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    Bank note engraving, purple, a large, highly detailed factory complex of pipes, tanks and chimneys.

    The Last Smokestack

    Putting an industrial facility on a bank note is not a casual decision. At the end of the 1960s, such places were earning a bad reputation for pollution. There was actually a good reason for this choice, but it wasn’t obvious to many Canadians.

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    Money: Past, Present and Future

    Explore the history of money in Canada and around the world using an inquiry approach.

    Understanding Money: Common Questions

    Ever wondered who decides what goes on Canadian coins or bank notes? Or why our coins have certain names and our notes are different colours? Use this guide to help answer some of your money-related questions!

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The Bank of Canada Museum remains closed due to COVID-19. Our museum experience is highly interactive, and our top priority is the safety of our staff and visitors. We look forward to welcoming you again once it is safe for us to reopen.

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If I Had a Million Dollars…I’d Be Reasonably Well Off

By: Graham Iddon


October 5, 2020

Inflation, pop music and real historical prices

When the Toronto band Barenaked Ladies (BNL) released “If I Had a $1,000,000" that sort of money would have provided them with most of their dreamy lifestyle. And 30 years later? Well …

There’s this thing we call inflation

The Bank of Canada defines inflation as “a persistent rise in the average level of prices over time.” The inflation rate is a number that reflects how much prices have risen or fallen compared to a previous year.

How it’s calculated

To calculate the inflation rate, the Bank starts with a list of items that represent the expenses of average Canadians. The prices of those items are recorded regularly throughout the year by Statistics Canada, creating what’s called the consumer price index (CPI). These prices are compared to prices of some year in the past (the base year) as an indicator of how much buying power our dollar has gained or lost.

Currently, the base year is 2002. In 2019, the inflation index was 136. And so in 2019, you would have had to pay $136.00 for those same goods and services you paid $100 for in 2002.

To save you the sweat and frustration of trying to make sense of old prices, the Bank has this wonderful online gadget: an inflation calculator. Loaded with years of historical inflation rates, it can translate prices from as long ago as 1914 into today’s dollars.

An early mobile phone receiver and its big carrying case.

In the late 1980s, a cellphone was a wildly expensive luxury item and it had little effect on the CPI. Today, cell phones are an everyday expense and a $40 billion chunk of Canadian spending.
Source: Wikimedia Commons, Trent021

So, let’s take a few items off the BNL shopping list and feed its historical prices into the calculator, asking the question: how much of a dent would these items make in a million dollars now?

“I’d buy you…” 1990 Converted to 2020
“Kraft Dinner" $1.00 $1.75
“a house”* $200,000 $350,000
“furniture for your house”† $4,000 $7,000
“a K-car” $8,500 $15,000
“not a real fur coat” $60 $105
“an exotic pet” $10,000 $17,835
“some art: a Picasso…”§ $200,000 $350,000
“or a Garfunkel” N/A N/A

* An average, detached, three-bedroom house in suburban Toronto
† For a basic living room, dinette, home office, three bedrooms
§ a pencil sketch

Inflation calculations with a grain of salt

An inflation calculator is great for getting a sense of how prices have changed since a given year. But its results don’t always match actual prices of the day. Many factors cannot be accounted for. Sometimes you need to do a bit of research to interpret the changing buying power of our dollar. So, let’s explore the effects of inflation on these common—and not so common—purchases, in light of actual historical prices. Because, context can be everything.

Buying some art

We can’t speak for today, but certainly Art Garfunkel was not for sale in 1990. And a Picasso? Even in 1990, auction prices for Picasso paintings were way out of the BNL’s league. They might have picked up a table napkin scrawl within their budget—but not anymore!

Buying an exotic pet

The BNL could certainly afford a llama in 1990. But at that time, it was the camelid du jour and llama prices were skyrocketing. In fact, the llama market was experiencing a price bubble! Before the bubble burst, a quality llama would have cost you, in today’s money, close to $18,000. Presumably, many llama speculators would have been ruined when the prices slumped.

Illustration of a llama with a price tag of $10,000 around its neck.

