Are you richer today than John D. Rockefeller was in 1916? The answer is, um, yes.
I suggest you are in fact richer today than John Rockefeller was 100 years ago. If it were possible for Prof. Don Boudreaux to switch places with John Rockefeller’s life and even if he could have a billion dollars after he arrived back in 1916, he would not make the switch. He would rather live as a comfortable professor today than be a billionaire 100 years ago.
Here are three posts to explain this strange idea: first, what life was like 100 years ago, why Prof Boudreaux would not make the switch, and then why Coyote Blog wouldn’t either.
(Cross-post from Attestation Update. This post supports my conversation on ancient finances at that blog and also fits the discussion of how much life has improved over the last 200 years here.)
An article in The Atlantic on 2/11/16 describes America in 1915: Long Hours, Crowded Houses, Death by Trolley. The article is drawn from a report by the Bureau of Labor Statistics: The life of American workers in 1915. If you enjoy this brief discussion, I heartily recommend you read the full BLS report. It is a fun read, but then, I am an accountant.
I will update a few of the stats in the Atlantic article where the author took a shortcut. When I browsed through the BLS report, I noticed some sentences which were repeated nearly verbatim in the article, which is okay since the report is a public document.
A few highlights:
Workers in factories averaged 55 hours a week. The fatality rate across the economy was 61 deaths per 100,000 compared to about 3.3 per 100,000 today.
Some women worked outside the home, primarily in elementary and high schools. Oh, do you know why? The Atlantic article asserts school boards not only thought female teachers were more loving but they would also accept less pay than men and do whatever they were told by the (male) principals.
Food was less varied and expensive. Typical families spend twice as much of their budget on food 100 years ago as compared to today: 1/3 then and 1/6 today (33% down to 16%).
The consumption of lard, chicken, and sugar per year? Check out this comparison of pounds of food consumed per year:
- Lard – chicken – sugar
- 1915 – 11.5 – 14 – 88
- 2015 – 1.5 – 57 – 130
- Chg – (10) – +43 – +49
Here are some costs for food staples, in 1915 prices, 1915 prices adjusted to 2015 dollars (const.), and 2015 price:
- 1915 -const.- 2015 – item
- 0.36 – 8.48 – 3.18 – 1# butter
- 0.34 – 8.01 – 2.81 – dozen eggs
- 0.15 – 3.53 – 6.55 – 10# potatoes
Homeownership was much rarer then: 20% of people owned a home then compared to 60% today.
Getting a home then usually required a 40% or 50% down payment compared to an average of 10% today. The loan would typically be for 5 or 7 years. Just imagine what that would do to your payment. Missing your payment twice would allow the bank to reduce the term to 3 years and increase the interest rate.
A home cost in 1915 was $3,200, which is about $75,600 in 2015 dollars. In contrast, the median home price is about $183,000 today.
Infant mortality has dropped dramatically. For comparison, today about 1 of 168 babies die in the first year of life compared to about 17 of 168 back then.
Clothing was bland and expensive – 100 years ago people would typically spend 13% of their budget on clothes, compared to 3% today.
Appliances? 100 years ago here’s the portion of houses that had these items:
- Telephone 30%, stove 20%, refrigerator rare, radio almost no one
What portion of families had
- clothes washing machine, dryer, air-conditioner, or television set?
The answer is zero, zero, zero, and zero. Those items had
would not be not yet been invented.
Doesn’t sound like a fun life to me. This lead us to:
Don Boudreaux commenting at Cafe Hayek on 2/20/16 that Most Ordinary Americans in 2016 Are Richer Than Was John D. Rockefeller in 1916. In comparison to a typical middle-class lifestyle today, life then
…was poor, inconvenient, dreary, and dangerous.
To illustrate the dangerous part, particularly regarding the lack of medical care, he points out the teenage son of Pres. Coolidge would die in 1924.
Why? A massive infection.
How did he get infected? He was playing tennis at the White House grounds, got a blister on his toe, which became infected, which without antibiotics proved fatal.
The 16-year-old died from a blister.
A billionaire in 1916 could have hosts of servants. Just like Rockefeller then, today I have dozens of servants in my home and business. In addition, I’ve realized that 100 years ago only the very richest people had servants – today even the poor have servants.
To cross the country he could take his a private, luxurious railroad car. Keep in mind that luxurious railcar had no air-conditioning for the summer and poor, if any, heat for the winter. In terms of wasted time it would take several days travel instead of five hours plus getting to the airport two hours early.
The telephone (if you were well off enough to have one) was hardwired to the wall. There was no Skype. No Wi-Fi connection. No computer. No Internet. Extremely few movies.
With all that wealth you could buy the most expensive, handcrafted Swiss watch on the market. The good professor points out that luxurious time piece did not keep time as well as the cheapest watch you could find today.
After mentioning many other similar factors, the professor points out that he would not trade places with John Rockefeller even if he was given $1 billion to take with him.
The conclusion? That makes him richer today than John Rockefeller was then.
Coyote Blog observed You Are Richer Than a 19th Century Billionaire on 2/23.
He posts a picture of the mansion owned by Mark Hopkins 100 years ago. By appearance it is four stories tall and probably has 100 rooms or more. A huge luxurious residence. In contrast, there is a picture of a two bedroom ranch house. Which would you choose? The mansion in 1915 or the two-bedroom ranch today?
Here is the contrast between the two, which I will quote:
One house has hot and cold running water, central air conditioning, electricity and flush toilets. The other does not. One owner has a computer, a high speed connection to the Internet, a DVD player with a movie collection, and several television sets. The other has none of these things. One owner has a refrigerator, a vacuum cleaner, a toaster oven, an iPod, an alarm clock that plays music in the morning, a coffee maker, and a decent car. The other has none of these. One owner has ice cubes for his lemonade, while the other has to drink his warm in the summer time. One owner can pick up the telephone and do business with anyone in the world, while the other had to travel by train and ship for days (or weeks) to conduct business in real time.
Article points out that if any family members of this filthy rich business tycoon were to contract cancer, tuberculosis, or even simple appendicitis, that person would probably die. Or even a blister on your toe could prove fatal.
Health care for everyone today, even including the poorest among us, is radically better than what a billionaire could obtain 100 years ago.
So, yes, you are richer now that when John Rockefeller was one of the richest men on the planet.