Value of $100 in 1921, adjusted to 1953

What happened to prices between 1921 and 1953

Between 1921 and 1953, the Consumer Price Index went from 17.9 to 26.7. Cumulatively, prices increased 49.2%, which works out to an average of 1.26% per year. Put differently, a dollar in 1921 bought what $0.67 buys in 1953.

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: 1953

Consumer prices rose 0.8% in 1953, down from 1952’s 1.9% as fighting in Korea wound toward a truce and three years of wartime buying pressure finally eased. The year’s biggest shock came from Moscow: Soviet leader Joseph Stalin died March 5 after nearly three decades in power, the first change of Soviet leadership since the 1920s, opening a period of uncertainty over how his successors would deal with the West. Washington used the calmer backdrop to unwind its own wartime machinery. Authority for the price and wage controls imposed in 1951 lapsed that spring, as the Eisenhower administration, which favored free markets over controls, wound down the Office of Price Stabilization. The war itself ended, on paper, that July: negotiators signed an armistice July 27 at Panmunjom, halting the fighting roughly along the original border near the 38th parallel. No formal peace treaty ever followed, and North and South Korea remain technically at war. Consumer prices finished 1953 169.7% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

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