PRICES AND "PROFITEERING."
T ORD DEVONPORT and those who help to design his policy may be recommended to read the article on " Food Prices and Food Supplies " by Dr. Arthur Shadwell in the Nineteenth Century for April. It opens with an apt quotation from Turgot, who a hundred and fifty years ago pointed out the mischief which ensued when a Government, in order to pander to popular prejudice, committed themselves to a policy of regulating food prices. Since Turgot's day numbers of economists and experienced administrators have reiterated his warnings. Yet, with that persistence in error which seems to be a fundamental human characteristic, Governments continue to repeat the experiments which Turgot denounced. Our own Government have recently become one of the worst sinners. Last autumn they began by limiting the price at which milk might be sokl, with the result that farmers sent t heir milch-cows to the butcher and arc now slaughtering their young heifers. The future supply of milk for the people of this country is being exhausted because last autumn Mr. Runciman had a fancy to limit milk prices.
The performances of the Government with regard to potatoes have rightly earned the contempt of the public. By attempting to draw a 'distinction between seed potatoes and potatoes for food, they have provoked the very easy fraud of the sale of potatoes at seed prices to be subsequently put in the saucepan. In the meantime they have discouraged the cultivation of potatoes, with the result that sonic months hence the country may be paving heavily, in the absence of potatoes, for the present policy. Latterly there has been talk of putting a limit on the selling-price of wheat, in spite of the fact that most of our wheat comes from abroad, and that if the selling- price in this country is limited the wheat that we want will go elsewhere.
When it is asked why these follies should be committed by men whose reputation for business acumen and general intelligence is indisputable, the answer is that now, as in Turgot's day, Governments are influenced by the popular cry that if prices rise the poor alone suffer. To a certain extent that statement is true, though not entirely so. Rich. people are affected by high prices as well as the poor. It may, however, be admitted that a rise in price which is a small inconvenience to a rich man is a cruel hardship to a poor man. That fact is indisputable ; but the conclusion to be drawn from it is that the hardships of poverty are themselves inevitable, whereas the conclusion which the Government wish to draw is that these hardships can be avoided by some Governmental trickery with food prices. They cannot. The moment the Government attempt to regulate food prices they set in motion forces which react to the injury of the poor far more than to the injury of the rich. The best illustration in our own country is furnished by the case of sugar. Here the late Government are to blame. They possessed complete control over the whole sugar supply of the country, and when, owing to• difficulties of carriage, that supply began to run short, their clear duty was to put up the price of•sugar so as to check consumption. Instead of doing so, they kept the price low, apparently for fear of offending the powerful confectionery trade. The result has been that many of the poor have been deprived of sugar altogether. The supply.being short, grocers have been compelled, in order to protect themselves, to Make conditions which would choke off an excessive number of customers. For a considerable period the condition made was that no person could buy sugar without at the same time buying a number of other articles which possibly the purchaser did not want at all. That practice is now nominally forbidden. But the grocer, can, and does, protect himself by the simple
• We quote the sating in JottuSou'e incorrect Conn.
plan of saying that he has no sugar when an unprofitable customer applies for it. It may be stated with confidence that the poor would have been better supplied with sugar if the Government had permitted the price to rise in accordance with the law of supply and demand.
