When the attempt is made to relate previous century money to modern values, complications arise for several reasons: (l) the inflationary factors of modern times, (2) the use of decimal coinage in the present day, and (3) that American dollars did not exist in colonial times. Also, in early United States history there was state banking in a manner not common at present. Banking and money management has drastically changed.|
'It is not easy, to make meaningful relationships between the purchasing power of money at any time in history and its value now. Perhaps the pound in the 1700's would have the purchasing power of $100 in 1970. The American dollar in the 1800's would have as much as twenty-five times the purchasing power of the same dollar in the mid-1970's.'
'Any general factor is misleading and any attempt to establish relative value purely conjectory. This is because a great number of things in common use now were unknown and unpriced in much of the period covered by The Grandfathers.'
It should also be kept in mind that earlier generations of Americans were more self-sufficient than those of the present day. That is, they produced a great amount of food on their own land, they wove their own cloth and, in general, had less need for cash. Today, we are strictly a money economy in which most of the things we use and purchase are produced away from the home and there is no bartering for commodities.
A good comparison is land. Land that was purchased from the government under the homestead provision at $1.25 an acre, as first class land today would bring many times that sum. Land engulfed in urban developments brings astronomical dollar prices.
Today, most of the descendants of The Grandfathers produce little from the land and work for others in a Society that operates on a salary or wage basis; a situation undreamed by our ancestors.+
+ The writer is indebted to George Malcom Thompson, who in the preface to his book: Sir Francis Drake, (Wm. Morrow & Co., N.Y. 1972) discusses this problem in the Author's Notes.