The world of Harry Potter is one that is rich, complex, and detailed. J.K. Rowling made it that way, because that is what J.K. Rowling does. Arguably, one of the greatest strengths of the original seven book series is how totally immersive it is. You can lose yourself completely in Hogwarts, or Wizarding London, or Hogsmeade. It seems to be a big part of the reason so many of us love the books as much as we do. It’s to the point where American muggles in their twenties and thirties strongly identify with the Hogwarts house they know they would have been sorted into. (Myself, I’m a Ravenclaw, though I have great admiration for Hufflepuff House and often wish desperately that I could be a Hufflepuff. It’s just not meant to be, don’t try to comfort me…)
But once you really start digging into this incredibly detailed world, it’s hard to escape the feeling that there is something going on at Gringotts Wizarding Bank. That is, the problem may not even be rooted within the bank itself, but something is certainly amiss in the wizarding economy of London. For reasons impossible to fully understand, magical currency is quickly losing value, and things don’t look good.
When eleven-year-old Harry Potter enters his vault at Gringotts Wizarding Bank for the first time, he’s greeted with a seemingly endless pile of glittering gold. Gold means galleons, in terms of wizarding money, and galleons are the largest unit of currency in magical England. Harry’s parents, who were killed when he was only a baby, left him plenty of the large coins. When we watch Harry step into that underground vault, we don’t know quite how rich he is (though we understand pretty well that he doesn’t want for much), because we don’t fully understand the value of a galleon itself. However, one year later, we get a small hint when Harry visits the wizarding bank with his friends, the Weasley family, and their nearly empty vault is shown in stark contrast to Harry’s glittering one. The Weasleys are poor, and though they have a collection of smaller coinage, they only have one gold galleon… for their entire household of seven people.
Yet, the Weasleys manage to acquire school supplies for all five of their school age children, including expensive textbooks. They have to scrimp and save and buy many things used, but in Molly Weasley’s words, they “manage.” At this point in the series, the year is 1992, and it would seem that a single galleon can go pretty far, indeed.
So, let’s talk about the money.
In the fourth book in the series, The Goblet Of Fire, Harry accompanies the Weasley family (minus Molly) to the Quidditch World Cup. There, they meet Ludo Bagman, a Ministry employee, former Quidditch star, and avid gambler. Fred and George Weasley are eager to jump into the betting themselves, and that’s when something really interesting happens.
“We’ll add five galleons for the funny wand, then, shall we…” Ludo Bagman says, in reference to a joke wand, made by Fred and George Weasley, which turns into a rubber chicken.
It is at this precise moment in the series when Ludo Bagman gains my undivided attention. I grew up decidedly working class, and my mother taught me how to write my own budget on a scrap of paper when I was a teenager. I’ve spent my life paying attention to numbers not because I love them, but for the same reason Molly Weasley pays attention to numbers—and remember, Molly Weasley, mother to Fred and George, two years ago only had one galleon in the bank.
Five galleons seems an extraordinary price for something that turns into a rubber chicken and has no real, practical function, but no one bats an eye. And it’s not an isolated incident, either. In the same book we learn that a pair of omnioculars (magical binoculars with special features such as instant replay) cost ten galleons, and Dobby the house-elf make ten galleons a week (a rate that Hermione informs us is, in fact, “not very much”).
A galleon is a gold coin, and it’s worth is the same as seventeen sickles (silver coins). The knut is the smallest unit of wizarding currency (copper coins), and it takes twenty-nine knuts to equal a sickle… therefore there are four hundred and ninety three knuts in one galleon. But, as it turns out, that’s about all we know about the galleon. Its actual value is incredibly tricky to nail down, in part because it’s never compared directly to any other currencies. So while we may know the individual prices of certain items (a wand, a pint of butterbeer, a fake wand that turns into artificial poultry) in the wizarding world (at least at a specific point in time) we don’t really have a larger context within which to place them. When young Harry takes that first trip to Gringot’s with Hagrid, we don’t know if a galleon is something like a dollar, or something like twenty dollars.
I have been looking into the matter (I told you: reluctant Ravenclaw), and I believe that the facts show that wizarding currency is woefully unstable, and the galleon is suffering from dangerously high rates of inflation. All of which has troubling implications for the wizarding world, Gringotts bank, and the Ministry of Magic. Here are just a few of the monetary facts that can be gleaned from the original seven books:
In Harry Potter And The Philosopher’s Stone, shortly after visiting Gringotts, young Harry purchases his magic wand, the most important tool he will ever own as a wizard, for seven galleons. Since wands are so powerful, it stands to reason they would also be quite expensive.
In The Chamber of Secrets, as mentioned above, the Weasleys have just one galleon for their entire family. They also, apparently have “a small pile of sickles” and it’s up to the reader to deduce how much currency we’re actually talking about. At seventeen sickles to the galleon, however, I think it’s nearly impossible that there’s anything more than three or four galleons’ worth of wizarding money in the Weasley’s vault. This is the year of Gilderoy Lockhart as Defense Against the Dark Arts teacher, and his books are said to be quite expensive. The Weasleys purchase as much as possible secondhand, but they do seem to buy at least three sets of Lockhart’s books (Ginny receives hers from Harry, and it’s possible that the twins would be able to share).
