Below is a transcript of our conversation with Dr. David Macleod:
David Nicholas:
I'm David Nicholas and this is Central Focus, a weekly look at research activity and innovative work from Central Michigan University students and faculty. Inflation from the 70s and the Great Depression of the 30s were critical points in U.S. history, but far less remembered, the decade of 1910 to 1920. A major shift in the American economy, a spike in the cost of living and inflation that lasted into the years of World War One. These events, the subject of a new book by retired CMU history professor, Dr. David Macleod, “Inflation Decade 1910 to 1920: Americans Confront the High Cost of Living.
David Macleod:
Actually, between 1914 and 1920. U.S. consumer prices fully doubled, in other words, everybody's cost of living an average, doubled.
DN:
Is this the first cycle of this type that we saw in our history?
DM:
There was inflation after the Revolution and after the Civil War. But in those days, many more people lived on farms and were at least closer to subsistence style of living, whereas by the 19 teens. More than half the population was out of agriculture and relied on things they bought.
DN:
The party in power is always going to take the fall for things, whether they've caused it or not, but (but) in this case was it policy from at that time a Republican administration?
DM:
Republicans were in favor of high tariffs much higher than today, on the theory that they protected American industry and protected American high wage jobs. At least that was the pitch. That may sound familiar today. The Democrats (were) had always been the low tariff party and so their solution was to lower tariffs, which they did in 1913, but then the war came along and scrambled international trade. And so there wasn't much food being imported and food was the crucial thing that everybody got excited about. During the war, the Democratic administration did run huge deficits and, if you subscribe to a money supply theory of inflation, they considerably inflated the money supply, chasing the same quantity of goods.
DN:
Is there a pivotal factor that we should be wary of that we're either experiencing now, or could be moving in the direction of, that could create another cycle, similar to what we saw then and proportionate, obviously difference between now and (and) 100 years plus ago.
DM:
Perhaps the single trigger event of most significant when inflation hit during the COVID period. In the 19 teens they worried about domestic supply chains like the meat trust, the Group of Packers that did control the price of meat. So, our concern about supply chains has shifted overseas. So, in that sense, globalization has made the whole question of what causes inflation substantially different from the 19 teens when the US economy was substantially more self-contained. Whether today, that will bring down inflation or, as many people have predicted, increase it is, however an open question because we have become dependent on these long international supply chains that for the most part, weren't there 100 years ago.
DN:
Congratulations on the book and thank you very much for taking the time to share the history and perhaps predict a little bit of the future with us here today.
DM:
Well, historians are very loath to predict the future. There's a saying that history does not repeat itself, though it sometimes rhymes. And that's about as far as we want to go.
DN:
And we'll leave it there. Thank you again very much, professor, for taking the time to be with us. We do appreciate that (it.)
DM:
Thank you.
