Value of $100 in 1919, adjusted to 1939

What happened to prices between 1919 and 1939

Between 1919 and 1939, the Consumer Price Index went from 17.3 to 13.9. Cumulatively, prices declined 19.7%, which works out to an average of -1.09% per year. Put differently, a dollar in 1919 bought what $1.24 buys in 1939.

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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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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