£1 in 1914 = £? in 2014

[rosewlsg]

I've been searching the internet for a reliable inflation calculation for the value of the pound sterling from 1914 to 2014 and I'm getting wildly differing results, for example £1 in 1914 = £20,000 or £7,800 etc in 2014.

Does anyone know of a good source or method for calculating a monetary comparison from 100 years ago to today? For example, £100 in 1914 would buy a .... and this would cost £xxx in 2014.

Thanks.

Rosemary

[auchonvillerssomme]

I looked this up when I was teaching Health and Social Policy last year, I can't find the source but it was around £1 in 1914 = £62-£65.

[bill24chev]

There are various scientific, or should I say Economic, methods for this calculation.

A less scientific method that I tend to use is comparison of the price of a Pint of Beer (Bitter).

This website http://www.europeanbeerguide.net/ukstats.htm

gives average price of pint at 3d or 80 pints to a pound so at current price of £2.35(price in my local) this would be £188

bill

Edit The Measuring Worth site gives various options, depending on method used from about £84 to about £650. "Lies, dammed lies and statistics" comes to mind.

[Dust Jacket Collector]

This site reckons £1 in 1914 to be about £97 now.

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

[John_Hartley]

I've always used the Measuring Worth site, as mentioned by Bill - although I've never been quite sure which of the various calculations is the most appropriate. Do we have an economist in the house who could clarify?

[kenf48]

The Bank of England's calculator gives a similar figure to that quoted above, i.e. £97.71, although it only calculates the figure to 2012. It also gives the average annual rate of inflation used to calculate this figure.

http://www.bankofengland.co.uk/education/Pages/inflation/calculator/index1.aspx

There is also a page on it's education website 'calculator caveats' explaining why the data is only approximate (far better than my A level economics could, John, it was a very long while ago and I'm not sure I understood it then!).

The current measure of inflation, the Retail Price Index dates from 1947 so it's not possible to make a direct comparison over the long term. You also need to look at wages as well as prices, and as noted on the Bank's site the significant changes in expenditure which is why, unfortunately the beer index is flawed. The average annual wage for a manual worker in 1913 was £106 and the cost of living was £108, by 1918 with wartime inflation the gap was considerably wider with earnings at £185- £191 and the cost of living at £216 (British Social Trends since 1900). Prior to the war inflation was fairly stable at below 5% by 1920 it had risen to over 20% as a consequence of full employment, as this tapered off in the 1920s there was significant deflation in the economy associated with high unemployment, rising again in WW2.

While there needs to be caution when looking at UK inflation due to changing spending patterns I'd suggest the Bank of England is a fairly reliable source but as they say the further back the calculation goes the less reliable it becomes.

Ken

[trajan]

Somewhat off-topic, but we Romanists have a similar problem when calculating what the denarius was worth in 'real' terms. The simplest way is to calculate the value of the coin in modern silver values and extrapolate from that, in the sense of XX denarii = YY grams of silver = ZZZ GBP. BUT as kenf48 points out, establishing what the actual purchasing power of something was in the past is more problematic - e.g., bread, olives, olive oil, etc., wine were a regular part of the diet in Roman times and so 'cheaper' in gross silver terms than today.

Trajan

[bill24chev]

Somewhat off-topic, but we Romanists have a similar problem when calculating what the denarius was worth in 'real' terms. The simplest way is to calculate the value of the coin in modern silver values and extrapolate from that, in the sense of XX denarii = YY grams of silver = ZZZ GBP. BUT as kenf48 points out, establishing what the actual purchasing power of something was in the past is more problematic - e.g., bread, olives, olive oil, etc., wine were a regular part of the diet in Roman times and so 'cheaper' in gross silver terms than today.

Trajan

do we know what the Roman Legionnaire paid for his Wine or other beverage.

[trajan]

do we know what the Roman Legionnaire paid for his Wine or other beverage.

We do! And we even know their pay raises between Augustus and Severus! And that they got paid three times a year(!). We also know the costs of prostitutes, wine in bars, etc., but of course these costs vary from one region to another (and soldiers in Britannia drank beer - cervasa!), and some things (except prostitutes) came as rations - but were deductable with stoppages from pay...

