readjustment with care and courage. Our people must give and take. Prices
must reflect the receding fever of war activities. Perhaps we never shall know
the old levels of wages again, because war invariably readjusts
compensations, and the necessaries of life will show their inseparable
relationship, but we must strive for normalcy to reach stability.5

To Buy or Not to Buy
In the still-bruised emotional atmosphere of the 1920s, waiting to buy
discretionary items until the prices fell seemed an obvious strategy, both moral
and practical, to most consumers. But postponing purchases helped bring on a
depression. As one observer wrote in 1920:
The buying public knows that the war is over and has reached the point where
it refuses to pay war prices for articles. Goods do not move, for people simply
will not buy.6
Populist anger grew, along with protests against profiteering manufacturers
and retailers. The protests sought to take advantage of a basic economic
principle:
If people determine to buy foodstuffs or anything else only what they actually
cannot do without, the working of the inexorable law of supply and demand
will operate automatically to bring conditions to a more normal state.7
Thus thrift became a new virtue as people waited for the return of the “normal”
prices of 1913.
Why 1913? An authoritative retail price index precursor to the modern
Consumer Price Index (CPI) was first published in the United States by the
Bureau of Labor Statistics in 1919, just before the 1920–21 depression. The
index used past data starting in 1913, the last year of complete peace before the
surprise start of World War I in 1914.8 The index highlighted a very dramatic
price increase since 1913. Thus 1913 became the benchmark date for price
comparisons, and consumers sought to delay purchases until prices returned to
their 1913 levels. In January 1920, the commissioner of labor statistics, Royal
Meeker, said, “The prices we kicked about in 1913 have come to be regarded as
ideal,”9 noting that the ideal was mistaken. The Consumer Price Index began
with a value of 9.8 in 1913. By 1920, it had more than doubled to 20.9, and by
mid-1921 it had fallen to 17.3. It would have to fall a lot further to get back
down to 9.8.
In extreme cases of deflation, embellished narratives about deflation might
develop enough emotional contagion to go viral, and only in that case would
buying behavior be significantly reduced; consumers see some vengeful reward

in postponing purchases until prices are at fair levels again. The anger depends
on the narrative; thus there is not a strong consistent relationship across countries
and through long periods of time between deflation and depression.10 The
economic narrative of the 1920s created an emotionally rich atmosphere of
expectations about falling prices. The narrative was not only that it was smart to
postpone purchases, but also that it was moral and responsible to do so.

Profiteering and Fair Wage Narratives
The price increase between the end of the war and 1920 was widely blamed on
businesspeople who were labeled with the newly popular word profiteer. None
of the words that were used in previous wars to criticize those who profited from
the war (harpy, racketeer, exploiter, black marketer, bloodsucker, vampire,
pilferer) seem to have the same connotations as profiteer, which suggests
wartime fortune building at the expense of war heroes. Profiteer suggested a big
operation, a corporation perhaps, with connections in government, rather than a
small-time individual opportunist, and it thus suggested more of a need for
collective action in the form of a serious boycott. An added benefit of boycotts,
from a US perspective then, was their lack of any connections with communism.
The word profiteer during and after World War I appeared in numerous
narratives, not just those reported in the business columns. Church sermons
began to inveigh against the high price of food during the war, criticizing the
selfish behavior of businesspeople who showed little human decency or respect
for human suffering.11 Other narratives described lawyers who discovered the
names and addresses of US families who had lost a family member in the war.
The lawyers would falsely state that families of fallen soldiers needed an
attorney to demand government benefits, and they asked the families to sign a
contract to pay them 20% of any government support in exchange for their help
in navigating the maze of government benefits.12 Such narratives make it easy to
understand the extremely emotional reactions to such rapacious profiteering.
The profiteer narratives did not stop with the end of the war in 1918. During
the postwar inflation, in 1920 and 1921, narratives spread of customers angry at
high prices chastising their milkman and telling their butcher they would stop
eating meat altogether to spite them. Economists understood why wartime
inflation continued until 1920 (heavily indebted governments faced troubles
from a war-disrupted economy and did not want to raise taxes or raise interest
rates, which would add to their deficit), but the public at large did not. The
public began to view the wartime experience and the immediate postwar
experience in terms of a battle between good and evil. The popular author Henry
Hazlitt wrote in 1920:
Hence we have self-righteous individuals on every corner denouncing the