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- Inflation And Real Value Of Money
Value of $1 from 1800 to 2021
Value of $1 from 1860 to 2021 $1 in 1860 is equivalent in purchasing power to about $32.73 today, an increase of $31.73 over 161 years. The dollar had an average inflation rate of 2.19% per year between 1860 and today, producing a cumulative price increase of 3,173.45%. This means that today's prices are 32.73 times higher than average prices since 1860, according to the Bureau of Labor.
$1 in 1800 is equivalent in purchasing power to about $21.56 today, an increase of $20.56 over 221 years.The dollar had an average inflation rate of 1.40% per year between 1800 and today, producing a cumulative price increase of 2,056.32%.
This means that today's prices are21.56 times higher thanaverage prices since 1800,according to the Bureau of Labor Statistics consumer price index.A dollar today only buys 4.64% of what it could buy back then.
The 1800 inflation rate was 2.44%. The current year-over-year inflation rate (2020 to 2021) is now 5.39%1.If this number holds, $1 today will be equivalent in buying power to $1.05 next year.The current inflation rate page gives more detail on the latest inflation rates.
| Cumulative price change | 2,056.32% |
| Average inflation rate | 1.40% |
| Converted amount ($1 base) | $21.56 |
| Price difference ($1 base) | $20.56 |
| CPI in 1800 | 12.600 |
| CPI in 2021 | 271.696 |
| Inflation in 1800 | 2.44% |
| Inflation in 2021 | 5.39% |
| $1 in 1800 | $21.56 in 2021 |
Buying power of $1 in 1800
This chart shows a calculation of buying power equivalence for $1 in 1800 (price index tracking began in 1635).
For example, if you started with $1, you would need to end with $21.56 in order to 'adjust' for inflation (sometimes refered to as 'beating inflation').
When $1 is equivalent to $21.56 over time, that means that the 'real value' of a single U.S. dollar decreases over time. In other words, a dollar will pay for fewer items at the store.
This effect explains how inflation erodes the value of a dollar over time. By calculating the value in 1800 dollars, the chart below shows how $1 is worth less over 221 years.
According to the Bureau of Labor Statistics, each of these USD amounts below is equal in terms of what it could buy at the time:
| Year | Dollar Value | Inflation Rate |
|---|---|---|
| 1800 | $1.00 | 2.44% |
| 1801 | $1.01 | 0.79% |
| 1802 | $0.85 | -15.75% |
| 1803 | $0.90 | 5.61% |
| 1804 | $0.94 | 4.42% |
| 1805 | $0.93 | -0.85% |
| 1806 | $0.97 | 4.27% |
| 1807 | $0.92 | -4.92% |
| 1808 | $1.00 | 8.62% |
| 1809 | $0.98 | -2.38% |
| 1810 | $0.98 | 0.00% |
| 1811 | $1.04 | 6.50% |
| 1812 | $1.06 | 1.53% |
