Value of $100 in 1923, adjusted to 1942

What happened to prices between 1923 and 1942

Between 1923 and 1942, the Consumer Price Index went from 17.1 to 16.3. Cumulatively, prices declined 4.7%, which works out to an average of -0.25% per year. Put differently, a dollar in 1923 bought what $1.05 buys in 1942.

Consumer prices rose 1.8% in 1923, the first increase since 1920 and a sign the postwar deflation had run its course; the economy settled into the steadier growth that defined much of the rest of the decade. The year’s biggest shock was political rather than economic: Warren Harding died August 2 in San Francisco while returning from a trip to Alaska, and Vice President Calvin Coolidge was sworn in the next day at his family’s farmhouse in Plymouth Notch, Vermont, administered the oath of office by his own father, a notary public, by lamplight. Coolidge would go on to preside over the low, stable inflation of the “Roaring Twenties.” The contrast with Germany that year was stark. The Weimar Republic’s currency collapse reached its peak in November 1923, with prices doubling every few days and a loaf of bread costing billions of marks; Germany introduced a new currency, the Rentenmark, that month to halt the spiral. U.S. consumer prices, by comparison, had moved in single digits or held flat every year since 1921, a gap that shaped how American economists would later think about what made the postwar inflation of Europe so different from the mild swings at home. First-class postage stayed at 2 cents.

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The destination year: 1942

Consumer prices rose 10.9% in 1942, up from 1941’s already rapid 5.0% and the fastest increase since 1920, as the economy’s crash conversion to war production collided with shrinking supplies of civilian goods. The government tried to contain it: the General Maximum Price Regulation, effective May 18 and known as “General Max,” froze most retail prices at their highest March level, the broadest price control Washington had ever attempted. Rationing followed close behind. Sugar rationing began that May and gasoline rationing went nationwide in December, the leading edge of a system that would eventually cover meat, coffee, shoes, tires, and dozens of other goods before the war ended. The year’s other defining wartime measure had nothing to do with prices. Executive Order 9066, signed February 19, authorized the military to remove more than 110,000 Japanese Americans, most of them U.S. citizens, from the West Coast and hold them in inland internment camps for the war’s duration, one of the era’s starkest violations of civil liberties. Even with price controls in place, consumer prices climbed more than 10% for the first time since 1920, leaving the CPI 64.6% above its 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

More about inflation in 1942 →