Value of $100 in 1914, adjusted to 1946

What happened to prices between 1914 and 1946

Between 1914 and 1946, the Consumer Price Index went from 10 to 19.5. Cumulatively, prices increased 95.0%, which works out to an average of 2.11% per year. Put differently, a dollar in 1914 bought what $0.51 buys in 1946.

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.

More about inflation in 1914 →

The destination year: 1946

Consumer prices rose 8.3% in 1946, up sharply from 1945’s 2.3% and the sharpest increase since 1942, as wartime price controls finally came apart. Congress let the Office of Price Administration’s authority lapse at the end of June, reinstated a weaker version soon after, then wound the whole system down through the rest of the year, releasing years of pent-up demand into the price level almost at once. Meat was the clearest casualty of the fight over decontrol: farmers withheld livestock rather than sell at capped prices, producing severe shortages that spring and summer until ceilings on meat were lifted that October, after which supplies reappeared almost overnight. Labor cashed in its own wartime restraint the same year. An estimated 4.6 million workers walked out at some point in 1946, hitting steel, coal, automakers, and the railroads in the largest strike wave in U.S. history, as unions pushed for wage gains to offset cost-of-living increases controls could no longer contain. Amid the turmoil, Congress made a less visible but lasting change to economic policy: the Employment Act of 1946, signed that February, committed the federal government to promoting maximum employment and created the Council of Economic Advisers. Consumer prices stood 97.0% above their 1913 level, nearly double where the index had started 33 years earlier. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

More about inflation in 1946 →