Value of $100 in 1914, adjusted to 1931

What happened to prices between 1914 and 1931

Between 1914 and 1931, the Consumer Price Index went from 10 to 15.2. Cumulatively, prices increased 52.0%, which works out to an average of 2.49% per year. Put differently, a dollar in 1914 bought what $0.66 buys in 1931.

Consumer prices barely moved in 1914, rising just 1.0% for the year, even as the country’s financial plumbing was rebuilt from the ground up. The Federal Reserve Banks, created by the Federal Reserve Act signed the previous December, opened their doors on November 16, giving the U.S. a central bank for the first time since the 1830s. Weeks earlier, the outbreak of war in Europe had spooked the New York Stock Exchange into closing for more than four months, the longest shutdown in its history, as officials worried European investors would dump American securities for gold. Domestically, the bigger story was labor: Henry Ford’s decision to pay factory workers $5 a day, announced in January, roughly doubled wages on his assembly lines and pushed other manufacturers to raise pay just to keep workers from leaving. A first-class stamp still cost 2 cents, a price that had held since 1885 and would keep holding for three more years, even as the war reshaping Europe began pulling the American economy toward the sustained wartime inflation of 1917.

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The destination year: 1931

Consumer prices fell 9.0% in 1931, a sharp acceleration from the 2.3% decline in 1930, as falling wages, collapsing farm prices, and a fresh wave of bank failures fed a downward spiral that the still-contracting economy could not shake. More than 2,000 banks failed during the year, far more than in 1930, as depositors who had watched earlier banks go under pulled their cash out of ones they feared were next. The crisis went international that September, when Britain suspended the gold standard amid a run on sterling. The Federal Reserve’s response made the domestic downturn worse before it made anything better: to defend the dollar’s own gold backing, the Fed raised its discount rate sharply that October, in two steps from 1.5% to 3.5%, tightening credit at the exact moment the economy needed the opposite. Not every headline that year was grim. The Empire State Building opened its doors on May 1, briefly the tallest building in the world, though so much of Manhattan’s office space sat vacant amid the Depression that tenants stayed scarce and New Yorkers took to calling it the “Empty State Building.” Consumer prices had now fallen for two straight years and stood 53.5% above their 1913 level, down from the 68.7% margin of just twelve months before. First-class postage remained at 2 cents.

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