Free To Choose 1980 – How to Cure Inflation – Tobacco


There is hardly anything that hasn’t been used for money; rock salt in Ethiopia, brass rings in West Africa, cowry shells in Uganda, even a toy cannon. Anything can be used as money. Crocodile money in Malaysia, absurd isn’t it? That beleaguered minority of the population that still smokes may recognize this stuff as the raw material from which their cigarettes are made. But in the early days of the Colonies, long before the United States was established, this was money. It was the common money of Virginia, Maryland and the Carolinas. It was used for all sorts of things. The legislature voted that it could be used legally to pay taxes. It was used to buy food, clothing and housing. Indeed, one of the most interesting sights was to see the husky young fellows at that time, lug 100 pounds of it down to the docks to pay the costs of the passage of the beauteous young ladies, who had come over from England to be their brides. Now, you know how money is. There’s a tendency for it to grow, for more and more of it to be produced, and that’s what happened with this tobacco. As more tobacco was produced, there was more money. And as always- when there’s more money, prices went up: inflation. Indeed, at the very end of the process, prices were 40 times as high in terms of tobacco as they had been at the beginning of the process. And as always… when inflation occurs, people complained. And as always, the legislature tried to do something. And as always…to very little avail. They prohibited certain classes of people from growing tobacco. They tried to reduce the total amount of tobacco grown. They required people to destroy part of their tobacco. But it did no good. Finally, many people took it into their own hands, and they went around destroying other people’s tobacco fields. That was too much. Then they passed a law, making it a capital offense, punishable by death, to destroy somebody else’s tobacco.

1 thought on “Free To Choose 1980 – How to Cure Inflation – Tobacco

  1. There is nothing new under the sun (to quote Solomon) Milton Friedman cites a good example. Wish so much there was at least one, someone today who could shine the light of good sense as Milton Friedman once did.

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