Purchasing power parity

“ By this I do not mean to imply that people should suddenly stop buying, but only that they should stop buying things that they do not need or that they can get along without. For how, pray, are we to place some seven billion dollars of purchasing power at the disposal of the Government unless we curtail our individual expenditures? ”

“ So long as the rank and file even of business men fail to realize that they are daily gambling in changes in the value of money, a fact of which they are blissfully unaware, they will exert no demand for preventing those changes. They are the parties whose interests are chiefly involved, and the first essential step in the reform process is that they shall be made to comprehend the benefits of a stable purchasing power.*53 Until this time arrives, any political proposals will be premature. ”

“ But if he does not use, or uses in part only, the orders he receives, and lays aside some portion of them; and thus every day bringing his contribution to the national store, lays by some per-centage of the orders received in exchange for it, he increases the national wealth daily by as much as he does not use of the received order, and to the same amount accumulates a monetary claim on the Government. It is, of course, always in his power, as it is his legal right, to bring forward this accumulation of claim, and at once to consume, destroy, or distribute, the sum of his wealth. ”

“ But as the currency changes in purchasing power, so the money value of all you possess, and all you have to buy or to sell, changes also; so that the power of the Government to determine the quantity of currency that shall be in circulation is virtually equivalent to the power, by its own arbitrary act, to increase or decrease the money value of all private property in the land; in other words, the private fortune of every citizen is placed at the mercy of the Government's arbitrary pleasure. ”

“ Let it be noted that the alliance between those who would centralize the government and the consolidated money power is not only close but essential. The one is the necessity of the other. Establish the money power and there is universal clamor for strong government. ”

“ So when the wealthier states as between themselves and their less favored associates, and all as between themselves and those who were to come, gave up for the common good the great sources of revenue derived through commerce, they did so in reliance on the protection afforded by restrictions on the grant of power. ”

“ Thus a large portion of the Union, in numbers and in geographical extent, contributing its equal proportion of taxes to the support of the Government, would under the operation of such a system be compelled to see the national treasure—the common stock of all—unequally disbursed, and often improvidently wasted for the advantage of small sections, instead of being applied to the great national purposes in which all have a common interest, and for which alone the power to collect the revenue was given. ”

“ If the secretary of the treasury, or his department, should retain the entire management of the system, no real relief could be expected. While the general government has the exclusive right to regulate the coinage and value of coin (money) , it is the assumption of power not delegated to vest in one man, or department, the exclusive management of the finances of the entire country, not only of the government, but of all private persons. ”

“ The consequences of this narrowness are often disastrous, as, for instance, when, in pursuance of the advice of New York business men, Secretary Chase issued the greenbacks, or when the ill-advised legislation to close the Gold Room was enacted. And it is not altogether in unusual predicaments such as those brought by the Civil War that the business man's limitations in knowledge react injuriously upon him. Every day he is hampered by a lack of understanding of the principles regulating the purchasing power of money ”

“ State-owned or Federal-owned power sites can and should properly be developed by government itself. When so developed, private capital should be given the first opportunity to transmit and distribute the power on the basis of the best service and the lowest rates to give a reasonable profit only. ”

“ Thus, if a man borrows $1000 when the index number is 100, he might agree to pay back, not the same dollars, but the same general purchasing power, with interest. If, at the time of repayment, the index number had gone to 150, the principal of the debt would be understood to be $1500, since this represents the same purchasing power that was borrowed. If, on the other hand, the level of prices had fallen to 80, the principal would automatically become $800. Thus, both parties would be protected against fluctuations in the value of money. ”

“ The rights and preferences of Power's stockholders would of course disappear with the distribution of Railways' common and the dissolution of Power. As holders of Railways' single class of common, a new relationship of equality would arise between Power's preferred and common stockholders. ”

“ No man can make an investment, no merchant can sell or buy a lot of goods on time, no manufacturer can accept an order, no contractor can make a contract for a railroad or building, without Congress having it in its power to determine their profit or their loss, by regulating the volume, and consequently the value, of the currency, up or down. Can Congress, can any body of legislators, be depended upon to exercise so tremendous a power with wisdom? ”

“ It was to the interest of all that every man should contribute his fair share of labour, and receive only his due proportion of profit. The complete system of representation rendered it impossible that any despotism could be established.
Ten per cent, more ,of dividends the second class received than the first, and the third than the second.
Those whose accounts were in credit might draw half their share of dividends in cash, or all in coupons.
These latter had ten per cent, larger purchasing power at any of the stores or settlements, than cash. ”

“ There will be no such excuse if we allow the production and distribution of electrical power to become the sport of private monopolists. If there is blindness in this matter it will be wilful blindness. For each district there can be but one power supply consistently with economy, and so much hangs upon the wise distribution of power that it is most important the public should be made to realize the nature of the interests which are at stake. ”

“ Other nations have adopted to some small extent this mode of indirect taxation of their people. By legally cutting off the competition of all private dealers in the taxed article, and by preventing to the utmost of their power its being smuggled into the country, Governments are enabled to sell the article at a price enhanced artificially by the monopoly; but all that the people are made to pay extra under the monopoly, saving the costs of maintaining it, goes directly into the treasury of the State ”