But coming back to ken's point earlier, about methods of calculating inflation. In Turkey they no longer include the price of petrol in doing this because it is usually the same as or higher here per litre than in the UK, even though Turkish salaries are significantly lower than the UK - a new univ. lecturer here gets the equivalent of about GBP 1,000 a month so GBP 12,000 a year...

[rosewlsg]

Thanks all for the contributions. I do like the beer comparison! But, yes, it does seem that it's not a straightforward multiplication solution so I'll probably use a few now-and-then cost comparisons and income averages plus a range of possible values.

[Honora]

Just the thread I was looking for!

Work in progress - I'm looking at the cost of erecting a War Memorial window in 1919 for £215. It's a sizeable chunk of money - even allowing for the fact that the local 'big family' put up nearly half of the amount,

Most of the 'middling class names' gave sums of between 5s and £1, while the local villagers have 2s or 2/5 against their names.

Minimum farm wage was about 12s in 1914 in this rural neck of the woods, and probably double that in 1919.

Has anyone done similar calculations?

Honora

[Ice Tiger]

For a measure of impact I have always used average wages.

e.g. item x cost £1 in 1914 which was y % of the average annual/monthly (delete as appropriate) wage. Y % of the average weekly/monthly wage today is Z. Therefore item x that cost whatever it's price was in 1914 would cost z today as a direct comparison in the impact on an individual/organisation.

Probably not explained the best way but it shows the cost of the item as an impact on average wages which I think is a fairer representation than relying in fluctuating prices of beer, milk, bread etc.

Andy

[Honora]

Thanks Andy

that's the way I look at it.

ie what I was struggling towards - for example

2s expressed as a percentage of a £1 a week wage = 1/10th - (historically a 1/10th is the tithe

2s expressed as a percentage of a £1 4s a week wage ie 1/12th.

5s is a 1/12th of £3 a week

So today I suppose

£240 a week today - 1/12th of which is £20, 1/10th = £24

£480 a week today -1/12th of which is £40,

(if my maths is right)

Honora

Edited 17 May , 2014 by Honora

[SiegeGunner]

It would be awfully convenient, for rough comparisons, if £1 then equated to £100 now.

[centurion]

Comparing historical rates is, as my old prof said (when I was doing an MBA in prehistoric times), a mugs game. The basket of what you would buy and on which rates could be judged has changed so much. Some of yesterday's essentials are but distant entries in a musty social history book and some of today's absolutely must haves are but unimaginable fantasies to yesterdays people.

[WilliamRev]

It would be awfully convenient, for rough comparisons, if £1 then equated to £100 now.

Yes, it would be convenient - but during the war we know that factory workers on a pound a week were considered extremely well-paid - so perhaps something like £400 per week today. And when it comes to property, £500 would buy a semi-detached 4 bedroom house in a respectable part of London - say a minimum of £500,000 today: that's £1 in 1916 = £1000.

So things are really not as simple as a single currency conversion.

William

[Ron Clifton]

The trouble with using measures such as the price of beer is that it includes excise duty, which varies according to the whims and needs of governments. The price of bread or milk ought to be fairer.

When I was writing articles for Stand To! in the late 1980s, I used a multiplier of 40, derived from historic indexes quoted in "The Reigning Error" by William Rees-Mogg, extended by the current RPI. By the late 1990s a multiplier of about 50 was more appropriate, and indeed I was able to confirm that the basic pay of a major-general was 50 times the 1914 figure.

Nowadays a figure of around 70 seems more realistic but, as others have pointed out, it depends on which prices or incomes you are considering. As I have already mentioned, the various kinds of tax which apply to a transaction can have a major effect on any comparison.

Ron

[Honora]

Hi All,

with regard to my previous post regarding proportions of wages in1914 and 2014. A statistian to whom I mentioned the discussion, said, in order to complete the picture, one has to also know that what proportion of the wages were spent on essentials of life before one can realistically compare, eg

2s expressed as a percentage of a £1 a week wage = 1/10th - (historically a 1/10th is the tithe) - But what proportion of this £1 was spent on essential living - ie rent, rates, fuel, food?

If 19/6 was needed to keep the family's body and soul together, then 2s was more of a sacrifice to donate to eg the erection of a war memorial than if 14/6 was needed to keep body and soul together.

And as this obviously depends on very much on personal circumstances = difficult to calculate as a generalised rule?!

