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appendix฀a NoteontheValueofaDollarintheCivilWarEra Because this book constantly mentions sums and prices measured in dollars, some readers may be interested in the value of a dollar during this period and how it has changed over time. Economic historians routinely use several standard methods, none of them perfect, to measure changes in the value of a currency. One of the most common methods is to use a long-run index of consumer prices, which attempts to trace the changing average costs over time of a similar bundle of consumer goods. A standard consumer price index for the U.S. dollar suggests that the purchasing power of $1 in 1861 is equivalent to that of about $20 today, in the early twenty-first century. But by other measures, such as those that compare average wage rates or per-capita incomes, $1 in 1861 can be regarded as the equivalent of $200 or more in our day. For a discussion of long-run price indices and the many di‹culties associated with them, see John J. McCusker, How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States, 2nd ed. (Worcester, Mass.: American Antiquarian Society, 2001). As of the summer of 2005, there was a good electronic resource on this subject, maintained by EH.NET and located at the following URL: http:/ /eh.net/hmit/ . One way to gauge the meaning of a dollar to the Americans who lived through the Civil War era is to consider contemporary wages and living costs. Just before the Civil War, in 1860, one dollar was a typical daily wage (for what was often a ten-hour workday) for a man doing what some economic historians call “unskilled” work or “common labor”—ditch digging, for example. Skilled male artisans, such as blacksmiths , could earn closer to $1.75 or $2.00 a day. Farm hands were typically paid about $13 a month plus board—exactly what privates in the Union army were paid for most of the Civil War (along with their clothing allowance). Female factory workers, who were among the highest-earning women in the country, often made around $0.50 a day. Many American households subsisted on less than $600 a year, nearly half of which went for groceries. For a small minority of Americans, earnings were significantly higher. Urban professionals, as well as senior military o‹cers (such as army majors 22฀ appendix฀a฀ and lieutenant colonels), might earn $2,000 a year. President Lincoln, like his predecessors in o‹ce, enjoyed a salary of $25,000. Some leading manufacturers, merchants, and bankers enjoyed incomes close to that of the president; a tiny handful, including wildly successful businessmen such as New York City dry goods king A. T. Stewart, saw annual incomes of six or even seven figures. For further reading on wages and the cost of living in 1860, see Edgar W. Martin, The Standard of Living in 1860 (Chicago: University of Chicago Press, 1942); Clarence D. Long, Wages and Earnings in the United States, 1860–1890 (Princeton: Princeton University Press, 1960); and Robert A. Margo, Wages and Labor Markets in the United States, 1820–1860 (Chicago: University of Chicago Press, 2000). Because of wartime inflation, the value of a dollar changed significantly between 1861 and 1864. Average consumer prices in the North rose by approximately 75 percent during this period, meaning that it took $1.75 in 1864 to buy the same goods that had sold for $1.00 in 1861. (In the Confederacy, where prices rose by close to 5,000% over the same period, inflation was far more severe.) One reason for the inflation, along with the higher costs of transport and insurance that the war inevitably created, was an increase in the money supply. In December 1861, Northern banks had ceased specie (gold and silver) payments, e¤ectively taking the United States o¤ the gold standard. In early 1862, Congress authorized the printing of greenbacks, currency notes that were not backed by gold. The introduction of large amounts of new paper money, along with a variety of other Treasury notes and bonds, allowed the North to pay for the war, but it also promoted inflation. Historians have long known that wartime wages in the North did not rise as fast as prices. On average, real wages (adjusted for inflation) in the North declined by close to 25...

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