As regards other commodities, we have to turn to Germany to see how the policy of fixing food prices is working out. Some illustrations were given in the Spectator a few weeks ago. Further information since to hand confirms all that was then said. For example, in the Prussian Landtag one speaker said, addressing the Government : " What have you effected by your interference with prices ? You have organized permanent distress in the large towns. You have promised the people lower prices, and have given them hatred and bitterness against the rural population, but not food. Even the working classes would prefer higher prices if they could only get food." It. may of course be replied to this that the shortage of food in Germany is due to other causes than Ministerial mismanagement. Some of us think it may be due to the British Navy. According to the Prussian Food Minister, "the responsibility rests with the good God, Who last year did not grant us the harvest we expected." But that is not the whole story. It is the poor alone who have had to go without food in Germany. The rich have been able to get what they wanted by secretly paying high prices or by purchasing forged bread tickets. This latter fact, at any rate, is admitted by the German Government themselves. Herr Michaelis states that bread cards have been forged and illegally used in appalling numbers. He also states that corn has been widely used as fodder. But like Ministers in other countries, instead of drawing the conclusion that the Govern- ment had better abstain from foolish interference, he proposes by way of remedy to organize another Government Office, this time to deal with the question of packing and carrying. " We must organize transport. We shall have to start a limited liability company to look after this ; not a new Imperial organization, but a body working in connexion with the War Economic Bureaus."
Similar evidence comes from Bavaria, where in a recent food debate in the Landtag it was stated that a good deal of bread corn had been used as fodder ; that there are fifty thousand more food cards in circulation in Munich than there arc inhabitants ; that in the upper classes food-hoarding is still going on ; and that the rich are able to get meat without meat tickets. As an example of what State organization does in Bavaria, it may be mentioned that the State Potato Office ordered three hundred trucks of potatoes, of which a large portion were frozen when they arrived. In Saxony the special grievance appears to be against the class of persons called self-providers," presumably people who cultivate allotments. Apparently their methods of cultivation are so unsatisfactory that they waste considerably more than they produce. A Saxon newspaper says that they are even more injurious to the nation than the rich, who manage to get all they want by paying high prices.
These examples are sufficient to show how in Germany, the home of organization, the Mecca of our English State Socialists, the attempt to regulate food prices in the professed interest of the poor has inflicted additional injury upon them, while leaving the rich still able to utilize the power that money gives. There can, in fact, be no equalization of conditions between rich and poor except by equalizing incomes. The conclusion is that the problem of the very poor, which is undoubtedly grave when prices rise, must be dealt with directly either by the Local Authorities giving subsidies to necessitous families, or by raising the wages of the lower-paid workers, or by both methods. Provided this is done, the hardship to the poor ought to be ruled out of consideration altogether, so that the nation might face the problem as a whole. It is from this point of view that Dr. Shadwell's article is so valuable. He explains in the clearest possible way how prices are fixed by the ordinary operations of commerce, and how absolutely futile is the Socialist talk—which popularity-hunting Ministers are fond of adopting—about the crime of "profiteering." As Dr. Shadwell pertinently asks : If all dealers are profiteers, and if it is profiteering that makes prices rise, why do they ever go down ? Do the profiteers suddenly become philan- thropists, or what ? " He goes on to give, as an illustration with which every housewife is familiar, the fluctuation in the prices of fish. Fish prices vary from day to day. When fish is scarce, it is dear, and prudent housewives abstain from buy- ing. When fish is plentiful; it is cheap, and the housewife buys freely. Everybody is so accustomed to these fluctuations that nobody complains. It is understood to be part.of the -law of Nature, and is accepted as such. But during long years we have grown accustomed to cheapness in other staple foods such as meat, bread, or potatoes, and the present rise is consequently regarded as a new phenomenon. And just as the savage attributes any unfamiliar phenomenon to the machinations of Mumbo Jumbo, so our present-day Socialists and politicians explain everything by the word " profiteering." In view of this persistent folly, it is perhaps hopeless to continue preaching that the only way to deal with the shortage of food is to allow prices to soar as high as they will. The peculiarity of the evil of high prices is that the evil cures itself. The higher the price rises, the more is consumption restricted, the more is production stimulated. If this country, with its necessary dependence upon overseas supplies, is seriously in danger of a shortage of food, then it is the bounden duty of us all to advertise to the world our willingness to pay any price that may be necessary to induce people to send food to us. If we do that, and if at the same time, warned by the rise in prices, we restrict our normal consumption, prices will begin to fall, and, above all, we shall get the food we want.
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