Archive for the ‘money’ Category

American money in 1897 was counted in dollars and cents:

1 dollar = 100 cents

Ordinary people started to write bank cheques in the 1890s, but for the most part money still took the form of gold and silver coins. There was paper money, but it did not become widely used till a generation later.

The following were the coins in common use (along with their rough value in metric pennies, which have 0.5 grams of silver):

  • Eagle_1897_Rev_Trompeter

    a $10 eagle gold coin

    $20.00 double eagle (2110) – gold

  • $10.00 eagle (1054) – gold
  • $5.00 half eagle (527) – gold
  • $2.50 quarter eagle (264) – gold
  • $1.00 dollar (105) – silver
  • $0.50 half dollar (53) – silver
  • $0.25 quarter (26) – silver
  • $0.10 dime (11) – silver
  • $0.05 nickel (5) – nickel
  • $0.01 penny (1) – copper

So the American penny in 1897 had about the same value as Shakespeare’s penny! Or Leonardo’s soldo. About $0.20 in current money.

Most coins had a woman’s head on one side (Liberty) and an eagle on the other. Most day-to-day money was silver, not gold.

Even though the dollar had 48 metric pennies of silver (24 grams), by this time its value had more than doubled to 105. There was not enough silver and gold to keep up with the growth of industry. Money became more valuable and prices went down, not up. This hurt debtors, like farmers in the west, but made creditors rich, like the bankers in the east.

But 1897 brought some good news for the farmers: wheat sold at 40 pennies a ton, high for those days, and gold was discovered in the Klondike. It was the beginning of good times for everyone.

What people made (in pennies a day):

   133 a day's work for most men, give or take

Most men made a bit more than a dollar a day, working more than nine hours a day and part of the day Saturday. Sundays off. Making more than two dollars a day was rare. Most had never finished high school.

Prices, many from the Sears catalogue itself (given in pennies):

  8000 surrey (horse-drawn carriage)
  2500 graphophone (yes, an early sort of phonograph)
  1995 Encyclopaedia Britannica
  1530 camera
  1150 telephone
  1050 bed for two (iron frame)
   950 overcoat
   800 man's suit
   295 boots
   240 gold ring (14k)
   195 Complete plays of Shakespeare
   195 Bible
   175 eyeglasses
   165 shoes
   168 Webster's Unabridged dictionary
   135 vest
   125 trousers
    75 a metre of velvet
    60 book
    55 tea, kg
    53 butter, kg
    50 dress shirt
    50 record (1 song)
    47 belt
    40 denim overalls
    40 a ton of wheat (high for those days)
    39 underwear
    35 scissors
    31 flour, kg
    31 potatoes, kg
    25 a metre of cloth (to make a dress)
    24 cheese, kg
    22 pepper, kg
    21 cap
    19 eggs, dozen
    12 beef, kg
    12 lock
    12 sugar, kg
    10 strawberries, kg
    10 dozen buttons
    10 magazine (Harper's Bazaar)
     8 pair of socks
     8 knife
     7 milk, L
     5 subway fare
     3 newspaper (New York Times)
     2 send a letter
     1 candle
     1 8 cups of tea

– Abagond, 2007.

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Money in New York is counted in dollars and cents:

1 dollar = 100 cents

Money comes in four forms:

1. Coins made of cheap metal (with their rough value in metric pennies, which have 0.5 grams of silver):

  • dollar (5)
  • quarter (1.25)
  • dime (0.5)
  • nickel (0.25)
  • penny (0.05)

2. Paper notes:

  • 20-dollar note (100)
  • 10-dollar note (50)
  • 5-dollar note (25)
  • 1-dollar note (5)

Paper money did not become common till the 1930s.

3. Cheques: a piece of paper issued by your bank where you write in how much to pay someone and then sign it. Not in common use till the 1890s.

4. Plastic bank cards: Most money exists as numbers in computers. Your card tells the computer at your bank to subtract money from your account and add it to another. Commonly used for amounts over $100 starting in the 1970s.

