once in 1747 and again in 1780—a tabular standard was created by law for the payment of soldiers and others as a means of combating the extreme uncertainty and depreciation of paper money.
The latter law lasted till 1786 when the extreme need of such a corrective was over. The correction was based on a crude index number of four commodities.[1]
Most of the foregoing facts regarding Massachusetts are taken from an interesting account of these early experiments with the tabular standard by Professor Willard Fisher.[2] These early gropings toward a goods standard were due to the dissatisfaction, mentioned in Appendix IV, § 1, following the disorganization of monetary standards by the Revolutionary War.
The Great War, also, has driven the industrial world to the use of a composite standard, though in a different way. Wage payments have, for the first time, so far as I know, been adjusted by means of index numbers of prices.
At the close of 1916 several banks, trust companies, and commercial and industrial establishments made special Christmas presents to their employees to compensate partially for the reduced purchasing power of their salaries for the preceding year, the presents being a fixed percentage of the salaries.
- ↑ The State issued its notes on this basis: "Both Principal and Interest to be paid in the then current Money of said State, in a greater or less Sum, according as Five Bushels of CORN, Sixty-eight Pounds and four-seventh Parts of a Pound of BEEF, Ten Pounds of SHEEP'S WOOL, and Sixteen Pounds of SOLE LEATHER shall then cost, more or less than One Hundred and Thirty Pounds current Money, at the then current Prices of the said Articles."
The same principle was applied to the payment of sums due the President of Harvard College.
This early example is particularly interesting because it anticipated those economists who are usually credited with originating the idea of a tabular standard, namely Sir George Shuckburgh Evelyn, 1798, Count Soden, 1805, Arthur Young, 1811, Joseph Lowe, 1822.
- ↑ "The Tabular Standard in Massachusetts," Quarterly Journal of Economics, May, 1913.
