Time Will Run Back (26 page)

When Peter first became aware of this he regarded it as a remarkable coincidence, and then as something of a miracle. But he soon came to realize that it was due to a perfectly natural and virtually inevitable development. Some brokers made it their business to specialize in what they called “triangular” transactions among ration tickets. They were constantly on the lookout for discrepancies in the mutual exchange relationships of any three commodities. As soon as they found any discrepancy from which they could profit, by a triangular exchange, they immediately tried to do so. Their competitive bids and offers continued until the relationships were ironed out, so that no further profit was possible for anybody as a result of a discrepancy.

For the same reason, Peter found, the ratios of exchange in the market at Engels Square were never far out of line for more than a very short period with the ratios of exchange on Death-to-Trotsky Street; for a set of brokers were always running back and forth between the two markets, or sending messengers, and trying to profit from the least discrepancy that arose between the markets in the exchanges or quotations.

A special name—“arbitrage business”—sprang up for this sort of transaction. Its effect was to unify, or to universalize, price relationships among markets between which this freedom of arbitrage existed.

As a result of this amazing consonance within the infinitely complicated pattern of exchange relationships, people took to the habit of saying that these wonderfully delicate market adjustments were “automatic.” The word was ingenious; but Peter was shrewd enough to recognize that it was only a striking metaphor which, if taken literally, could be misleading. These market adjustments were anything but “automatic.” They took place solely because there was an alert group of people ready to seize upon the slightest discrepancy to make a transaction profitable to themselves. It was precisely the constant alertness and the constant initiative of these specialists that prevented any but the most minute and short-lived discrepancies from occurring.

Of course each of these specialists was doing this, not in order to make a more perfect market, or with any conscious effort to confer any benefit on society, but solely in the hope of making a transaction profitable to himself—profitable in the sense that he would end up with more ration tickets. And as everybody was trying to maximize his own satisfactions by getting the maximum supply of the particular kinds of ration tickets he wanted, his drive to do this, and the devices to which he resorted to do it, might also be called “automatic.” But the process was not automatic in the sense that it took place without anybody’s initiative or effort or ingenuity or planning. It took place precisely because each individual—or at least each individual who was energetic and enterprising—was devoting his initiative, effort, ingenuity and planning toward maximizing his own satisfactions.

And soon a fifth fascinating development occurred. The exchange relationships had become too complicated for any blackboard or notebook or for anyone to hold in mind or calculate in their totality. Therefore the practice grew up of quoting other ration tickets in terms of only a few leading kinds of ration tickets, chiefly those for bread, potatoes, and cigarettes. In the course of further time everything came to be quoted solely in terms of cigarette coupons. The quotations on the big blackboard, which came to be known simply as the Big Board, then became comparatively easy to read. The last transactions would be recorded like this:

Beer coupons =
¹
/
₄
cigarette coupons

Bean coupons
=
1 cigarette coupons

Bread coupons = 1 cigarette coupons

Cap coupons = 8 cigarette coupons

Chair coupons = 40 cigarette coupons

Potato coupons =
¹
/
₂
cigarette coupons

Shirt coupons = 10 cigarette coupons

And so for all other coupons.

This resulted in enormous simplification. It eliminated the necessity for all the complex cross-rates and cross-calculations of any one type of coupon in terms of another. If a shirt coupon exchanged for 10 cigarette coupons and a chair coupon for 40 cigarette coupons, then it was obvious at once that it would take four shirt coupons to exchange for one chair coupon—and so for any other two items. Thus the device of quoting every type of coupon in terms of a single type of coupon simplified the whole task of comparing the exchange value of any type of coupon in terms of any other.

Instead of speaking of the exchange ratios of these coupons, people now began to speak of the “price” of the coupons. And by the “price” of the coupons they always meant the ratio of exchange with cigarette coupons.

