VolkStudio Blog

Just an idle thought: from 1900 to 1933, US dollar was worth roughly a pennyweight (1/20 troy ounce or 1.556 gram) of gold. As of today, gold trades for just under $43/gram. A dollar today buys about 67 times less gold than it did in 1925. Do we earn 67 times more? A more meaningful comparison would be to the wages and prices of the day.

In 1924, a typical farm wage was a little less than $50/month, or a little over $44K annually in today’s money. Skilled trades (numbers for unionized workers in NYC, therefore not typical of the rest of the country) were four to six times higher. Another source listed average income under $100/month — I am sure that these numbers varied greatly with location and other factors.  I am not sure how the linked site came up with the 1:12.48 ratio — for that to be accurate, the purchasing power of gold had to be 5.3 times lower than today.

For new technologies, like radios, that was more than true. A good radio with a speaker approached $100 — imagine how much technology $6700 buy us today! Cars were still a luxury, but an entry level vehicle (Ford Model T) could be had for about $260 — the gold equivalent of $17420 in today’s money.  Alcohol was almost unobtainable by legal channels due to the prohibition. Meat, dairy, most fruit were far more expensive once transported — but became very cheap in season or near the producers. The FDA had not choked the local food production quite as badly back then.

Imported goods were far fewer back then and heavily taxed. Tariffs could reach 40-60%, making quality European products unaffordable for many. Income tax wasn’t even a concern for most people, but property taxes were a problem for many, especially later in the decade.

The sum of this comparison is that the 1920s were a fairly prosperous decade even by today’s standards, a bit like 1990s from the perspective of today. Technological advances make direct comparisons difficult, but it’s my impression that government “cures” of economic downturns , now and in the 1930s, were extremely counter-productive and also detrimental to economic and social freedoms. The censorship and intimidation practiced by the FDR administration are again in vogue today. A 1920s American did face certain problems that are minimized today (such as government discrimination by race) but was also able to buy a machine gun or dynamite unimpeded. Certain freedoms, such as almost unrestricted travel, did go out with World War One, but many others have been lost since.