Nico Colchester fellowship - Making words danceIt is now two years since this column, provoked by incessant sterling inflation, first introduced the Mars Bar as an alternative currency. This small ingot of staple commodities, packaged with great consistency since 1932, is the ultimate unit of consumer wealth. When historic prices and incomes are expressed in Mars Bars (MB) they display consistency and reassuring stability, whereas measurement in shrinking pounds leads to disorientation and dissatisfaction.
The effect of this revelation was electric - and exactly that was predicted by Hayek in his theory of competing monies. In a bid to preserve loyalty to sterling, the British Government rushed out an official guide to historic sterling prices to help people regain their bearings. Then the Bank of England went to work against inflation in earnest. Within a year of that Lombard column’s publication, sterling inflation had been reduced from 12 per cent to 6 per cent.
But the Mars Bar monetary agency in Slough struck back. A special minting of “Golden Jubilee” bars was snapped up by hungry hoarders. Mars followed this with a series of “special offers,” all of which went down well. Above all, the weight of the British Mars Bar was increased from 59 to 68 grams to emphasise the soundness and “big Bar value” of the new coinage.
Despite the sterling efforts of the Government, the pound today stands at an all-time low of 17p against the Mars Bar, down from 15p two years ago. It has thus lost value at a real rate of 6 per cent per annum, a figure which tallies with the cost of living statistics concocted by the Government (a misleading concept: the cost of living is a constant, like the Mars Bar, and indeed for addicts the two are synonymous. It is the value of sterling that is wayward).
The table below, updated with the latest prices, shows how some price relationships have shifted since 1981. The graduate lucky enough to get a job with ICI is now earning no less than MB 41,000 a year while the price of his first mini has dropped gradually back since 1960 to MB 18,000 today.
The cost of the definitive plate of roast beef and Yorkshire pudding at Simpsons in the Strand has been stabilised under the Thatcher regime at around MB 38.
The cost of the definitive plate of roast beef and Yorkshire pudding at Simpsons in the Strand has been stabilised under the Thatcher regime at around MB 38.
The allure of Mars Bar price stability may have been challenged somewhat since 1981, but those who have adopted the Mars Bar standard have found other delights beyond non-inflationary contentment. The Mars Bar is a unique coinage in that it is issued by a number of agencies dotted round the world. The opportunities for arbitrage between these centres are eye-opening.
Thus, true to form, the Japanese have developed a miniaturised Mars Bar which weighs just 45 grams and can be slipped easily into a shirt pocket to enhance its liquidity. This micro-Bar is trading in Tokyo at Y85 which is equivalent at current exchange rates to no less than 25p. The US Mars Bar is also a rather skimpy affair at 53 grams, and the mean of price fixings in New York and Washington is 40 cents or a handsome 28p.
Even after allowing for freight and insurance it is clear that arbitrage between the UK and either country can be very profitable. Those willing to defy the men from Mars and engage in a little illicit recasting can exploit the weight differential as well.
It is no surprise that the main Mars issuing agency is fighting a rearguard action against the “internationalisation” of the Mars Bar market. It frowned upon Rothschilds’ offshore Mars Bars fund. It came down hard on Morgan Grenfell for the first Euro-Mars Bar bond. But its battle will be lost as soon as the Mars Bar futures contract starts trading in Chicago.
