Value of $100 in 1916, adjusted to 1970

What happened to prices between 1916 and 1970

Between 1916 and 1970, the Consumer Price Index went from 10.9 to 38.8. Cumulatively, prices increased 256.0%, which works out to an average of 2.38% per year. Put differently, a dollar in 1916 bought what $0.28 buys in 1970.

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: 1970

Consumer prices rose 5.7% in 1970, up from 1969’s 5.5%, extending a run of faster price growth that stretched back to the mid-1960s, even as a recession that began in December 1969 pushed unemployment toward 6%. Prices and joblessness rising together confounded the era’s economic thinking, which held that policymakers could trade a little more inflation for a little less unemployment; 1970 was an early sign that trade-off was breaking down, a pattern that would harden into stagflation later in the decade. Washington restructured how it delivered mail that year: after postal workers staged the first strike ever by federal employees that March, Congress passed the Postal Reorganization Act in August, replacing the cabinet-level Post Office Department with the independent U.S. Postal Service. Environmental policy also took shape in 1970. An estimated 20 million Americans marked the first Earth Day on April 22, and the Environmental Protection Agency opened that December to enforce the Clean Air Act and the pollution rules that followed. The Vietnam War kept dividing the country: on May 4, National Guard troops fired on antiwar demonstrators at Kent State University in Ohio, killing four students and setting off strikes on hundreds of campuses. A median household earned $8,734 that year, a gallon of gas averaged 36 cents, and a first-class stamp cost 6 cents, the rate it had held since 1968. Prices stood 291.9% above their 1913 level by the end of 1970, a milestone that would look almost mild against the decade still to come.

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