The problem with using pricing indexes is that costs have not risen uniformly in all areas, and in some have declined. Let me use a trivial example: I paid nearly $5,000 for my first personal computer. I could buy a whole small business's worth of top-of-the-line computers for that money today.

We need to remember that many items that were dirt cheap "back then" were cheap because labor was plentiful and wages were low. Others, like land, were cheap because they were plentiful (40 acres could be yours simply for settling on the land for 5 years and building a house on it). Some of those items today (houses, furniture made of real wood, services) are expensive because the cost of labor has gone way up, or because demand has driven up the price (land). Additionally, cash money was less of a means for transacting business then than it is now, with much done in trade or with "virtual" accounting like bonds and notes. In New England, for example, families would keep account books for services rendered to other families in the neighborhood. If I helped you build your barn, you then "owed" me for an equivalent amount of work on some other project. This custom was not peculiar just to New England from the evidence I've seen. Paper money was so disreputable in America prior to the late 1800s that notes were often referred to as "shin plasters" because they weren't worth the paper they were printed on in an era when any bank could issue notes, fail and leave the note holder with worthless scrip.

So when asking how much $1,000 was worth in 1860, for example, there are many variables to take into account. It's usually better to use lists like the one offered here of prices paid in the era before making judgments simply with a multiplier.

Bill Cross

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