Thursday, February 03, 2011

Economics of POW Camp - whatever happened to R. A. Radford?

The conclusion of an essay beloved to Krugman and many other economists ...
Economics of POW Camp, R.A. Radford 1945
.... In January, 1945, supplies of Red Cross cigarettes ran out: and prices slumped still further: in February the supplies of food parcels were exhausted and the depression became a blizzard. Food, itself scarce, was almost given away in order to meet the non-monetary demand for cigarettes. Laundries ceased to operate, or worked for £s or RMk.s: food and cigarettes sold for fancy prices in £s, hitherto unheard of. The Restaurant was a memory and the BMk. a joke. The Shop was empty and the Exchange and Mart notices were full of unaccepted offers for cigarettes. Barter increased in volume, becoming a larger proportion of a smaller volume of trade. Thus, the first serious and prolonged food shortage in the writer's experience, caused the price structure to change again, partly because German rations were not easily divisible. A margarine ration gradually sank in value until it exchanged directly for a treacle ration. Sugar slumped sadly. Only bread retained its value. Several thousand cigarettes, the capital of the Shop, were distributed without any noticeable effect. A few fractional parcel and cigarette issues, such as one-sixth of a parcel and twelve cigarettes each, led to monetary price recoveries and feverish trade, especially when they coincided with good news from the Western Front, but the general position remained unaltered.

By April, 1945, chaos had replaced order in the economic sphere: sales were difficult, prices lacked stability. Economics has been defined as the science of distributing limited means among unlimited and competing ends. On 12th April, with the arrival of elements of the 30th U.S. Infantry Division, the ushering in of an age of plenty demonstrated the hypothesis that with infinite means economic organization and activity would be redundant, as every want could be satisfied without effort.
The essay has a very English style. Radford's upper lip was rock solid.
A Caracas Chronicles 2002 post has a bit of background and some analysis of the article ...
In 1941, a British officer by the name of R.A. Radford was captured by the Nazis and confined to a POW camp. At the camp, Radford and 2400 other inmates were forced to live on meager rations delivered by the Red Cross. The rations issued to each prisoner contained a bit of bread, some sugar, biscuits, jam, margarine, tea and chocolate bars, with small rations of canned meat sporadically made available. They also included 25 cigarettes per prisoner per week. Radford, who had been trained in economics before the war, noticed how even in the extreme conditions of a Nazi prison camp, a rudimentary market system developed as prisoners traded with one another to maximize their satisfaction. The British army's Gurkahs, for instance were eager to trade their meat for other foods, since as Hindus they were strict vegetarians. Prisoners who didn’t smoke were eager to trade their cigarettes for food. At first, each of these trades was a simple barter. But soon enough, the inmates realized the need for a more sophisticated system of exchange. Lacking money, they started using cigarrettes as prison currency. A ration of margarine might be bought for seven cigarrettes, which could then be used to buy one and a half chocolate bars, and so on.
Soon after his release, Radford described the system that developed in a classic paper entitled “The Economic Organization of a POW Camp,” a write-up that's much appreciated by undergraduates everywhere for its skill at explaining the mysteries of monetary systems. What interested Radford the most was the way that cigarrettes, as a means of exchange, were subject to all of the fluctuations of normal currency. So long as there was a roughly steady relationship between the number of cigarettes in circulation and the goods those cigarettes could be traded for, “prices” in terms of cigarettes remained more or less stable. But when a shipment of cigarrettes unexpectedly arrived, an inflationary spiral was set in motion. With the camp suddenly awash in “unbacked cigarettes” (additional cigarettes that circulated without a corresponding increase in the amount of other goods they could buy) prisoners would demand more and more of them in exchange for other goods. Alternatively, when cigarettes failed to arrive for one reason or another (an allied bombing raid, for instance,) a liquidity crunch took hold of the camp. These currency shortfalls would actually lead to recessions at the camp: with inmates eager to hang on to their scarce cigarettes, it became more and more difficult to find people to trade with.
So what happened to Radford after the war? There's no Wikipedia entry for him, and I couldn't find a biography or a reference to anything but his 1945 publication. I couldn't even find out what the initials "R.A." stood for.

It is a mystery.

Update 10/21/2011: Mystery solved in a comment on this post. R stood for Richard, he moved to the US to work for the IMF. See: http://faculty.csusb.edu/urmann/POW_Article.pdf

5 comments:

Hohenheim said...

After the war he finished his degree at Cambridge and moved to the US to work for the International Monetary Fond. See the introduction to his article at : http://faculty.csusb.edu/urmann/POW_Article.pdf

Also, R stands for Richard.

JGF said...

Thanks!

mwbrandl said...

Sadly he died on Nov. 7, 2006 in Maryland at the age of 87.

John Gordon said...

87 isn't such a bad age -- thought it's not as far away as it used to be. He must have had many stories to tell.

karee radford said...

Amazing man my grandfather was. Missed by many. And yes he had many stories many he did not share.