In The Prisoner of Azkaban, Percy Weasley bets ten galleons on a Quidditch match, which seems utterly absurd, but is also apparently a bluff as he tells Harry he doesn’t have the money. Is the value of the galleon falling? It’s hard to say.
Which brings us to book four, The Goblet of Fire, when suddenly a fake wand that does nothing but turn into an artificial bird costs five galleons, only two galleons less than the genuine article (Harry’s wand) did three years earlier.
Then, one year later, Harry rather casually tosses a galleon on the table of a tea shop, to pay for a pot of tea, in The Order Of The Phoenix.
These numbers are a bit tricky to work with, but I think we can at least say that the worth of the galleon appears to have depreciated quite rapidly. I’d estimate that if a galleon were worth around twenty-five U.S. dollars in the first book, by the fifth book its value has fallen to less than half that. That seems bad to me, but I’m no economist.
So I looked up the inflation rates for the U.S. dollar in the same time period. As it turns out, the internet is full of rather handy inflation calculators! The average inflation rate between 1991 and 1995 here in the United States was 2.83% per year, and to have the same purchasing power as $100 in 1991, you’d have to have $111.89 in 1995. Calculating an exact inflation rate for the galleon is of course trickier—most inflation calculators I found use CPI (consumer price index) and the wizarding world just doesn’t have one of those. But we can still use our estimates to compare American inflation in the 1990s against inflation in the wizarding world: to have the same purchasing power as 100 galleons in 1991, by 1995 you would need at least 200 galleons.
I first learned about exactly what inflation is and how it works by listening to NPR’s Planet Money podcast. The people who make Planet Money aren’t economists either—they’re reporters, but they do talk to economists and other experts. In 2010, they did a story on inflation in Brazil, how it got dangerously out of hand, and how it was finally reined in; in Brazil in 1990, the inflation rate was about 80% a month, almost comically higher than that of either the dollar or the galleon.
But the story does shed some light on what living with a drastically high inflation rate is like—the situation was so bad that prices in stores actually went up daily, and people would try to run ahead of the person changing the prices in order to pay yesterday’s price. Here’s a quote:
Inflation was a pain for people who shopped in stores as well as for people who ran those stores because the problem is you can only possibly know that inflation was 80 percent a month in retrospect. At the time it’s actually happening, you have no idea. This is one of the pernicious effects of sustained high inflation. You assume because prices were going up in the past that they’re going to continue going up in the future, but you don’t really know how much, how much do you tell the sticker man to raise prices by.
Another Planet Money story—this one about inflation in the United States in the 1970s—sheds further light on the economic situation unfolding throughout the Potter series. The inflation rate for the U.S. dollar in 1974 was about 10% a year: much lower than that ridiculously high Brazilian rate and considerably lower than what we’ve seen in the wizarding world, yet higher than what Americans live with today. Despite being so much lower than the fluctuations in value that wizards treat as normal, inflation in the 1970s was considered a “silent thief.”
So what could be causing the high inflation rate in the wizarding world? Obviously, it’s hard to say for sure, given the mysterious goblin origins of wizard gold. In Brazil, the high inflation trouble started in the 1950s, when the government printed extra money to pay for a new capitol in Brasilia. When you add more money to the economy, the value and purchasing power of currency goes down.
Wizards, however, are not in the business of printing paper money—we’re basically talking about the gold standard, here. Rowling herself is no help, stating in interviews that the galleon is worth around five British pounds. That number assumes the galleon’s inflation rate more or less keeps pace with that of muggle money, which according to my calculations can’t be true (and I’m more interested in what is in the books themselves, rather than what Rowling has to say about them after the fact). My best guess (given that wizards cannot, in fact, simply make more gold out of thin air, and the Philosopher’s Stone was destroyed) is that Cornelius Fudge’s government is leaning on the Gringotts goblins to mine gold faster, and produce more galleons, to fund the Ministry of Magic. That, in turn, would lead to a rise in inflation, and a decrease of faith and trust in the system of wizarding currency.
What we can be fairly certain of is that living with high wizarding inflation is stressful and difficult. Many witches and wizards are already highly isolated, and live under a government that doesn’t appear to be democratic (and easily sways towards corruption). On top of that, the magical people of England also deal with all the problems of a high inflation rate.
In Wizarding England in the 1990s, faith in the galleon must be fairly low. Because of that, folks would be likely to spend their galleons as quickly as possible, rather than letting them sit and lose value (perhaps that explains why the Weasleys have such a miniscule amount of cash in their vault). Resource hoarding is potentially a problem, as well—for a rich family like the Malfoys, it probably makes more sense to invest in rare artifacts of the Dark Arts than it does to keep a pile of galleons around, knowing that they could be worthless soon enough.
One thing is certain: Gringotts Wizarding Bank may be the safest place in the world, as Hagrid notes, but even the savviest goblins and the heaviest protective enchantments can’t do much to ensure the actual value of all those golden galleons stashed away in its vaults.
Katherine DM Clover is a mother, recovering fine artist, and a writer fascinated with the tiny weird details of each and every story. She’s been published at The Washington Post, Crixeo, Everyday Feminism, and many other fine publications. She lives in Detroit, Michigan with her wife and child, and their three cats, and she just learned how to make pie crust. Read her blog, Post Nuclear Era, or follow her on Twitter.