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Fascists of the first hour
The fasci di combattimento held its founding convention on March 23, 1919 in Milan, which 119 people attended. The Association of Industrial and Commercial Interests lent the fascists the meeting hall. Three groups, known as "the fascists of the first hour", contributed to the original fascist organization, ex-socialists and syndicalists, former military officers and Futurists. The influence of the former socialists was evident in the first fascist manifesto, which included support for universal suffrage, an eight-hour work day, minimum wage and other traditionally left-wing positions.

In the 1919 elections, the fascists received a small portion of the vote. In Milan, the city with the strongest fascists support, Mussolini's list received only 5,000 votes out of 270,000 voters. Mussolini resigned himself to the conclusion, "fascism will always be an urban phenomenon".

Anti-socialist violence
In 1920, the fascist movement became a militarized force. The fasci organized their former military members into squadristi, fascist action squads, and began 'punitive expeditions' into the countryside to strike at labor and socialist organizations. In the first expedition in Julian Venetia, the fascists destroyed the Slav Association Headquarters and the Chamber of Labour.

In the post WWI environment of political radicalism, landowners were losing power to the Italian Socialist Party. Agrarian capitalists used the squadristi as strike breakers and developed an alliance with them. The agrari publicly endorsed fascism, coordinated tax strikes against local socialist governments and in many cases personally lead fighting squads. The squadristi attacked socialist meeting halls and other organizations. Through these 'punitive expeditions' the squadristi demobilized their socialist enemies and attracted new recruits. The action squads developed autonomously of the urban fascio, where the movement originated.

The two fascisms
In 1921, with the Socialists largely routed, Mussolini looked to the next step of the movement. He intended to enter Parliament as the representative of a broad 'middle party' that would represent consumers and tax-payers. At this time, Mussolini opposed the creation of a fascist party that would take power. In August, Mussolini narrowly succeeded in convincing the National Council to agree to a peace treaty, the 'Pacification pact', with the PSU. With the pact, Mussolini hoped to increase his legitimacy and cement his control over the military wing of the fascist movement.

The Pacification Pact provoked the most serious crisis in the history of the fascist organization. The rural squadrisiti leaders were strongly opposed to peace with the socialists, and demanded to be able to continue with their violent campaigns against socialists and workers.

In an article for the Communist paper, L'Ordine Nuovo, Italian Communist Party leader Antonio Gramsci described the internal crisis of the fascist movement


 * "The urban, collaborationist nuclei see themselves as having achieved the objective they had set themselves, of shifting the Socialist Party from its position of class intransigence, and they are eager to get their victory down in writing in the pacification pact. The agrarian capitalists, in contrast, cannot renounce the only tactic which ensures them a free hand in exploiting the peasant classes, without any trouble from strikes and organizations. The whole polemic that is stirring up the Fascist camp, between supporters and opponents of pacification, comes down to this basic disagreement, whose origins must be sought in the very origins of the Fascist movement."

After the squads went on a series of marches, attacking socialist organizations along the way, Mussolini resigned from the National Council.

Formation of the fascist party
After submitting his resignation, Mussolini announced that he had reconsidered his position on forming a fascist party. At the founding conference of the National Fascist Party, Mussolini also repudiated of the Pacification Pact, thereby adopting the position of the squadristi. The new party program was devoid of the earlier anti-capitalist demands and reflected the interests of the squadristi's landowner allies.