Documents

António de Oliveira Salazar

Novidades between 30 November and 21 December 1927

António de Oliveira Salazar wrote a series of articles in the Catholic newspaper Novidades towards the end of 1927 in which he set out his interpretation of Portugal’s finances during the first year of the Military Dictatorship that had come to power in the wake of the coup of 28 May 1926. The military leadership had appointed Sinel de Cordes as its finance minister. The finance minister believed the only way to balance the country’s budget and to stem its slide into bankruptcy was to negotiate a loan from the League of Nations. Salazar, however, had other ideas. Salazar used the newspaper to both to undermine Sinel and the Military Dictatorship’s financial policy, and to present himself as a man who had a clear idea about what needed to be done and the determination to do it. It was his manifesto.

Part I

Novidades, 30 November 1927

Let it be understood from the outset that, while being largely dry, these two or three aspire to the greatest objectivity, and limit themselves to demonstrating, with just enough commentary to help with their understanding, the data extracted from official publications.

In a book entitled Bolshevism, fascism and dictatorship, which was published last year, the former prime minister of Italy, Professor Nitti, wrote: ‘It is not possible to speak of the finances of countries under dictatorship. There is always some mystery. In free countries the crises are signalled in advance, they are discussed, remedies are sought with the cooperation of all. In countries under dicatorships the crises are mysteriously hidden and, when they appear, the always tip the country into a disaster’.

In principle, this is a rebuke that cannot be aimed at the Portuguese dictatorship which has continued to publish the data, sometime even with greater punctuality than before. The budget, accounts, floating debt notes, the Bank of Portugal’s balance sheets, fund listings—everything has been published and is in the public domain, and no important operation in the public finances has been undertaken without the public being made aware. If any accusation can be levelled at the ministry of finances, it is not because it is not saying what it intends to do to resolve a crisis that was not of its making, but that it cannot without being responsible for making things infinitely worse.

There is no need—and this is perhaps inconvenient—to disappear into the minutiae that emerge or that could made the necessary measures ineffective, but it is desirable that the country are made aware of the general direction financial policy needs to take over the next few years, so that it can bravely prepare to accept its share of the many and heavy sacrifices they will have to bear, if we are all willing—friends and enemies of the dictatorship—to abandon once and for all the hope for financial miracles, as if the public authorities could conjure up other miracles that are different from those resulting from clear thinking, firm wills, absolute honesty and the productive effort of the nation. The messianic views that are widely employed in our public life is forgivable among a people that lacks culture; among those with responsibilities—whether friends of enemies of the dictatorship—such views can only signify mental laziness or a cynicism that laughs at the naiveté of others—in either case, it represents intellectual or moral inferiority.

Enough of this.

The supplement to the Diário do Governo that I have in my hands contains the provisional accounts for the state for the months of July 1926 to July 1927, and show a deficit during that period of 689,000 contos, of which 652,000 contos are attributed to the current financial year. These accounts cover the first year of the dictatorships, given that in June 1926 it spent almost all their time selecting of new occupants for some of the offices on the Terreiro do Paço. In July the dictatorship began governing, now with its own budgets which while not prepared by the dictatorship was quickly reviewed by it. This is their work.

We have not rushed to judgement of this deficit, the value and meaning of which can only be truly understood following an analysis of the movement of expenditure; however, we can see straight away that the difference between spending and revenues is around 1,300,000 contos, of which the deficit represents some 50%. If we cannot expect public receipts to increase in this proportion from one moment to the next, then we must choose another direction for our spending policies.

The first observation worth making in respect of receipts is that—a rare, if not unique, phenomenon in Portugal—the accounts show a balance that is higher than in previous budgets. The first defect of our budgets is the result of excessive ministerial optimism and consists in the exaggeration of expected revenues, which immediately leads to even more spending, as if, like two lovers, the exchequer can live on hope.

Looking at the revenue, and excusing some explainable calculation mistakes here and there, the budget for 1926-27 was both prudent and serious.

I will waste no time with praise, because it seems to me I had some personal responsibility, if Commander Filómeno da Camara took advantage of the revision that was carried out against ‘those elements who at the time claimed I must have had advantages that others did not’. Whatever the case may be, the revenue forecast is close to the reality — that is to say, to the receipts of the previous year, in relation to which, save for some points in which appreciable decline was anticipated, the 1926-27 budget represents a certain improvement.

Looking at the table, in which the numbers have been rounded for ease of reading and in which, for reasons that will be explained, those relating to interest on treasury bonds.

The table shows the figures representing liquidated revenues considered to belong to the state, save the corrections later introduced in the settlement of outstanding revenues. In any case, in my opinion they are preferable to the levy, which is often delayed in such a way as to accumulate with the other during the financial period. It ought to be noted that the distinction only has value in respect of the major direct taxes under Chapter I, the contribution of registration certificates under Chapter II, the tax on transactions under chapters III and IV, the part in which the primary education fund is affected by the incomplete levy on the extras they constitute. For the rest it can be said that both the levy and the settlement are identical.

Taking the ordinary revenues, we note that the effective income exceeded anticipated revenue by 24,000 contos, and the income in the previous budget period exceeded anticipated revenue by 23,000 contos. If we add one part of the ordinary revenue, which is then included in the budget as extra-ordinary revenue, then the accounts for 1926-27 exceed the budget by 16,000 contos, although it is 6,000 contos less that the accounts for the previous accounting period. Thus, it would be wrong to say the deficit is the result of poor revenue forecasting.

However, it is worth examining in detail each one of the revenue chapter headings. This will be the subject of another article. And it is to this ‘deception of the soul’ that I now retire.

,000 contos

Budget headings

Budget estimate 

for 1926–27

1926–27 

accounts

1925–26

accounts

Direct taxation

260

266

288

Land registry and stamp duty

157

165

159

Indirect taxation

295

351

336

Rents and profits

171

100

84

National property

27

33

39

Capital gains and dividends

93

99

98

Refunds and renewals

6

9

6.4

Other revenue

114

125

114

1124

1148

1125

Extraordinary revenue

162

154

183

1286

1302

1308

Tags: António de Oliveira Salazar, military dictatorship, finances, Novidades, budget, finances

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