Value of $100 in 1931, adjusted to 1963

What happened to prices between 1931 and 1963

Between 1931 and 1963, the Consumer Price Index went from 15.2 to 30.6. Cumulatively, prices increased 101.3%, which works out to an average of 2.21% per year. Put differently, a dollar in 1931 bought what $0.50 buys in 1963.

Consumer prices fell 9.0% in 1931, a sharp acceleration from the 2.3% decline in 1930, as falling wages, collapsing farm prices, and a fresh wave of bank failures fed a downward spiral that the still-contracting economy could not shake. More than 2,000 banks failed during the year, far more than in 1930, as depositors who had watched earlier banks go under pulled their cash out of ones they feared were next. The crisis went international that September, when Britain suspended the gold standard amid a run on sterling. The Federal Reserve’s response made the domestic downturn worse before it made anything better: to defend the dollar’s own gold backing, the Fed raised its discount rate sharply that October, in two steps from 1.5% to 3.5%, tightening credit at the exact moment the economy needed the opposite. Not every headline that year was grim. The Empire State Building opened its doors on May 1, briefly the tallest building in the world, though so much of Manhattan’s office space sat vacant amid the Depression that tenants stayed scarce and New Yorkers took to calling it the “Empty State Building.” Consumer prices had now fallen for two straight years and stood 53.5% above their 1913 level, down from the 68.7% margin of just twelve months before. First-class postage remained at 2 cents.

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The destination year: 1963

Consumer prices rose 1.3% in 1963, up slightly from 1962’s 1.0% as the expansion entered its third year with inflation still low, conditions that gave Kennedy room to push the large tax cut he had proposed to Congress. The cost of a first-class stamp rose that January 7, to 5 cents from 4 cents, the first postal rate change since 1958. That August 28, Martin Luther King Jr. delivered his “I Have a Dream” speech from the steps of the Lincoln Memorial to a quarter million people gathered for the March on Washington, building pressure on Congress to pass the civil rights bill Kennedy had proposed that June. The year ended in tragedy: Kennedy was assassinated while riding in a motorcade through Dallas on November 22, and Lyndon B. Johnson was sworn in aboard Air Force One that same afternoon. Johnson would spend the following year pushing Kennedy’s stalled tax and civil rights agenda through Congress. The minimum wage rose again that September, to $1.25 an hour, the second step of the phased increase set two years earlier. Consumer prices finished 1963 209.1% above their 1913 level.

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