Value of $100 in 1934, adjusted to 1948

What happened to prices between 1934 and 1948

Between 1934 and 1948, the Consumer Price Index went from 13.4 to 24.1. Cumulatively, prices increased 79.9%, which works out to an average of 4.28% per year. Put differently, a dollar in 1934 bought what $0.56 buys in 1948.

Consumer prices rose 3.1% in 1934, the first annual increase since 1926; every year from 1927 through 1933 had been flat or falling, so the turn marked a real break after eight years without a single gain. Currency policy did some of the work. The Gold Reserve Act, signed January 30, formally devalued the dollar by raising the official price of gold from $20.67 to $35 an ounce, part of the administration’s deliberate effort to reflate prices after four straight years of deflation. Financial regulation tightened at the same time: the Securities Exchange Act of June 6 created the Securities and Exchange Commission to police stock exchanges and enforce disclosure rules, a direct response to the speculation blamed for the 1929 crash. The recovery was fragile and unevenly felt, especially on the Great Plains, where drought had turned overplowed farmland to dust. Over May 9-11, high winds lifted an estimated 350 million tons of topsoil into the air, darkening skies as far away as Washington and New York and giving city readers who had never seen a wheat field a first glimpse of the disaster building in Kansas, Oklahoma, and Texas. Consumer prices stood 35.4% above their 1913 level, still well below the 1929 peak but rising for the first time since the Depression began. First-class postage held at 3 cents.

More about inflation in 1934 →

The destination year: 1948

Consumer prices rose 8.1% in 1948, down slightly from 1947’s 14.4% but still the second straight year of sharp postwar inflation now that wartime price controls were fully gone. Congress moved to stabilize a different economy that April, passing the Economic Cooperation Act to fund the plan Secretary of State George Marshall had proposed the year before: more than $13 billion over four years to rebuild Western Europe and counter Soviet influence. The Cold War turned tense closer to the plan’s target that June, when Soviet forces cut off road and rail access to the Western-controlled sectors of Berlin. American and British aircraft responded almost immediately with an airlift of food, fuel, and supplies that would keep the city running for nearly a year. Domestic politics produced its own upset that November: nearly every poll and pundit had predicted a Republican win, but Harry Truman defeated New York Governor Thomas Dewey, handing the Chicago Tribune its famously wrong “Dewey Defeats Truman” headline. Consumer prices finished the year 143.4% above their 1913 level and 40.9% above 1929’s pre-Depression peak. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

More about inflation in 1948 →