30 AN ECONOMIST'S PROTEST : 1915—IV 
to the old, old cause of excitement in the presence of scarcity 
the belief that the rise of price was due, not to the obvious 
scarcity, but to the wicked conspiracy of sellers, who, by hold- 
ing back a really plentiful commodity, manage to draw enormous 
profits. The Committee found nothing to indicate that the evil 
passions of the merchants were so particularly excited by the 
war that they chose this occasion for the extreme exercise of 
a power which they had always possessed but were apparently 
reluctant to use in time of peace. 
It is really amazing that the Committee should finish up by 
recommending that, « if prices do not shortly return to a reason- 
able level,” the Government should ¢ consider a scheme for 
assuming control of the output of the collieries of the United 
Kingdom, with a view to regulating prices and distribution in 
accordance with national requirements during the continuance 
of the war.” The Governments of Europe, or some of them, 
by their extreme incompetence in carrying out their most 
slementary functions, have muddled the world into a prodigious 
conflict which no one now believes he ever wanted. The 
necessities of this conflict cause our own Government to take 
various steps which create an acute shortage of shipping and an 
intense congestion of railway traffic, and this interference with 
the normal conditions of transport results in a moderate rise 
of the price of coal in a populous corner of the country in which 
the consumption of the wealthy is doubtless a larger proportion of 
the whole than anywhere else. Inordertoremedy this the Govern- 
ment is recommended not to be content with its large powers in 
regard to shipping, and its complete control of the railways, but 
to assume control of the whole output and distribution of coal ! 
In making this plunge, the Committee seem to have been 
inspired by that very dangerous thing, a smattering of economic 
theory. In section 9 they speak as follows: — 
““ The effect of a temporary failure in the supply of any commodity 
is normally that the price rises, and rises without relation to the 
cost of production and distribution. In theory at least such an in- 
crease, though apparently arbitrary, may be expected to perform 
three functions: it acts as a danger signal, warning consumers to 
be careful of their stores; it ensures the distribution of the avail- 
able supplies to those who are willing to pay most, i.e., presumably 
to those who have the greatest need ; and it automatically attracts