How do I assess the value of old money?

February 3, 2008 1:48 PM

How do I assess the value of old money?

How much would five pounds sterling in 1649 be in today's dollars? Is there a site for this sort of thing?

posted by andythebean to work & money (13 comments total)

I don't know about 1649, but in case you're just saying that as an example rather than exactly what you want, this paper from the House of Commons Library (PDF) claims that the "purchasing power" of a pound in 1750 was approximately 150 times the purchasing power of a pound in 2005.

I don't think that this sort of question is really well-defined enough to have any real answer, though, without stating a bunch of assumptions about what is actually meant by "value" or "purchasing power". And those definitions might not match up between you and this paper (or any other source).
posted by Flunkie at 1:59 PM on February 3

There are several -- you can google "inflation calculator" to find them -- but I'm not aware of any that stretch back to the 17th century.
posted by danb at 2:00 PM on February 3

I've found this which is close to what I want but I would like it for pounds.
posted by andythebean at 2:12 PM on February 3

well, with some revised googling I found it. In 2007, £5 from 1649 is worth £449.59 using the retail price index.
posted by andythebean at 2:16 PM on February 3

The problem with long-period inflation calculators is that the basket of goods has changed drastically. Leaving aside magic and wonders like Ask Metafilter, how would you compare the value of modern spectacles to what was available in 1649? Toilets and toilet paper with whatever horrible thing you would have used in the 17th Centurey? Electric lighting to smoky torches? The year-around availability of pineapples and mangoes? And so on.

It's even difficult to compare a period of a couple generations (at least if there's significant technical change) -- what's the value of 1950-style medical care compared to what's available now -- much less hundreds of years. Yes, you can come up with some notional value, but that doesn't tell you the story of that those values actually mean.
posted by chengjih at 2:36 PM on February 3

chengjih has the right point. We need more data, here.

It's impossible to figure out what you're asking (beyond raw inflation calculators) without more data.

£5 from 1649 may be worth £449.59 in today's sterling. But, at that time, £449.59 could have been a small fortune to a family based on the relational goods it could acquire.
posted by generichuman at 2:59 PM on February 3

To calrify:

£449.59 buys you a decent LCD television now.

£449.59, even translated as £5 in 1600s sterling might have fed a family for a year, given than televisions didn't exist.
posted by generichuman at 3:01 PM on February 3

To clarify, I am reading The Maryland Toleration Act. In it, fines for certain behavior are set. I wondered how substantial the £5 fine for "utter[ing] any reproachfull words or Speeches concerning the blessed Virgin Mary the Mother of our Saviour" really was.
posted by andythebean at 4:19 PM on February 3

Maybe a better question would be "how does £5 in 1649 relate to average incomes in that era?" According to the link, In 1625 The Clerk to the Market salary was 13d. [pence] a day.
Now, in old English money there were 240 pence per pound, so it would take this person about 93 days' worth of work time to make five quid. If you then take into account that his daily food costs were 6d., then it would take over 170 days' worth of work to make up that money with the remaining 7d.

It would be cheaper not to make said utterances.
posted by lowlife at 4:56 PM on February 3

The problem with long-period inflation calculators is that the basket of goods has changed drastically. Leaving aside magic and wonders like Ask Metafilter, how would you compare the value of modern spectacles to what was available in 1649?

The paper that I linked to (first comment in this thread) addressed this issue by not comparing "bread in 1750" to "bread in 2005", but "common household purchases in 1750" to "common household purchases in 1751", then "common household purchases in 1751" to "common household purchases in 1752", and so on, all the way up to "common household purchases in 2005".

The idea is that, even though the basket of goods for 2005 is not directly comparable to that of 1750, it is directly comparable to that of 2004, because the basket changes very, very slowly.

Whether this is reasonable or not is another question, but it's not like the issue you've raised hasn't been thought about and accounted for.
posted by Flunkie at 5:11 PM on February 3

In addition to the considerations above, you might also think about time-value compounding. To get from $5 to ~$449.59, it would only have to grow at 1.26% per year. Given that there are roughly 358 periods, a slight change in the rate can have a huge impact:

$5*(1+r)^359
1% --> $176
2% --> $5,996
3% --> $197,105
4% --> $6,264,775
5% --> $192,636,718
posted by fourstar at 5:12 PM on February 3

... also, for perspective's sake, in 1626, the Manhattan was purchased for $24 USD.
posted by fourstar at 5:14 PM on February 3

The Manhattan thing is so vast an oversimplification as to be essentially meaningless (at best). See The Island at the Center of the World for details.
posted by Flunkie at 5:22 PM on February 3