Monday, June 25, 2012

My ancestor had $1000 in 1860 -- was he rich?

As genealogists, we need to make the world of the past as understandable as possible to our present-day audience. One way is to translate dollar values from, say, 1800, into current money. Sounds simple? It's not.

According to Westegg, $100 in 1800 would be worth $1265.30 in 2010.

According to the Minneapolis Federal Reserve Bank, $100 in 1800 would be worth $1284.90 in 2010.

According to Measuring Worth, $100 in 1800 would be worth something between $1730 and $3,050,000 in 2010. It depends on exactly what you're valuing, and which of ten different measures you work with.

One problem with these translations is that the passage of time changes things in many dimensions. You could buy bread in both 1800 and 2010, but it was relatively more expensive in 1800. Not even a multibillionaire in 1800 could buy a car, a liver transplant, or a post on Facebook. Few people in 2010 could buy a buggy whip -- or a comfortable place to spend the night in a strange city without presenting an identity card. Not only have the items of the typical "market basket" changed, so have their values relative to one another. So even the best translations are unlikely to agree.

Of the three reputable sites above, Measuring Worth offers the most detailed and thoughtful explanation. Lawrence H. Officer and Samuel H. Williamson, both economists at the University of Illinois at Chicago, explain that it works best to use different measures to compare commodities, income/wealth, and projects over time. "There is no single 'correct' measure," they conclude, "and economic historians use one or more different indicators depending on the context of the question." On the site they use ten different measures -- check it out! You can measure by the Consumer Price Index or the proportion of Gross Domestic Product or the average laborer's wage, and get different results that highlight different aspects of the changes over time. (See the gasoline example at the bottom of this page: among other things, we learn that a gallon of gasoline is only one-sixth as great a part of the Gross Domestic Product now as it was in 1949.)

So even this piece of genealogical context isn't a simple lookup! I would suggest a couple of ways to use these tools without stretching them to absurdity, confusing your readers, or having to go back to school and major in economics:

(1) Focus on shorter time intervals. If your research target owned $200 worth of real estate in 1850 and $1,000 in 1860, how much of that was true gain and how much was inflationary? Many of the conundrums of long time comparisons do not apply to short-term comparisons, because the economic world didn't change radically during any single decade.

(2) Use cross-sectional comparisons -- where your ancestor stood relative to others, rather than trying for a precise dollar value. For instance, in the agricultural schedule of the US census for 1860, you can learn the cash value of your research target's farm -- and use Kennedy's 1864 statistical compilation of agricultural information from that census to calculate the average (mean or median, it could make a difference) value of a farm in their county. It may be more pertinent to learn how their farm stacked up against neighbors in that time and place than to get a dollar value in 2010, when farming is no longer such an omnipresent occupation.

In any case, studying the various comparisons gives us another sense of how different the past really was.


Lawrence H. Officer and Samuel H. Williamson, "Measures of Worth," Measuring Worth, 2010 (www.measuringworth.com/worthmeasures.php : accessed 24 June 2012).


Joseph C. G. Kennedy, Agriculture of the United States in 1860 (Washington DC: Government Printing Office, 1864); digital image, Internet Archive (http://archive.org/details/agricultureunit01kenngoog : accessed 24 June 2012).



Harold Henderson, "My ancestor had $1000 in 1860 -- was he rich?" Midwestern Microhistory: A Genealogy Blog, posted 25 June 2012 (http://midwesternmicrohistory.blogspot.com : accessed [access date]). [Please feel free to link to the specific post if you prefer.]

2 comments:

Judy G. Russell said...

Great post, Harold -- particularly the advice to compare folks within the area. Somebody with that $100 could be doing well in one place and poorly in another!

Michael Hait said...

Another discussion of this subject is in Estate Inventories: How to Use Them by Kenneth L. Smith (Masthof Press, 2008), which I picked up at Heritage Books (at IGHR). I just read this chapter yesterday.

One key point to remember is that historic prices for various goods or services were not always the same relative to each other as they are today. We have to remember this aspect when considering the wealth of someone from 200 years ago.

This point is also the wisest part of your post and Judy's comment. Instead of trying to convert 1800 dollars to 2012 dollars, compare those 1800 dollars to other 1800 dollars in the same area. After all--as I have become acutely familiar with since moving from an area with a $75000 median income to an area with a $35000 median income--wealth is really measured as relative to your neighbors, not in dollars and cents! :)