In 1974 Gerald Ford faced sky high inflation, even greater than ours in 2022. This is a tale of how the 38th President addressed this hot BUTTON issue.
In 1974 Gerald Ford faced sky high inflation, even greater than ours in 2022. This is a tale of how the 38th President addressed this hot BUTTON issue.
I Say Whip It, WHIP it Good!
A Story of Gerald Ford’s Whip Inflation Now Campaign (WIN) and the Last Time Americans had Sky High Inflation
June 2022
By a continuing process of inflation, the government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
John Maynard Keynes
I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.
Friedrich August von Hayek
Inflation is taxation without legislation.
Milton Friedman
It is a way to take people’s wealth from them without having to openly raise taxes. Inflation is the most universal tax of all.
Thomas Sowell
Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
Sam Ewing
Now whip it
Into shape
Shape it up
Get straight
Go forward
Move ahead
Try to detect it
It’s not too late
To whip it
Whip it good
DEVO (stood for devolution-I think)
Gerald Ford, the 38th president of the United States, was a doubly accidental president. If he is remembered today, it is probably a really big and expensive aircraft carrier that sets the standard for other really big, really expensive aircraft carriers (they call them Ford class for a reason). But part of the reason for his less than famous stature is his being the only person to serve as president to have never been elected to either the office of President or Vice President. After the resignation of Richard Nixon’s Vice President, Spiro Agnew, Ford was appointed in Agnew’s place. Then, after the later resignation of Nixon himself, Ford assumed office for the remainder of Nixon’s term.
Throughout American history, there have been several reasons for accidental presidencies, but we have not seen one since Ford. This is mainly due to improvements in medicine and healthcare and better security. The first unintentional president was John Tyler when William Henry Harrison, suffering from an ailment he garnered during his inauguration, was the first man to die in office. Modern antibiotics could have more than likely prevented his death.
In Candice Millard’s excellent Destiny of the Republic, the author makes a strong case that had James Garfield been shot in 2022, as opposed to 1881, he would have made a full recovery.
Part of this was simple sterilization tactics that are commonplace today but not in the 19th century.
And, of course, there were the straight-up assassinations of presidents such as Lincoln, McKinley, and Kennedy. No amount of care could have prevented their deaths. Better security has become the norm, fortunately. The last president to get shot was Reagan 41 years ago. Though the recent attempt on the life of Justice Brett Kavanaugh, something ignored by the leftist media, should bring a stark reminder that vigilance can never be relaxed where prominent politicians are a factor.
Ford never won that election in his own right. Instead, he lost the 1976 presidential election relative fresh-faced Jimmy Carter, Governor of Georgia. Ford nearly lost the GOP nomination to former California Governor Ronald Reagan that year. One of the possible factors in Ford’s loss to Carter was Ford’s decision to grant a presidential pardon to Richard Nixon. Ford’s desire was not to drag out the scandals of his predecessor’s administration any further and allow the country to move. But many saw the act as a quid pro quo for giving him the vice presidency. In hindsight, it was the right move, but this is looking at how things have played out over the intervening half-century. Things felt differently in the 1970s.
One of the challenges for Ford was the upsurge of Conservatives embodied by Reagan. Eisenhower created the interstate highway system, and when he contemplated his run in the early 1950s, many were not even certain whether he was a Republican or Democrat. Nixon created the EPA and imposed price controls. One had to go back to Calvin Coolidge to find a true archetypal conservative. And ford, and especially his vice president, Nelson Rockefeller, were not conservatives. But there was another factor. Inflation.
First though, a brief primer on inflation. The rising prices seem to be determined by two primary factors, supply and mainly true demand. I have two gallons of gas that I am selling for $3 bucks, and I am the only guy with the gas. So I got two guys, one driving a corolla and the other a Ford 150 pickup. The pickup guy suggests he will meet my price of $3, but the other will only pay $2.75 because he does not need it that badly. So I meet that 2nd guy’s price. Deflation! But later, I get two more gallons, but this time three guys, all driving Ford 250s, show up and start bidding up the price of my gas. Inflation! It seems simple, right, but the missing factor, the third one, is that note I am using U.S. currency in both transactions, and there is the rub. I am a historian and only play at being an economist, so I am going to turn over this part of the primer to the real McCoy.