| 1813 | $1.27 | 20.30% |
| 1814 | $1.40 | 10.00% |
| 1815 | $1.22 | -12.50% |
| 1816 | $1.12 | -8.44% |
| 1817 | $1.06 | -5.67% |
| 1818 | $1.01 | -4.51% |
| 1819 | $1.01 | 0.00% |
| 1820 | $0.93 | -7.87% |
| 1821 | $0.90 | -3.42% |
| 1822 | $0.93 | 3.54% |
| 1823 | $0.83 | -10.26% |
| 1824 | $0.77 | -7.62% |
| 1825 | $0.79 | 2.06% |
| 1826 | $0.79 | 0.00% |
| 1827 | $0.79 | 1.01% |
| 1828 | $0.75 | -5.00% |
| 1829 | $0.74 | -2.11% |
| 1830 | $0.73 | -1.08% |
| 1831 | $0.69 | -5.43% |
| 1832 | $0.68 | -1.15% |
| 1833 | $0.67 | -2.33% |
| 1834 | $0.68 | 2.38% |
| 1835 | $0.70 | 2.33% |
| 1836 | $0.74 | 5.68% |
| 1837 | $0.76 | 3.23% |
| 1838 | $0.74 | -3.12% |
| 1839 | $0.74 | 0.00% |
| 1840 | $0.69 | -6.45% |
| 1841 | $0.69 | 0.00% |
| 1842 | $0.65 | -5.75% |
| 1843 | $0.59 | -9.76% |
| 1844 | $0.60 | 1.35% |
| 1845 | $0.60 | 1.33% |
| 1846 | $0.61 | 1.32% |
| 1847 | $0.65 | 6.49% |
| 1848 | $0.63 | -3.66% |
| 1849 | $0.61 | -2.53% |
| 1850 | $0.62 | 1.30% |
| 1851 | $0.61 | -1.28% |
| 1852 | $0.61 | 0.00% |
| 1853 | $0.61 | 0.00% |
| 1854 | $0.67 | 9.09% |
| 1855 | $0.69 | 3.57% |
| 1856 | $0.67 | -2.30% |
| 1857 | $0.69 | 2.35% |
| 1858 | $0.65 | -5.75% |
| 1859 | $0.66 | 1.22% |
| 1860 | $0.66 | 0.00% |
| 1861 | $0.70 | 6.02% |
| 1862 | $0.80 | 14.77% |
| 1863 | $1.00 | 24.75% |
| 1864 | $1.25 | 24.60% |
| 1865 | $1.29 | 3.82% |
| 1866 | $1.26 | -2.45% |
| 1867 | $1.17 | -6.92% |
| 1868 | $1.13 | -4.05% |
| 1869 | $1.08 | -4.23% |
| 1870 | $1.04 | -3.68% |
| 1871 | $0.97 | -6.87% |
| 1872 | $0.97 | 0.00% |
| 1873 | $0.95 | -1.64% |
| 1874 | $0.90 | -5.00% |
| 1875 | $0.87 | -3.51% |
| 1876 | $0.85 | -2.73% |
| 1877 | $0.83 | -1.87% |
| 1878 | $0.79 | -4.76% |
| 1879 | $0.79 | 0.00% |
| 1880 | $0.81 | 2.00% |
| 1881 | $0.81 | 0.00% |
| 1882 | $0.81 | 0.00% |
| 1883 | $0.80 | -0.98% |
| 1884 | $0.78 | -2.97% |
| 1885 | $0.77 | -1.02% |
| 1886 | $0.75 | -3.09% |
| 1887 | $0.75 | 1.06% |
| 1888 | $0.75 | 0.00% |
| 1889 | $0.73 | -3.16% |
| 1890 | $0.72 | -1.09% |
| 1891 | $0.72 | 0.00% |
| 1892 | $0.72 | 0.00% |
| 1893 | $0.71 | -1.10% |
| 1894 | $0.68 | -4.44% |
| 1895 | $0.67 | -2.33% |
| 1896 | $0.67 | 0.00% |
| 1897 | $0.66 | -1.19% |
| 1898 | $0.66 | 0.00% |
| 1899 | $0.66 | 0.00% |
| 1900 | $0.67 | 1.20% |
| 1901 | $0.67 | 1.19% |
| 1902 | $0.68 | 1.18% |
| 1903 | $0.70 | 2.33% |
| 1904 | $0.71 | 1.14% |
| 1905 | $0.70 | -1.12% |
| 1906 | $0.71 | 2.27% |
| 1907 | $0.75 | 4.44% |
| 1908 | $0.73 | -2.13% |
| 1909 | $0.72 | -1.09% |
| 1910 | $0.75 | 4.40% |
| 1911 | $0.75 | 0.00% |
| 1912 | $0.77 | 2.11% |
| 1913 | $0.79 | 2.06% |
| 1914 | $0.79 | 1.01% |
| 1915 | $0.80 | 1.00% |
| 1916 | $0.87 | 7.92% |
| 1917 | $1.02 | 17.43% |
| 1918 | $1.20 | 17.97% |
