Mary's Library

Wednesday, January 25, 2006

The Problem of Money and Time

I read a lot of novels written in the 18th and 19th century and in many of them the problem arises of the relative value of a currency then and now. There are tables and algorithms that purport to translate say 1850s pounds into present-day dollars. But that’s only the beginning.

For example, before the invention of the cotton gin, picking the seeds out of cotton bolls was the devil of a job. So cotton was much more expensive in the early 1800s, when Jane Austen was writing PRIDE AND PREJUDICE (1813), than it is now. Eli Whitney’s 1793 invention was soon to result in a dramatic decrease in the cost of cotton, but in Jane Austen’s day those wispy muslin dresses girls wore cost more than you’d expect. Silk was cheaper.

In fact, until the 20th century clothes were much more expensive than they are today. So when you are figuring out how far the income would have gone that Mr Bennet was going to be able to leave to his family when he died you have to take this sort of value change into consideration. Rent was cheap, food was cheap, clothing was off the charts.

John Steele Gordon addressed this problem years ago in the column he writes for American Heritage Magazine called “The Business of America.” In the May/June 1989 issue, Gordon tells of the 1917 sale of a Fifth Avenue mansion to Cartiers for $1.2 million. Instead of taking the money, the owner exchanged his house for a “two-strand Oriental pearl necklace.” The house and the necklace, in other words, were of equal value in 1917. But by 1989 their relative value had changed considerably.

Guess who came out ahead in this deal, when viewed from 70 years later. At the time Gordon was writing, the mansion, now Cartier’s New York City store, was valued at about $20,000,000. That was 16 years ago and as we all know the cost of Manhattan real estate has increased a bit since then. Meanwhile, the necklace, the whereabouts of which is unknown, was worth about $200,000. In other words, in 1989 the mansion was worth at least a hundred times as much as the pearls. You see the problem.

The article can be found here:


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