ClVl 



in prices. The Government ofi&cers would need to be almost omnis- 

 cient to perform this function eflBciently without the aid afforded by 

 the natural course of prices. 



8. The Government by selling salt produced at different places at 

 a uniform price, without reference to the cost of production or the 

 conditions of demand and supply, bolsters up inferior factories and 

 handicaps the better sources, the result being on the whole increase 

 in the cost of salt and loss to the community. 



9. The monopoly system has not the effect of steadying prices, as 

 is commonly believed. On the contrary, though under it salt is sold 

 at a uniform price when it leaves the factory, outside the factory the 

 prices are subjected to fluctuations all the more violent, because the 

 factory price is kept down at an artificial level. The result is that 

 the trader benefits at the expense of the producer, except in cases in 

 which both occupations are combined in the same person. The truth 

 of the above observations will be seen from the following example. 

 Take 3 factories A, B and C, at a distance of 20 miles from each 

 other north to south. When there are sufficient stocks in these 

 factories and the facilities of communications are equal, each factory 

 will snpply all places within a distance of 10 miles north and south, 

 besides tracts which are at less distance from it than from other 

 factories. If stocks are deficient in A and the demand great, and 

 Government continue selling salt at 3 annas a maund, there is sure 

 to be a run on the factory. When the salt is all sold out, traders from 

 A and the regions supplied by it will have to go to B, and though 

 they may get the salt at 3 annas a maund, the cost of carriage will 

 have increased. Meanwhile the factory at A having been denuded 

 of salt, the retail prices at that station will have enormously risen. 

 Under the excise system what would happen is this. When the 

 stocks in A are insufficient to meet the demand, the price of salt in A 

 will rise to such an extent as to make it profitable for traders in some 

 of the tracts served by A to go to B for the salt. This will again 

 affect the price in B and then in C and so on all along the line. The 

 result is that no factory will be absolutely denuded of salt, producing 

 panic and violent perturbations in retail prices, but stocks will be 

 conserved as long as practicable, a diversion of trade being effected in 

 various directions. 



10. The above remarks, I repeat, are not based merely on theoretic 

 considerations, but on actual experience. The report of the Salt 

 Commission and the annual reports of the administration of the Salt 

 Department are full of instances of factories having been denuded of 

 salt in the manner pointed out. 



11. In view of the grave evils inherent in the monopoly system, 

 we should be justified in giving preference to the excise system, even 

 if it were attended with some increase of price to the consumer ; but 

 has there really been an increase of price and over what ? The cost 

 price under the monopoly system has been assumed to be 3 annas for 

 the last 30 years, and this rate has acquired in popular estimation 

 a sort of prescriptive right to be regarded as the normal cost not- 

 withstanding changes in the rates of wages, in the value of money, 

 and in the conditions of trade. Even when the Salt Commission 



