Value of $100 in 1951, adjusted to 1971

What happened to prices between 1951 and 1971

Between 1951 and 1971, the Consumer Price Index went from 26 to 40.5. Cumulatively, prices increased 55.8%, which works out to an average of 2.24% per year. Put differently, a dollar in 1951 bought what $0.64 buys in 1971.

Consumer prices rose 7.9% in 1951, up sharply from 1950’s 1.3% and the fastest increase since 1947, as Korean War buying and a defense spending surge hit an economy still adjusting to peacetime. Much of the jump came early in the year, before the government stepped in: the Office of Price Stabilization imposed a general ceiling on prices January 26, and the Wage Stabilization Board froze wages soon after, the broadest peacetime controls since the war began that June. The year’s more lasting change came in monetary policy. On March 4, the Treasury and the Federal Reserve signed the Accord, ending the Fed’s wartime obligation to hold down interest rates on government bonds and freeing the central bank to fight inflation on its own terms for the first time since 1942, a shift that would shape Fed independence for decades. Congress raised taxes that October to help pay for the war: the Revenue Act of 1951, signed October 20, lifted individual and corporate income taxes along with a range of excise taxes, the third increase in taxes since fighting began in Korea. Consumer prices finished 1951 162.6% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 75 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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