th December 1888, see Pareto (1981, p. 604). On this important interlocutor of Pareto, V. Mogavero, Francesco Papafava of the Carraresi, in Italian Dictionary of Biography, vol. 81, Istituto dell’Enciclopedia Italiana, Rome, 2014, pp. 222–226.

Società delle Ferriere Italiane – minutes of the meeting of 14th May 1889.

The duty of 10 lire per metric ton of puddled iron implies an increase of 10 lire in the proceeds of the sale of the same. The duty of 10 lire per metric ton of pig iron implies an increase of 11.6 lire in the cost of production of puddled iron, since 1.16 tons of pig iron are needed to make a ton of puddled iron. In order to avoid the duty damaging the profitability of puddled iron production it would thus be necessary to prevent the increase in the cost of production of a ton of puddled iron exceeding 10 lire. This would be possible if the duty on pig iron were reduced, in line with Pareto’s request, to 8.60 lire per ton.