Value of $100 in 1926, adjusted to 1971

What happened to prices between 1926 and 1971

Between 1926 and 1971, the Consumer Price Index went from 17.7 to 40.5. Cumulatively, prices increased 128.8%, which works out to an average of 1.86% per year. Put differently, a dollar in 1926 bought what $0.44 buys in 1971.

Consumer prices rose 1.1% in 1926, a third straight year of mild inflation and part of the price stability that defined the middle of the decade. Florida’s real estate boom, which had peaked the previous year on speculative buying of undeveloped land, ended abruptly that September when the Great Miami Hurricane made landfall near the city, killing hundreds and wrecking the market for land whose value had rested on continued speculation rather than anything underneath it. In Detroit, Henry Ford moved his company to a five-day, 40-hour work week without cutting pay, a break from the standard six-day schedule that other large employers would gradually adopt over the following decades; Ford argued publicly that workers with more leisure time would also become better customers for the cars his factories built. Consumer prices remained low enough by historical standards that a first-class stamp still cost just 2 cents, the same price it had held since mid-1919.

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The destination year: 1971

Consumer prices rose 4.4% in 1971, down from 1970’s 5.7% as the recession that started in December 1969 finally cooled demand. The bigger economic story came that August 15, when President Nixon closed the “gold window” that let foreign governments exchange dollars for gold, ending the Bretton Woods system that had anchored the dollar since World War II. The same address announced a 90-day freeze on wages and prices, the first peacetime controls the country had seen, an attempt to break inflationary expectations without the slower grind of tighter money. The “Nixon Shock,” as it came to be known, let the dollar float against other currencies for the first time and set the stage for a wage-and-price-control regime that would run in various forms into 1973. Politically, the country lowered its voting age that year: the 26th Amendment, ratified July 1, extended the vote to 18-year-olds, capping a campaign built on the argument that men old enough to be drafted to Vietnam were old enough to vote for the people who sent them. The Postal Service, independent since 1970’s reorganization, raised first-class postage from 6 to 8 cents that May. A median household earned $9,028 in 1971, up from $8,734 the year before, while gas held near 36 cents a gallon and a new home sold for a median $25,200. Consumer prices stood 309.1% above their 1913 level by year’s end, still years away from the double-digit inflation the controls were meant to prevent.

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