On daily expenses in nineteenth-century america
This year, 2021, has been an interesting one for most people, different than most years anyone has experienced. And now, after all the supply chain disruptions caused by a Chinese energy crisis, blocked canals, backlogged ports, government expenditures, work disruptions, and the massive death toll of COVID-19, severe inflation has taken hold. This blog will take a stroll back through time to explore the cost of commodities and other daily expenses in 1869 as reported in an 1871 "Special Report on Immigration" published by Edward Young, the then chief of the Bureau of Statistics, particularly evaluating the cost of living between states during the industrial revolution and the massive growth of the United States of America.
For the purposes of this economic comparison, the researcher will explore some of the most expensive states to live in today. According to CNBC, in 2021, these are the top 10 most expensive states to live in:
Hawaii
New York
California
Oregon
Massachusetts
Alaska
Maryland
Connecticut
Rhode Island
New Jersey (1).
The 1871 report on retail prices does not include data for Hawaii or Alaska, so those two states will be excluded from the discussion. While the report, glimpsed below, includes prices and costs for various goods and expenses, this discussion will focus on the following commodities and expenditures: flour (by the barrel), milk (by the quart), soap (by the pound), cotton flannel (by the yard), and rent of a "four-roomed tenement" (by the month).
United States Dept. of the Treasury Bureau of Statistics, Young, E. (1871). Special report on immigration: accompanying information for immigrants relative to the prices and rentals of land, the staple products, facilities of access to market, cost of farm stock, kind of labor in demand in the western and southern states, etc., etc., to which are appended tables showing the average weekly wages paid in the several states and sections for factory, mechanical, and farm labor, the cost of provisions, groceries, dry goods, and house rent in the various manufacturing districts of the country, in the year 1869-'70. Washington: G.P.O.
As described above, the prices recorded are the "average retail prices of provisions, groceries, and other leading articles of consumption" and rent relates to the rent in towns (2). The table below compiles the selected commodities for the relevant states (3).
Analyzing this data, one might note that some states have similar prices to each other, sometimes seemingly related to geographic location. Overall, the New Jersey average ($4.12) was the highest of these in 1869, and the Maryland and Rhode Island averages ($2.69) were the lowest. There are a few outliers, like California's rent, which remains high, even today. The 2021 CNBC article about the most expensive states to live in utilizes the price of a half-gallon on milk to compare states. To compare the relationships between the states in 1869 and 2021 (especially to account for the different units of measure), the table below denotes the percentage of the highest price for each state.
California remains relatively expensive to buy milk. On the other hand, Maryland's price remains similar when related to the other states, with 83% in 1869 and 80% in 2021. While California is a clear outlier with regard to rent, it also represents the most expensive milk in 1869. Massachusetts and Rhode Island are the least expensive milk. Interestingly, these are the same two states with the lowest averages.
When referring to the state prices for all items, another outlier stands out. Maryland's price of soap is half of that of New York and less than half of the price in Connecticut. Rhode Island is also an outlier when it comes to rent, at $3.26 per month. This is less than half of 5 of the states included.
What is missing from this report in the simple state-by-state comparisons is real estate, the price of land or homes. Rent is the only compared price. According to Knoll, Schularick, and Steger in a 2017 article on global house prices, the likely reason for this is that in the late nineteenth century, most people would not have known how one's home compared to others in different states in what is now called the "real estate market" (5). Instead, they discuss that despite the fact that "houses are typically the largest component of household wealth" and that they are important to the macroeconomy, "surprisingly little is known about long-run trends in house prices." They worked to fill that void and documented a national home value over time, from 1890 on (6).
What this demonstrates, as the authors describe is that home prices remained within a certain band until the late twentieth century. So, perhaps a comparison between states would have been useless for the 1871 report.
Overall, while flour, soap, and rent prices varied greatly from state to state, the prices of milk and cotton flannel were similar across all the states included. Today, also, these two commodities are similar across states, despite the 2906% average increase in milk prices.
(1) Scott Cohn, “These Are America's 10 Most Expensive States to Live In,” CNBC, July 15, 2021, https://www.cnbc.com/2021/07/15/these-are-americas-most-expensive-states-to-live-in.html.
(2) United States Dept. of the Treasury Bureau of Statistics., Young, E. (1871). Special report on immigration: accompanying information for immigrants relative to the prices and rentals of land, the staple products, facilities of access to market, cost of farm stock, kind of labor in demand in the western and southern states, etc., etc., to which are appended tables showing the average weekly wages paid in the several states and sections for factory, mechanical, and farm labor, the cost of provisions, groceries, dry goods, and house rent in the various manufacturing districts of the country, in the year 1869-'70. Washington: G.P.O., 224.
(3) Ibid., 224-229.
(4) Scott Cohn, "These Are America's 10 Most Expensive States."
(5) Katharina Knoll, Moritz Schularick and Thomas Steger, "No Price Like Home: Global House Prices, 1870-2012," American Economic Review 107, no. 2 (February 2017): 331.
(6) Ibid., 331-332.