How much was 20,000 pounds worth in dollars in the 19th century?

Question

As you may have guessed if you're versed in Verne, the derivation of this question is from Around the World in 80 days, published in 1873. Many thanks. And I'd really appreciate knowing how you calculated this conversation rate (inflation and currency). Appreciate it!

Answer 1

1801 or 1899? Nominal conversion or purchasing power parity?

The easy answer is to use the price of gold in pounds and dollars for the time you want. That gives you the nominal exchange rate.

Britain went to the gold standard in 1844 with 7.32 grams of gold per pound:

http://en.wikipedia.org/wiki/Gold_standa...

America has had more standards, for some time including both gold and silver at standard prices. In  both 1837 and 1900, a dollar was pegged to 1.505 grams of gold. (During the Civil War, the dollar floated)

Silver, being another monetary metal, also makes a reasonable basis for computing nominal exchange rates for portions of the 19th century, but the price of silver varied significantly during this century:

http://goldinfo.net/silver600.html

And then, of course, if you were to ask how much it could buy in terms of standard of living, that clearly varies from place to place - cost of living in the U.S. was higher than that in England for just about anything except unimproved land (labor was much more expensive in the U.S.)

So, if you are talking about the value of a bet made in 1873, I'd use gold; and 20,000 pounds would have bought you around $100K in 1873 dollars.

The current price of gold is about $30/gram:

http://www.goldprice.org/gold-price-per-...

so this on the order of $4.4 million dollars.

http://en.wikipedia.org/wiki/US_Dollar

(which is not quite what normal inflation rate computations will give you. Take a look at this site - it has everything you could want:

http://www.measuringworth.com/exchange/

http://www.measuringworth.com/worthmeasu...