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In June 1916, after a series of military failures, the Salandra government resigned. The new prime minister was Paolo Boselli, who in turn resigned after the momentous military disaster at Caporetto in October 1917, which enabled the Austrians to occupy much of the Veneto in 1917 and 1918. This single battle left 11,000 Italian soldiers dead, 29,000 injured, and 280,000 taken prisoner. Some 350,000 Italian soldiers deserted or went missing, and 400,000 people became refugees. Only a strong rearguard action in November and December prevented further Austrian advances.

Caporetto signified the end of the war for many Italians and encapsulated the disastrous leadership of General Luigi Cadorna, as well as the terrible conditions under which the war was being fought. In some mountain regions, far more soldiers died from cold and starvation than from actual fighting with the Austrians. The generals themselves tended to blame the defeat at Caporetto on poor morale and “defeatism.” Cadorna blamed “shirkers” and called Caporetto a “military strike.” (Caporetto had coincided with the Russian Revolution of 1917). Cadorna himself was replaced by General Armando Diaz in November. Nonetheless, the invasion of Italian territory helped consolidate the war effort on the home front, and thousands of support committees, often sustained by middle-class groups, were formed to “defend the nation.” Some Socialist deputies and intellectuals, such as Turati, rallied to the war effort as the threat to Italian territory became clearer. After the war, the wounds of the defeat in 1917 were reopened in the long Caporetto Inquest of 1918–19, which blamed the invasion largely on various top military leaders.

The war was deeply unpopular both among the troops—mostly conscripted peasants who were undernourished and fighting for a cause few could understand—and among the civilian population back home, which included almost one million workers in arms factories who were also subject to military discipline. Many rebelled within the army. (It has been estimated that some 470,000 conscripts resisted call-up, 310,000 committed acts of indiscipline under arms, and 300,000 deserted.) More than one million soldiers came before military tribunals before a postwar amnesty was granted. Many once again saw the Italian state only as a repressive institution. Antiwar disturbances struck Milan in May 1917, and serious bread riots took place among the industrial workers of Turin in August 1917. Troops occupied Turin and took four days to restore order; some 50 demonstrators and 10 soldiers were killed in the clashes.

After November 1917 a more liberal government under Vittorio Emanuele Orlando rallied the country to defend its frontiers. Diaz made welfare concessions to the troops and fought a far more defensive campaign until October 1918, when, in the closing stages of the war, the Italians won a final, decisive victory at the Battle of Vittorio Veneto. In reality, Italy’s victory was as much the result of the internal collapse of the Austro-Hungarian Empire and Germany as of any radical transformation in the capacities and motivations of the Italian army. The cost of victory

Italy won the war, therefore, but at a huge cost: some 600,000 dead, 950,000 wounded, and a legacy of bitterness and division. The victorious patriots and nationalists now detested parliament, where the Giolittian majority had never supported the war, although they defended the idea of the nation and the war record of the Italian army. Many workers, peasants, Socialists, and trade unionists were disgusted by the costs of the conflict and were inspired by the revolutions in Russia and Germany. Returning veterans expected the land that they had been promised in 1917–18. The Italian flag became a powerful focus of division and hatred. War memorials were contested all over the peninsula. These divisions greatly weakened the postwar political regime and fractured elements of society.

Furthermore, the pro-war groups were themselves bitterly divided when the war ended. Should Italy, at the Paris Peace Conference (1919–20), try to secure the terms of the Treaty of London, as Foreign Minister Sonnino urged, or should it support U.S. President Woodrow Wilson and adhere to the “principle of nationality”—that is, be willing to accept less territory in the Adriatic region, as the Left Liberals and Republicans advocated? In the Treaty of Saint-Germain (1919), Italy gained Trentino, part of Slovene-speaking Gorizia, Trieste, the German-speaking South Tirol, and partly Croatian-speaking Istria. But Dalmatia was excluded, despite the Treaty of London, as was Fiume (now Rijeka, Croatia), a Yugoslav port largely inhabited by Italian speakers, which Sonnino had also decided to claim; so too were any colonial territories in Africa or Asia and any claim on Albania. Nationalists therefore argued that Italy had been robbed of its rightful gains (“a mutilated victory”).

Orlando resigned in June 1919. When the new government of the Radical leader Francesco Saverio Nitti was also unsuccessful in foreign affairs, the flamboyant poet Gabriele D’Annunzio led a group of volunteers to Fiume in September and captured the city himself. Fiume became a centre of nationalist agitation for more than a year, and D’Annunzio was dislodged (by Italian forces) only in December 1920 when Fiume became, briefly, an independent republic. Fiume became a symbol of heroic nationalism for those Italians who had supported the war and felt betrayed by the postwar settlement. Economic and political crisis: the “two red years”

Italy faced serious postwar economic problems. Wartime governments had printed money to pay for arms, and inflation intensified. By the end of 1920 the lira was worth only one-sixth of its 1913 value. Savings became nearly worthless, and rents collected by landowners plummeted in value. Meanwhile, the major arms and shipbuilding firms went bankrupt after the war for lack of government orders. Unemployment rose to two million as returning soldiers searched for work. Peasants, organized by trade unions, ex-servicemen’s groups, or Catholic leagues, seized land for themselves, especially in the south; agricultural labourers went on strike at harvest time. Trade unions, now operating again, pressed for higher wages, and strikes, including those in the public services, became routine. A series of stoppages paralyzed the railroads, as well as postal and telegraph services.

Throughout the biennio rosso (“two red years”; 1919–20), revolution appeared imminent. While spontaneous land occupations swept through the south, riots and lootings hit shopkeepers in the north and centre in the summer of 1919, and prices were cut by half throughout the country. Socialist deputies walked out of parliament in December 1919 to protest the presence of the king. They were attacked by nationalists, and widespread general strikes followed. In April 1920 the Piedmontese General Strike blocked work throughout Piedmont. The Socialist Party and the trade unions met in Milan to decide, absurdly, whether or not to call a revolution. They voted against, and Piedmont was isolated. In June 1920, mutinies, riots, and strikes hit the Ancona region and threatened to become an insurrection. Massive rural-worker agitation swept the whole of the Po valley and threatened the harvest during the summer of 1920. The Catholic “white” (as opposed to the Socialist “red”) union federation, the CIL (Confederazione Italiana Lavoratori), formed in 1918, grew massively throughout the biennio rosso, above all in the agricultural regions of the north and especially around Bergamo, Brescia, and Cremona. A Catholic left even emerged in the north that preached revolution and led long strikes in Lombardy and the Veneto. Yet this mass movement never linked up with the Socialists, whose ideological anticlericalism alienated them from all wings of the Catholic movement.