| 1919 | $1.37 | 14.57% |
| 1920 | $1.59 | 15.61% |
| 1921 | $1.42 | -10.50% |
| 1922 | $1.33 | -6.15% |
| 1923 | $1.36 | 1.79% |
| 1924 | $1.36 | 0.00% |
| 1925 | $1.39 | 2.34% |
| 1926 | $1.40 | 1.14% |
| 1927 | $1.38 | -1.69% |
| 1928 | $1.36 | -1.72% |
| 1929 | $1.36 | 0.00% |
| 1930 | $1.33 | -2.34% |
| 1931 | $1.21 | -8.98% |
| 1932 | $1.09 | -9.87% |
| 1933 | $1.03 | -5.11% |
| 1934 | $1.06 | 3.08% |
| 1935 | $1.09 | 2.24% |
| 1936 | $1.10 | 1.46% |
| 1937 | $1.14 | 3.60% |
| 1938 | $1.12 | -2.08% |
| 1939 | $1.10 | -1.42% |
| 1940 | $1.11 | 0.72% |
| 1941 | $1.17 | 5.00% |
| 1942 | $1.29 | 10.88% |
| 1943 | $1.37 | 6.13% |
| 1944 | $1.40 | 1.73% |
| 1945 | $1.43 | 2.27% |
| 1946 | $1.55 | 8.33% |
| 1947 | $1.77 | 14.36% |
| 1948 | $1.91 | 8.07% |
| 1949 | $1.89 | -1.24% |
| 1950 | $1.91 | 1.26% |
| 1951 | $2.06 | 7.88% |
| 1952 | $2.10 | 1.92% |
| 1953 | $2.12 | 0.75% |
| 1954 | $2.13 | 0.75% |
| 1955 | $2.13 | -0.37% |
| 1956 | $2.16 | 1.49% |
| 1957 | $2.23 | 3.31% |
| 1958 | $2.29 | 2.85% |
| 1959 | $2.31 | 0.69% |
| 1960 | $2.35 | 1.72% |
| 1961 | $2.37 | 1.01% |
| 1962 | $2.40 | 1.00% |
| 1963 | $2.43 | 1.32% |
| 1964 | $2.46 | 1.31% |
| 1965 | $2.50 | 1.61% |
| 1966 | $2.57 | 2.86% |
| 1967 | $2.65 | 3.09% |
| 1968 | $2.76 | 4.19% |
| 1969 | $2.91 | 5.46% |
| 1970 | $3.08 | 5.72% |
| 1971 | $3.21 | 4.38% |
| 1972 | $3.32 | 3.21% |
| 1973 | $3.52 | 6.22% |
| 1974 | $3.91 | 11.04% |
| 1975 | $4.27 | 9.13% |
| 1976 | $4.52 | 5.76% |
| 1977 | $4.81 | 6.50% |
| 1978 | $5.17 | 7.59% |
| 1979 | $5.76 | 11.35% |
| 1980 | $6.54 | 13.50% |
| 1981 | $7.21 | 10.32% |
| 1982 | $7.66 | 6.16% |
| 1983 | $7.90 | 3.21% |
| 1984 | $8.25 | 4.32% |
| 1985 | $8.54 | 3.56% |
| 1986 | $8.70 | 1.86% |
| 1987 | $9.02 | 3.65% |
| 1988 | $9.39 | 4.14% |
| 1989 | $9.84 | 4.82% |
| 1990 | $10.37 | 5.40% |
| 1991 | $10.81 | 4.21% |
| 1992 | $11.13 | 3.01% |
| 1993 | $11.47 | 2.99% |
| 1994 | $11.76 | 2.56% |
| 1995 | $12.10 | 2.83% |
| 1996 | $12.45 | 2.95% |
| 1997 | $12.74 | 2.29% |
| 1998 | $12.94 | 1.56% |
| 1999 | $13.22 | 2.21% |
| 2000 | $13.67 | 3.36% |
| 2001 | $14.06 | 2.85% |
| 2002 | $14.28 | 1.58% |
| 2003 | $14.60 | 2.28% |
| 2004 | $14.99 | 2.66% |
| 2005 | $15.50 | 3.39% |
| 2006 | $16.00 | 3.23% |
| 2007 | $16.46 | 2.85% |
| 2008 | $17.09 | 3.84% |
| 2009 | $17.03 | -0.36% |
| 2010 | $17.31 | 1.64% |
| 2011 | $17.85 | 3.16% |
| 2012 | $18.22 | 2.07% |
| 2013 | $18.49 | 1.46% |
| 2014 | $18.79 | 1.62% |
| 2015 | $18.81 | 0.12% |
| 2016 | $19.05 | 1.26% |
| 2017 | $19.45 | 2.13% |
| 2018 | $19.94 | 2.49% |
| 2019 | $20.29 | 1.76% |
| 2020 | $20.54 | 1.23% |
| 2021 | $21.56 | 4.98%* |
This conversion table shows various other 1800 amounts in today's dollars, based on the 2,056.32% change in prices:
