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highly essential rationing device of a capitalistic economy. 

 Price was the dominating force influencing production, di- 

 recting the distribution of goods through the channels of 

 trade, and guiding consumption. 



This system did not work perfectly, but it worked. It was 

 ruthless and was no discriminator of persons. Those who did 

 not respond to its mandates were deemed socially undesir- 

 able and were prevented from interfering with society's best 

 interests by the harsh process of bankruptcy. In one respect 

 the system was charitable. It punished those who did not 

 obey its mandates, but it did not deprive those it bankrupted 

 of the opportunity to make a new start in life and continue 

 to be productive. 



The price-rationing mechanism had the advantage that it 

 was practically automatic and therefore very efficient. The 

 system had the further advantage that in one sense it was 

 costless. It did not require a large amount of human effort 

 to regulate those who produced, distributed, and consumed. 



Under the price mechanism the black market did not exist. 



The price-rationing mechanism did not solve the problem 

 of inflation and deflation, nor did it presume to do so. In fact, 

 the price system historically has invoked a certain amount 

 of inflation as a stimulus to production and a deterrent to 

 consumption in tune of war. 



Although the price-rationing system was ruthless, it did 

 have definite standards of equity. The system rewarded men 

 in proportion to their relative performance. In general the 

 individual who produced the most received a higher income 

 and, if so disposed, could purchase more of the good things 

 in life. Price incentives spurred the individual to greater ef- 

 forts in the interest of the group. Despite its shortcomings, 

 this measure of equity stood the test of time. It produced 

 more plenty for the many than any other system. 