You can buy a well-equipped llama these days for around $3,500.
Source: Wikimedia, Pearson Scott Foresman

Buying a house

A three-bedroom, detached house for $350,000—in Toronto?! That would be a serious fixer-upper, so what gives, Mr. Inflation Calculator?

First off, the CPI doesn’t include real estate prices because a house is considered an asset—a form of investment. Besides, the housing market follows a jagged path that varies wildly from city to city and would never be a reliable reflection of a nation’s inflation rate. So, an inflation calculator’s not much help for real estate prices, even though the cost of shelter is a significant part of our spending.

The way the CPI accounts for this market is to calculate for things affected by real estate values in a long-term sense, such as rent and mortgage interest. This calculation smooths the peaks and valleys of the housing market and tends to reflect a more realistic cost of living.

The price of furniture for your house, on the other hand, has stuck reliably to the inflation rate over time. Furniture prices are not likely to suffer greatly from supply and demand issues, nor has furniture ever been a party to price bubbles—not even ottomans. The same can be said for a “not real” fur coat.

Black and white photograph of a 1950s suburban house.

My parents bought this average Toronto house for $15,000 in 1959. That works out to $143,000 on the calculator for 2020. But in fact, the same sort of house in the same modest suburban neighbourhood would sell for closer to $900,000.
Source: Dawn Iddon

Buying a nice reliant automobile

A plain, compact, four-door sedan.

The affordably modest K-car was Chrysler’s response to the rocketing oil prices of the 1970s and 1980s. North America could no longer afford to feed its voracious, V-8 family sedans, and Japanese cars began to dominate the market.
Source: Wikimedia, IF CAR

Certainly, you can still buy a reasonable little car for around $15,000. But it’s no K-car. Not that it was anybody’s idea of a luxury automobile, but a K-car could carry all the Barenaked Ladies plus their manager! Try stuffing six adults and their dignity into your modern “reasonable little car,” and then tell me nothing’s changed. Though it has little to do with price, this difference in practicality between an entry-level car in 1990 and one in 2020 is actually a form of inflation.

This sort of inflation is similar to a sneaky variety referred to as “hidden inflation.” Often associated with such mysteries as the shrinking contents of cookie packages, it is the erosion of a product’s bang-for-your-buck factor in order for a manufacturer to maintain a good price.

But in the case of the K-car, the most significant issue is that, for pure utility, there is simply no comparably priced equivalent available today. In fact, you’d have to move into the full-size car or SUV market to find a similar carrying capacity. But having said all that, the quality and performance of such things as cars and electronics is constantly improving, creating greater value of another variety. This sort of comparison just gets more and more complicated the further you go back in time.

Illustration of a cookie and a rising arrow on a graph.

Since 1971, the price of a package of Oreo cookies has remained on track with official US inflation rates. However, the price by weight has risen at more than twice that rate. Inflation is in the tummy of the beholder.

Levelling the playing field

Bank note with an 18th-century gentleman’s profile printed in purple ink.

Adam Smith was an 18th-century economist and philosopher whose keen observations on how economies work are still relevant today.
Source: 20 pounds, Great Britain, 2008 NCC 2008.15.51

When searching for historical equivalency, you need to look at both economic and functional contexts. And one very powerful context is average income.


The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."

- Adam Smith, The Wealth of Nations, 1776


And Mr. Smith is talking about wages here. Comparing the price of a home or a car across several decades is not very useful unless we can establish some sort of common context. A good place to start is to pay less attention to the actual numbers and to consider, as Mr. Smith says, the labour it takes to purchase the item. In the case of a Toronto house, an average example in 1960 was selling for around three times the average annual salary. By 1990, that house was worth eight times the average salary. And today? That modest little Toronto home is worth 15 times the average Canadian income! However, right now average incomes in Toronto are the highest in the nation, and current interest rates are extremely low. This goes a long way toward explaining how the market can bear such prices and, at the same time, showing what a complicated business researching historical equivalency can be.

