Perhaps the most forgotten period in American economic history is the eight years that followed the creation of the Fed and the income tax in 1913. From 1913 to 1921 the growth rate came in at just 1.4 percent per year. The period included two long recessions: one beginning in 1913, in which that year痴 level of production was equaled only two years later (and with the assistance of military production that did nothing for living standards), and another from 1919 to 1921 that was simply the worst depression the nation would ever suffer outside of the 1930s. 填nemployment quickly joined the parlance; people scrambled to measure the phenomenon, and the consensus was that it stayed in the high double digits in the latter recession. And then this novelty: the price level went up by 110 percent from 1913 to 1920, and then swerved down in the year following by 25 percent. Strikes swept the land, since wages had no hope of keeping up with the unprecedented inflation, and the new income tax system hit persons making as little as $1,000 a year ($11,000 in today痴 terms).
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1913: Worst Year Ever | Intercollegiate Review