SUCROSE, AND YET SO FAR: COMMODITY DEPENDENCE IN THE BRITISH WEST INDIES AND THE DANCE OF THE MILLIONS
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Date
2022
Authors
Ely, Jonathan
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon
Abstract
The Dance of the Millions occurred during the year 1920 when, following the cessation of World War One price controls, the price of sugar increased by 43%. Sugar producers of the British West Indies, a group of 12 islands in the Caribbean Sea, realized incredible profits during the price surge. The price of sugar was unsustainable, however, and decreased by 51% in 1921. This thesis exploits the fact that some Islands relied heavily on the exportation of sugar while others exported none at all to determine the impact of the Dance of the Millions. Considering the period from 1910-1930 with non-producers as a control group, the price volatility is found to decrease producer imports by 48.2% while not significantly impacting exports. Differences in price levels do not change significantly with sugar producer perhaps having slightly lower prices for subsistence. Government revenue and expenditure for sugar producers decrease by 28.2% and respectively 26.3%. Governments are seen to reduce expenditure with revenue and no significant increase in public debt is found. Finally, producers see total deposits in government-run savings banks decrease by 45.5% even as the price volatility of World War One lead to a concentration of wealth in sugar-producing countries. Taken together, the Dance of the Millions is seen to be a deeply harmful event for the economies of sugar producers. These results confirm explanations of the resource curse that focus on the negative impacts of price volatility.
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Keywords
Economics, History, Price Volatility, Commodity Dependence, Econometrics