Ever wonder why that dollar bill in your pocket is worth anything? After all, it is not gold or silver, but printed paper. The basic reason it has value is simply because it says it does. Just beside the portrait of the late great George Washington is written, “This note is legal tender for all debts, public and private.” However, it is obvious that a dollar will not buy what it used to.
My Grandfather and namesake Henry Walker passed away more than a year before I was born. Then a longtime family friend Philip Caillouet, a transplanted Canadian born in Montreal in 1893 unselfishly became the Grandfather of this fatherless son.
I will never forget one afternoon when I was almost 10 years old, Caillouet and I had taken that familiar six block walk to the Piggly Wiggly for bread and milk. As we were paying for our groceries, Caillouet learned that the price of the loaf of bread had just gone up from .24 to .29. He paid the clerk, but it was the first time I can remember seeing him get visibly angry.
Walking back home he carried the milk while I carried the bread. After a couple of blocks, he stopped, glared back at the grocery store and said, “When I was your age a loaf of bread cost a nickel and today it is 29 cents. That is outrageous!” Offering me my first taste of political opinion, he looked at me and added, “Son, by the time you are my age, these politicians are going to bankrupt the country.”
Well, I am not quite as old as Caillouet was at that time, but he was right… the politicians did bankrupt the country. If that may sound a bit extreme, just consider not only what happened to the value of our currency before 1970, but since then as well.
Philip Caillouet was born in 1893. Consequently, in 1903 he was a 10 year old boy buying 5 cent loaves of bread. It took 67 years for that same bread to increase in price by 24 cents. Now, that may not seem as much to us today as it did to Caillouet when he was 77, but that was more than a 500% increase in the price of bread.
However, now that I am 50 years old, I just bought a loaf of bread yesterday for $2.69. Think about it, in only 40 years since I was 10 years old, a loaf of bread increased $2.40, or about 900%. By the way, that was done in 27 less years. Obviously, the value of bread is not the reason for this increase. It is actually the decrease of the value of our money.
So I decided to research how much money I would need today to have the same “purchasing power” of $500 in 1970. I almost fell out of my chair after verifying my calculations for the third time, when I learned that I would need $2760 today to buy the same goods that took $500 to buy only 40 years ago. Can you say inflation?
Measuring the value of the dollar in terms of gold is not difficult. In the early 1930’s when our Country’s currency was based on the gold standard, gold was set at a fixed price of $20.67 per ounce, according to The Economist magazine. By the early 1970’s, the gold standard was completely removed and the price of gold was allowed to reach a “market” value. As of last month, that “market” value had exceeded $1300 per ounce.
The rise of gold from almost $21 an ounce to over $1300 an ounce effectively created a massive devaluation of the American dollar. An ounce of gold purchased in 1930 for $21 could be sold today for more than $1300. Had you just kept that $20 in your cookie jar, it would still be worth $20, but it would purchase less than 1/50th of an ounce of gold.
We lost Philip Caillouet in early 1981. Less than a year after I gave my first born son his name. I have little doubt that he would be pleased to know that his namesake is doing well on the eve of his 30th birthday.
If history continues on its present course, by the time my oldest son turns 50, that infamous nickel loaf of bread will then be $3.60. I hate to think about what it will cost him to make a turkey sandwich.
Henry Piarrot is the general manager of the SpringHill Suites by Marriott Pigeon Forge. Please send all story recommendations to hpiarrot@yahoo.com
