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Whenever I hear the phrase "a penny saved is a penny earned", I like to point out that if you do a back of the envelope calculation for inflation you'll come up

• hugh3 16y ago
  Is that so? I find it hard to imagine a currency in which the smallest denomination available is the equivalent of five dollars. If you're inventing a new currency from scratch, why not have a smaller minimum denomination?
  • pavel_lishin 16y ago
    Maybe there wasn't much you could buy for less than $5. What's a single Zimbabwe dollar going to get you? Nothin'.
    • hugh3 16y ago
      In which case, in what sense was it worth five dollars? If you tell me that something is worth five dollars then I'm going to expect to, for instance, be able to get two loaves of bread for it. Or maybe half an hour's work from an unskilled labourer. Of course the conversion ratio between loaves and hours was different then (I assume bread is a lot cheaper/labour is more expensive) which is why we can't really convert between today's money and the money of the 1770s.
  • jws 16y ago
    There were half pennies and farthings (quarter pennies). Once the US got done with revolting and got around to writing a constitution they decreed the "mill" would be 1/10th of a penny. They seem to have largely only useful for sales tax. I think a smaller coin would have been impractical: • Coins were self-backing with their metal value. Even in copper, it gets too small to keep track. • Manufacture was more labor intensive, the cost to produce a very low coin is a problem. • Mass production hadn't devalued objects, so things we think of as cheap today would have been relatively more expensive. • If you live in a small community and "run a tab" at the general store, you don't make payment in small batches. None of these speculations should be mistaken for accurate historical facts.
    • hugh3 16y ago
      OK, I looked it up for myself, and the one penny = five dollars conversion doesn't seem too far from the truth. This page gives some 18th-century prices for various things; in British pennies rather than US pennies, but I'm assuming they were similar in value since they were both small coins of copper: http://footguards.tripod.com/08HISTORY/08_costofliving.htm http://footguards.tripod.com/08HISTORY/08_costofliving.htm Half a penny = half a loaf of bread, implying bread was five bucks a loaf... just a bit too expensive by today's standards. 1.5 pennies was an hourly rate for a boy to chop firewood -- I bet you could hire a kid for $7.50 an hour nowadays. 1 penny was enough gin to get drunk on... a third of a bottle of the cheapest $15 gin would get you pretty drunk. 4d was a quart of beer. OK, that's pretty expensive. 1s (12 pence) gets you a dinner at a steakhouse with beer... yep, sixty bucks is a plausible price for a steak dinner. It's also the sign-on bonus for joining the Army, which seems like a bit of a gyp, or postage for a letter from London to New York. (!) So in conclusion, if you take the one penny to five dollars conversion, then some things (basic foodstuffs) seem expensive while others (labour) seem cheap. This is consistent with the fact that people were much poorer (in real terms) back then, and you'd have to chop wood for 40 minutes just to buy a loaf of bread. It still seems like a weird way to use money, but I guess that's just because I've grown up in a world where it's entirely possible to undercut your competition by 1% on the price of a loaf of bread. If that ability went away, I might not miss it.
  • gte910h 16y ago
    We had half pennies as well from 1793 on. Remember, this was before there were cheap industrialized goods.