Yesterday on May 11th 2007 I gathered prices in New York. To make them easy to compare with those of Shakespeare and Leonardo, I have converted them to metric pennies.

To get the original dollars, divide by five; to get current British pounds, divide by ten and to get grams of silver divide by two.

What people get paid in New York (and the presidents, secretaries of state and senators who live in Washington) in metric pennies a day:

   379000 Chuck Prince, head of the largest bank in New York
     7600 president
     6060 surgeon
     3550 secretary of state (foreign minister)
     3100 senator
     3050 judge
     2380 airline captain
     1800 pastor
     1750 computer programmer
     1550 English professor
     1150 undertaker
     1120 teacher
     1050 actor
     1025 store manager
     1015 secretary
      860 fireman
      655 taxi driver
      630 watchman
      500 cook
      430 waiter
      400 bus driver
      400 maid
      400 labourer
      300 beggar

I assumed an 8-hour work day and a 250-day work year. Some get free food, like beggars and cooks. I do not figure that in.

Prices in metric pennies (those above 25 are rounded to the nearest 5):

    65000 car

     6720 Encyclopaedia Britannica
     6100 MacBook computer
     4800 washing machine and clothes dryer
     1900 television
     1665 eyeglasses (mine)
     1665 computer
     1500 bed for two
      950 iPod Nano
      800 man's suit
      620 two-bedroom flat in Manhattan, daily cost
      330 microwave oven
      280 small DVD player
      260 gold ring, 14k
      240 two-bedroom flat in Queens, daily cost
      190 boots
      190 Complete works of Shakespeare (hardcover, Oxford)
      165 see a play
      145 shoes
      130 hard-cover book
      100 tea, kg (makes 400 cups of tea)
       95 Webster's Unabridged dictionary
       95 dress shirt
       95 blue jeans
       85 cheese, kg (Swiss)
       85 belt
       75 film on DVD - "Casino Royale"
       75 butter, kg
       70 chocolate, kg
       70 pepper, kg
       65 haircut
       65 Bible
       55 book (Iliad, Penguin paperback)
       50 see a film
       50 underwear
       50 CD - Beyonce's "B'day" (10 songs)
       50 Barbie doll
       50 telephone
       45 taxi (5 km)
       40 beef, kg
       40 lock
       35 a meal
       30 melon
       30 magazine (The Economist)
       24 scissors
       24 knife
       24 bread, kg
       24 magazine (TIME)
       24 Frosted Flakes, kg
       22 strawberries, kg
       20 magazine (Harper's Bazaar)
       17 Big Mac
       14 salad
       14 beer, L
       12 Coke, L
       11 dozen eggs
       10 subway
        9 candle
        9 yogurt, kg
        8 sugar, kg
        7 pair of socks
        5 song on iTunes
        5 newspaper (New York Times)
        4 Internet service, daily cost
        2 send a letter
        1 4 cups of tea

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The florin of Florence, 3.5g of gold. Used all over Europe by 1300.

The florin of Florence, 3.5g of gold, used all over Europe by 1300, what Grimm fairy tales call a piece of gold.

Leonardo da Vinci mentions money and prices in his notebooks, almost in passing. He tells how much he paid gravediggers, for instance, and how much it costs to have your fortune told.

Leonardo counted money in lire, soldi and dinari:

  • 1 lire = 20 soldi
  • 1 soldo = 12 dinari

It is one soldo, two soldi.

Like the English pound, shilling and pence, these come from the Roman system of of libra, solidus and denarius. But the money in Italy lost its value far more quickly than in England so that by Leonardo’s time the soldi had pretty much the same value as Shakespeare’s penny.

The coins that Leonardo mentions (with their rough value in metric pennies, which have 0.5 grams of silver):

  • ducat (120)
  • florin (120)
  • Rhenish florin (120)
  • scudo (110)
  • grossoni (40)
  • lire (20)
  • carlino (4-8?)
  • soldo (1)
  • dinari (0.083)

Ducats and florins were two crowns each ($26 in current money) , while a lire was a third of a crown.