“ Nothing need be added, it would seem, to show that the power to make such notes a standard of value and a legal tender cannot be derived from the power to borrow money, without so expanding it by implication as to nullify the power to coin money and regulate its value, nor without extending the scope and operation of the power to borrow money to an object never contemplated by the framers of the constitution ”

“ But organization by private hands,—the combination of industrial units into great trusts economizing management, production and distribution,—cannot safely be tolerated. It means the wielding of the chief power in the State by monopolists who will use their power for private ends. The era of private competition is closing. On every hand capital is combining with capital in restraint of competition. ”

“ So that it follows inevitably, in those instances where there can be no fair competition, where monopolistic condition is paramount, the State must assume control,—not that this is desirable, nor can ever be satisfactory, but that it is absolutely necessary to prevent a part of the taxing power being exercised by individuals,—and thus establishing "taxation without representation." ”

“ Given private ownership, the monopolists of Energy will run their mains where most profit is quickly to be garnered instead of seeking, as we should seek, first profits in the thinning out of towns and the restoration of the health of our people. If we part with the control of power, it is Power indeed which we part with. We should part, also, it is important to add, with a magnificent source of public revenue, which will amount, in the time to come, to much more than the revenue of our railways. ”

“ Only through well-established policies of transmitting power directly to its market and thus encouraging widespread use at low rates can the Federal Government assure the people of their full share of its benefits. Additional power—public and private—is needed to raise the ceilings now imposed by power shortages on industrial and agricultural development. ”

“ But the fact that for every dollar taken out of the Treasury for these objects a much larger sum was transferred from the pockets of the people to the favored classes was carefully concealed, as was also the tendency, if not the ultimate design, of the system to build up an aristocracy of wealth, to control the masses of society, and monopolize the political power of the country. ”

“ The existence of such a system of taxation, with the machinery for collecting money in this way, allows the government more freedom of industrial action than any private individual can command. It can make up a deficit by compulsory payments; and this gives it a wider range of power in deciding what services it will undertake and what prices it will charge—a power which affords almost unlimited opportunity for good or bad use, according to the degree of skill and integrity with which it is exercised. ”

“ A striking instance of the truth of the proposition is seen in the fact that the existing tax of ten per cent. imposed by the United States on the circulation of all other banks than the National banks, drove out of existence every State bank of circulation within a year or two after its passage. This power can as readily be employed against one class of individuals and in favor of another, so as to ruin the one class and give unlimited wealth and prosperity to the other, if there is no implied limitation of the uses for which the power may be exercised. ”

“ It is a fair question to ask, therefore, whether conceding, as I do, that there is not sufficient elasticity of the currency, I can suggest no remedy, but would prefer present evils to those resulting from the creation of too centralized a power ”

“ The length of credit allowed, generally permits, on the part of some of the debtors, a postponement of payment, and in the mean time the balance may turn the other way, and restore the equality of debts and credits without any actual transmission of the metals. And this is the more likely to happen, as there is a self-adjusting power in the variations of the exchange itself. Bills are at a premium because a greater money value has been imported than exported. But the premium is itself an extra profit to those who export. ”

“ The plain truth is, the assertion of such a power is claiming the right to disregard the contract entirely, and substitute for it a different one, without the consent of the debtor. If the United States can exact now one-quarter of the net earnings of each of these companies, and place it in their treasury, they can, by the same power, and with the same reason, exact the whole of the earnings, or any other property equal to the amount of the debt. ”

“ And a significantly large percentage of that money is invested in power companies all over the nation. In an attempt to keep their heads above water, those banks would be forced to make up tremendous losses if Power Utilities failed overnight. ”

“ We can afford to make the stock of the combination half a dozen times what it naturally would be and pay dividends on it, because there will be nobody to dispute the prices we shall fix.
Talk of that as sound business? Talk of that as inevitable? It is based upon nothing except power. It is not based upon efficiency. It is no wonder that the big trusts are not prospering in proportion to such competitors as they still have in such parts of their business as competitors have access to; they are prospering freely only in those fields to which competition has no access. ”

“ The worst monopoly of all is that of the power to issue money, which power is now restricted to the holders of a certain kind of property,—government bonds and gold and silver. If the holders of all kinds of property were equally privileged to issue money, not as legal tender, but acceptable only on its merits, competition would reduce the rate of discount, and therefore of interest on capital, to the mere cost of banking, which is much less than one per cent. And even this percentage would not be interest, properly speaking, but simply payment for the labor and expense of banking. ”

“ WILLIAM T. BAKER.
"You cannot maintain two kinds of money at a parity, when one has a commercial value and the other has none, except by making one redeemable in the other.
"But you might have a purely paper money. The method would be to have no redemption money and to make it legal tender in the payment of all debts public and private.
"Limit it in quantity by fixing the amount at so much per capita. Maintain the volume at that as population increased, and from time to time provide for what had been destroyed. ”