| Initial value | Equivalent value |
|---|---|
| $1dollarin 1800 | $21.56dollarstoday |
| $5dollarsin 1800 | $107.82dollarstoday |
| $10dollarsin 1800 | $215.63dollarstoday |
| $50dollarsin 1800 | $1,078.16dollarstoday |
| $100dollarsin 1800 | $2,156.32dollarstoday |
| $500dollarsin 1800 | $10,781.59dollarstoday |
| $1,000dollarsin 1800 | $21,563.17dollarstoday |
| $5,000dollarsin 1800 | $107,815.87dollarstoday |
| $10,000dollarsin 1800 | $215,631.75dollarstoday |
| $50,000dollarsin 1800 | $1,078,158.73dollarstoday |
| $100,000dollarsin 1800 | $2,156,317.46dollarstoday |
| $500,000dollarsin 1800 | $10,781,587.30dollarstoday |
| $1,000,000dollarsin 1800 | $21,563,174.60dollarstoday |
Inflation by Country
Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1800 would be equivalent to £85.92 in 2021, an absolute change of £84.92 and a cumulative change of 8,492.23%.
Compare these numbers to the US's overall absolute change of $20.56 and total percent change of 2,056.32%.
Inflation by Spending Category
CPI is the weighted combination of many categories of spending that are tracked by the government. Breaking down these categories helps explain the main drivers behind price changes. This chart shows the average rate of inflation for select CPI categories between 1800 and 2021.
Compare these values to the overall average of 1.40% per year:
| Category | Avg Inflation (%) | Total Inflation (%) | $1 in 1800 → 2021 |
|---|---|---|---|
| Food and beverages | 3.87 | 441,348.92 | 4,414.49 |
| Housing | 4.15 | 801,449.42 | 8,015.49 |
| Apparel | 1.95 | 7,053.22 | 71.53 |
| Transportation | 3.24 | 114,370.15 | 1,144.70 |
| Medical care | 4.69 | 2,486,878.17 | 24,869.78 |
| Recreation | 1.11 | 1,046.41 | 11.46 |
| Education and communication | 1.82 | 5,301.32 | 54.01 |
| Other goods and services | 4.93 | 4,168,782.35 | 41,688.82 |
The graph below compares inflation in categories of goods over time. Click on a category such as 'Food' to toggle it on or off:
For all these visualizations, it's important to note that not all categories may have been tracked since 1800. This table and charts use the earliest available data for each category.
Inflation rates of specific categories
Medical Care· Housing· Rent· Food· MoreInflation-adjusted measures
S&P 500 price·S&P 500 earnings·Shiller P/EHow to Calculate Inflation Rate for $1 since 1800
Our calculations use the following inflation rate formula to calculate the change in value between 1800 and today:
Then plug in historical CPI values. The U.S. CPI was 12.6 in the year 1800 and 271.696 in 2021:
Time Value Of Money Investing
$1 in 1800 has the same 'purchasing power' or 'buying power' as $21.56 in 2021.