The invaluable and incredible Foundation for Economic Freedom (please patronize this site and this organization. Writing back in 2008, Howard Baetjer Jr wrote, “The single most important principle concerning inflation is Milton Friedman’s now-famous aphorism: “Inflation is always and everywhere a monetary phenomenon,” he wrote in Money Mischief. Central bankers, economists, and economic journalists should use this as their screensavers. “Inflation occurs,” Friedman continued, “when the quantity of money rises appreciably more rapidly than output, and the more rapid the rise in the quantity of money per unit of output, the greater the rate of inflation.” This can occur either by actually printing money or by “the magic of the bookkeeper’s pen”—creating new deposits on the banks’ books.
To understand Friedman’s aphorism, consider this thought experiment (which I proposed last year in The Freeman): Suppose that tonight, as we sleep, Harry Potter flies across the country and waves his magic wand in a money-doubling charm. The charm does not affect the amounts of goods and services; it affects only money. Every nickel becomes a dime; every quarter becomes a 50-cent piece, every dollar becomes two, every ten-dollar bill becomes a twenty, and every checking account doubles its balance. What would we expect to happen to prices over the next day or two? Even if no one knew that everybody else’s money holdings had also increased, we would expect to see prices rise substantially over the next weeks and months as sellers discover that they can charge more for their goods than they could yesterday. Picture automobile dealerships: as people perceived an apparent sudden increase in “wealth”—it’s not wealth, it’s just money, but they don’t know that yet—many of them would head out excitedly to buy a new car. The dealerships would see many more customers, willing to pay much more than before. The dealers would raise their prices very quickly, realizing they could charge more for the cars on their lots (which are no more numerous than before). A similar process would occur at every store, market, online retailer, and real estate agency in the land, and very quickly, prices of just about everything would approximately double. After all, what else would we expect with the same amount of stuff to buy but twice the money to buy it with?”
But wait, Bel, to do this, there would have been some form of a massive infusion of government money in a recent time frame, right? And I give you, dear listener, COVID relief. All governments, federal, state, and local, annual spending is roughly $9 trillion. Total COVID spending bills now total over $6 trillion in additional spending, or nearly 66% of that total. $9 trillion is too much. $15 trillion boggles the mind.
But wait, there’s more. For decades now, from Bernanke to Yellen, the Federal Reserve, whose sole role is supposed to be currently maintaining quality, has, like so much of Washington, experienced scope creep. Keeping money cheap through lower and lower interest rates, some even negative, is happily advocated by both parties. Whether the names are Clinton, Bush, Obama, or Trump, the policy is the same. Do not raise interest rates because that stifled spending and stifled spending will mean a slowing economy. Lately, the fed has even been asked to help drive green initiatives, but I digress.
That is our inflation woes of today. What about Ford?
In 1974, Ford faced an annual inflation rate of more than 12 percent after taking over the presidency in August when Nixon resigned. According to Investopedia writer Leslie Kramer, the macroeconomic event referred to as the Great Inflation lasted from 1965 to 1982. This is the story of the painful period in the 1970s, which began in late 1972 and continued until the early 1980s. In his book, Stocks for the Long Run: A Guide for Long-Term Growth, Wharton professor Jeremy Siegel called this time “the greatest failure of American macroeconomic policy in the postwar period. Upon his inauguration in 1969, Nixon inherited a recession from Lyndon Johnson, who had simultaneously spent generously on the Great Society and the Vietnam War.
Despite some protests, Congress went along with Nixon to continue to fund the war and increase social welfare spending. In 1972, for example, Congress and Nixon agreed to a big expansion of Social Security—just in time for the elections. Although the Fed is supposed to focus solely on money creation policies that promote growth without excessive inflation, Burns was quickly taught the political facts of life. Nixon wanted cheap money. That meant low-interest rates to encourage growth in the short term and make the economy seem strong as voters cast their ballots. Adding to the money supply worked in the short term. Nixon carried 49 out of 50 states in the election. Democrats easily held Congress. Inflation was in the low single digits. However, the country paid the price in higher inflation once the election year festivities ended.5
In 1973, inflation more than doubled to 8.8%. Later in the decade, it would go to 12%. By 1980, inflation was at 14%. Was the United States about to become another post-WWI Weimar Republic experiencing the severe effects of crippling inflation?
