While paging through my pocket-sized Constitution today, I came across the 7th Amendment, which reads:
This got me to thinking. The Founding Fathers clearly didn’t anticipate the abandoning of the gold standard and the subsequent invasion, and assumed that $20 would always be worth what it was worth then. Of course, things have changed, and what was a hefty sum in 1791 is barely enough to buy dinner for 2 in 2004. If we were to rewrite this amendment today to account for the difference between the value of money then and money now, what would the equivalent sum be?
It’s hard to make a meaningful comparison of purchasing power over such a long period. Inflation is normally measured by comparing the prices of a basket of common household purchases at two different date, but few of the items in a 1791 basket would be in a 2004 basket, and vice versa. A crude measure over long periods is to take the price of one item, or a small number of items, which are household staples throughout the period, such as a loaf of bread. But even this measure ignores the fact that the quality of the loaf you buy today may be very different from the loaf you could buy in 1791 and, in any event, both in 1791 and 2004 people spent most of their money on goods and services other than loaves of bread.
Your mention of the gold standard is a red herring; the gold standard fixed the purchasing power of of the dollar with respect to gold, but not with respect to any other goods or services. Price inflation (and deflation) was a reality while the gold standard was observed, and not just afterwards.
Having said all that, this site http://www.westegg.com/inflation/ suggests that what cost $20 in 1800 (it doesn’t go any earlier than that) would cost $203.16 in 2002. This site http://eh.net/hmit/ppowerusd/ allows you to go back to 1791 and suggest that the answer is $380.81. The discrepancy between the two answers probably has more to do with the difficulty of making any meaningful comparison than with the 9-year difference in the periods being measured.
If I go by a source based on changes in US purchasing power, $20 of 1787 would be roughly $385 in
2004.
If I go by a source based on changes UK purchasing power, $20 equivalent of 1787 would be roughly $1500 equivalent in 2004.
Oddly enough, both sources are on the same server: http://eh.net/hmit/
This could be explained by positing that the Pound has fallen in purchasing power 4-5 times faster than has the Dollar.