Prisoner of War Camp as an Economic Network

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Table of Contents

Defining the market
Development of Cigarettes and Food as a Currency
Paper Currency v/c Cigarettes
Conclusion
References

Radford (1945) has discussed at length how a prisoner of war camp in the second world war transformed into a viable economic network where cigarettes and food intermittently served as the currency while items such as jam, marmalade, bread, chocolate, and services such as laundry, sewing, handyman and others were exchanged. The author has depicted how the market was formed, how a commonly accepted currency was developed and how market forces drove the prices for different products. The paper forms a thesis statement that ” a viable economic network would be formed even when there are severe restrictions and a common currency is evolved and that the currency is subjected to ups and downs, just like a real market.”

Defining the market

The market is defined by the inmates of the P.O.W., guards, and the Red Cross parcels that are delivered to each P.O.W., and each individual receives the same amount of goods. The prisoner receives the initial capital free and without excretion or efforts, and it is only his trading skills on how he plays the market that makes him rich or poor. He can barter and exchange the goods only with other inmates and the prison. This forms a closed market. A system has been developed that places a value for each item against each other and against a common currency. The internal market is influenced by the availability of certain goods, rising or falling demand for certain items, availability or scarcity in the external market, and market rumors. The prisoners are placed in a bungalow that could hold about 200 people, and there were about eight bungalows in a compound, and there were many compounds, but prisoners could only interact with people in their own compound (p. 190).

Development of Cigarettes and Food as a Currency

A compound had prisoners from different countries such as France, England, the U.S., and people of Sikh origin who do not eat meat. It soon became evident that while the food parcels contained many items, some people liked or did not like certain items, and while Sikhs were ready to give away beef tins, they wanted jam or marmalade in return. This soon created some unmet demand since there were only a fixed number of chocolate bars or tins of jam, and deciding how much of one item was worth another created dissatisfaction. Market forces soon determined that there was one commodity that could be used as a currency, and that was cigarettes. Items such as bully, sugar, marmalade, and others started being quoted in terms of cigarettes (p. 191- 195).

One cigarette issue was worth several chocolate issues; one tin of cheese was worth five cigarettes, a tin of salmon was worth 20 cigarettes, and so on. The French, who were housed in a different compound has set up a very active market that was very well organized, everyone knew the value of each item in terms of cigarettes, and they also knew who wanted a certain item and who was willing to sell. A number of middlemen who could broker a deal between two individuals also came up, and they received their fees in terms of cigarettes. The compound where the author was placed developed an exchange Trade Mart, and rates of different items were noted down. (p. 194).

The value of certain items would change drastically when food parcels were received, and a fixed pattern developed that on Mondays and other days, there would be a sudden deflation in prices as supply increased and food items were available at lesser cigarette currency, and when stocks of food items had worn out, the rates would increase so lesser food was available for more cigarettes. Some sharp traders started hoarding cigarettes, waiting for such events, and they would buy and sell to make good profits (p. 193).

Some enterprising people who had other languages skills managed to broker deals with Sikhs who could not speak English. The closed market had interactions with other compounds where the cigarette currency was valued differently, and depending on the supply-demand in the parent compound, traders could make quick profits. The French had great demand for Coffee, while in other compounds, it had less value. Some people also undertook forward trading in items such as sugar and gamble in the hope that the next week, sugar would reach so many cigarettes (p. 198).

Paper Currency v/c Cigarettes

After some time, people develop a Restaurant and Shop where people could buy food and hot drinks by exchanging paper currency that was again weighed against cigarettes. The Shop bought food on behalf of the Restaurant with paper notes, and the paper was accepted equally with the cigarettes in the Restaurant or Shop and passed back to the Shop to purchase more food. This event worked fine until certain shortages hit the P.O.W. camp and certain items became very scarce, and people who had valid paper currency could not buy food since food had appreciated and inflation had set in. This caused the market to crash, and it was back to cigarette currency again. Some attempt was made at price-fixing, but they could not come through, and it was back to market forces that fixed the prices (p. 198).

When the was nearing its end, and U.S. forces landed at the camp, the whole economy collapsed as the value of cigarettes was nullified since the economy became one of plenty and all requirements could be easily met (p.200-201).

Conclusion

The paper has examined how a simple and rudimentary closed economy managed to take root in a P.O.W. camp. The camp has displayed all the market forces such as supply, demand, consumers, buyers, common currency, inflation, price-fixing, deflation, share market, investors, and so on. A common currency was developed against which all other items could be traded. In effect, the case represents many economies that are active in the market, and the common currency discussed represents gold which is an internationally accepted currency.

References

Radford, R. A. (1945). “The economic organization of a P.O.W. camp,” Economica, New Series, Vol. 12, No. 48, pp. 189-201.

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Prisoner of War Camp as an Economic Network

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