Consumer prices fell 9.0% in 1931, a sharp acceleration from the 2.3% decline in 1930, as falling wages, collapsing farm prices, and a fresh wave of bank failures fed a downward spiral that the still-contracting economy could not shake. More than 2,000 banks failed during the year, far more than in 1930, as depositors who had watched earlier banks go under pulled their cash out of ones they feared were next. The crisis went international that September, when Britain suspended the gold standard amid a run on sterling. The Federal Reserve’s response made the domestic downturn worse before it made anything better: to defend the dollar’s own gold backing, the Fed raised its discount rate sharply that October, in two steps from 1.5% to 3.5%, tightening credit at the exact moment the economy needed the opposite. Not every headline that year was grim. The Empire State Building opened its doors on May 1, briefly the tallest building in the world, though so much of Manhattan’s office space sat vacant amid the Depression that tenants stayed scarce and New Yorkers took to calling it the “Empty State Building.” Consumer prices had now fallen for two straight years and stood 53.5% above their 1913 level, down from the 68.7% margin of just twelve months before. First-class postage remained at 2 cents.
Year in review
Inflation in 1931
The U.S. inflation rate in 1931 was -9.0% (CPI: 15.2). Convert 1931 dollars to today →
-9.0% 1931 inflation rate
-1.9% 1930s average
-7.0% peak month (Jan)
-10.4% lowest month (Nov)
What things cost in 1931
| First-class stamp | $0.02 |
|---|
What $100 from 1931 was worth later
| In 1940 | $92.11 |
|---|---|
| In 1950 | $159 |
| In 1960 | $195 |
| In 1970 | $255 |
| In 1980 | $542 |
| In 1990 | $860 |
| In 2000 | $1,133 |
| In 2010 | $1,435 |
| In 2020 | $1,703 |
| In 2026 | $2,182 |
Inflation in 1931, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 15.9 | -7.0% |
| February | 15.7 | -7.6% |
| March | 15.6 | -7.7% |
| April | 15.5 | -8.8% |
| May | 15.3 | -9.5% |
| June | 15.1 | -10.1% |
| July | 15.1 | -9.0% |
| August | 15.1 | -8.5% |
| September | 15 | -9.6% |
| October | 14.9 | -9.7% |
| November | 14.7 | -10.4% |
| December | 14.6 | -9.3% |
Economic events of 1931
- Consumer prices fall 9.0% as deflation accelerates The decline steepened sharply from 1930's 2.3% drop, as falling wages, collapsing farm prices, and a wave of bank failures fed a downward spiral in spending that the still-contracting economy could not shake.
- Britain abandons the gold standard Sterling came under sustained pressure through the summer, and on September 21 Britain suspended gold convertibility. The Federal Reserve responded by raising its discount rate sharply that October, in two steps from 1.5% to 3.5%, to defend the dollar's own gold backing even as unemployment climbed at home.
- A second wave of bank failures sweeps the country More than 2,000 U.S. banks failed during 1931, far more than in 1930, as depositors, spooked by earlier failures, pulled cash out of banks they feared were next.
Sources: U.S. Bureau of Labor Statistics, Consumer Price Index history; National Bureau of Economic Research, US Business Cycle Expansions and Contractions; Federal Reserve History; USPS historical postage rates.
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.