Value of $100 in 1916, adjusted to 1925

What happened to prices between 1916 and 1925

Between 1916 and 1925, the Consumer Price Index went from 10.9 to 17.5. Cumulatively, prices increased 60.6%, which works out to an average of 5.40% per year. Put differently, a dollar in 1916 bought what $0.62 buys in 1925.

1916 was when World War I first showed up clearly in American price tags. Consumer prices rose 7.9% for the year, easily the sharpest increase since the Bureau of Labor Statistics’ CPI history begins in 1913, as factories ran flat out to fill steel, munitions, and food orders from Britain and France. Railroad workers felt the squeeze from rising living costs enough to threaten a nationwide strike; Congress headed it off in September with the Adamson Act, which set an eight-hour standard workday for interstate rail employees, the first federal law of its kind covering private-sector hours. Washington was also preparing more directly for war: the National Defense Act, signed in June, expanded the Army and National Guard and funded new government-owned munitions plants, adding another source of demand to an economy already running hot. Woodrow Wilson won re-election in November largely on having kept the country out of the fighting so far, a promise that would not survive the following spring. A first-class stamp still cost 2 cents, one of the few prices that had not yet moved.

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The destination year: 1925

Consumer prices rose 2.3% in 1925, the CPI’s largest single-year increase since the deflationary swings of the early 1920s, though still mild next to the double-digit inflation of the World War I years. The country’s cultural fault lines were on full display that summer in Dayton, Tennessee, where high school teacher John Scopes was tried July 10-21 for violating a state law against teaching evolution, a case that drew national press coverage and pitted prosecutor William Jennings Bryan against defense attorney Clarence Darrow. Real estate speculation, meanwhile, peaked in Florida, where buyers flipped undeveloped land in the Miami area on thin down payments, driving prices far above what the land itself could support; the bubble would collapse the following year. Detroit reshuffled that June too: Walter Chrysler reorganized the struggling Maxwell Motor Company into Chrysler Corporation, the start of what would become one of the American auto industry’s “Big Three.” First-class postage held at 2 cents for the sixth straight year.

More about inflation in 1925 →