ABSTRACT
DURING the course of the war the supply of many articles in common use and in inelastic demand became very short. If nothing had been done by the Government, demand would have been adjusted to the short supply through a great rise in prices. This would have meant that betterto-do people would have substantially maintained their previous consumption, while poor people were unable to satisfy elementary needs. State action to limit prices unaccompanied by anything else would have broken the equilibrium between demand and supply, but it would not have secured fairness in distribution. At the restricted prices more would have been asked for than was available, with the result that the sharing-out would have been determined by favouritism, pull, accident or capacity to stand for long periods, without fainting, in queues. That would have been an intolerable arrangement. Consequently the State restricted by law the amount of the most important commodities in short supply that any individual was allowed to purchase. The idea was in this way to reduce the total quantity demanded, account being taken of the fact that some people would buy less than their permitted ration, so that it equalled the amount which, at the regulated price, was being supplied.