The ducat was the gold coin of Venice, just as the florin was the gold coin of Florence. Both had 3.5 grams of gold and were accepted all over Europe. They are called “pieces of gold” in the Grimm stories.

The soldo and lire are silver coins. I put six lire to a florin, but in practice it was not that fixed. You might get anywhere between four to seven lire for a florin, depending on the going rate between silver and gold.

Leonardo generally got paid in ducats and florins. His income went up and down a lot, but in the long run he made about 50 to 100 ducats a year. That is equal to about a painting a year.

At the end of his life Leonardo worked for the king of France, who paid him 400 ducats a year. Compare that to Michelangelo, who got between 200 to 450 ducats for his sculptures.

One ducat was spending money for Leonardo, but for one of his students it was ten days’ pay.

In 1499, just before the fall of Milan, Leonardo had 600 ducats in the bank. In his will he gave his brother 400 ducats.

Some prices from his notebooks (in soldi):

    225 a metre of velvet
    140 bed
    140 ring
    120 to bury someone - bier, gravediggers, priests, the works
    100 lined doublet
     45 crockery
     40 cloak
     40 jerkin (up to 120)
     40 pair of hose (up to 120)
     30 for canvas
     23 a metre of cloth (for a shirt)
     22 gardener
     21 sword and knife
     20 anise comfits
     20 cap
     20 glasses
     20 lock
     18 for paper
     16 for gravediggers to bury someone
     13 shirt
     13 jasper ring
     11 sparkling stone
     11 what a student of his could make in a day
     11 to the barber
      6 have your fortune told
      5 pair of shoes (up to 14)
      4 a dozen laces
      3 rent a room for a day
      3 melon
      1 salad

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purchasing power parity

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purchasing power parity (1920) , or PPP for short, is a way to compare the value of money from country to country and from year to year. It compares money against the price of a fixed basket of goods: a set of goods, like food and housing, that gives you an idea how much the cost of living is.

A simple example is The Economist’s Big Mac Index. The Big Mac, which makes for a good meal in the middle of the day, is sold in 120 countries by McDonald’s. It is the same everywhere.

Being the same everywhere, the Big Mac must have the same value everywhere. This gives us a quick way to compare the value of money between countries and between years.

For example, a Big Mac in 2007 costs $3.22 in America and 280 yens in Japan. That means that 87 yens equals one dollar. This is called the real exchange rate.

But no one uses the real exchange rate in real life. It is just a theory. An American who went to Japan to get a Big Mac would have changed his dollars to yens at the nominal exchange rate that banks use, which is currently 121 yens to the dollar, not 87.

But this nominal exchange rate is only affected by things that can trade worldwide, like cars and gold and oil. It is not affected by the price of food, housing, transport or maid service – things close to home.

Some say that the two rates over time come into a rough balance. In fact, The Economist applies this idea to the Big Mac Index to find out whether the dollar will rise or fall against the yen.

But there is more: the Penn effect. This says that things are more expensive in rich countries than in poor ones. With the growth of industry, workers can produce more so they get paid more. But that raises the price of everything else. Including a meal at McDonald’s.

This is different than inflation. Inflation is when prices go up because the government prints too much money. In the 1900s both the dollar and the pound lost most of their value because of this.

Inflation has nothing to do with the Penn effect. Even measured in silver or gold, prices are still higher in rich countries and go up as a country becomes richer.

In Shakespeare’s time a kilo of bread cost 1.3 pennies or 0.66 grams of silver ($0.29). It now costs 5.4 grams or eight times as much. It is not because the bread is eight times better or eight times scarcer. Hardly. It is because people in England now make 100 times more.

But because of the Penn effect, the people in England are not 100 times better off, but only 12 times. A sign of this is that England can support ten times more people now then it could in Shakespeare’s time.

– Abagond, 2007.

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Money in Shakespeare’s time

Money in Shakespeare’s time was counted in pounds, shillings and pence – or pennies:

  • 12 pennies make a shilling
  • 20 shillings (or 240 pennies) make a pound

English money remained that way till 1971, when it was decimalized. Shillings then disappeared and now 100 pence make a pound.

