Value of $100 in 1932, adjusted to 1958

What happened to prices between 1932 and 1958

Between 1932 and 1958, the Consumer Price Index went from 13.7 to 28.9. Cumulatively, prices increased 110.9%, which works out to an average of 2.91% per year. Put differently, a dollar in 1932 bought what $0.47 buys in 1958.

Consumer prices fell 9.9% in 1932, the steepest single-year drop in the CPI’s history to that point and the third straight year of decline following 1930 and 1931. Wages, farm incomes, and industrial output all kept falling, and Congress tried to arrest the credit collapse by creating the Reconstruction Finance Corporation that January, capitalized at $500 million with authority to borrow up to $1.5 billion to lend directly to banks, railroads, and other struggling businesses. Relief did not reach ordinary households as quickly. That summer, tens of thousands of World War I veterans and their families camped in Washington demanding early payment of a service bonus not due until 1945; in July, U.S. Army troops under General Douglas MacArthur forcibly dispersed the encampment, an episode that badly damaged the Hoover administration’s standing months before an election it was already losing. Voters delivered their verdict on November 8, electing Franklin D. Roosevelt in a landslide over the incumbent Hoover on a promise of relief and a “new deal for the American people.” Roosevelt would not take office until the following March, leaving a long and difficult transition during the depths of the crisis. First-class postage rose from 2 cents to 3 cents on July 6, the first change to the rate since 1919.

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The destination year: 1958

Consumer prices rose 2.8% in 1958, down only slightly from 1957’s 3.3% even as the country sank into the sharpest postwar recession to that point, an early sign that inflation and a shrinking economy could coexist rather than trade off against each other. The National Bureau of Economic Research dates the downturn’s trough to that April, with unemployment peaking near 7.5% that summer, the worst reading since the 1930s. The Post Office raised first-class postage to 4 cents that August 1, up from 3 cents, the rate’s first change since 1932. Washington answered the Soviet Union’s technological lead that summer too: Eisenhower signed the National Aeronautics and Space Act on July 29, establishing NASA, which opened for business that October 1 to compete with the Soviet space program after the shock of Sputnik the year before. Consumer prices finished 1958 191.9% above their 1913 level. The minimum wage held at $1.00 an hour, and first-class postage rose to 4 cents that August, the first increase since 1932.

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