PRICES IN THE UNITED STATES FROM
1810 TO 1920
(Prices in 1914 = 100)
Retail prices are based on wholesale prices.
Three times have wholesale prices in America risen to more than double the normal.
1. During the war of 1812, which was in reality the country’s participation in the Napoleonic wars—one of the great world wars.
2. During the Civil War, in 1861-65, a long and costly struggle.
3. During the recent World War.
Not less notable than the great rise of prices during these great wars has been the long and continued fall of prices extending over a generation of time which followed the great rise.
THE RISE OF PRICES IN WAR TIME
The diagram on the reverse of this page illustrates the way in which war disturbs a nation’s economic life. It sends prices sky-high by reason of the monetary inflation which almost invariably accompanies war. This rapid rise in prices causes industries to expand. Wages rise with prices, and for the moment we have an era of prosperity or “good times” as it is usually called. But when the stimulus of war inflation is removed, the general level of prices begins to decline, and with this fall in prices the industries slacken. Wages also come down, although more slowly than prices, and we have an era of industrial depression or hard times.