The pound came from the old Roman libra, the shilling from the solidus and the penny from the denarius. That is why “s” is short for shilling, “d” is short for penny and the sign for pound looks like a fancy L.

There was no paper money back then, just silver and gold coins. No copper coins either. The penny was a silver coin down to the time of Napoleon. It was about 12 mm across and had half a gram of silver.

I will express all prices in pennies to make them easier to compare. Divide by 60 to get crowns. And, based on the price of silver, divide by 5 to get current American dollars and by 10 to get current British pounds. As you will see, the cost of living was much lower.

The English coins that Shakespeare mentions (the value of each is given in pennies):

  • angel (120)
  • crown (60)
  • shilling (12)
  • sixpence (6)
  • groat (4)
  • twopence (2)
  • penny (1)
  • halfpenny (0.5)
  • farthing (0.25)

He mentions pounds but only as an amount of money, not as a coin. The one-pound coin was called a sovereign, but I do not see where he mentions them.

Crowns, the most commonly used coins, were made of either silver or gold. Any coin more than a crown was made of gold, while the lesser coins were all made of silver.

Foreign coins that Shakespeare mentions (with the value in pennies):

  • ducat (120)
  • guilder (120)
  • dollar (50)
  • crusado (27-48)

He calls the French ecu a crown.

What people got paid (in pennies a day):

 80,000     the top merchants
 80,000     Duke of Bedford
 54,000     queen (what she spent a day)
   3200     minister
   2000     nobleman
   1200     knights
    600     esquire
     80     merchant
     80     country gentleman
     53     army captain
     29     lieutenant
     17     ensign
     15     army corporal
     16     common parson
     14     army drummer
     13     pikeman
     12     craftsman
     12     actors
     11     landowner (12 hectares)
     10     journeyman
     10     soldier
      9     labourer
      7     watchman
      7     ploughman
      7     maid
      6     shepherd

For those who get food as part of their pay, like maids and soldiers, I added 5 pennies.

For some of these I assumed a 6-day work week or a 300-day work year.

What things cost, given in pennies (“L” means the price is for a litre, “kg” for a kilo):

   1152     tobacco, kg
   1080     portrait
    480     sugar, kg
    480     Bible
    360     horse
    331     officer's cassock
    300     silk hose
    264     cloves
    240     spices, kg
    240     a book of Shakespeare's plays
    171     officer's canvas doublet
    120     hire a coach for a day
     96     pepper, kg
     80     boots
     48     bed
     24     tooth pulled
     15     small book
     12     hire a horse for a day
     12     wine, L
     12     shoes
      6     cherries
      6     butter, kg
      6     beef, kg
      6     scissors
      6     eyeglasses
      6     blue cloth jerkin (vest)
      5     meal at an inn
      4     food for a day
      4     a dozen eggs
      4     a knife
      3     cheese
      3     a dozen buttons
      2     see a play from the gallery
      1.3   bread, kg
      1     see a play from the ground
      1     bed in a tavern
      0.8   candle
      0.5   ale or beer, L

Note that many of these are a middle price of a broader range.

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American dollar

The American dollar ($) or US dollar (USD) is the form of money used in America. It is also widely used for world trade, banking and crime. In fact, most dollars are not in America but abroad.

The dollar is a green piece of paper money worth about 2 grams of silver. For most of the 1700s and 1800s it was a silver coin of about 25 grams.

In 2007 the dollar had a value of about 2.255 grams of silver. That makes it somewhat similar to Plato’s drachma, Cicero’s denarius, Shakespeare’s groat and Alice’s sixpence.

When you write a dollar amount you put a “$” before the number, as in $150.

A 100 cents make a dollar.

Here are the most common denominations:

Coins (made of cheap metal):

  • $0.01 penny
  • $0.05 nickel
  • $0.10 dime
  • $0.25 quarter
  • $1.00 dollar

Notes (made of cloth-like paper): $1, $5, $10, $20.

