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Guerrilla Hoarding

Mises Daily: Tuesday, April 12, 2011 by

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The headlines scream, "Is this Baby in Danger Due to Hoarding Grandma?"; "The Horrors of Hoarding"; and "Animal 'Hoarding' Often Tied to Mental Illness." Meanwhile, a popular TV series entitled Hoarders focuses upon people whose "inability to part with their belongings is so out of control that they are on the verge of a personal crisis"; like drug addicts, they require an intervention. The vilification of hoarders as mentally ill, child-endangering animal abusers is in full swing.

What is this vile and dangerous thing called hoarding? The noun "hoard" is defined as "a store of money or valued objects, typically one that is secret or carefully guarded." The verb means to "save up as for future use." In common usage, anyone who stores more of a good than their neighbors do is often viewed as a "hoarder."

A common example of hoarding is stocking up on durable grocery items — such as canned goods, rice, or pasta — when they are on sale, so that your family has a year's supply of staples in the house. In rural areas, this is known as "keeping a good pantry."

Historically, governments have frowned upon hoarding. Especially in bad economic times, stigmatizing the hoarder for "causing" high prices or shortages because he buys more than his "share" serves a useful political purpose. They divert attention away from government policies, such as tariffs, that are the true cause of empty shelves and high prices. By stirring up resentment toward neighbors who own one more can of peas than you do, politicians avoid the full and just brunt of public anger.

In times of economic crisis, when governments flirt with rationing and price controls, the frown can turn into a scowl; laws against hoarding are then passed and goods are sometimes confiscated. The most notorious confiscation in America came in 1933 when President Franklin D. Roosevelt signed Executive Order 6102, ostensibly as a measure to combat the Great Depression. The order commanded the American people (with a few exceptions) to relinquish all but a still-permitted $100 worth of gold coins, bullion, and certificates to the Federal Reserve in exchange for a payment of $20.67 per troy ounce. Less than a year later, the government raised the trade rate to $35 per troy ounce. Thus, the government reaped huge profits at the expense of private investors and savers — a.k.a. hoarders of gold.

Hoarding, like any other human activity, can become obsessive. But in its common form, hoarding is nothing more than preparing for the future by laying aside a store of items you and your family may need. This is an especially valuable practice during economic instability, when necessary supplies can become scarce or suddenly double in price.

The Austrian investment counselor Jack Pugsley once explained another perspective on hoarding: it is an investment. A low-income family may not be able to afford precious metals, but they can afford to invest in dry or canned consumables. Last year, with some frequency, my grocery store sold a 900-gram package of pasta for 99¢. With wheat shortages, and with the American government diverting almost 30 percent of corn crops into producing ethanol, food products dependent on grain have skyrocketed. The same package of pasta now regularly costs $2.99. If a struggling family bought 60 packages of the 99¢ pasta for a future consumption of one package a week, then their hoarding would have knocked perhaps $100 off their grocery bill. By consistently buying more than they immediately need of bargain items, the family can build a solid pantry to sustain them through unemployment, inflation or scarcity.

Unfortunately, during economic crises, the government also acquires an interest in hoarding — specifically, in punishing the hoarder as unpatriotic. A historical example is the Food and Fuel Control Act, which became law in 1917, during World War I; the acts official name was "An Act to Provide Further for the National Security and Defense by Encouraging the Production, Conserving the Supply, and Controlling the Distribution of Food Products and Fuel." In short, the government became a food dictator, and anyone possessing more than a 30-day supply of food (which was considered reasonable by food administrator Herbert Hoover) could be arrested.

The May 30, 1918, New York Times carried the headline, "Navy Man Indicted for Food Hoarding." It reported on a man who had invested his wife's inheritance in a year's food for storage; and so they were held on a $3,000 bail each. The food was confiscated.

The navy man's fate is a cautionary tale in more than one way. The store of food for his family was discovered because a grocer and neighbors informed upon him. Thus, a sad corollary to the wisdom of hoarding food for your family is the need to do so with discretion. This is sad, because the natural impulse of people in a community is to assist those in need. Measures like the Food and Fuel Control Act mean that sharing food with a neighbor who has hungry children is no longer simply a gesture of compassion and generosity; such government acts make sharing into a danger to your safety and your own children's well-being.

There is still time to hoard the items upon which your family depends. Prices are rising, to be sure, but the full force of inflation and shortages is probably several months in the future. Hoard now; hoard quietly.