To get the total inflation rate for the 221 years between 1800 and 2021, we use the following formula:
Plugging in the values to this equation, we get:
News headlines from 1800
Politics and news often influence economic performance. Here's what was happening at the time:
- First session of Congress held at under-construction Capitol building in Washington D.C.
- First cowpox vaccination (for smallpox prevention) in the United States. The vaccine was given by Dr Benjamin Waterhouse to his son.
- The free African American community of Philadelphia submits its first petition to US Congress for the abolition of slavery.
- Barnaba Niccoclo Maria Luigi Chiaramonti elected pope, taking the name Pope Pius VII.
- A Smallpox vaccine is invented by Doctor Benjamin Waterhouse leading to the first immunization against the disease.
- Congress holds its first session in the, at the time, still incomplete Capitol building in Washington D.C.
- The French army defeats the Turks at Helipolis, after which they advanced on to Cairo.
Raw data for these calculations comes fromthe Bureau of Labor Statistics'Consumer Price Index(CPI), established in 1913. Inflation data from 1665 to1912 is sourced from a historical study conducted by political scienceprofessor Robert Sahr at Oregon State University.
You may use the following MLA citation for this page:“$1 in 1800 → 2021 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 27 Jul. 2021, https://www.officialdata.org/us/inflation/1800?amount=1.
Special thanks to QuickChart for their chart image API, which is used for chart downloads.
The previous article was an introduction about the two basic decisions that corporate finance helps a corporation in making. Prima-facie, these two decisions may look pretty simple. After all everyone raises money in their daily lives and puts it to productive use. Simple accounting can tell us whether or not we should make those financing and investing decisions. So, why is there a need for a complicated subject called corporate finance to make these decisions? Well, it turns out there is a need? The need arises because of this concept of nominal and real value of money. This article will explain why corporate finance is required:
The Concept of Inflation
Inflation Value Of Money
We are all intuitively aware of the concept of inflation. We know that money loses its value every year. The same amount of money will purchase less and less every year. Let’s say that $100 is required to purchase a certain commodity of goods today. So if there is an inflation of 10%, the same goods will be available for a $110 next year.
Introduction to Nominal Value of Money
So, if we made an investment that was yielding 9% return this year, we would have a total of $109 next year from the $100 we had invested. In accounting terms we would have a profit of $9. This is because we are only considering the nominal values. Nominal values do not consider the effect of inflation, opportunity cost of capital and such other forces which cause the value of money to decrease in a given time period.
The Problem with Nominal Values to Measure a Firm’s Performance:
Nominal values present a distorted image of the firm’s performance to its shareholders and this is to say the least. Consider the case we discussed above. Here, the firm has lost 1% purchasing power. This means they were better off consuming the $100 in year 1 and could have purchased more goods with it rather than investing it and consuming $109 a year later. Thus, if nominal values are considered, firms will end up eroding their capital by investing their money in projects that offer a rate of return that is below the firm’s cost of capital.
Introduction to Real Value of Money
Present Value Of Past Money Calculator
To offset this problem, specialists in corporate finance have come up with the concept of real value of money. The real value of money takes into account inflation, opportunity cost of capital and such other forces. Thus, firms that base their calculations on these inflation adjusted values make better financial decisions as compared to those that do not. The calculation for both real as well as nominal values is simple and can be done with the help of the following formula:
Real Value = Nominal Value / (1 + (i / 100))
i = The prevailing inflation rate in the market
Subjectivity in Real Value of Money:
It must be understood that the real and nominal values of money are subjective. This is because, they are determined using the inflation rate. There is no single measure of inflation. The government itself produces multiple estimates of inflation. Also, for the purpose of the company’s calculation, these measures may not be good enough. So the company may create its own inflation index depending on which the real values are calculated. Thus, there is widespread subjectivity in this calculation. Different companies use different rates to convert nominal values to real values.
The biggest take-away from the concept of nominal and real values is that money in one time period is not directly comparable to money in another time period. It is for this reason we have to calculate present values, future values and the like. These calculations form the backbone of corporate finance.
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