Americans like to put eagles, women, Native Americans and dead presidents on their money.

A bit of history:

The first dollar appeared in Bohemia in 1517. It was a large silver coin called a Joachimsthaler – or thaler for short – because it came from a mine in Joachimsthal. Joachim, the father of the Virgin Mary, appeared on the coin. In Dutch “thaler” became “dollar”, and so it did in French and English.

Later in the 1500s when the Spanish conquered Mexico and Peru, they turned the silver they found into coins of a similar size called the Spanish dollar or “pieces of eight” – famous in America as pirate money. You could cut it into eight pieces, each with a value of one Spanish real. That is why a quarter is called “two bits” and prices on the New York Stock Exchange were quoted in eighths of a dollar till 2001.

By the 1700s the Spanish dollar was used throughout North and South America and East Asia. Present-day dollars, pesos and yuans all grew out of the old Spanish dollar.

The Spanish dollar had 25.56 grams of silver. In 1792 the American government began to make American dollars, which had a little less silver, 24.056 grams.

American prices changed little from 1635 to 1892, in part because even paper dollars could be turned into a fixed amount of silver or gold. The chief exception was during the civil war in the early 1860s when the government began printing money outright. The dollar lost half of its value, but after the war it recovered.

In the 1900s America changed over to paper money and the value of the dollar has been all over the place. It could still be changed into silver or gold at set rates for overseas trade, but even that ended in 1971 when the American government printed money to pay back its debts from the Vietnam War. In the 13 years that followed the dollar lost three-quarters of its value.

The value of the dollar in grams of silver:

By decade:

  • 1800: 24.05
  • 1810: 24.05
  • 1820: 24.05
  • 1830: 24.05
  • 1840: 24.00
  • 1850: 24.07
  • 1860: 24.07
  • 1870: 21.75
  • 1880: 27.87
  • 1890: 29.45
  • 1900: 48.00
  • 1910: 56.25
  • 1920: 47.94
  • 1930: 94.25
  • 1940: 89.38
  • 1950: 38.88
  • 1960: 34.03
  • 1970: 19.02
  • 1980: 1.90
  • 1990: 7.65
  • 2000: 6.28
  • 2010: 1.54
  • 2020: 1.51

By year:

  • 2000: 6.283
  • 2001: 7.117
  • 2002: 6.762
  • 2003: 6.379
  • 2004: 4.662
  • 2005: 4.251
  • 2006: 2.694
  • 2007: 2.324
  • 2008: 2.075
  • 2009: 2.120
  • 2010: 1.540
  • 2011: 0.886
  • 2012: 0.999
  • 2013: 1.307
  • 2014: 1.630
  • 2015: 1.984
  • 2016: 1.814
  • 2017: 1.825
  • 2018: 1.980
  • 2019: 1.919
  • 2020: 1.514
  • 2021: 1.184 (July 1st)

The crowns that I sometimes use for historical prices on this blog are 30 grams of silver – a bit more than what the dollar was in the 1700s, 1800s and again in the 1960s.

– Abagond, 2007, 2021.

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A crown coin from 1847 showing Queen Victoria

The crown (1526-1900) was a large silver coin that was in daily use in Britain from the middle 1500s till 1900. It is the coin most commonly mentioned by Shakespeare: I will stuff your purses full of crowns.

The crown was a bit bigger than an American silver dollar and had almost an ounce of silver: 30.33 grams, reduced 7% to 28.27 grams in 1816. About $13 at the current 2007 price of silver. It fell out of use after 1900.

The crown was less than a pound but more than shilling:

  • 1.0 crown = 0.25 pounds = 5 shillings = 60 pence (pennies)

The crown first appeared in 1526 as a gold coin. There were both silver and gold crowns from 1551 to 1662, and then just silver ones after that.

