British Mandate: A Survey of Palestine: Volume II - Page 832

CHAPTER XIX,

27. The subsidization policy is accordingly to be regarded in two aspects : as a measure which ensured that the people of Palestine were adequately fed and clothed during the period of interrupted supplies and with regard to the contribution which it made towards stabilizing the economy of the country. Both aspects have been given due weight by the Subsidization Committee, a body appointed in the summer of 1943 to advise Government on the administration of the subsidization policy. It consists of three official and three non-official members, under an official chairman.

28. The following net expenditure has been incurred on the subsidization of essential commodities :

LP.

92,874 1,140,341 3,353,525 4,708,149

1941/42 1942/48 1943/44 1944/45 1945/46 (estimated) _JJ_,QQ0.000

12,289,889

Total

The method by which the subsidy was injected was in the operation of the Government trading account, covering the Government's transactions in relation to the procurement of supplies, Prices were fixed for the range of commodities falling under this arrangement and these commodities were sold at the fixed prices irrespective of variations in the prices of procurement. As a set off to the heavy losses incurred in maintaining the level of prices of the basic foodstuffs and utility articles, commodities which were not in the essential class were selected for sale at prices which left the Government with a margin. Moreover, in the exercise of the powers conferred by the Defence (Amendment) Regulations (No. 3), 1944* the High Commissioner could impose a surcharge on any article or class of articles. Such charges have been imposed for the purpose of obtaining revenue to offset expenditure on subsidization: as a price equalization measure; and to ensure that 'windfall' profits would accrue to the State and not to private enterprise. The proceeds of both trading margins and surcharges were utilized for the purpose of subsidization. The figures of expenditure given above accordingly represent the actual loss to Government of procuring essential supplies and maintaining them at a price level lower than the cost price. They do not include the administrative expenses of control. The gross expenditure in 1944/45 on subsidization and the manner of its allocation between the various classes of commodities (or services in the case of transport) was :
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.* Laws or 1944. Vol. II, page 569.

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