How did cigarette coupons come to be chosen as the kind in which all the others were quoted? This was a problem that particularly fascinated Peter. As a result of his inquiries and inferences he concluded that the situation was something like this. Practically everybody smoked cigarettes and wanted cigarettes.

10
₃

But if anybody didn’t smoke them himself, he nevertheless found that cigarette coupons were the easiest to exchange for other coupons. This was so for several reasons. A cigarette coupon entitled the holder to one package of cigarettes. This package did not spoil quickly like many other things. It was compact and easy to handle and carry in proportion to its value. And in case of necessity exact “change” could be made by opening the package and exchanging single cigarettes.

And as soon as people discovered that they could handle and exchange cigarettes and cigarette coupons more easily than other coupons, they were ready to accept cigarette coupons in exchange for the kind of coupons they had to offer rather than demand the particular kind of coupons that they ultimately wanted. For they found that they could make the best and quickest bargains by taking cigarette coupons
first,
and then
re-exchanging
them for what they ultimately wanted, instead of trying to make a direct exchange. A man with a chair coupon who wanted instead an extra shirt, an extra cap, and more bread, for example, no longer had to shop around until he found someone who had and was willing to part with the exact combination that he wanted—and who was also eager for a chair. He found that he could satisfy his wants more quickly, fully and exactly by exchanging his chair coupon for cigarette coupons first.

And then occurred what was to Peter still one more fascinating development. As cigarette coupons began to establish themselves as the chief medium of exchange and “standard of value,” people who already had as much as they could smoke, and even nonsmokers, began to demand cigarette coupons in exchange for their own “surplus” coupons of all kinds, for the sole reason that they found it easier in this way to get the particular coupon and commodities that they ultimately wanted. And this
extra
source of demand for cigarette coupons—as a medium of exchange—increased their exchange value—which meant that the “price” of other goods in terms of cigarette coupons began to fall a bit.

But one day, after the new system of free exchange had been in effect about six months, an extraordinary and alarming thing happened.

The “price” of all the coupons on the board began to shoot up simultaneously. Most people were at first delighted by this development. People with bread coupons now found that they could get two cigarette coupons for their bread coupons instead of only one; people with shirt coupons found that they could get twenty cigarette coupons for them instead of only ten; and so on. And as many people had got into the mental habit of measuring their welfare in terms of the value of their coupon holdings in cigarette coupons, they began to feel richer and better off. They were disillusioned, however, the moment they tried to re-exchange their cigarette coupons for the coupons they ultimately wanted. They regarded the “prices” of these other coupons as exorbitant.

What had happened? Why had the price of everything suddenly gone up simultaneously?

Peter soon discovered the reason. A rumor had developed that the government did not have as many actual packages of cigarettes available as the number of cigarette coupons it had issued, and that therefore people would soon not be able to exchange their cigarette coupons for actual cigarettes. As soon as this rumor developed there was a run on the government shops and warehouses for the actual cigarettes, with everyone presenting his ration coupon at once. The rumor was true. The supply of cigarettes was not in fact equal to the supply of outstanding cigarette coupons.

“It ought to be made a crime, chief,” said Adams, “for anyone to present his cigarette ration coupons or even to be caught holding actual cigarettes. The people who are now demanding cigarettes for their coupons are only undermining confidence in the government. They are precipitating a panic. Up to now cigarette coupons have always been as good as cigarettes themselves in any exchange. Most people came to want the cigarette coupons only for exchanging anyway. Why shouldn’t they be as good now as they ever were? After all, the government stands behind the coupons even if the cigarettes don’t; the whole wealth of Won-world stands behind the coupons. People should be forced to...”

But Peter took a different view. He promised that all outstanding cigarette coupons would ultimately be redeemed in actual cigarettes as the government had promised. There had been, he explained, a regrettable “inflation” in the number of coupons printed as compared with the number of cigarettes available. But this would be cured by the government’s refusal hereafter to issue coupons in excess of the available packages of cigarettes.

