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# Economics/value of guinea in 1920s

Question
I have been reading an autobiography of Gerald Moore, an English pianist. He talks about the fees earned in the 1920s in guineas. This confuses me because I read that the guinea was converted to pounds in the 20th century. So I am wondering if you might know what is the current US dollar equivalent of 400 guineas in, say, 1924 approximately. In other words if he earned 400 guineas in 1924 in England, what would that be equal to in today's dollar?

Hi David,

Thank you for asking a question on financial economics.

This is indeed a very complex question, because there do many variables and parameters impinge on the dynamical impact on British currency. First, the guinea itself was replaced by decimal currency. Secondly, owing to various international ups and downs affecting British economy, there have been an upward trend in the price index, and the real income has undergone tremendous changes (as has happened in the U.S.). Hence, two variables go side by side: (a) the retail price index and (b) the GDP deflator. I shall try to give as satisfactory an answer as possible, subject to the limitation of the available data affording a well-neigh determination of the time value of British money.

On the basis of the available data, we may first calculate guinea in terms of £, and then calculate how £ has increased in face value over time in terms of today's £. Since exact data can't be available, we will get at an approximation.

The guinea was replaced by the pound in 1816. Subsequently, the name “guinea” was long used to indicate roughly  £1.05. So 1 guinea was about £1.05. Using the index calculator of the most recent time 1 guinea of the 1920s works out at:

£95.90   using the retail price index

£101.00   using the GDP deflator

£315.00   using the average earnings

Let us get at the rough calculation at 1 guinea = £100. Then 400 guineas in 1924 would come to about £40, 000.

I hope, David, this serves your purpose. I wish you best success in your endeavors. Please do not hesitate to ask any further question that I may be of help to you.

My best wishes to you.
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#### Eklimur Raza

##### Expertise

It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.

##### Experience

About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

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I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

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Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

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