Gerald Ford’s plan. To create the Whip Inflation Now campaign! Yup, to quote former Raiders owner Al Davis WIN Baby WIN. Yes, there were even buttons. Unfortunately, one of the problems with podcasting is I cannot, unfortunately, show you one of those doozies.
In a speech on October 8th, 1974, Ford stated, “My fellow Americans,” Winning our fight against inflation and waste involves total mobilization of America’s greatest resources — the brains, the skills, and the willpower of the American people. Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less. To help save scarce fuel in the energy crisis, drive less and eat less. Ford slapped on a button as he continued. “The symbol of this new mobilization,” he said, is the button, “which I am wearing on my lapel. It bears the single word ‘WIN.’… I will call upon every American to join this massive mobilization and stick with it until we win as a nation. “I pledge to my fellow citizens that I will buy, when possible, only those products and services priced at or below present levels,” the president declared. He said the pledge applied especially to his wife, “who spends all the money.” Mrs. Ford joked, “I signed in blood.”
During World War I, U.S. President Woodrow Wilson issued a proclamation calling for every Tuesday to be meatless and one meatless meal to be observed every day, for a total of nine meatless meals each week. The United States Food Administration (USFA) urged families to reduce consumption of essential staples to help the war effort and avoid rationing. Conserving food would support U.S. troops and feed populations in Europe, where the war had disrupted food production and distribution. This campaign was revived in World War II. This is one of the few things the odious Wilson got right.
Yet it is one thing to ask Americans to reduce their lifestyle consumption when millions of young men are serving and dying overseas. Quite another to ask the same in 1974.
It should also be noted that it is good leadership not to ask things of others you are unwilling to do yourself. You know, like asking people to wear masks and then discarding them yourself. But asking them to make sacrifices is another because you cannot think of a better plan.
Writing for the Washington Post about Gerald Ford and WIN, in November 2021, when inflation was still seen as transitory by the Biden White House, author Ronald Shafer wrote, “The WIN program got off to a fast start. Russell Freeburg, the White House coordinator of the program, said his “tiny staff” was hit with an “avalanche of citizen inquiries.” It was handling “1,000 telephone calls a day, and more than 200,000 letters addressed to Ford,” Freeburg told the New York Daily News. Songwriter Meredith Willson of “The Music Man” fame wrote a WIN song. (“Who needs inflation? Not this nation.”) By mid-November, orders for WIN buttons passed the 15 million mark. It was the best-selling button since 1971, when more than 50 million smiley face buttons were sold.” Yet as Shafer adds, “But signs of skepticism also began emerging. New York Times humor columnist Russell Baker wrote that he wore his WIN button to the butcher shop “and focused its powerful message on the hamburger. The price purred and rose immediately… Back to the White House. ‘This one doesn’t work; give me another. Some pushed back against the buy-less theme. Staffers for Michigan Gov. William Milliken, a Republican like Ford, donned buttons reading BAC for “Buy a Car.” Democratic lawmakers, including young Sen. Joseph R. Biden Jr. of Delaware, criticized Ford’s economic plan as trying to fight inflation with slogans.”
Alan Greenspan, noted economist and one-time head of the federal reserve, wrote in his book, The Age of Turbulence, “My first experience of policymaking in the Roosevelt Room of the White House almost sent me racing back to New York. It was a senior staff meeting at which the speech-writing department unveiled a campaign called Whip Inflation Now, WIN, as they wanted it to be known,” that would involve national voluntary efforts and citizen summit meetings to fight rising prices. “I agreed with the president’s priorities, but I was horrified to learn how his White House staff planned to tackle the issue,” Greenspan wrote. “… The speechwriters had ordered millions of Whip Inflation Now buttons, samples they handed out to us in the room. It was surreal. I was the only economist present, and I said this is unbelievable stupidity. What am I doing here?”
In addition to his scheme of asking people to buy fewer things, Ford, a Republican keep in mind, proposed to impose a surtax on high earners, thus further stifling consumption. Nate Goldberg, a Phoenix advertising professional, began selling a LOSE button for “Let Others Share Equally.” Buttons mocking Ford’s theme appeared. One said WIN stood for “Where Is Nixon?”
