The US dollar is one of the most frequently traded currencies worldwide. However, the US dollar has not always been steady and solid and was fluctuating quite a lot back in the 1800s. Since the currency is still the topic of discussion in the various fields of the financial industry, we have prepared the illustration below to demonstrate how the dollar value has been changing over time since the 1800s and what 1 dollar from the past could buy you today. 

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History of USD and what it could buy you summarised in Text

The global economy, political instability, wars, and reformations were affecting the price of the US dollar a lot. However, after the US abandoned the gold standard in 1971 by the declaration of President Richard Nixon, the fiat money system became more complex to analyze, on the other hand, a number of factors determining the price of gold had no more impact on the dollar value. Below is the description of all the major events that affected the value of the US dollar since the 1800s. 

Beginning of Economic Revolution – 1800

The inflation rate in 1800 was 2.44%. The population of the United States was 5.3 million at that time and the economy was very slow. The factories for textile production were just beginning to be established. Most of the power came from the waterfalls, therefore the factories were concentrated alongside the rivers in rural areas. An economic revolution was beginning at that point. A single dollar from today would have a purchasing power of $21.61 back in 1800. For instance, you would afford to buy a pair of shoes back with 1800’s dollar today, while the current value of 1 USD would get you a pair of Adidas flip flops.

Financial Panic – 1820:

In 1820, Americans began to penetrate the Mexican market. Most of the textile goods, such as clothing were sewed at households for private use, however, since 1820, people started to display the goods in local stores for sale. On the other hand, the increasing trades and the war in 1812 produced a financial panic across the country. The panic was expressed in rapidly increasing unemployment and deflation of the dollar. In 1820, the prices were 7.2% lower than back in 1800 and a dollar bill from 1820 is equivalent to today’s $23.15 which would cover your weekly salary. However, it is a 1.5-hour wage today. 

First Crisis – 1840:

In 1840, the US inflation was at a record-low -6.7%. It was following what was known as the Panic of 1837, a financial crisis that left a huge impact on prices and wages and the unemployment rate resulting in major depression. The crisis was caused by speculative lending, falling prices on cotton, and the failure of the land bubble. The dollar experienced a significant devaluation, with prices dropping by 25.64% compared to 1820. Therefore, a 1 dollar value of 1840 that is equivalent to $31.39 today would get you 0.05 ounces of gold back then and 0.018 ounces today. 

Age of Gold Rushes – 1860: 

A lot has happened since 1840 in the US, Florida, Texas, Iowa, Wisconsin, and Minnesota got admitted to the Union. But the most notable event was the California Gold Rush when gold was discovered in Coloma, California by James W. Marshall. The sudden discovery of gold has aided the American economy significantly. The Pike’s Peak Gold Rush followed in 1858 when Colorado joined the party with more than 100,000 gold seekers taking part in the gold rush. The inflation rate fell to 0% by 1860, however, the dollar value could not recover that fast. At that point, the dollar stood at 32.63 current US dollars. With one dollar of 1860, you could get 70 pounds of potatoes in the 1880s, and 2 large domino’s pizzas today.  

Long Depression – 1880:

The American Civil War outbreak hurt the economy badly back in 1861 and lasted for four more years. The war was fought between the Union-loyal northern states and southern states. The main reason behind the outbreak was the enslavement of black people. During the war, inflation rates went up to 27% and even though it stabilized soon after the end of the Civil War, the US had yet to experience the Long Depression of 1873. The depression was primarily fueled by the second industrial revolution and the deflation rate fell down to -10%. The 1880’s dollar equivalent today would be $26.50, which is enough to buy you and your family of 6 members movie tickets. Today, with the same amount you can buy 2 tickets to the movies. 

Gold Standard Act – 1900:

As soon as the Long Depression was over, the economy in the US got back to normal and held an inflation rate of 0% for 9 consecutive years, between 1885 and 1894. The US was formally on a bimetallic standard, meaning that it was based on gold and silver until 1900 when Congress officially passed the Gold Standard Act. The gold standard remained until 1971 and went through few changes meanwhile. After adopting the gold standard, the US dollar became fixed at $18.60 per ounce of gold. Today, the dollar from 1900 has a value of a little over $32. If back then you would get a man’s dress shirt, today you get a woman’s dress from ZARA. 

World War I – 1920:

The US takes the greatest economic hit when it enters World War I in 1917 with a striking inflation rate of 17.4%. Not to mention the effects of the involvement of states in the war, the US has to go through an influenza epidemic from 1918-1919. The great economic recession began in 1920 bringing the inflation rate down to -10.4%. At that time, a single dollar bill would be equivalent to 13.12 US dollars today, getting you a Kodak Brownie Camera, or a selfie stick from Amazon in 2021.

Great Depression – 1940:

The population of the United States had a very short break from the economic turmoil when the Great Depression began in the 1930s. The panic of 1927 accompanied by the stock market crash, rapidly increasing unemployment rates, currency devaluations, and the global financial crisis ultimately led to the Great Depression which lasted for 10 years. After which World War II begins and pressures the economy once more. Furthermore, the private ownership of gold is officially abolished following the Great Depression. A single dollar bill equivalent to $18.75 today could purchase 0.15 ounces of silver back then but would afford 0.75 ounces of silver in 2021. 

Warfare and Baby Boom – 1960:

The period between 1940 and 1960 might be the most intense 20 years that the United States history has witnessed. In 1941, the US got involved in the second World War, Korean War outbreaks in 1950 and lasted for three more years and the Vietnam War began in 1959. The post-war situation resulted in the Baby Boom which somewhat contributed to the improving economic conditions as the increasing population surged the demand for housing, transportation, and food. By the end of 1960, the inflation rate in the US is around 1.9%, making the dollar value of what would amount today 8.88 US dollars. With 1 1960’s dollar, you would get 1 gallon of gas, while today you will get 3 gallons of gas. 

20 years of Peace – 1980:

Except for the multiple oil crises, the United States has lived a peaceful life between 1960 and 1980. The average annualized inflation rate would be around 4% for the given 20-year period. However, the dollar value has increased significantly since the Iranian revolution-induced oil crisis. In 1980, the rate of inflation was already spiking up to 13.5% with the ongoing tensions in Iran. The dollar from 1980 is equivalent to $3.19, approximately the price of the 0.9 McDonald’s stock, or Big Mac burger in 2021. 

The Most Stable Currency of Century – 2000:

By the beginning of the 21st century, the US economy had already stabilized with the dollar being one of the most stable currencies worldwide. The inflation rates have also been more or less below 3% annually. The dollar value has been approaching more and more to what its price is today. By the year 2000, a dollar bill value had become equivalent to $1.53 of today’s USD giving you the purchasing power for 1.1 Euros. As of 2021, it would get you 1.3 Euros.

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About Author

Tomasz Wisniewski

During his career, Tomasz has held over 400 webinars, live seminars, and lectures across the globe. He was also an academic lecturer at Poland's Kozminski University. In his previous work, Tomasz initiated live trading programs, where he traded on real accounts, showing his transactions, providing signals and special webinars for the accounts; none of which were ever negative. Tomasz gives preference to a technical approach to trading: mainly price action with very strict money management rules. He believes that the most important thing in trading is your mind, so it is much better to focus on trading psychology than to look for the Holy Grail of trading systems.

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