1970s Italy
Prices and wages pushed each other higher, and inflation continued.
Around 20% per year
TOPICS
The Value of a Single Phone Call
Italy in the 1970s. Small change disappeared from circulation, and public telephone tokens began to be used as change.
The Value of a Single Phone Call, Explained in 3 Minutes
1See it
Swipe to see more
Around that time
Small coins disappeared from towns, and the country ran short of change.
Around that time
Candies and small slips of paper started appearing in the change from shops.
Around 1975–1978
Banks printed small-denomination checks and circulated them as change.
Paper notes for tens or hundreds of lire
Around that time
Tokens for public phones were also used as change.
Why?
Because they had a value everyone knew: the price of one phone call.
Even though it wasn't official money
It worked as money because everyone believed others would accept it.
However,
It only worked because the phone company kept its value stable.
2In numbers
20around %
Annual price increase in 1970s Italy
3What would you do?
You're in a café in 1970s Italy. You're given a public phone token as change for your coffee. Do you accept it?
Pick one
Yes, I'll take it. I can use it for one phone call.
That's what people did back then. Even though it wasn't legal money, it worked as change because everyone believed others would accept it.
No, I'll refuse. It's not official money.
The country was short on small change. But the tokens worked because their issuer, the phone company, kept their value stable.
Money is anything that people believe others will accept. Something whose value no one guarantees can't be used as change.
4Read more
In 1970s Italy, things other than coins began to appear in the change given at shops. Candies. Small bank cheques. And public telephone tokens.
Small Change Vanished
The background to this was inflation. After the oil crisis and a wave of wage increases, prices and wages continued to push each other up. Studies cite a level of around twenty percent per year.
The mechanism that linked wages to prices—the *scala mobile*—is said to have worked to entrench this situation. However, the causality is debated and has not been definitively established.
What is certain is that small-denomination coins withdrew from circulation. The small change issued by the state became insufficient.
Paper Printed by Banks
Banks were the first to fill the gap. They printed small-denomination cheques—*miniassegni*—for tens or hundreds of lire, which circulated as change. This occurred from around 1975 to 1978.
These were, in effect, private banknotes. People received their change for a coffee in the form of small pieces of paper with a bank's name printed on them.
Telephone Coins
Another substitute was the *gettone*. This was a grooved brass token for use in public telephones.
It became accepted as change. The reason was simple: it had a value that everyone knew—the price of a single phone call.
It was not established by the state. Nor was it legal tender. Yet it circulated. Because everyone believed that others would accept it.
Where the Definition of Money Was Tested
What happened here touches upon the very definition of money.
Money is that which everyone believes will be accepted—the *gettone* proved this definition in daily life. The telephone coin filled the void left by the scarcity of the state's small change.
However, this does not mean that the role of the state is unnecessary. The *gettone* was accepted because its issuer, the telephone company, kept its value constant. Something whose value is guaranteed by no one cannot serve as change.
Only something qualified to be a substitute can stand in as one. Italy in the 1970s demonstrated this over several years.
MORE
More in Stories of money
The Wealth of the Realm, and a Handful of Earth
The edict declaring "All the wealth of the realm is mine" continues immediately with "even a handful of earth is welcome." In an age when the country was exhausted by plague and rebellion, copper was gathered to construct the Great Buddha.
Mitsuru Hayama
The Day a Creditor Nation Became a Debtor
One hundred million guldens. That number, written on the treaty paper, summed up in a single line the fall of a nation that had once lent money to the courts of Europe.
Mitsuru Hayama
Waiting for the War to End, While Printing Counterfeit Money
Adolf Burger, a printer forced to forge British pound notes in a Nazi concentration camp. We trace the inside of Operation Bernhard through his own testimony and the records of museums and research.
If you would like to read on
The rest of the story is in the material of NOMISMA.
Price
After purchase, the full courses, the illustrated books, every country’s story and the numismatics examination are open to you.
See the price →