In his highly sympathetic biography of Ford, historian Douglas Brinkley wrote, “As sensible as Ford’s 1974 commonsense initiative and the truths behind his speech were, unfortunately, the vast majority of Americans were not buying it.” When I say sympathetic, I mean Brinkley’s book presents the danger of all biographers falling in love with their subject. At one point, Brinkley admonishes the American people of 1974, “He (Ford) also urged his constituents to stop wasting so much food, pointing out economic foolishness of buying more than they could eat and throwing the rest out?” For one, Brinkley wrongly labels Ford a conservative. Really? A conservative who raises taxes and thinks it appropriate to nanny Americans about their food choices?
I would also like to comment on that wasting food thing. Do you know who suffers when food is thrown out? The person is doing the throwing. The entire “but what about other people is bunk. Do you know what happens when people cut back on food? Everyone suffers. The company that employs people making the seeds. The farmers are growing the crops—the Drivers bring the food to the packaging center and the center itself. Then the driver brings the food to the grocery store. Then the workers at the grocery store. There are about 5-6 stops on the seeds to farm to table, and everyone suffers when consumers do not, you know, consume. And this does not include all those parts of the food ecosystem. Even on an organic farm, implements like shovels need to be bought, and all the people employed around the packaging. Heck, even media suffers without the ads. Without consumption, there is no need for production, and everyone suffers.
Now, in this case, we are talking about inflation, so everyone suffers from that, and our opening quotes are clear. But the answer is not artificially, inorganically, to reduce demand, but rather to increase supply. So the response to record-high gas prices is not just about “drive less, you selfish bastard.” It is to increase the supply, which is why Biden is going hat in hand to every unsavory oil despot from Valenzuela to Arabia. Of course, the one thing he could do is reverse his decision on the Keystone oil pipeline or open up additional domestic drilling. You may not have seen it, but there is a collar around Joe Biden’s neck, and the leftists, including the eco-warriors, are holding the leash.
Nevertheless, as Brinkley notes, Americans did not stop consuming. Whether that would have been a factor is problematic, but we know that WIN was a dud. Comedian Bob Hope, a Ford friend, quipped, “President Ford went on television to tell us how we can whip inflation, and within half an hour, the price of whips went up 50 cents.” Ouch. Forget Walter Cronkite; if you lose 1970s Bob Hope, something is amiss.
In March 1975, just six months after the big launch, financial columnist Sylvia Porter, who headed Ford’s citizen’s anti-inflation group, announced the end of WIN. “As an acronym, it is dead, and God bless it,” she said.
From the early 1980s until 2021 (way before Putin invaded Ukraine), we enjoyed inflation-free economies. So what ended the 1970s inflation? I am pretty certain it was not those buttons. The Great Inflation period would finally come to an end once later, Fed chair Paul Volcker pursued a bold but painful contractionary money policy to control it. Eventually, aggressive monetary policy tightening in the late 1970s and early 1980s sharply reduced inflation in advanced economies and established central bank credibility, although often at the cost of deep recessions. For example, short-term interest rates almost quadrupled between the end of 1976 and mid-1981. In the wake of these interest rate increases, U.S. output contracted by more than 2% between early 1981 and mid-1982. In some advanced European economies, central banks prioritized inflation control and responded earlier to rising inflation. As a result, the inflation cycle in several of these economies was less pronounced than in the U.S., but recessions also accompanied it in the early 1980s.
Two things keep Biden from taking the necessary steps to end this inflation. The possibility of recession through rate hikes and the more insidious, the refusal to look at the reduction of government spending because, as noted, he is the in thrall to the left. But let’s be clear about inflation in terms of both sides. One my great frustrations, one that led to the election of Donald Trump rejecting 14 to 15 typical Republicans, was that they often seem the same as the other guys. Nixon created the EPA, HW Bush raised taxes, George W Bush oversaw federal expansion into the Education sphere. And the likes of Romney and McCain seemed to do not better had they been elected. But also to be clear, Trump is lockstep on the policy of big government as well. For all his bluster, he took social security, medicare and Medicaid off the table immediately. It is one thing to cut taxes but another to curtail government spend. I love it when trumpists extoll Trump but malign W Bush but keep in mind, Bush is the only president since Reagan to address social security spend. And it was the Trump administration and GOP Senate that approved the firtst $4 trillion of COVID spend. I have often noted that a key factor in our divisiveness is that we have less things to fight over. Off the table is the size of the government to both parties and until we address the vast spending power, and reduce the presence of easy money from the Fed, we will face the scourge of inflation.
There are no easy answers, not even a slick button.