We just have more stuff

Our incomes also appeared to go further back in “the good old days.” Actually, we simply had fewer things to spend our money on. Today, we live in a world of digital devices, streaming TV, Wi-Fi, data plans and laptops, and our closets are bursting with many more outfits than our grandparents could find reasons to wear. All of these are the expected purchases of our average lifestyles and are accounted for by the CPI. There are also many more ways of finding credit to pay for it all than in our grandparents’ day. And that’s another thing…

So, when you’re trying to get a sense of the dollar’s buying power from a few generations ago, you’ll find the inflation calculator a useful tool. But once in the inflationary ballpark, put on your historian’s hat and take a look at the context to discover what those prices really meant to the average Canadian.

And the Barenaked Ladies in 2020? Well, they’d have to take out a mortgage, lease an SUV and maybe get a Picasso print from an art gallery, but they could still afford to eat as much Kraft Dinner and pre-wrapped sausages as they could hold. More, actually, because Kraft Dinner is a little cheaper than the inflation calculator predicts. Bon appétit.

Black and white photo of a very basic kitchen.

In 1928, this Bauhaus kitchen was on the leading edge of design. But it had none of the gadgets and appliances that we now take for granted. It’s a poor comparison to today’s kitchen.
Source: Wikimedia, Canadian Centre for Architecture

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Content type(s): Blog
Subject(s): Education, History

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The Museum Blog

March 23, 2021

The Last Smokestack

By: Graham Iddon


Bank note engraving, purple, a large, highly detailed factory complex of pipes, tanks and chimneys.
Putting an industrial facility on a bank note is not a casual decision. At the end of the 1960s, such places were earning a bad reputation for pollution. There was actually a good reason for this choice, but it wasn’t obvious to many Canadians.
Content type(s): Blog Subject(s): Collection
February 26, 2021

Playing with Economy

By: Graham Iddon


A diverse group of 4 young children playing a board game.
There might be only a handful of basic game formats, but there is an infinity of variations—a surprising number of which require the skills we need to manage our daily economic lives.
Content type(s): Blog Subject(s): Education
January 4, 2021

Economic Opportunity Costs

By: Graham Iddon


Man in a superhero costume crouching in an aisle of a home renovation warehouse.
With his superpowers, Peter Parker would no doubt do a fabulous job of tiling his kitchen backsplash. But as Spider-Man, he has more valuable things to do with his time.
Content type(s): Blog Subject(s): Education
November 30, 2020

How Many Groats Are in a Noble?

By: Graham Iddon


For daily users of modern money, getting an understanding of the old British system of currency can be an act of confusion and wonder. But it’s also a peep into 13 centuries of European numismatic history.
Content type(s): Blog Subject(s): Collection, History
November 27, 2020

Understanding Money: Common Questions

By: Nathan Sells


Ever wondered who decides what goes on Canadian coins or bank notes? Or why our coins have certain names and our notes are different colours? Use this guide to help answer some of your money-related questions!
Content type(s): Blog Subject(s): Education
November 2, 2020

Teaching Economics During the COVID-19 Pandemic

By: Adam Young


Authentic, teachable moments show students how the Bank of Canada is helping the economy navigate the COVID-19 pandemic.
Content type(s): Blog Subject(s): Education
October 21, 2020

The Story Behind the Engraving

By: Graham Iddon


The men on the back of this bill were part of a small community of families, a summer hunting camp called Aulatsiivik on Baffin Island.
Content type(s): Blog Subject(s): Collection, History
July 16, 2020

Johnson’s Counterfeits

By: David Bergeron


Johnson’s entire family, two girls and five boys, was involved in the counterfeiting operation: dad made the plates, the daughters forged the signatures and the boys were learning to be engravers.
Content type(s): Blog Subject(s): Collection, History
June 29, 2020

The Reluctant Bank Note

By: Graham Iddon


Among 1975 $50 bill’s various design proposals were three images, three thematic colours and even three printing methods.
Content type(s): Blog Subject(s): Collection, History
June 11, 2020

Nominating an Icon for the Next $5 Bank Note

By: Graham Iddon


Using a Bank of Canada Museum lesson plan, nearly 200 students told us who they thought should be the bank NOTE-able Canadian on our new $5 bill.
Content type(s): Blog Subject(s): Education
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