Mr. Raley is a free-lance author, speaker, philosopher from Gadsden, Alabama.
One of the first things I remember is a story about Oscar Jones and a box of matches. It seems this old gentleman was out walking one evening after dark and decided to light his old cob pipe. According to the story, he dropped a match and then wasted the whole box in a vain attempt to find that which was lost.
Perhaps this story was a bit overdrawn, but it does tend to emphasize the most frustrating experience known to man. Some quirk of human nature makes this method of separation more exasperating than loss through robbery, poor judgment, or even taxes. This being true, I feel sure you can understand how I reacted to the discovery that eighteen months of my life are lost. I hasten to add that this does not pertain to future years which may possibly be lost to obesity, sweets, bitters, nicotine, and other nebulous factors. The time I have lost was lopped off those years assumed to have been expended in the past. This, of course, is the worst kind of loss, because when I have a year to live, I have been dead six months; but perhaps I should start at the beginning.
Shortly after our first child was born the wife and I decided to purchase an eighteen-year endowment insurance contract. At the time it appeared to be a very good investment, an almost painless way to insure the child’s education through four years of college. The agent knew his business, had everything included; even transportation and incidentals. We checked with the college of our choice and were assured that the sum contracted for was ample. As the years passed Mr. Stork paid his respects at regular intervals until we amassed four educational endowment contracts.
These contracts came to mean a great deal to us. In fact, one might say they had a sentimental value, above and beyond their actual worth. There was a time when a quarterly payment on our children’s higher education wiped out a three-week vacation; we settled for a weekend on the river. The house was damaged permanently when we were compelled to forego painting it two years in succession. Then there was the spring my wife had set her heart on new drapes for every window in the house, but had to settle for a premium payment and a box of dye.
As a whole, those were wonderful years, of course. Perhaps we did become just a bit smug, but I prefer to think of the emotions we felt as pardonable pride. At any rate, there was a certain satisfaction in the belief that we were putting first things first. This belief acted as a sustaining factor through many hardships until the time arrived for our number one son to enter college. Now, we realize that the downward trend of dollar value should have been observed more closely. The value of the sum designed to cover four years’ expenses had so declined that it would cover only two years and four months. At this rate, it appears doubtful that the youngest child can buy, with his four-year fund, more than the right to walk across a college campus.
A Disturbing Experience
To say that I was disturbed by this condition would be the understatement of all time. Since I earn money by devoting a certain amount of time to a particular task, money, to me, equals time. Going a step further, I found that the time required to earn the lost buying power was equal to a year and a half. Adding to this the wounded pride, deflated ego, and loss of direction triggered by such an experience makes the total sum appalling indeed.
A senator with whom I discussed my problem was a great deal less disturbed than I. It seems this senator has a sure-fire remedy for anyone in my condition. His theory maintains that the government (and he as a vital part) should, and very shortly would, make me whole in this matter through direct aid to higher education.
In all truth, I am not a prudish man. If one or all of my children can earn a scholarship, freely endowed by an individual or organization, no one will cheer louder than I. I do not believe, however, that the individual citizen can be made completely whole by dissecting the general public, of which said citizen is a part. In fact, the people of New York, Detroit, or San Francisco are not responsible for the education of my offspring, and I have no desire to see them forced to shoulder this burden. All that I want government to do in this matter is "to coin money, regulate the value thereof"—and otherwise refrain from upsetting the stability of the unit of exchange. If the state will do this, I will finish the job myself.
What Is Inflation?
Working on the assumption that action is the best antidote for a severe blow, I set out at once to re-examine my position regarding inflation. The general facts are well-known, of course. Many remember when a dollar, with fixed gold content, represented a fairly certain buying power. Many remember, too, that when the gold content of the dollar was cut almost in half, it produced nearly double the number of dollars; but each new dollar had only a fraction of the old dollar’s purchasing power.
Americans, in general, know that "cheap money" is a monster swallowing up the life savings, pensions, and retirement insurance of responsible citizens. Many informative papers have been written approaching this subject generally and showing the effect of inflation on a people, nation, or society as a whole. This general information is good to know, but it fails somehow to prepare—properly arouse—the individual for a meeting, at arms length, with this nebulous monster.
Inflation is a personal adversary to all individuals who attempt to manage their affairs in a manner befitting citizens of a free Republic. When the government arbitrarily expands the supply of money and credit—through deficit spending and pumping bonds into the fractional-reserve banking system—the result is much the same as watering the soup when company "drops in" for dinner. In this case, however, the guest may be assumed to be unwelcome, and the host denied freedom of choice.
Irresponsible pressure groups and those who advocate an all-powerful state have sustained themselves for quite some time by watering the responsible citizen’s soup. These inflationists are sustained by the thin soup but their hunger is unappeased. To remedy this, they propose to add more water rather than invest in the means of production. This tends to increase money income more rapidly than real income; and the soup grows thinner for everyone, including those responsible citizens whose work and savings made the product possible in the first place.
When you examine inflation as a personal enemy, able, and almost certain, to take some part of your life, many provocative questions are sure to demand answers. Does inflation happen, or is it planned? If it is planned, are the planners superficial philanthropists who honestly think this is good for the economy; or do they seek to destroy the individual citizen by killing incentive, and making everyone a common ward of the state? Regardless of how you answer these questions, I think you will agree with me that the general public has failed to overcome inflation in general. The implications of the general problem are too remote for most of us to grasp. I believe this incentive-killing monster can and will be controlled when individual citizens recognize the enemy for what it is and launch a personal counterattack.
Concerning this counterattack: if you are fed up (or perhaps underfed would be more appropriate) with watered soup as I am, zero hour is at hand. Henceforth: Eternal vigilance!
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A Means to Progress
The success of the European Economic Community is a classic illustration of the benefits that flow to people when, under forward-looking governments, markets are broadened, trade barriers torn down, and enterprising people invited to capitalize upon opportunity. Economies of international division of labor can be realized, but only with the willingness of people to adjust themselves and find their best opportunities. We must avoid two perils: of becoming so concerned over adjustments that the benefits are lost; and of getting drawn into substituting government-directed trade under quota systems for free market trade. Burgeoning bureaucracies are the impediment, not the means, to progress in the free society.
From the April 1962 Monthly Letterof the First National City Bank of New York
