With its roots in 17th century mercantilism, purchasing power parity was developed by Swedish economist Karl Gustav Cassel (1866-1945). It asserts that exchange rates are in equilibrium when the domestic purchasing power of currencies are the same.
A FFrlO = £1 rate would be in equilibrium if FFrlO bought the same quantity of goods and services in France as £1 bought in Britain. This is a useful concept when comparing international living standards.
G Cassel, "The Present Situation of the Foreign Exchanges - I', Economic Journal, vol. XXVI (March, 1916), 62-65