Value of $100 in 1933, adjusted to 1946

What happened to prices between 1933 and 1946

Between 1933 and 1946, the Consumer Price Index went from 13 to 19.5. Cumulatively, prices increased 50.0%, which works out to an average of 3.17% per year. Put differently, a dollar in 1933 bought what $0.67 buys in 1946.

Consumer prices fell 5.1% in 1933, a smaller decline than 1932’s but enough to complete a four-year slide of 24.0% from the 1929 peak. The National Bureau of Economic Research dates the trough of that contraction to March 1933, closing out the longest downturn in its chronology, one that had run 43 months since August 1929. The bottom arrived alongside a change in government: Franklin D. Roosevelt was inaugurated March 4 and, within 48 hours, ordered every bank in the country closed to halt a fresh round of runs. Congress passed the Emergency Banking Act on March 9, letting solvent banks reopen under federal supervision, and the panic that had been building for months broke almost immediately. The administration moved on the currency next: Executive Order 6102, issued April 5, required Americans to turn in most gold coin, bullion, and certificates to the Federal Reserve, taking the country off the domestic gold standard (formal devaluation of the dollar followed the next January). Congress capped the year’s banking overhaul in June with the Banking Act of 1933, commonly called Glass-Steagall, which created the Federal Deposit Insurance Corporation and separated commercial banking from investment banking. Even after four straight years of falling prices, the CPI still stood 31.3% above its 1913 level. First-class postage held at 3 cents.

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The destination year: 1946

Consumer prices rose 8.3% in 1946, up sharply from 1945’s 2.3% and the sharpest increase since 1942, as wartime price controls finally came apart. Congress let the Office of Price Administration’s authority lapse at the end of June, reinstated a weaker version soon after, then wound the whole system down through the rest of the year, releasing years of pent-up demand into the price level almost at once. Meat was the clearest casualty of the fight over decontrol: farmers withheld livestock rather than sell at capped prices, producing severe shortages that spring and summer until ceilings on meat were lifted that October, after which supplies reappeared almost overnight. Labor cashed in its own wartime restraint the same year. An estimated 4.6 million workers walked out at some point in 1946, hitting steel, coal, automakers, and the railroads in the largest strike wave in U.S. history, as unions pushed for wage gains to offset cost-of-living increases controls could no longer contain. Amid the turmoil, Congress made a less visible but lasting change to economic policy: the Employment Act of 1946, signed that February, committed the federal government to promoting maximum employment and created the Council of Economic Advisers. Consumer prices stood 97.0% above their 1913 level, nearly double where the index had started 33 years earlier. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

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