Value of $100 in 1925, adjusted to 1979

What happened to prices between 1925 and 1979

Between 1925 and 1979, the Consumer Price Index went from 17.5 to 72.6. Cumulatively, prices increased 314.9%, which works out to an average of 2.67% per year. Put differently, a dollar in 1925 bought what $0.24 buys in 1979.

Consumer prices rose 2.3% in 1925, the CPI’s largest single-year increase since the deflationary swings of the early 1920s, though still mild next to the double-digit inflation of the World War I years. The country’s cultural fault lines were on full display that summer in Dayton, Tennessee, where high school teacher John Scopes was tried July 10-21 for violating a state law against teaching evolution, a case that drew national press coverage and pitted prosecutor William Jennings Bryan against defense attorney Clarence Darrow. Real estate speculation, meanwhile, peaked in Florida, where buyers flipped undeveloped land in the Miami area on thin down payments, driving prices far above what the land itself could support; the bubble would collapse the following year. Detroit reshuffled that June too: Walter Chrysler reorganized the struggling Maxwell Motor Company into Chrysler Corporation, the start of what would become one of the American auto industry’s “Big Three.” First-class postage held at 2 cents for the sixth straight year.

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The destination year: 1979

Consumer prices rose 11.3% in 1979, the fastest pace since 1947 and the decade’s second bout of double-digit inflation after 1974’s 11.0%. The trigger was familiar: the Iranian Revolution that January halted Iran’s oil exports, and panic buying amplified the shortage, sending crude prices sharply higher over the year and motorists back into gas lines, with some states reviving the odd-even rationing last seen in 1974. Paul Volcker, appointed Federal Reserve chairman that August, responded with a strategy shift announced that October: the Fed would target the money supply directly and let interest rates rise as high as necessary to break inflation, whatever the short-term cost. That cost would arrive as a deep recession in 1981-82, but by year’s end 1979 had already delivered enough turmoil on its own. A reactor at the Three Mile Island plant near Harrisburg, Pennsylvania, suffered a partial core meltdown that March 28, the worst commercial nuclear accident in U.S. history, and on November 4, militants in Tehran stormed the U.S. embassy and took 52 Americans hostage, beginning a 444-day crisis that consumed the rest of Carter’s presidency. A median household earned $16,461 in 1979, a new home sold for a median $62,900, and gas jumped to 86 cents a gallon. Consumer prices finished the decade 97.8% above where they stood in 1969, very nearly doubling in ten years, and stood 633.3% above their 1913 level. The 1970s had opened with inflation cooling from the 1969 spike and closed with prices rising faster than at any point since 1947, setting up the Great Inflation’s final act in 1980.

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