Value of $100 in 1918, adjusted to 1939

What happened to prices between 1918 and 1939

Between 1918 and 1939, the Consumer Price Index went from 15.1 to 13.9. Cumulatively, prices declined 7.9%, which works out to an average of -0.39% per year. Put differently, a dollar in 1918 bought what $1.09 buys in 1939.

1918 brought the steepest annual price increase the CPI had recorded: consumer prices rose 18.0% for the year, edging out 1917’s already sharp 17.4% as the economy stayed at full wartime mobilization for most of the year. A first-class stamp cost 3 cents, up from 2 cents the previous November under the War Revenue Act’s wartime tax increases. The war itself ended on November 11, when Germany signed an armistice with the Allied powers after more than four years of fighting in Europe, but the inflation built up over a year and a half of mobilization did not disappear along with the fighting. The bigger public health story that year was the influenza pandemic that reached the U.S. in a mild spring wave and then returned that fall in a far deadlier form, eventually killing roughly 675,000 Americans, more than the country’s combat losses in the war. It hit factories, docks, and shops alongside households, adding disruption to an economy already strained by wartime demand. Prices would keep climbing even after the armistice, into the postwar surge of 1919.

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The destination year: 1939

Consumer prices fell 1.4% in 1939, closing out a decade in which the CPI fell in six years and rose in four, leaving prices 18.7% below their 1929 level even after the mid-decade recovery. Measured against the start of the CPI’s modern record, prices still stood 40.4% above their 1913 level, a reminder that even a decade defined by deflation left the cost of living well above where it had been a generation earlier. The decade’s final months reset the economic picture entirely. Germany invaded Poland on September 1, and Britain and France declared war two days later; the United States stayed formally neutral under the Neutrality Acts, but Allied orders for war materiel began flowing to American factories almost immediately, a demand shock that would do more to end the Depression over the next few years than any peacetime relief program had managed. Domestic policy kept building on the New Deal’s framework, too: the federal minimum wage rose to 30 cents an hour that October, the second step in the schedule set by the 1938 Fair Labor Standards Act. Amid it all, the New York World’s Fair opened April 30 in Queens, themed “The World of Tomorrow” and drawing tens of millions of visitors with exhibits on television and other technologies promising a more prosperous decade than the one just ending. First-class postage held at 3 cents.

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