Value of $100 in 1921, adjusted to 1924

What happened to prices between 1921 and 1924

Between 1921 and 1924, the Consumer Price Index went from 17.9 to 17.1. Cumulatively, prices declined 4.5%, which works out to an average of -1.51% per year. Put differently, a dollar in 1921 bought what $1.05 buys in 1924.

Consumer prices fell 10.5% in 1921, the mirror image of the wartime inflation that had more than doubled the cost of living between 1913 and 1920. The Depression of 1920-21, one of the sharpest contractions in U.S. history, bottomed out that July according to the National Bureau of Economic Research, even though it had lasted barely eighteen months. Unemployment climbed toward one worker in ten as businesses cut production and prices to work through wartime inventories, but the same collapse in prices also meant the recovery, once it started, had room to run without reigniting inflation. Warren Harding took office March 4, promising a return to “normalcy” after a decade of war, pandemic, labor unrest, and rapid price swings; his administration moved quickly to cut top income tax rates and federal spending. Congress also acted on immigration that year: the Emergency Quota Act, signed May 19, capped annual arrivals from each country at 3% of that nationality’s population in the 1910 census, the first time the United States had set a numerical ceiling on immigration. The law favored northern and western Europe and cut total immigration by more than half compared with prewar levels; Congress tightened the formula again in 1924. First-class postage held at 2 cents, unchanged since mid-1919.

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The destination year: 1924

Consumer prices held flat in 1924, the CPI’s annual average unchanged from 1923 after swinging from a sharp postwar drop to a modest rise the year before. That stability, extending the calm that had settled in after the deflation of 1921 and 1922, became a defining feature of the rest of the decade. Congress tightened immigration policy further with the Immigration Act of 1924, signed May 26, which cut the national-origins quota from 3% of each nationality’s 1910 census population to 2% of its 1890 population, shifting admissions further toward northern and western Europe and effectively excluding most immigration from Asia. Abroad, the U.S.-backed Dawes Plan, adopted that August, reorganized Germany’s war reparations payments and opened the way for American loans into the German economy, helping stabilize European currencies after the hyperinflation that had peaked in 1923. At home, Calvin Coolidge, who had served out the remainder of Warren Harding’s term after his death the previous year, won a full term of his own that November, campaigning on continued prosperity and limited government. First-class postage remained at 2 cents, a price unchanged since mid-1919.

More about inflation in 1924 →