(For those of you who can't recall pre-decimal days - 19/6 equates to 98 1/2 p !!!!!!!!!!!!!!!!!!)

Honora

Edited 21 May , 2014 by Honora

[kenf48]

FWIW

Average male annual earnings 1913- 1914 = £94 (using the Bank of England calculator as above for 2012 = £9185 p.a.)

Average male annual earnings 1922-1924 = £180

and females £50 and £103

for clarity and taking the male population only in 1913-1914 clerks earned £99 p.a.; foremen £123; skilled manual £106 and unskilled £63. The war skewed the figures and there was some wage inflation. Interestingly in 1920 the wages of stonemasons and similar trades rocketed as the demand for memorials grew!

As for percentage income spent:-

in 1918 it was 38.7% food; 7.1% Alcoholic drink; tobacco 2.9%; rent 7.5%; fuel 4.1%;clothing 11.1; household durables 4.3% ; transport 4.7%

(other goods and services not included one imagines the subscription came out of this proportion of income or savings).

Food inflation as a consequence of the war was up over 5% as a percentage of household expenditure but fell back to pre war levels as the peacetime economy stabilised.

The equivalent figures for 2012 (with the caveats at post 6 and the comments at post 15 firmly in mind ) are on the ONS website.

http://www.ons.gov.uk/ons/rel/family-spending/family-spending/family-spending-2012-edition/index.html

Not sure what you are trying to show as there would have been many other pressures outside of financial for the congregation to subscribe to the memorial.

Ken

[rosewlsg]

On top of the 100 years of difference, I'm also dealing with a very skewed property market. When I thought of describing the current value of a a grade one listed manor house where one man had grown up as 'sold for £x million in 2012' and then converted the amount to Singapore dollars it actually seemed like a huge bargain in a country where apartments cost millions!

[PeterFV]

Try:

http://www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/flash/default.aspx

[David_Underdown]

Try the measuring worth website. Offers a range of different values according to some of the different ways of making the calculation mentioned in this thread

[nigelcave]

Just the thread I was looking for!

Work in progress - I'm looking at the cost of erecting a War Memorial window in 1919 for £215. It's a sizeable chunk of money - even allowing for the fact that the local 'big family' put up nearly half of the amount,

Most of the 'middling class names' gave sums of between 5s and £1, while the local villagers have 2s or 2/5 against their names.

Minimum farm wage was about 12s in 1914 in this rural neck of the woods, and probably double that in 1919.

Has anyone done similar calculations?

Honora

2/5 (a strange figure - or half a crown, ie 2/6?

[JMB1943]

By chance I came across this from a link in a thread about the use of sound mirrors in the war...

"There is no reliable single multiplier for converting the value of £1 in 1914 to that of today. I estimate roughly by using 200 as the conversion factor. W. Van der Kloot, World War I fact book (Amberley, Stroud, 2010)."

Regards,

JMB

[Guest]

There are various scientific, or should I say Economic, methods for this calculation.

A less scientific method that I tend to use is comparison of the price of a Pint of Beer (Bitter).

This website http://www.europeanbeerguide.net/ukstats.htm

gives average price of pint at 3d or 80 pints to a pound so at current price of £2.35(price in my local) this would be £188

bill

Edit The Measuring Worth site gives various options, depending on method used from about £84 to about £650. "Lies, dammed lies and statistics" comes to mind.

The Bitter price standard fails simply due to the Tax and Duty differentials. Tax and Duty as a % of sales distorts this by a multiple factor compared to 1914. The best standards are those based on a basket of staples with utility (i.e essential) that do not attract excessive tax. Mostly food staples. I believe England has bread prices that go back nearly 900 years (Church records), but this again is vulnerable as a single product.

A lifetime in Finance tells me that any 'benchmark' is going to be highly subjective. Economics is known as the dismal science in the City. Kahneman who won the 2002 Nobel prize for economics famously and proudly claimed he had never had an economics lesson - such was his desire to distance himself from the dismal science. He was (and is) a rather brilliant psychologist. MG

The other distortion is the wealth differential across society. Measured by the Gini Coefficient. It changed rather a lot between 1914 and 2015 and again induces massive distortion on spending power, houshold incomes etc. Personally I think the comparison is a futile pursuit.