From the archives | 22 January 2015

From ‘Economic quackery’, The Spectator, 23 January 1915: Ever since the war began there has been a tendency to rely upon the government, instead of relying upon ourselves and upon the operation of economic laws. The political mischief resulting is the establishment of what is virtually an uncontrolled Cabinet autocracy. The economic mischief, though it has already made itself evident in one important particular, may only be realized years hence. The instance to which we refer is the case of sugar. The public and the government worked themselves up into a panic at the beginning of the war over the price of sugar, with the result that Mr McKenna was permitted to gamble in sugar with many millions of the nation’s money. The gamble turned out badly, as most government speculations do, and after a short time, in order to protect their improvident purchase, the government prohibited the importation of all sugar into this country. The result is that the country is now paying more for its sugar than it would have had to pay if the government had let the matter alone. What was forgotten in this case, and what is forgotten now by those papers which are busy agitating about the food prices, is that a rise in price necessarily produces an increase of supply, and in turn the increase of supply necessarily leads to a reduction in price. The present open market price for sugar is fully a halfpenny a pound below the government price.