The value of coffee has increased fifteen times from its price 234 years ago. This is similar to the decrease in the value of the dollar, based on the purchasing power of a dollar and the consumer price index.
The value of land has risen a great deal in certain parts of the country – particularly those areas that were rural and now are parts of big cities. It was impossible to know 150 years ago that land in New York’s Central Park would be worth several thousand times what it was in 1776. Conversely, products like whale oil, once used to light homes, now have no legal value at all. Powdered wigs have almost certainly dropped in value now that they are out of fashion.
Inflation is amazingly variable from decade to decade, from product to product, and service to service. 24/7 Wall St. set out to illustrate this by looking at the costs of a number of items which were, and in some cases still are, a part of everyday life in America. We examined prices of common goods every 25 years, beginning in 1776. Some items could not be tracked over the entire timeline. Levi Jeans were not available until the 1870s. Similarly, most Americans do not own horses now, but many did in the late 18th and early 19th Centuries. In this way, the goods and services we examined changed over time.
Many economists and Governors of the Federal Reserve argue that inflation is dead. They are worried that America could enter a period of high unemployment and falling prices, like the deflationary era that ruined the Japanese economy nearly 20 years ago. And these experts might be right. However, they are likely to only be right briefly.
Low interest rates, high joblessness, and a faltering housing market may keep the prices of many of the things Americans buy and sell in everyday life low for the next few years, but economies recover and occasional shortages of critical products like oil can turn periods of modest price increases into times of hyperinflation. Rapidly rising prices for oil and other goods drove inflation up by 15% in 1980. Mortgage rates were 18%. Some of this was due to the tremendous increase in the price of oil which began with the twin oil import crises of 1973 and 1979. Petroleum was such a crucial part of American consumer activity and industrial production that the entire cost of living and doing business was affected in the late 1970s – almost overnight.
If the 24/7 Wall St. analysis of 234 years of the cost of living in America shows anything, it is that the prices of goods and services can rise rapidly for a number of years, and then, quickly, a once-important item becomes of no use at all. That is the “buggy whip” phenomenon. The horse and carriage were rapidly replaced by the automobile just after the beginning of the 20th Century. On the other hand, the value of commodities like land and gold can rise almost indefinitely. This is because they are virtually finite assets, unlike oil, and therefore are perfect hedges for when the GDP turns lower and stays troubled for a number of years.
In our analysis, we relied on “The Value of a Dollar: 1600-1865″ and “The Value of a Dollar: 1860-2004,” considered to be among the the definitive sources for how the value of the dollar fluctuates and, looking at historical prices of goods and salaries, how it impacts the economy. We also referred to
measuringworth.com , a site dedicated to making available “the highest quality and most reliable historical data on important economic aggregates.”
1776
-One ton of iron cost $63.73 (Philadelphia, 1775)
-Twenty gallons of orange peel cordial cost 3 pounds (Richmond County, VA, 1776)
-One checkerboard with pieces cost 2 shillings, 6 pence (Richmond County, VA, 1776)
-One double-barreled gun cost 3 pounds (Richmond County, VA, 1776)
-One pound of coffee cost 0.13 silver dollars (Boston, 1775)
-$1 in 1775 = $29 today
At the time of the American Revolution, the United States was still primarily using the British pound as its currency. As the war dragged on, the colonies began printing a vast amount of paper money (about $450 million) to cover costs, causing extreme inflation. This, combined with shortages resulting from British blockades, made the prices of many goods rise significantly.
1800
-One dictionary cost $0.50 (1797)
-One 12-volume encyclopedia cost $20 (1820)
-One chest of drawers cost $2 (1802)
-One cow cost $10 (Charles County, MD, 1804)
-Total cost to build the President’s house for South Carolina College was $8,000 (1806)
-One Pound of Coffee Cost $0.25
-$1 in 1800 = $17.60 today
In the early nineteenth century, the United States still has a immature economy. The country’s money supply did not exceed $30 million, which was less than $6.00 per citizen and only $20 million more than the combined amount held between all of the colonies twenty-five years earlier. The price of many goods increased due to the country’s poor infrastructure. It cost $9.00 to ship a ton of goods 3,000 miles from Europe to America. To move the same amount of goods 30 miles from America’s coast inland, it cost the same amount.
1825
-Ten pounds of sugar cost $0.20 (1822)
-One acre in a tract of land of over 400 acres cost $2.00 (Sumter, SC, 1823)
-One bushel (35.2 liters) of potatoes cost $0.12 (1829)
-One set of blue china cost $8.00 (1828)
-One cow cost $12.00 (1829)
-One Pound of Coffee Cost $0.17
-One dollar in 1825 = $22.40 today
The US economy of 1825 was marked by innovation and expansion. The development of canal systems and railroads opened access to the country’s interior and, as a result, mass-produced goods became available to many who lived away from the industrial cities and domestic trade increased. In addition to this, about 100,000 Europeans were immigrating to the United States each year around this time, many of whom were skilled artisans, thereby stimulating the economy greatly.
1850
-One bottle of port cost $0.11 (Greenville County, SC, 1847)
-One piano cost $195 in 1847
-A routine doctor’s visit cost $2 (Florida, 1852)
-A new home in Brooklyn, NY cost $2,500 (1853)
-One pound of coffee cost $0.80
-$1 in 1850 = $28.30 today
By 1850, the United States’ economy was doing extremely well thanks to the success of agriculture in the South and manufacturing and commerce in the the North’s. The nation’s population grew about five times its own size from the beginning of the century and, furthermore, labor productivity increased dramatically. Between 1840 and 1860, the country more than doubled its agricultural output. Its mining and manufacturing industries approximately tripled their worth over this time period.
Marvin Heemeyer of Granby, Colorado was a profoundly frustrated muffler repair man. In the late 1990s–after years of protests, petitions, and town meetings–it became obvious to the 52-year-old that he was entwined in a gross miscarriage of justice. His business was ruined by some shady zoning changes, and Heemeyer contended that mayor and city council were corrupt. Even as he was forced to give up his legal fight and sell his land, he hatched one last plan to secretly retool his muffler shop to serve a single malevolent purpose: to construct a machine that would allow him to exact his revenge upon those who had wronged him.
-Monopoly the game cost $4 (1950)
