Call your vet. If you can't get through to your own veterinarian on the phone, grab your credit card and take the dog to an emergency vet.
Are you sure it was a whole inch long, or had the dog managed to whittle it down before swallowing it? You'd be surprised what a dog's gut will digest. Some commercial "bone" or "dental cleaning" toys are digestible, but others, such as Nylabone, are not. Dogs can and do puncture their intestines with objects they bolt down, including commercial chew toys. I wouldn't get hysterical...but wouldn't ignore it, either.