After disastrous defeat in Abyssinia in 1896 and a dangerous collision between the government and the governed, especially in Milan, in 1898, with the turn of the century Italy entered into a period of conciliation and prosperity. When in 1900 King Umberto was murdered by an anarchist in revenge for the civilian casualties of 1898, his successor, Victor Emmanuel III seemed able to turn over a new leaf. In February 1901 the enlightened radical, Zanardelli, was appointed Prime Minister: his right hand was Giovanni Giolitti as Minister of the Interior. These two men were the first Italians in authority to show understanding for Italy's new social problems. The king of Italy had a less thorough control of government than the emperors of Germany and Austria, and men like Zanardelli and Giolitti played up the powers of parliament—they were deputies and depended upon a parliamentary majority.

In the preceding decade, in spite of the lack of coal and iron, the industrialisation of northern Italy on a modern scale had begun. Milan had become a great industrial centre as well as Italy's financial and commercial capital. In 1899 the FIAT car factory was founded at Turin, whose life was transformed by this. The port of Genoa had been developed by the Ansaldo concern. Population increased quickly in evil conditions. Industrial profit was monopolised by the rich, who were absurdly favoured by the fiscal system. Although the franchise had been slightly extended since the foundation of the kingdom, only the better-off classes elected the deputies to the Chamber.