supply side Sleight of hand

stowing away the corn in Columbus

“Supply and Demand” an “old standard”

James Seddon, the Confederate Secretary of War pleaded with newspapers not to publish accounts of the April 2, 1863 Richmond Bread Riot. Nevertheless, 150 years ago today a Richmond paper was able to continue one of its main themes – one of the underlying causes of the seeming scarcity was speculation throughout the South.

From the Richmond Daily Dispatch April 4, 1863:

“Shall speculators be longer Tolerated?”

–Under the above heading the Columbus (Ga.)Enquirer thus writes:

It is apparent to every observing men that speculation has much to do with the prevailing high prices. The old standard of “supply and demand” is constantly referred to by those who apologize for speculation; and it is insisted that nothing but a scarcity inadequate to the demand enhances prices. This test would be a good one if all the supply was in market for sale. But the face [fact?] is notorious that immense supplies of provisions are held up by speculators for still higher prices. We have no doubt of the truth of the assertion that there was never before half the amount of corn stowed away in Columbus, as at the present time; yet the article commands a Signer [higher?] price than it has for many years before. It has been bought for speculation, and the speculators are still buying, and prices constantly advancing. That the heavy operations of these dealers have run up the only kind of breadstuffs that the great make of the people can at present afford to eat, to the prevailing extraordinary price, is beyond question.

It is believed, moreover, that the store rooms of deniers contain very large quantities of sugar, syrup, salt, etc., which are not offered for sale at even the high prices now ruling, but are held up for still higher figures. It is not so much an inadequate supply as the withdrawal of that supply from market, that makes scarcity and high prices.

Up North it was reported that the federal government had found a way to intervene in the quinine market to make that market work better.

From The New-York Times April 1, 1863:

… The day after the publication in the TIMES of the intention of the Medical Department to manufacture its own quinine, the price of that article declined 33 per cent., and within a day or two past the Department has received propositions from parties in New-York and Philadelphia, offering to furnish the drug at a reduction of 70 cents per ounce. Speculators in the article have lost heavily. …

Quinine was, and still is, used to treat malaria and other fevers. A surgeon in one Connecticut regiment wrote, “In one pocket I carried quinine, in the other morphine and whiskey in my canteen”. As with other important products the Confederacy developed quinine substitutes, which I guess is another way to deal with supply issues.