n inflated prices. Cf. quotations from the German
Press in _The New Statesman_ of January 29, 1916.]

[Footnote 22: "Ces choses sont plutot des moyens que l'on emploie pour
travailler a faire prosperer l'Etat qu'ils ne sont l'essence de sa
prosperite."--Rousseau, _Political Writings_, I, 345 (C. E. Vaughan's
edition).]

Sec. 7

Duties of Commerce to the State

The State has a primary right to be fairly served. Prices should not be
arbitrarily raised by any wholesale merchant who happens to be in a
position to do so, or by any cartel of dealers in league for that
purpose. Prices should be regulated by the cost of production, and
should not be an indication of demand; they should rise beyond the cost
of production augmented by a fair profit only when the supply is
insufficient (production not being artificially restrained) to meet some
abnormal demand, and only as a means of checking and regulating the
excessive demand. We find instead that any dealer or group of dealers
will raise their prices almost absent-mindedly as soon as they are in a
position to meet a demand which cannot be postponed. Thus it is that
governments are habitually overcharged in all their contracts and
purchases; because governments have neither the time nor the opportunity
for casual dealings, and because they do not undertake such transactions
at all unless their absolute necessity has already been decided.[23] So
at the beginning of the war English warehouses were full of all sorts of
commodities required by the governments of the Allies; but the urgency
of war prevented any sort of bargaining; and the private merchants took
advantage of the situation to the amount of about two hundred per cent.
At present however I am dealing with trade in time of peace and I must
not flavour the ordinary facts with any consideration of War Office
contracts. It is enough to state the fact that in ordinary times the
private tradesman regards a special demand as an opportunity for raising
prices rather than as the stimulus of supply; a rule which is most
easily detected in the experience of Government departments.

The State, through its individual citizens, has a primary right to
obtain the particular commodity which it happens to prefer, without
restrictions imposed for the benefit of any particular tradesman. We
find instead that the ordinary purchaser no longer has any effective, or
selective, demand. He has to buy what he is given. The informal
organis