How much was money worth back then?

[kev67]

While I was reading the book, I wondered how much the sums of money mentioned would be worth in today's prices. For example, when Pip wants to buy some furniture to move in with Herbert, Jaggers first asks if he wants £50 but Pip says he does not need near so much. Then Jaggers asks if he wants £5 and Pip thinks this sounds too little. Finally they agree on £20 iirc. Several years later, after turning twenty-one, Pip receives £500 a year, of which he decides (very generously) to donate half to funding Herbert's career. Towards the end of the book, Pip is nearly arrested and taken to debtors' prison for owing about £115. Miss Haversham writes a cheque for £900 to complete the secret funding of Herbert's career and changes her will to leave Matthew Pocket £4000.

I imagined inflation had made £1 then worth somewhere between £500 and £1000 today. Eventually, I decided a pound was worth about 500 times back then than it is now. £25,000 would seem like an awful lot to spend on furniture to someone straight out of Pip's background, but £2,500 is probably not enough if you wanted to buy new, good quality furniture. If Magwitch funded Pip the equivalent of £250,000 a year, that would enable a very luxurious standard of living. It is also an amount that would enable you to be very generous. That also sounds like the sort of money you would need to buy your way into a capital investment firm (Herbert said he wanted to become a capitalist). Finally, £57,500 sounds like the sort of serious debt for Pip to build up, which a blacksmith could possibly afford to pay, although I am not sure Joe paid the entire debt or just the immediate debt. I also noticed, that Charles Dickens' magazine, All Year Around, cost 2d, which multiplied by 500 would be about £4.00. That seems reasonable.

However, this does not seem to be the case. It seems like there were periods of inflation in the nineteenth century, but these were matched by periods of deflation. Prices were kept stable because currencies were pegged to the gold standard. According to the Bank of England (http://www.bankofengland.co.uk/education/Pages/inflation/calculator/flash/default.aspx) website, prices have only risen by 79 times since 1820. I am really surprised by that. That makes Pip's annual income about £20,000 after giving away half. There's a big difference between £20,000 and £40,000. £40,000 a year tax free is pretty good, but it is not outrageous. Finally, Pip's debts only amount to £9,085, which he could pay off in several years by being frugal and working hard. It sounds like Pip was not as profligate as I thought.

[kev67]

Interestingly, someone (http://everything2.com/title/The+Value+of+Money+in+British+Literature) has calculated the equivalent of Pip's annual income of £500 as £23585.82 or $34,199.44 in 2001 prices. That does not sound excessive, but Jane Eyre's salary as a governess was £30 a year, the equivalent of £1465.82 or $2125.44 in 2001. I suppose Jane Eyre's terms and conditions included meals and lodgings, but that sounds very low. Mr Darcy's income of £10,000 a year equated to £326,514.98 or $473,446.72 in 2001. I am sure that would not be enough to run a massive stately house and pay all their staff these days.

[OrphanPip]

You have to consider how poor poor people were at the time. William Booth, the sociologist/reformer and founder of the Salvation Army did extensive research in the London slums at the end of the 19th century. He categorized the lower-middle class in London as living on 22-30s per week. So, roughly around the same as Jane Eyre given inflation by the 1890s, and they had to cover their rent and food as well as support children. He categorized 42% of the London population in this class, and he considered them often to be barely surviving.

Pip, even with an income of 500 pounds a year, would be solidly in the upper middle class. He would live quite comfortably by the standards of Victorian England. He goes into debt because he lives beyond his means.

http://booth.lse.ac.uk/static/a/4.html#eight-tier

[kev67]

Robert Tressell, who wrote The Ragged Trousered Philanthropists said the same sort of thing. He was writing about a group of painter-redecorators in the early 1900s. He describes a situation that alternated between poverty and destitution for most people. When they were in work, they lived in poverty. When they were out of work, they lived in destitution. They seriously had trouble affording enough to eat and clothe themselves properly. Since Robert Tressell was one of those class of people, he knew what he was talking about. So, you have to take relative income into account, not just inflation. BTW, the first half of that book is good, although it starts to get repetitive.