The crown was sometimes called a dollar. Shakespeare calls French ecus crowns. All these coins had a similar value, here given as grams of silver:

  • 30.33 English crown (1600s and 1700s)
  • 29.50 French ecu (1700s)
  • 28.27 English crown (1800s)
  • 25.56 Spanish dollar (1700s)
  • 24.06 American dollar (1800s)

Rough values of historical currencies in crowns (30 g of silver):

  • 867: Athenian talent (-400s)
  • 4.2: British guinea (1700s)
  • 4.0: British pound (1700s)
  • 2.0: Venetian ducat (1500s), Florentine florin (1500s), Dutch guilder (1600s), Byzantine solidus (600s), Arab dinar (600s), Grimm’s piece of gold.
  • 1.0: French ecu (1700s)
  • 0.85: Spanish dollar or peso or pieces of eight, the silver coin of pirates (1700s)
  • 0.80: American dollar (1800s)
  • 0.5: Hebrew shekel (-500s), Judas’s piece of silver (maybe)
  • 0.4: Indian rupee (1800s), Alexandrian silver tetradrachm (100s)
  • 0.3: Babylonian shekel (-500s)
  • 0.2: Persian shekel (-400s), British shilling (1700s), American quarter or two bits (1800s)

Smaller currencies in silver pennies (0.5 g of silver):

  • 8.67: Athenian drachma (-400s). It was day’s pay for a soldier in Herodotus.
  • 6.72: Roman denarius (000s), what the King James Bible calls a penny. See Matthew 20:2 and 22:19. It was a day’s pay for labourers in Jesus’s parables, the coin with Caesar’s image on it.
  • 6.4: Spanish real (1700s)
  • 6.0: British sixpence (1700s)
  • 4.5: American dollar (2007)
  • 3.11: denarius of Charlemagne (in common use in western Europe, 800s to 1200s)
  • 3.0: deben of Ancient Egypt (-1250)
  • 1.68: Roman sesterce (000s)
  • 1.6: Athenian obol (-400s)
  • 0.250: British farthing (1700s)
  • 0.125: British mite (1700s)

Something that I am trying out is to express money as crowns. American dollars are known all over the world and are fine if you are talking about the present day. But if you are talking about the past, dollars are terrible because their value changes too much.

I will use  crowns and pennies rounded off to metric values:

  • 1 metric crown (c) = 30.00 grams of silver = 60 metric pennies
  • 1 metric penny (p) = 0.50 grams of silver

This is very close to the crowns and pennies that Shakespeare and Pepys knew: 30.33 grams and 0.50544 grams.

When I use crowns I will convert it to current American dollars on first mention. Likewise, when I use dollars I will convert it to crowns on first mention. (I try to do the same with English and metric units.)

The value of the American dollar in metric crowns through the years based on the price of silver:

By decade:

  • 1800: 0.8017 crowns = $1.00
  • 1810: 0.8017
  • 1820: 0.8017
  • 1830: 0.8017
  • 1840: 0.8000
  • 1850: 0.8023
  • 1860: 0.8023
  • 1870: 0.7250
  • 1880: 0.9290
  • 1890: 0.9817
  • 1900: 1.600
  • 1910: 1.875
  • 1920: 1.598
  • 1930: 3.142
  • 1940: 2.979
  • 1950: 1.296
  • 1960: 1.134
  • 1970: 0.634
  • 1980: 0.1748 *
  • 1990: 0.2549
  • 2000: 0.2094
  • 2010: 0.05134

* I use the 1978 value here since in 1979 and 1980 there was an attempt to corner the silver market. The 1980 value was 0.0632.

By year:

  • 2000: 0.2094
  • 2001: 0.2372
  • 2002: 0.2254
  • 2003: 0.2126
  • 2004: 0.1554
  • 2005: 0.1417
  • 2006: 0.08980
  • 2007: 0.07747
  • 2008: 0.06917
  • 2009: 0.07066
  • 2010: 0.05134
  • 2011: 0.02952
  • 2012: 0.03328
  • 2013: 0.04357
  • 2014: 0.05434
  • 2015: 0.06612
  • 2016: 0.06047
  • 2017: 0.06275 (January 9th)

– Abagond, 2007, 2017.

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