More State Control

Nobody expected miracles when Cesare Merzagora, an accomplished businessman and former leader of Italy's Senate, took over six months ago as president of Montecatini-Edison, the country's largest industrial firm. The Milan headquarters of the overdiversified chemical colossus was torn at the top by a management divided into two hostile camps--representatives of the government's substantial interest and champions of private investors (including the Agnelli and Pirelli families)--which held equal stakes. Directors had hoped that the appointment of Merzagora, 71, would keep both factions in balance and allay fears that the state was aiming for an outright takeover.

Last week, after a five-hour meeting attended by many of the most powerful men in Italian business and state agencies, Merzagora stalked out and resigned. The state, he complained, was seeking domination of the firm. The news sent ripples of concern through Western Europe's business community. Amid rumors of a drastic organizational shakeup, the company's stock scraped a new low. Investors remembered that Giorgio Valerio, a bitter foe of state encroachment, was ousted as president last April by his rivals in the government.

There have been tension and trouble ever since 1968, when two state-run enterprises, ENl and IRI, bought a major block of stock in Montecatini-Edison. The state companies want Italy's chemical industry welded into a cartel strong enough to thwart foreign competitors. The government's men have proved to be far more dynamic and adept at grabbing power than the representatives of private shareholders. Now the state's executives are likely to move into the vacuum created by Merzagora's departure. In Italy, the government already has monopoly control over electric power, telephones, railroads, radio and television. The state also has big interests in shipping, steel, airlines and oil. After last week's flare-up, it seems quite possible that the Continent's biggest chemical concern eventually will be tucked completely into the government fold.

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