Defining the American Dream

What Things Used to Cost

Posted on Monday, September 20, 2010

The cost of living in America has gone up about fifteen fold since the Declaration of Independence was signed in 1776. Of course, not all prices have risen at the same rate.

The value of coffee has increased fifteen times from its price 234 years ago. This is a similar increase to 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.” Finally, we conferred with the Commodities Mercentile Exchange in order to evaluate historical prices of commodities and to determine which commodity would best reflect inflation over time.
In our description of each period, we provide a historical background and a list of some of the more interesting prices. To give perspective, we provide the price of coffee for each year across the timeline, as well as the estimated historical purchasing power of a dollar in that year.

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.

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.


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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.


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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.

Also Read: The Flaw In AIG’s Escape Plan


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1875

-A necktie “designed to supersede all other methods for fastening the bow to a turndown collar” cost $0.10
-A dozen pairs of Levi Strauss blue jeans cost $13.50 (1874)
-One pair of shoes cost $0.98 (1875)
-One suit cost $10.00 (1875)
-One opera ticket for “The Marriage of Figaro” cost $1 (San Fransisco, 1875)

-One pound of Coffee cost $0.25

-$1 in 1875 = $20.20 today

Following the Civil War, there was an unprecedented boom in US production compared with. This growth, however, was stalled by the Panic of 1873, a major economic recession. Apart from this downturn, the country underwent rapid expansion as the population over doubled from 1860 to 1890, from 31.5 million to 76 million. Most professions required a 60 hour work week, which paid anywhere between $1.60 per day (a fireman in Massachusetts) to $4.64 per day (a glassblower in New Jersey.)


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1900

-”Tooth soap” cost $0.25 (1896)
-Board at Clemson College for 40 weeks cost $59 (1896)
-A home on Flatbush Ave in Brooklyn, NY cost $7,000 to $12,000 (1901)
-One Oldsmobile cost $650 (1904)

-One pound of coffee cost $0.15

-$1 in 1900 = $26.40 today

The beginning of the 20th century is known as the Progressive Era. The lower classes got fed up with the abuses of the trusts and the railroad companies and pushed for legislation against corruption and poor working conditions. During this period, the United States continued to see a growth in industry, and the number of non-farming jobs increased from 800,000 million to 2.2 million from 1900 to 1920. Similarly, disposable income rose from $20 billion to $71.5 billion. Kodak released its famous “brownie” camera in 1900. It cost $1
1925

-Total annual cost of Cornell University, including living expenses was $1,400 (1927)
-A Harley-Davidson motorcycle cost $235 (1927)
-A camera cost $80 (1928)
-A Chrysler Imperial Sedan cost $2,995 (1928)

-One pound of coffee cost $0.47

-$1 in 1925 = $12.20 today

In 1925, America found itself in the midst of the “Roaring Twenties,” which saw a heavy emphasis on rampant business growth and consumerism. In 1925, more than 40 million Americans went to the movies each week, there were 20 million cars on the road, and owning a radio was, for most Americans, as important as owning a television is today. In this year, Chesterfield Cigarettes began marketing to women, and Hormel introduced its first processed meat in a can, which would later be called “Spam.”


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1950
-Monopoly the game cost $4 (1950)
-One bottle of aspirin cost $0.54
-A Chevy Corvette cost about $3,000
-A one-way flight from New York to California cost $88

-One pound of coffee cost $0.79

-$1 in 1950 = $8.91 today

In the 1950’s the American industrial economy was changing after World War II. With millions of American soldiers now back from the war and settling down with the aid of the G.I. bill, as well as the new 40-hour work week resulting from the New Deal, the economy saw the American middle class heavily bolstered, and a mass migration to the suburbs. In 1950, there was one car for every 3.7 Americans and 5 million homes had television sets, with only 45 million still containing radios. In this year, Coke owned 69% of the cola market.

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1975

-An Apple II computer cost $1300 (1977)
-A six-pack of beer cost $1.49 (1978)
-A microwave cost $168 (1978)
-One movie ticket cost $1 (Chicago, 1978)

-One pound of coffee cost $1.40

-$1 in 1975 = $3.98 today

In in the mid-1970’s, the United States was experiencing one of its worst economic crises since the Great Depression. Oil prices skyrocketed and, in 1978, the price of regular gasoline went above $1.00 per gallon for the first time. In 1975, 120,000 Americans declared bankruptcy and unemployment hit 9.2%. That same year, McDonald’s opened its first drive-thru restaurant.


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2000

-A 12 pack of Bud Light bottles cost $8.99 (2003)
-A Samsung 42” television cost $999 (2004)
-One movie ticket in Chicago cost $7.50 (2004)
-One year’s tuition at St. John’s College cost $30,570 (2004)

-One pound of coffee cost $3.54 (2000)

-$1 in 2000 = $1.25 today

When the United States entered the 21st century, the economy was booming thanks to a “dot-com bubble.” Unfortunately, conditions took a turn for the worst as the tech bubble burst in 2001. The period is marked by many other characteristics however, such as the fact that 60% of American households owned a personal computer. 2000 also saw the beginning of the modern “green” movement, and Honda released its first hybrid vehicle.

-Charles B. Stockdale, Michael B. Sauter, Douglas A. McIntyre


Read more: The History Of What Things Cost In America: 1776 to Today - 24/7 Wall St. http://247wallst.com/2010/09/16/the-history-of-what-things-cost-in-america-1776-to-today/3/#ixzz104ePAbcZ



Read more: The History Of What Things Cost In America: 1776 to Today - 24/7 Wall St. http://247wallst.com/2010/09/16/the-history-of-what-things-cost-in-america-1776-to-today/2/#ixzz104eJOjGd

Read more: The History Of What Things Cost In America: 1776 to Today - 24/7 Wall St. http://247wallst.com/2010/09/16/the-history-of-what-things-cost-in-america-1776-to-today/#ixzz104eCvVxS


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