Meanwhile he extended the freedom of the market. He now permitted anybody not only to exchange ration coupons but to exchange the actual commodities themselves after they had got them from the government. He felt like kicking himself for not having done this sooner.

A striking development followed. A dual market sprang into existence—one in the coupons, as before, and another in the actual commodities. Usually the quotations for the commodities were close to, or identical with, the quotations on the coupons for them. But whenever any coupon got too close to its expiration date, or any suspicion arose that there might be fewer commodities available than the amount of ration tickets outstanding against them, or that a particular kind of ration ticket might not be honored for some reason or other, the price of the coupons fell in relation to the price of the commodity that they represented.

The most striking development of all was the gap that developed between the quotation for cigarette coupons and the quotation for the cigarettes themselves. The coupons now exchanged at only about half the value of the actual cigarettes.

This expressed itself in an odd way. A dual set of “prices” appeared on the Big Board—one stated in terms of cigarette coupons, and the other stated in terms of actual cigarettes. And the prices in terms of cigarette coupons were about twice as high as those in terms of cigarettes.

“This is a very bad thing, chief, for the government’s prestige,” said Adams. “People are permitted through the market publicly to express their distrust of the government’s promises. Through the whole price system, and through direct quotation of cigarette coupons in terms of cigarettes, there is a discount of 50 per cent on the cigarette coupons. You are in effect permitting people to say without fear of punishment that this is the extent to which they distrust your promise.”

But Peter refused to take repressive measures. “It is a good thing to know,” he said, “the real extent of public confidence in the government. In that way we can tell what measures destroy confidence and what measures restore it. In fact, it is wonderfully helpful to us to have the exact quantitative measure of fluctuations in confidence that this open market provides. If we suppress the freedom of the market we suppress the very information we need for our own guidance.”

And he set about to restore confidence in the cigarette coupons.

He ordered an increase in cigarette output. He extended the period for which the outstanding cigarette coupons were valid. He announced a reduction in the volume of cigarette coupons that would be issued in the next period so that these would not exceed the available supply of cigarettes.

And he had the satisfaction of seeing an immediate rise in the quotations of the cigarette coupons to a discount of only 20 per cent. Within a few months, as people saw that his promises were being kept, the discount on the coupons disappeared altogether.

He had ordered the record of daily market quotations of coupons and commodities published in the
New Truth.
On the day after the cigarette coupons reached “parity,” he circled the quotation in red pencil and silently handed a copy of the newspaper to Adams.

He could not resist a feeling of triumph.

LIENA BOLSHEKOV is here, Your Highness.” “Show her in, Sergei.”

She had called for the appointment a few days before. What could she want of him? Peter had never met her to speak to, and his mind went back to his first night in Moscow when he had seen her at the opera. Her black hair and lovely legs were still vivid in his memory.

He was not disappointed. She was as striking off the stage as on. Her black Protector’s uniform was very trim; the trousers fitted just snugly enough to bring out the shapeliness of her hips and thighs. Her dark eyes were inviting.

“It’s so good of you to see me,” she began. “I’ve always been a tremendous admirer of yours, Your Highness—of your statesmanship and courage—but I didn’t realize till now how young and handsome you are!”

Peter blushed. He had been a great admirer of
hers,
he said.

“I’ve come to ask you,” she continued, “if we could possibly get you to act as a patron—the chief patron, of course—of our new pageant on The Growth of Civilization. It will depict the whole history of feudalism, capitalism, the class struggle, the final triumph of communism—”

“I’d be delighted,” said Peter. “You could have put my name down as a matter of course, or just telephoned me—” “But I wanted to
see
you, and I wanted to enlist your active interest. I
do
wish you could see what we are planning. Wouldn’t you like to see the sketches for the costumes and floats? I would
so
much appreciate your suggestions and ideas.” “I really know nothing about these matters,” Peter said. “But of course if you would really like me to—”