Economic Data

In assessing the overall wealth of a nation, economists begin with its Gross Domestic Product, or the value of all of the goods and services it produces. They then typically divide Total GDP by the Population count to arrive at Per Capita GDP or an average person’s annual income.

Finally they attempt to compare incomes against the prices charged for needed goods and serviced to assess a “cost of living” measure of prosperity.

While sophisticated measures of Per Capita GDP exist today, that is not the case for America between colonial times and around 1840, when the Census began to record economic data. Thus a series of scholars have tried to piece bits of information together to capture the early history. Among them are Professor Paul David (Stanford), Thomas J. Weiss (Kansas), Roger Ransom (UC-Riverside) and Douglas North (Washington).

But it is the team of Peter Lindert (UC-Davis) and Jeffrey Williamson (Harvard) who have been in the forefront of “cliometric” research, tying econometric models to historical events and causes. Their “Measuring Worth” framework provides the foundation for much of the economic tables which follow.

As evident in Table 16.0, Per Capita GDP estimates vary widely between the researchers up until around 1830 where they begin to tighten up. The decline between 1810 and 1820 likely reflects the aftermath of the War of 1812. Then come gains from 1830 to 1850 as the economy diversifies from Jefferson’s agricultural model to Hamilton’s capitalism and industrialization. The dramatic jump to 1860 coincides with the nation’s rapid expansion into the western lands.

15.0 Estimated Annual Per Capita Income

To begin to see how the above translates into average family income, we can multiply the per capita amounts by 6, the average size of households at the time.

15.1 Estimated Annual Household Income

The annual incomes can then be broken down into weekly, daily and hourly incomes, assuming a 10 hour work day.

15.2 Estimated Weekly and Daily Household Income

While at Vanderbilt University, Professor Robert Margo estimated how the annual income levels differed between common day laborers, skilled artisans and white collar workers. By 1860 the gap between the low and high earners is already sizable.

15.3 Average Annual Wages For Various Workers

For added perspective, the 1860 Census provides more details on the distribution of occupations in 1860.

15.4 Occupations in America in 1860

And Dr. David Walbert’s look at the occupational classes in the State of North Carolina in 1860 shows that farming remained more prevalent in the South.

15.5 Occupations in North Carolina in 1860

Further insights on wages by occupation and region are provided by the Lindert and Williamson tandem. They show that the highest paying jobs go to clergymen, government officials, lawyers and judges.

15.6 Average Annual Wages in 1840-50 By Worker Groups and Regions

President Lincoln’s pay in 1860 was $25,000.

An attempt by the author to identify economic classes among whites goes as follows:

15.7 Guesstimated Economic Classes Among White Americans Circa 1850

The picture for the 14% of the population who are African-Americans is dismal. Nine in ten of them are enslaved, and have no hopes for income. The rest are “freedmen” typically confined to segregated enclaves and barely surviving at the lowest rung on the economic ladder.

But in order to assess how well off financially early Americans really were, one must start with their ability to find land to build a dwelling, operate a farm and raise a family.

For some, “squatter sovereignty” is the initial answer. Find open space; lay down stakes; and proceed from there. The federal government, however, frowned on this path, especially since the sale of public domain land was one of the two main sources of revenue, the other being tariffs.

To curtail squatters, a series of Land Acts are passed over time. The 1796 bill said that a minimum of 640 acres could be purchased at a set price of $2.00 per acre. But the total cost of $1280 proved way beyond what settlers could afford, and so the terms were eased.

By 1804, a settler could buy 160 acres – about the size of a typical farm – for $320. And after the victorious War of 1812, the price per acre dropped to $1.25.

But it is Lincoln’s 1862 Land Act that really opens up the land west of the Mississippi River. For a simple filing fee of $18, it offers 160 acres – enough to produce crops of corn or wheat — for free to anyone who guarantees to settle down and work the land continuously for five years.

15.8 The Cost of Land per Digital History

The cost of land aside, personal wealth comes down to “buying power.” Thus if an average worker in 1860 has an income of roughly $3 per day, how many days would he need to work to buy the basic necessities of life?

While much of the data on “what things cost around 1860” is anecdotal, the National Park Service has accumulated their estimates for 1870 in the tables which follow.

The cheapest form of shelter belongs to squatters on public lands who build one room shanty shacks with dirt floors costing around $25. A nicer 2 room house with a wood floor would cost $300 and about 100 days of labor at the average rate of $3 per day.

15.9 Housing

Clothing is reasonably affordable, although even a pair of boots would require 8 days of labor.

15.10 Clothing

Tea was much more of a luxury than coffee, while a glass of beer or a shot of whiskey cost about 10 cents a pop. Distilled liquor especially is consumed in huge amounts at the time, with annual estimates around 5 gallons per adult.

15.11 Beverages

Tobacco is in widespread supply and is inexpensive at 10 cents a pound.
Most American eat three meals a day, typically rich in the protein needed to fuel their physical labors. Consumption of chickens is minimal. Pigs are the one species dedicated to dining, and products like bacon and ham command higher prices. Beef consumption is initially limited by the role cattle played in operating a farm – with cows yielding milk and bulls working the fields.

15.12 Meat, Poultry and Fish

But beef consumption rises sharply as cattle ranches take off in the west around 1840. In his book, A History of Livestock Raising in the United States: 1607-186, University of Chicago Professor James Westfall Thompson profiles the growth of these ranches. They originate when cowboys see a market for rounding up cattle (female cows and male bulls) for the purpose of breeding and selling their offspring at a profit. Annual cattle drives follow, with herds moved cross country over tracks like the Chisolm Trail, first to slaughter houses in the Midwest, then on to local butcher shops and grocery stores. Texas Longhorns soon become the most popular breed among the early ranchers.

The table below recaps estimated prices for various livestock around 1860.

15.13 Livestock Prices

The cost of dairy, starches and other foods are shown below.

15.14 Other Foodstuffs

On top of shelter, clothing and food, settlers on the frontier have other necessities. Firearms are considered mandatory – with shotguns and rifles for hunting and handguns for personal protection against potential lawlessness.

15.15 Armaments

Then there is transportation. An average working horse costs around $150 and a saddle horse is $200 and up. Mules run from $50-100 depending on their condition. A basic wagon for hauling things runs about $65, while a fancier buggy goes for $75.

15.16 Transportation

Again, much of the above data is anecdotal rather than scientific, but it at least provides an approximation of the prosperity of everyday Americans.

Finally, there is the question of how “prosperity” in America compared to other more established nations in the west? Beginning with per capita GDP income.

Work on this very complicated and data-scarce topic was pioneered by British economist Angus Maddison in the 1970’s. As of 2010 Professors Jutta Bolt and Jan van Zanden at the University of Groningen in the Netherlands initiated The Maddison Project to continue the earlier analyses. Their recent indices below show that America’s per capita GDP lagged well behind Britain and the Netherlands in 1820, but grew much more rapidly between then and 1860.

Unfortunately the absence of comparable data on costs of living make it impossible to measure relative prosperity.

15.17 Estimated Per Capita GDP Across Nations