A Science for Everyone, Community, Demography

Thoughts on Inflation

I’ve been watching monetary inflation since 1976 when I voted for Jimmy Carter.  I still don’t give Jimmy full credit for that spate of inflation – Nixon made the call that the US dollar would no longer be backed by gold in August of 1971.

1968 had been an interesting election – I recall the unhappy observation “Nixon, Humphrey, Wallace – three strikes and you’re out.”  The picture below brought back memories of a happier time, when I would add a million dollar Zimbabwe bill to a retirement card, so that my retiring colleagues would be millionaires as they left the university.  Ten bucks bought all the Zim million dollar notes I needed for a slew of retirement receptions.

Now the thing about inflation is that it taxes savers, and can move into being a tax on investors.  If we look at the value of gold during the California Gold Rush – 1849 – it was $18.93 per ounce.  That same value held through the Virginia City days, and basically took Montana from wilderness to statehood.  In 1920, gold finally topped $20 per ounce.  When Franklin Roosevelt was elected President, gold was at $20.69 per ounce – the next year, 1933, it was $26.33.  In 1934, it went to $34.69.

A couple of old Winchester catalogs, from 1900 and 1916, suggest that my Grandfather paid about $19.50 or a little more for his 1894 32 special rifle.  A glance online suggests somewhere close to $1,200 dollars today.  As I write this, gold is going for $1890.35 – roughly 100 times higher than when the rifle was made in 1902 along with the new, more powerful 32 special.  The cost of the rifle hasn’t kept up with gold.  Inflation or not, it’s kind of nice to look off the front porch and see the spot where my grandmother got a four-point in 1922.

At that turn of the century, land here was still available for homesteading – land here in Trego had little value.  Thirty dollars per acre was still a norm for accessible land in the 1950’s.  It’s another basis for calculating inflation – and if memory serves, Lee Harvey Oswald was paid 85 cents per hour in 1963. 

Median family incomes were somewhere around $500 per year in 1900, and had risen to about $3,300 by 1950.  Still, that half century was a time of many new developments and a greatly improved living standard.  Part of the change was that people could buy more – much like during our more recent inflationary times – along with the inflation of the eighties came the personal computer, the compact discs, video players etc.  Technical advances reduced the impact of inflation.

There is a certain irony in Putin’s decision to tie the Russian ruble to the value of gold.  Since that decision the ruble has gone up 6% compared to the US dollar.  He’s kind of the anti-Nixon, creating a stronger currency instead of a weaker one.  I guess that inflation often boils down to a handful of government officials making the decision to print more money.  I have a hunch inflation helps the folks who get the new dollars a lot more than it helps those who are trying to hang on to the existing dollars.


Homesteading and Risk

I saw a vague statistic the other day – an estimate that between 46 million and 93 million Americans are descended from homesteaders.  The number seems low – but my work experience is in the West . . . I have received a few paychecks from Minnesota, but most of my working life has been in Montana, Colorado, and South Dakota.  I suspect that, at least in Montana and South Dakota, the majority of my coworkers had homesteader grandparents and great-grandparents.

My maternal great-grandparents had a story about Sitting Bull and his two wives stopping by their homestead right after my grandmother was born.  The dates of her birth and his death make the story possible, but don’t verify.  At the least, she was born in the same area and time where Sitting Bull was for the last year of his life.  My maternal great-grandparents were homesteaders,  My grandfather homesteaded in North Dakota, then finished proving up on two homesteads (which he bought) in Trego.  There is a special place for the legislation that authorized both homesteading and the land grant colleges – they were passed at a time when most of the Democrat legislators were in Richmond, not Washington.

The Homestead Act granted free land – but the homesteader had to live on that tract, raise a crop and build a house.  I’ve seen the log cabins and soddies that were their initial homes, and realize how limited the toolbox on the homestead was.  Yet the risks and hardships associated with the homesteading movement are the basis real estate investment for about a tenth of the land in the United States.  Not a tenth of the private land – a tenth of the total land mass. 

Checking the records in South Dakota, I learned that the majority of female homesteaders near my home were Indian women – not all tribes received reservations, and these Indian women didn’t wait until 1924 for the rights of US citizenship – they were recognized as citizens upon proving up their homesteads.  Single women, white or Indian, former slaves, immigrants, all could qualify for homesteads.

Not all succeeded.  Along the Milk River, that reliable water source also brought disease – typhus if memory serves correctly.  Homesteads were being claimed when Custer was still on active duty.  Risks from all sources were high.  Yet the Homestead Act gave Americans of all backgrounds the opportunity to risk it all for the chance to become landowners.

Some died.  Some gave up, sold the homestead and found a job in town.  Some became landowners – property owners.  The Homestead Act provided a framework for upward mobility in rural America.  That opportunity to choose risk and hard work as a way to property doesn’t exist in today’s risk averse society.

I think we’ve lost that link with the homesteaders – when my grandparents moved to Trego, their neighbors were people like them, homesteading to become property owners and eking out a living until the land became their own.  My last link with that generation went with the passing of Loretta Todd – I doubt if she ever realized that her comments on “Fahlgren’s Pond” were my last touch with a grandfather who died before my fifth birthday.