Value of $100 in 1915, adjusted to 1919

What happened to prices between 1915 and 1919

Between 1915 and 1919, the Consumer Price Index went from 10.1 to 17.3. Cumulatively, prices increased 71.3%, which works out to an average of 14.40% per year. Put differently, a dollar in 1915 bought what $0.58 buys in 1919.

Consumer prices rose 1.0% in 1915, the second straight year of near-flat inflation before the wartime price surges of 1916 through 1918. The year’s defining event had nothing to do with prices directly: a German submarine sank the British liner Lusitania off the Irish coast on May 7, killing 128 Americans and hardening U.S. opinion against Germany two years before the country entered the war. Economically, 1915 was a turning point of a different kind. A recession that had dragged on since 1913 began lifting as Britain and France placed growing orders for steel, munitions, and other war materiel with American manufacturers, and U.S. exports to the Allied powers climbed sharply through the year. That demand would keep building through 1916, eventually pulling prices up with it. On the regulatory side, the Federal Trade Commission opened for business in March, taking on enforcement of the Clayton Antitrust Act that Congress had passed the previous fall. A first-class stamp still cost 2 cents, unchanged since 1885 and still two years from its first wartime increase.

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The destination year: 1919

The fighting in Europe ended in November 1918, but American prices kept climbing through 1919 almost as fast as they had during the war itself, rising 14.6% for the year. Wartime price and production controls were being dismantled, millions of soldiers were returning to the civilian labor market, and demand that had been held back for years ran into supply that had not caught up, a combination that kept the cost of living rising even with the guns silent. Workers, whose pay had fallen behind three straight years of double-digit inflation, pushed back: a general strike shut down Seattle in February, Boston’s police force walked out in September, and a nationwide steel strike that same month drew in roughly 350,000 workers and ran into the following January. One price did fall that year: first-class postage reverted to 2 cents on July 1, ending the wartime 3-cent rate that had funded part of the war effort since late 1917. By year’s end, prices had risen close to 75% since the CPI’s 1913 starting point, compressing more than a decade of typical peacetime inflation into six years of war and its aftermath.

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