It sort of makes sense a pound being worth 80 times back then as now in that the lowest value coin was a farthing, which is slightly over a thousandth of a pound (in GE they are called fardings, I noticed). If inflation had cause a decrease in value of about 500 times then a farthing then would be worth 50p now, which is too high a value for the smallest coin. If the pound was worth 80 times then as now, then a farthing would be worth about 8p, which is more reasonable. The lowest value coin we have now is 1p, but the lowest value useful coin is 5p.

I wonder how Charles Dickens' readers felt about Pip's lifestyle. They must have really loathed him. I suppose most of them were middle class as they could read, but they were still working hard and struggling.

[kiki1982]

You're right that the pound was worth much more than it is now. There are several ways to assess the amount of money sums from back then. One way is the retail index, but another way is the wage index.

The retail index takes into account prices of commodities (which we still use now in order to argue for wage increases). The wage index takes into account wages and how your sum compares to what people earned back then and where in the scale that comparative sum would be now on today's wage scale.

This (http://www.georgianindex.net/banking_economics/expenses.html) is a list of indexes for years in the 18th and 19th centuries. Unfortunately is stops in 1998. So it's a little bit outdated...

And here (http://projects.exeter.ac.uk/RDavies/arian/current/howmuch.html) you can find a whole lot of links to pounds, dollars, French Francs etc. with several kinds of indexes, retail prices of food, housing and all kinds of things, including the cost of buiding a farm, old weights, and even medieval monetary systems.

I once calculated that Jane Eyre's wage of £30 per annum was the equivalent of about £1,500 per month now. Now, this may not seem much, but she did not have to pay rent, commodities like water/heating/electricity, travel, food etc. So, in service you have just got your clothes and anything you want to pay for interms of hobbies (like knitting material). That's pretty nice pocket money. But she was reportedly paid handsomely, even for a governess. I know Connoly, an innovator in the lunatic asylum spectrum of things paid his staff handsomely (so they treated his patients well) at £25 per annum, and that was after a wage increase of £5 I think.

Pip with his 500 pounds indeed was pretty well off, although that is a single man who in all likelihood rented a room in a respectable household or guesthouse or something with maids to look after them and give them their food. I don't think he would have been able to sustain a good life of leisure with a wife and four to six children who would go to a nice upper class school on that £500. He would have had to look for a profession of some kind to bring in more money, or like Herbert for an executive post with a share in the company attached.

[kev67]

Thanks for that. I am guessing things came to a head in GE around 1820. According to your link, £1 then was worth about £50 now, making Pip's income of £500 a year worth about £25,000. That does not seem right though. Your link suggests a pint of beer in 1820 (half a quart) cost somewhere between 1.5 and 3.5d while it costs about £3-50 now. That suggests a pound then was worth between 240 and 560 times what it is now, maybe more. Beer is the only foodstuff listed there of which I have any idea of price, I'm afraid. However, beer now has a lot of duty because it is considered a luxury. Then it was almost a necessity because the water was not safe to drink. Estella gave young Pip a mug of beer to drink along with some meat and bread.

[kev67]

Hmmm, according to the Measuring Worth site, £500 in 1820 was worth £31,200 in 2010 according to the retail price index, but a whopping £355,000 compared to average earnings.

[kev67]

Wow (http://privatewww.essex.ac.uk/~alan/family/N-Money.html),

Jane Eyre's wages at £30 a year seems to be the going rate for a female teacher, certainly much better than for a maid, and even better than a housekeeper. If I understand correctly she would also get the equivalent of ten shillings per week in board. Men and women both get free beer :cornut:

Meanwhile, Pip with his £500 a year, if he had succeeded in marrying Estella and having children (which I hope he eventually did) could also have afforded to employ three female servants and a boy. Pip did employ a boy for a while, who he dressed up in yellow livery and called The Avenger iirc. Pip was receiving more money than a lawyer, although probably not as much as Jaggers because Jaggers was the best. I suppose Joe was earning £92 a year.

[OrphanPip]

The value of commodities will not have a direct relationship to the inflation in the value of currency (which is measured against relatively stable commodities like gold). Food for the Victorians cost relatively less than it does today, as did housing, because of the dynamics of supply and demand.

