Staunton Star - Times - Published in the Interest of the Staunton Community for Over 143 Years

By Tom Emery

Inflation is a frontline issue in America today, and has driven down approval ratings for the Biden administration. It’s one of several periods in the nation’s history when rising prices have hammered consumers, especially the working class.

The current inflationary pressures are the strongest in decades, but at times, they’ve been even worse. Inflation in the World War I era was particularly severe, as the period from late 1916 through 1920 sent prices skyrocketing.

Inflation reached double digits in every month from October 1916 through September 1920, with a record 23.7 percent in June 1920. The rates never fell below 19 percent from May 1917 through January 1918, and ran over 20 percent in five straight months from February to June 1920.

Experts attribute the horrific run to expansionary monetary policy, as well as the boom in the nation’s economy during the war effort. During that time, resources were shifted to military planning, and the period was dominated by government intervention in multiple sectors of the economy. Federal borrowing was also high, as “Liberty Bonds” sold in droves to help finance the war effort.

The inflation of the war years was followed by a stiff recession, as national output fell while unemployment rose. That contributed to one of the most startling deflationary periods in American economic history. The inflation percent was negative for 26 consecutive months from January 1921 through March 1923, dropping as low as minus-15.8 percent in June 1921.

Though inflation stabilized for the rest of the decade, the Great Depression brought on another prolonged stretch of deflation. During the worst of the downturn in 1932, the rate averaged minus-9.9 percent.

During World War II, swings in inflation mirrored the experience in the previous world war, as prices shot up with the oncoming entry into the conflict in late 1941. Inflation was in double digits for the first eight months of 1942, and remained high well into 1943.

The late 1940s ushered another price spike amid a booming postwar economy, as inflation raged in double digits from August 1946 through October 1947, with six straight months above 18 percent. The numbers peaked at 19.7 percent in March 1947.

Inflation also took its toll in the 1970s, with 15 straight months in double digits from February 1974 through April 1975. A few years later, inflation was at least 10 percent in 34 consecutive months from March 1979 through October 1981, and was a factor in the 1980 Presidential campaign.

None of that, however, matches the runaway inflation of the post-Revolutionary War era, when rates soared to an estimated 29.78 percent in 1778, the worst in American history.

During the Civil War, the Confederacy struggled with staggering inflation that rendered most of its currency worthless. Estimates of inflation in the South range from 5,000 to 9,000 percent.

Much of the cause was due to miserable economic management, as the Confederate government printed money with no backing from gold or silver, and borrowed huge sums to avoid taxation. Even the wealthiest Southern citizens were often cash-poor, with many assets tied up in land or slaves.

Working-class and lower-income Southerners were decimated by sky-high prices. In 1863, a pair of shoes in the Confederacy cost $125, while coats sometimes reached $350. A barrel of flour cost as much as $275, an added burden for Southerners who were short on needed supplies. The desperation led to riots over food in the Confederate capital of Richmond in 1863.

Tom Emery is a freelance writer and historical researcher from Carlinville, Ill. He may be reached at 217-710-8392 or [email protected].