Value of $100 in 1943, adjusted to 1971

What happened to prices between 1943 and 1971

Between 1943 and 1971, the Consumer Price Index went from 17.3 to 40.5. Cumulatively, prices increased 134.1%, which works out to an average of 3.08% per year. Put differently, a dollar in 1943 bought what $0.43 buys in 1971.

Consumer prices rose 6.1% in 1943, a slower pace than 1942’s surge but still well above anything the country had seen before the war. The slowdown owed largely to the “Hold the Line” order, issued that April, which froze most wages, prices, and rents at their current levels after the previous year’s jump showed how far demand had outrun the existing controls. Rationing grew more sophisticated alongside the freeze: starting in February, a points system split scarce goods into red points for meat, butter, and other fats and blue points for canned and processed foods, letting households budget across categories instead of simply going without once a flat quota ran dry. The government also changed how it collected the taxes paying for all of it. The Current Tax Payment Act, signed June 9, required employers to withhold federal income tax directly from paychecks for the first time, smoothing the flow of wartime revenue and creating the pay-as-you-go system still used today. Consumer prices stood 74.7% above their 1913 level and 33.1% above 1933’s Depression-era low. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

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The destination year: 1971

Consumer prices rose 4.4% in 1971, down from 1970’s 5.7% as the recession that started in December 1969 finally cooled demand. The bigger economic story came that August 15, when President Nixon closed the “gold window” that let foreign governments exchange dollars for gold, ending the Bretton Woods system that had anchored the dollar since World War II. The same address announced a 90-day freeze on wages and prices, the first peacetime controls the country had seen, an attempt to break inflationary expectations without the slower grind of tighter money. The “Nixon Shock,” as it came to be known, let the dollar float against other currencies for the first time and set the stage for a wage-and-price-control regime that would run in various forms into 1973. Politically, the country lowered its voting age that year: the 26th Amendment, ratified July 1, extended the vote to 18-year-olds, capping a campaign built on the argument that men old enough to be drafted to Vietnam were old enough to vote for the people who sent them. The Postal Service, independent since 1970’s reorganization, raised first-class postage from 6 to 8 cents that May. A median household earned $9,028 in 1971, up from $8,734 the year before, while gas held near 36 cents a gallon and a new home sold for a median $25,200. Consumer prices stood 309.1% above their 1913 level by year’s end, still years away from the double-digit inflation the controls were meant to prevent.

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