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[Clansgian AT wmconnect.com]

The idea of gold being an eternal and stable storehouse of wealth, a line 
that is most often heard on the infomercials offering to sell you gold, was 
being 
discussed amongst some acquaintances and the following I found a bit 
interesting.

At one time, and for a long time, in our history, the definition of a dollar 
was the monetary value of the goods and services for a family for more or 
less 
a couple of days.  Thus the average wage, based on this definition, for a 
very long time in our history was a dollar a day.  That is, the definition of 
a 
dollar was naturally extrapolated from placing a cash value on what it took 
in 
rent, food, fuel, and other expenses for a typical family.

During that time a dollar a day was not the (de facto) minimum wage, it was 
the wage for an AB trained worker in difficult and dangerous work.  It was 
the 
wage paid to mine workers, loggers, boatmen, teamsters, etc.

My great grandmother worked as a cook in the logging camps just before the 
turn of the previous century.  She told how (and apparently this was a 
universal 
practice) the payroll was accomplished by going to the bank on payday and 
getting sacks of silver dollars.  When the men lined up for the pay roll, the 
boss made sure they agreed how many days the man had worked and then counted 
out 
a stack of silver dollars for that many days.  The main purpose of silver 
dollars was for paying for labor in an efficient and easily recognized manner.

The "value" of silver in dollars was fixed by the government in order to 
ensure a stable currency.  In those days a 'day' was as long as the employer 
said 
it was and people typically worked six days a week.  But I want to inject an 
anachronism here and impose 21st century habits on my 19th century workforce 
so 
that I can make a valid comparison.  Let's suppose you emplyed someone back 
then five days a week, a typical month would mean you are going to pay them 
for 
twenty to twenty-two days.  The 1889 Double Eagle I have would have, in 1889, 
paid for the hard physical work for a trained or semi-skilled AB worker for a 
month.  The coin is of course, by definition, one troy ounce of gold since at 
that time, and until the 1930's, the definition of a dollar was fixed at 
1/20th an ounce of gold.

Let's suppose, as is the case, someone (my great grandfather in this case) 
slipped a double eagle in his pocket in 1889 and it passed along three more 
generations to get to me.  Has it increased in value or at least kept its 
1889 
value?

In 1889 I could hire someone for more than 8 hours a day for twenty days with 
that coin.  Now if I paid the new 2009 minimum wage of $7.25 for an 
abreviated (and less valuable) twenty days of only eight ours each, I would 
have to pay 
$1160 (even if I could do that without paying my contribution to SS on behalf 
of this worker).  Gold is now enjoying a somewhat elevated price at just 
under $880.  It might bubble, as Leslie suggests it might, but usually 
goldniks 
began to breath heavily and drool when gold approaches $1000.  Still, just 
hiring some minimum wage dolt to stand around would cost me more than that 
ounce of 
gold.

Ah, but in 1889, the dollar a day wasn't equivalent to the minimum wage, it 
was an average wage for a capable trade worker.  That amount today is closet 
to 
$20/hr.  So to hire such a worker today would cost me at least $3200 for the 
month.

This is not an observation that gold is more common or less "valuable" today, 
it illustrates that gold had that value in 1889 because the government 
enforced the definition of its value.  Today, with gold being higher than it 
has for 
some years, it still does not have the "value" it had 120 years ago.

James