Value of $100 in 1930, adjusted to 1945

What happened to prices between 1930 and 1945

Between 1930 and 1945, the Consumer Price Index went from 16.7 to 18. Cumulatively, prices increased 7.8%, which works out to an average of 0.50% per year. Put differently, a dollar in 1930 bought what $0.93 buys in 1945.

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: 1945

Consumer prices rose 2.3% in 1945, up from 1944’s 1.7% but still modest, a rate that understated how much pressure had built up behind wartime price and wage controls, which stayed largely in place even as the conflict that justified them came to a close. The year opened with a shock at home: Franklin Roosevelt died of a cerebral hemorrhage on April 12, less than three months into an unprecedented fourth term, and Vice President Harry Truman was sworn in that same afternoon. The war Roosevelt had led for nearly four years ended without him. Germany surrendered on May 8, and Japan surrendered on August 15, after atomic bombs fell on Hiroshima and Nagasaki that month, with the formal signing aboard the USS Missouri on September 2. Domestic policy kept moving even as the guns fell silent: the federal minimum wage rose to 40 cents an hour that October 24, the final step of the schedule Congress had built into the 1938 Fair Labor Standards Act, up from 30 cents in 1939 and 25 cents at the law’s start. Consumer prices stood 81.8% above their 1913 level, a gain that would look modest next to what followed once wartime controls actually came off. First-class postage held at 3 cents.

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