… is from page 101 of Edwin Cannan’s December 1916 Economic Journal paper, “The Report on Food Prices,” as this paper is reprinted in the original edition of Cannan’s marvelous 1927 collection, An Economist’s Protest:
Now giving people more money is quite an effectual way of meeting higher prices when it is applied to a limited class or a small area in commercial communication with the world outside; it enables the persons who get the increased money-means to increase their own consumption at the expense (production being for the time limited) of others, and so is a perfectly proper plan to adopt in favour of any class whose sufferings are likely in its absence to be disproportionately great. But, applied all round, or anything near all round, it defeats itself by causing a further rise of price; even if applied widely only within the boundaries of a single country, it is exceedingly expensive to the State, involving heavy taxation, present or future, unless the State prefers bankruptcy.
Governments therefore fall back on the alternative of “keeping prices down.” The more agile of the stupider among them promptly enact maximum prices. This ordinarily diminishes supply, and, whether it does so or not, it causes a worse distribution of what is available than took place before. Before, if you had some money you could buy some quantity, though perhaps not as much as you wanted: now, whether you can buy any at all or not depends on whether you get early enough into the queue or stand long enough when you have got in. The inconveniences and injustices of this cannot long be tolerated, so far as the more necessary articles are concerned, and some system of equal or graduated rationing is substituted for it in their case.
