History of the Parity Concept

by Fred Lundgren & Jerome Friemel

The subject of parity has a long and significant history. At one time, organizations such as the National Farmers Union and the National Farmers Organization promoted an awareness of parity. To a small degree, those organization still do today.

More recently, the American Agriculture Movement has promoted, and continues to promote, the parity concept. However, the use of the "parity" term is much older than any farm organization. The word "parity" traces back to the Latin words "parium" and "paritas," that mean justice and equality, or a condition of equilibrium.

In the 18th century, a group of French economists, doctors, and business owners called the "Physiocrats' first brought the concept of parity into the arena of economics. They concluded that trade and industrial commerce changed the form and location of wealth, but not the amount of wealth in existence. Thus, trade and commerce were necessary spin-offs of original raw material wealth production as technology increases the efficiency of raw materials usage. Most important from a historic perspective, they recognized that wealth originates from nature.

Dr. Francois Quesnay, the personal physician to King Louis XV of France, was the most prominent thinker among the Physiocrats. He and his followers charted the economy in a publication called "Tableau Economique." Another prominent Physiocrat was Pierre Samuel DuPont de Nemours. DuPont immigrated to America and started the family that founded the DuPont chemical and financial empire.

In the last decade of the 19th century, William Jennings Bryant and the Populists brought the parity concept into the debates on American monetary reform. They demanded the free coinage of silver at a par exchange value of 16 to 1 with gold.

In 1921, professor George M. Warren officially brought the parity concept into agricultural policy debates in the form of USDA Bulletin 999, "Prices of Farm Products in the United States." Warren was first to compare the movement of farm gate prices, as published by the USDA, to the other segments of the domestic economy. George Peek of the Moline Plow Company later popularized the parity concept. Eventually in the 1930s, "New Deal" federal farm programs incorporated parity as part of those programs.

This cumulative body of knowledge led to the formation of a "parity think tank" in 1937 called the Raw Materials National Council. An assortment of raw materials producers, including farmers, miners, and lumbermen, organized the Council to educate Congress and the American public about the importance of a structurally balanced or "par" economy. The economic analyst for the Council was Carl H. Wilken, who came to the Council as president of the Progressive Farmers of Iowa.

Wilken, along with Dr. John Lee Coulter, Fargo, ND, Dean of North Dakota State University's agricultural programs, and Charles B. Raw, Chicago, an engineer for Sears, Roebuck & Company, discovered the formula behind the 1-1-7 ratio. This formula states that $1 of gross farm income generates $1 profit and savings in the economy and $7 of national income in the economy on an earned basis.

Wilken and other members of the Council, along with the States Commissioners and Secretaries of Agriculture, convinced the U.S. Congress that the formula, if extended to include all raw materials, held the key to America's sustained prosperity. They argued that the performance of the national economy in this century, and their analysis of it, revealed a natural economic law. Their efforts led to the passage of the so-called "Parity Laws" in 1941, which remained in effect from 1942 through 1952.

After Wilken's death in 1968, his most able student, Arnold Paulson of Granite Falls, Minnesota, a former spokesman for the Junior Chamber of Commerce, picked up the torch. In 1971, Paulson, and several of his close friends enlisted a score of men and women into a new organization. This organization was called "NORM," an acronym for the National Organization for Raw Materials. Today, the concept of a par economy still lives in the hearts and minds of thousands of Americans through the work of the NORM organization.

Note: Lundgren and Friemel wrote a book, The Nature of Wealth, that is currently out of print. The book provides mathematical proof of the parity concept. It brings the logic of parity into the 21st Century. It is mandatory reading for both supporters and skeptics and is available from many university and city libraries. NORM has a lending copy for interested readers.