getting money of questionable value, itself declining in purchasing power (and looking more and more crumpled and grubby). The only answer was for them to combine and to create scarcities, as the oil producers in 1973 elected to do.
But the volume of paper-money purchasing power in the Atlantic countries meant that an increasing amount of money chased goods, with the inflationary results that would follow. Primary produce of all sorts, including food, now rose in price: in the USA even in 1971 wheat went up by 50 per cent. As an instance of what happened, there is the index of prices paid for ‘Omaha Choice Steer’ of roughly one ton in weight. In 1951, at a time of rising prices in the Korean War, the price was $35. In the 1960s it varied around $25. Then in 1969, 1970 and 1971 it started to rise — $30 and above — reaching $36 in 1972 and $45 in 1973, where it stabilized until 1978, when it reached $50, and then in 1979 almost $70 (the figure then stuck for almost a quarter-century). Inflation was telling and prices since 1956 have risen ten times: a Florida bungalow in the early 1960s cost $35,000 with interest at 5 per cent, but a decade later stood at four times as much with a higher rate of interest, and there was more to come. Inflation on this scale was general, and when it affected oil prices, it threatened the existing order at its base. From August 1972 to August 1973 meat and fish rose by 40 per cent and
It was a strange inflation. Ordinarily, when prices started rising, there was a heightening of activity as people worked harder to make ends meet, or for that matter dealt in the black economy (as had happened in post-war France, Italy or Germany). In 1974 this did not happen. The American economy declined by 6 per cent between 1973 and 1975, and unemployment rose to 9 per cent. This was in defiance of the rules, because money had indeed been spent — and spent, and spent, and not just on Vietnam. Nixon had not reversed the sixties programme — quite the contrary. A budget of $5.5bn in 1964-5 became $144bn by 1993; welfare spending rose twenty-five times by the end of the seventies, taking half of the budget and three times the earlier share of the GNP (12 per cent). Under Johnson, permanent deficit-financing had become the rule, as distinct from conscious additions strategically thought through: $3.7bn in 1966 became $8.6bn in 1967 and $25.1bn in 1968. In March 1968 the Treasury Secretary protested that this would bring down the dollar, and so taxes were put up, such that there was even a surplus in 1969 — the last time for a generation. Thereafter control was lost, and by 1975 federal spending had reached $332bn, the deficit being over $50bn. By then government spending was taking almost 25 per cent of the entire output of the economy. All of this added to the national debt, which started to climb. It had reached $271m after the war, fell somewhat as a proportion of GNP until 1965, and then, under Johnson, grew and grew.
Nixon had to wrestle endlessly with the external problems, including of course that of the dollar’s world role, and he neglected the internal problems — finding Congress difficult to deal with, and anyway lacking powers to deal with it head-on. The Constitution itself in effect left the State sometimes paralysed: it was weaker in many ways even than the Swiss central state (where on occasion the cabinet had nothing to do but play cards). By contrast, the legal machinery was much more developed: there were 312 lawyers per 100,000 people, as against 190 in Germany and 134 in England. Given that the President could be frustrated by Congress and/or the Supreme Court, if they so decided, the very system of government was not well-equipped to deal with a general crisis, and in 1973 much went wrong.
With Nixon’s resignation, the United States went into a sort of tailspin. The inflation — or rather ‘stagflation’ — went together with a, for the USA, very strange phenomenon, that much of business now appeared to fail: some of the greatest names in American business got into trouble, symbolized by the fall of one of the largest modernizing enterprises of all, the Penn Central railway. Chrysler itself was saved by the Republicans only as a national symbol: by 1980 the collapse of public services was such that 88 per cent of Americans went to work by automobile. ‘The pursuit of happiness’, in the foundation charter of the United States, has always struck foreigners as funny. That is a misunderstanding of the original, which was just a polite way of saying ‘money’ (‘commodity’ is a similar euphemism, and in English ‘honorarium’, ‘remuneration’, etc. have the same function). As the seventies went on, the expression could only be used with irony. Much of the country — in its way, the real part — was still innocent and old-fashioned: churches got a billion dollars for building, twice what public hospitals got, and the modern ills of family breakdown and drug addiction passed these parts by. But overall the country was paying for the very obverse of the pursuit of happiness, and there was a sort of civil war. It was an extremely strange period. Hollywood became anti-patriotic, and embarked upon a campaign of anti-American film-making, with Robert Redford in the lead, though he had several less talented imitators. But there was hysteria at large. Senators George McGovern and Ed Muskie referred to Nixon in apocalyptic terms: ‘one-man rule’, ‘this tyrant’. The ‘Pentagon Papers’ affair, in 1971, which had then led to Watergate, was a disaster for the whole concept of national security, encouraging babyish attention-seeking among journalists without the talent of the pioneers in the business; and a campaign was launched against the old CIA, its assorted enemies being cast as martyrs (e.g. Seymour Hersh’s work on the Chilean coup in
Politics fell into paralysis, and foreign policy for a time became mouthings. Congress was now cutting the powers of the presidency. In November 1973, even before he fell, Nixon had faced a Resolution preventing him from sending troops overseas for any length of time if Congress did not formally give support, and the Jackson-Vanik amendment of 1973-4 put an obstacle in the way of his policies towards the Soviet Union, by cancelling favourable trade arrangements if Moscow did not cease harassing Jewish would-be emigrants. In July-August 1974 Congress again paralysed US handling of another strategic headache, on Cyprus, where first Greeks and then Turks had intervened. Both were in NATO, and each had treaty rights to invoke; Cyprus mattered because there were British bases there, and the island was on the very edge of the Middle East. One set of Greeks attacked another set of Greeks, and there was a Turkish minority with paper rights, which the Turkish army then invoked, occupying a third of the island. The enraged Greek lobby intervened, against the advice of Kissinger, who felt that it was giving up the chance of a long-term solution in order to vent short-term steam, a judgement proven correct. That autumn Congress restricted the CIA, and in 1975 frustrated any positive policy towards Angola, where a civil war killed off a fifth of the population. Endless new committees in both Houses now supervised aspects of foreign affairs, and the old congressional committees which had been notorious for insider dealings, with long-term chairmen who knew which levers to pull, were replaced by an allegedly open system in which nothing worked at all. The staff monitoring the White House rose to 3,000.
The seventies were a period when the formula of fifties America appeared to be failing, and there was a symbol of this. The very capital of capitalism was in trouble. New York was reigned over by a Mayor John Lindsay, a man in the Kennedy mould, who shrank from making enemies. The city’s workers were collecting wages that, with inflation, bought less and less; in 1968 the rubbish was not collected for a week, and rats ran through the streets of Manhattan. The sewage workers then struck, and from Harlem hundreds of thousands of gallons of raw sewage floated along the river. This (1971) was the background to the famous riot, in which ‘hard hats’ working on building sites near Wall Street and the World Trade Center attacked anti-war protestors demonstrating there. The protestors fled, to fight (successfully) another day. Lindsay had attitudinized in their direction, decreeing that the city administration’s flag should, in mourning, be put at half-mast. He was forced to restore it to celebration mode,
