Value of $100 in 1930, adjusted to 1942

What happened to prices between 1930 and 1942

Between 1930 and 1942, the Consumer Price Index went from 16.7 to 16.3. Cumulatively, prices declined 2.4%, which works out to an average of -0.20% per year. Put differently, a dollar in 1930 bought what $1.02 buys in 1942.

Consumer prices fell 2.3% in 1930, a mild decline compared with what was coming but the first sign that the summer 1929 downturn was not going to be short. The National Bureau of Economic Research dates that contraction from August 1929, and by the time it finally bottomed out in March 1933 it would run 43 months, the longest of any downturn in the NBER’s chronology back to 1854. Congress made the trade picture worse in June, when President Hoover signed the Smoot-Hawley Tariff Act, raising duties on more than 20,000 imported goods to some of the highest levels in a century. Trading partners retaliated with tariffs of their own, and global trade volumes collapsed over the next several years, deepening a downturn economists still debate how much the tariff itself worsened. The financial system cracked that fall: a regional banking panic culminated in the December 11 failure of the Bank of United States in New York, at the time the largest bank failure in American history, wiping out more than $200 million in deposits. It was the first of four banking panics that would hit the country before 1933 was out. Consumer prices still stood 68.7% above their 1913 starting point, but the direction had clearly turned. First-class postage held at 2 cents, unchanged for eleven straight years.

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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 →