Value of $100 in 1913, adjusted to 1940

What happened to prices between 1913 and 1940

Between 1913 and 1940, the Consumer Price Index went from 9.9 to 14. Cumulatively, prices increased 41.4%, which works out to an average of 1.29% per year. Put differently, a dollar in 1913 bought what $0.71 buys in 1940.

1913 is where this site’s price history begins, because it’s where the Bureau of Labor Statistics’ own consumer price data begins. The CPI wasn’t published in real time back then; the BLS built the earliest index retroactively from retail price records collected starting in 1913, which makes every dollar figure on this site ultimately anchored to that year’s prices. It was also the year the machinery of modern federal economic policy was built. The 16th Amendment, ratified in February, cleared the constitutional path for a federal income tax, and the Revenue Act that followed in October imposed a top rate of just 7% on income above $500,000, a narrow tax that would later be reshaped into the broad-based system that funds the government today. In December, Congress passed the Federal Reserve Act, creating the central bank that would eventually take on fighting inflation as one of its core jobs, including the 19%-plus interest rates it deployed against the 1970s and early 1980s price surge. Consumer life in 1913 was correspondingly simple by later standards: a first-class stamp cost 2 cents, a price that held from 1885 all the way to 1917, and the Ford Motor Company introduced the moving assembly line at its Highland Park plant that year, a manufacturing breakthrough that would spend the next decade driving down the cost of a car faster than prices elsewhere were rising.

More about inflation in 1913 →

The destination year: 1940

Consumer prices rose 0.7% in 1940, snapping 1939’s decline and marking the first increase since 1937. The gain was modest, and the CPI still stood 18.1% below its 1929 peak, a reminder of how far the recovery from the Depression’s trough had left to go even as defense orders from Britain and France began reaching American factories. War was already reshaping domestic policy well before it touched American soil. Congress passed the Selective Training and Service Act that September, the country’s first peacetime draft, requiring men aged 21 to 35 to register and authorizing the induction of up to 900,000 men a year, more than a year before Pearl Harbor. That November, Franklin Roosevelt won an unprecedented third term, defeating Republican Wendell Willkie after campaigning on keeping the United States out of the war then consuming Europe and Asia. The promise would not hold much longer: within two years, wartime demand would push consumer prices up faster than at any point since the aftermath of World War I. First-class postage held at 3 cents, and the federal minimum wage stayed at 30 cents an hour, the level set the previous October under the Fair Labor Standards Act.

More about inflation in 1940 →