Pip was essentially comfortably well off, upper middle-class, but not rich. He could afford a servant, but probably not living in the most fashionable parts of London.

[kev67]

I think I read somewhere that housing cost less, but that food cost more. That makes sense because growing food was more labour intensive, there were no artificial fertilisers or pesticides, and fewer economies of scale.

[kiki1982]

Yes, inflation also has to be taken into account.

And indeed food and housing cost less relative to people's incomes than it does now. Servants, I think, were easy to keep and didn't cost a lot, certainly if you took the bottom end. A 'boy' was literally a boy, i.e. a boy of about 14 who ran errants for you. I don't think we are talking of a real valet-of-all-work here, like Jeeves.

Then you do have to take into account that you can't really calculate the value (or factor) of a pound based on the price of beer as beer now has tax on it. That's a first, but I think prices of single foods also fluctuated more than they do now, as they depended more on the national harvest. If there was no barley, there was no beer and then the price went up, as did the price of bread for example (and that could be quite dramatically). Nowadays, we go and buy the stuff somewhere else if we ourselves do not have any and the price will go up with inflation a bit, but not dramatically.

I agree with Pip that Pip from Great Expectations would have been well off as a single man, but let's say he would not have been living in Richmond, Grosvenor Square or anything fancy. Nor could he have kept a carriage and horses to drive him everywhere, a house and a household with several servants.

I think the interest rate was about 10% back then, so his £500 would have meant he had some £5000 in a trust fund. That's not a lot, if you compare it with Mr Bennet's £2000-generating estate.

In regards to lawyers: you have to remember that it depends on the type of lawyer, but also that those people mostly came from families who could afford education, i.e. the rich, and such lawyers, beside their professional income mostly had either private investments generating an income or a (small) estate that brought in some cash. The fact they had a profession like lawyer, physician or something (not to be confused with apothecry, tailor or anything mean like that) meant that their savings were not enough, but not that they got their income solely from their profession, like we do now.

[kev67]

Interesting (http://www.econ.ucdavis.edu/faculty/gclark/papers/farm_wages_&_living_standards.pdf), average rent for a farm labourer's cottage in 1820 was £3.34 a year, although wages were only £21.36. Farm labouring is notorious for its low wages, but even for those times, those wages seem very low. OTOH, £3.34 per year for rent seems very reasonable indeed. You wouldn't be able to rent a country cottage these days for less than 15% of your income, not unless you were mega-rich.

[kev67]

I went into the local supermarket today to note some prices:


Tea 250g £1-70
Sugar 1kg £0.98
Flour 1.5kg £0.90
Butter 250g £1.50

According to kiki's link (http://www.georgianindex.net/banking_economics/expenses.html), at around 1790 prices were as follows:


Tea 1lb 4s to 12s
Sugar 1lb 7d
Flour 1lb 1.75d to 4.5d
Butter 1lb 10d


Converting metric (hiss) measurements to imperial, modern prices per pound are as follows:


Tea 1lb £3-09
Sugar 1lb £0.45
Flour 1lb £0.27
Butter 1lb £2.73


Converting the old pounds, shillings and pence into decimal, the old prices per pound are as follows:


Tea 1lb £0.20 to £0.60
Sugar 1lb £0.03
Flour 1lb £0.0073 to £0.0188
Butter 1lb £0.04


Wow, tea was expensive then!

So the price per foodstuff has increased by the following factors:


Tea 5 to 15
Sugar 15
Flour 14 to 37
Butter 68


I have not checked my figures, so they may well be wrong, but it looks like food was comparatively more expensive then than now. The only one of those food staples that has gone up proportionally with inflation (79x) seems to be butter.

I did wonder at the start of the GE that Mrs Joe was giving Joe and Pip slices of bread and butter for their tea. It did not sound very substantial, especially for Joe who has to do a lot of heavy manual work.

[OrphanPip]

Tea and sugar had to be imported from the Indies, so they aren't good markers of food prices.

Flour prices fluctuated radically, but tended to be affordable.

People's diets would be simpler, involving more grains like oats.

Tea and sugar were commodities restricted to the middle and upper classes, or as an occasional treat to the lower classes. The lower classes would also take their tea a lot weaker than we would expect today.