Value of $100 in 1915, adjusted to 1933

What happened to prices between 1915 and 1933

Between 1915 and 1933, the Consumer Price Index went from 10.1 to 13. Cumulatively, prices increased 28.7%, which works out to an average of 1.41% per year. Put differently, a dollar in 1915 bought what $0.78 buys in 1933.

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: 1933

Consumer prices fell 5.1% in 1933, a smaller decline than 1932’s but enough to complete a four-year slide of 24.0% from the 1929 peak. The National Bureau of Economic Research dates the trough of that contraction to March 1933, closing out the longest downturn in its chronology, one that had run 43 months since August 1929. The bottom arrived alongside a change in government: Franklin D. Roosevelt was inaugurated March 4 and, within 48 hours, ordered every bank in the country closed to halt a fresh round of runs. Congress passed the Emergency Banking Act on March 9, letting solvent banks reopen under federal supervision, and the panic that had been building for months broke almost immediately. The administration moved on the currency next: Executive Order 6102, issued April 5, required Americans to turn in most gold coin, bullion, and certificates to the Federal Reserve, taking the country off the domestic gold standard (formal devaluation of the dollar followed the next January). Congress capped the year’s banking overhaul in June with the Banking Act of 1933, commonly called Glass-Steagall, which created the Federal Deposit Insurance Corporation and separated commercial banking from investment banking. Even after four straight years of falling prices, the CPI still stood 31.3% above its 1913 level. First-class postage held at 3 cents.

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