… is from page 147 of the Robert Schuettinger’s and Eamonn Butler’s classic 1979 study, Forty Centuries of Wage & Price Controls (footnote omitted); here, Schuettinger and Butler discuss the consequences of a Pennsylvania statute that capped the prices of many domestically produced items, including food, that were thought to be vital for the American revolutionary-war effort:
During the American War of Independence, Washington’s army nearly starved at Valley Forge largely due to what John Adams called “That improvident Act for limiting prices [which] has done great injury, and [which] in my sincere opinion, if not repealed will ruin the state and introduce a civil war.” As one economic historian explained, “The regulation of prices by law had precisely the opposite effect to that intended; for prices were increased rather than diminished by the adoption of the measure.” The same historian concluded that “Tried by facts, the measure was a total failure in achieving the end proposed by its authors and ultimately had not a defender.”
The economic historian quoted here by Schuettinger and Butler is Albert Sidney Bolles; the quotations are from pages 165 through 173 of volume one (1896) of Bolles’s three volume The Financial History of the United States. The Adams quotation is from this September 8, 1777 letter to his wife, Abigail.
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Among the great achievements of supply-and-demand analysis is its clear demonstration that government edicts that force the monetary price of a good or service down cause the actual price of that good or service – the value of the actual bundles of resources spent by buyers in their efforts to obtain each available unit of the price-ceilinged good or service – to rise.
