Inflation fears

It appears both from the public opinion polls, and from the general noise of one's neighbours, that inflation is the main anxiety of most Americans. Now this might not sound like a spellbinding bit of news but it is the first time in several years that it has risen out of a cluster of other concerns – unemployment, poverty, crime, abortion – and been declared by a hefty majority of Americans to be the most nagging of the country's problems.

Of course it's impossible for anybody, for the secretary of the treasury or the corner delicatessen owner, impossible to say what triggered this new wave of anxiety. Everybody’s an economist these days, whereas a generation or more ago most of us left the businessmen and the treasury to talk in a jargon that was incomprehensible to most people. 

I remember, when I was starting in here as a foreign correspondent, the fun, but also the fright, of this trade is that unlike a sports writer or a parliamentary reporter or a gardening correspondent, you're expected to cover everything. Well, I soon graduated from train accidents, obituaries of famous Americans and run-of-the-mill general news, to picking up Washington politics and became at home with court trials and even baseball. But the thing I dreaded was the thought that one day I might have to cover a business story or an economic report. 

I once heard, in my earliest days, two businessmen sitting over lunch and one of them said glumly to the other, 'Freight loadings are down'. I hadn't the foggiest notion what it meant but when I checked with my boss, the New York correspondent of the London Times, THE Times, he said gravely, 'Well, after all, freight loadings are THE economic indicator.' 

This was about as helpful to me as the dialogue between a famous vaudeville team consisting of wizened little man named Willy Howard and his straight man, a gabby character who spouted nothing but double talk. He would come bustling on the stage and run into the pensive Willie Howard, the man would look over both shoulders to indicate he was about to communicate some state secret or devilish bit of gossip and he would say, 'The trend of the martin is trestling the Velten Island, what's more, flugal's ravelling the portisfrigis.' And Willie Howard would look aghast and say, 'You mean every weekend?' 

Well the day, the night, came my boss, a large, craggy, gentle old American, incredibly well-preserved for his age – he must've been all of 55 – he always wrote on Sunday morning a weekly survey of Wall Street and business news for the Monday morning paper. One weekend he was down with the flu and he phoned me and he asked me to do it. I was petrified. If somebody'd said, 'Write a piece on the prospects of the Swedish skiing team in the Winter Olympics', I couldn't have been more completely thrown. 

I called old Louis Hinrichs and begged for help and at the other end of the phone he croaked, 'I don't know any more about economics than you do, but if you'll go through the financial writers of the New York Times and the Sun and the Journal American, cut out their columns and weave them together and then add a pinch of caution to show you're not taken in by the alarmists or comforted by the complacent.' I did this and received one of the rare, the very rare, cables of congratulation that came from London in those days. 

Well today maybe people are more knowledgeable or maybe they've just learned to 'weave together' the more plausible bits of jargon and make the weave sound sensible. Like Americans and medical jargon. I used to think Americans were much more informed than the English about sickness and health but discovered rather late in the day that because they used words like mononucleosis or thrombosis, they knew more than we did. It took a little time to realise that when an American says,’ He’s suffering from a lesion on the tibia' all he's saying is somebody's kicked Fred in the shins. 

But there is one economic indicator, or if you like bad news for the pocketbook, which is always reported once a month when the figures are out, in the nightly half-hour of news that all the networks put on. This is the latest reading on wholesale food prices. Usually, or very often, the change is minute. 'Wholesale food prices,' the man will say, 'were up this past month by point one per cent.' But the other night, he/they said that wholesale food prices had gone up in the previous week by 3.2 per cent, the biggest jump in several years. Of course this always means that the wholesaler will pass it on to the distributor, to the retailer, to you. 

It is an alarming figure and I sometimes wonder if the regular publication of the figures doesn't provide a panic it's meant to prevent. People tend to hear this and they rush off and buy five cans of peaches or six frozen spinach soufflés, or whatever, instead of the usual one or two. Anyway, that figure, which used to be tucked away at the bottom of page 67 of the daily paper, but is now tossed like a little bomb into the homes of 30 or 40 million people. That figure was serious enough to invite a comment – several comments – from a farmer in Ohio, a meat packer in Chicago, a spokesman for the Department of Commerce. 

The question was why, after a humdrum run of point one and point two per cents, it should suddenly go up to over three per cent in one week? The general opinion was that the spring was coming in and the farmers were getting out and counting the cost of an Arctic winter. What the snows and the big freeze didn't kill off, spring floods are drowning out. 

Well, the little feature ended with the safe prediction that meat was going to go up by about 10 per cent at the butcher's counter. Bread, too and a lot of other edibles. And since the perishing weather had arrested the supply of oil across the Midwest and shut off electricity in many industries, production was way behind. Many thousands, working people, had been laid off and, inevitably, you and I would be competing for fewer goods. So automobiles are going to cost more and electricity and the telephone bills and so on. 

Put all this together, as the government has been doing for the past month or so, and they see a nasty trend ahead. The United States, as much as any country of the Western world, has been proud, in the past few years, of keeping inflation down to 5,6 per cent, while we read about 12, 16, 20 per cent in Europe and preposterous rates, like 50, 100 per cent a year in some of the countries of South America. But now it suddenly appears we are in for a big, new surge of inflation and it's rousing the housewife and maddening the taxpayer who this week has been racing against a deadline and thrashing over the incredibly complicated and verbose form 10-40, the federal income tax form. 

So, Mr Carter decided to make one of his rare – rare, these days – crusading or missionary speeches. He made it before the annual meeting of the American Society of Newspaper Editors, an audience usually responsive to brave news and pungent opinions, but this time an audience that sat on its hands throughout and didn’t raise so much as a clap, a response which the New York Times's leading pundit, James Reston, takes to be a reflection of the popular misgivings about Mr Carter's capacity for leadership. 

Well, Mr Carter put in a plea for no wage or price increases higher than the average of the past two years. He announced a limit of 5.5 per cent for increases in the pay of federal employees. He threatened to veto any bills – and they're in the works – that would increase the government's subsidy to farmers or would give a tax credit to parents putting children through college. He deplored America's continuing appetite for foreign oil. He appealed to labour and industry to sacrifice for the common good. And a few hours before his speech, 3,000 miles away in London, Mr Denis Healey, the Chancellor of the Exchequer, was presenting his budget and saying, 'I do not in this budget make any call for sacrifice'. 

Now these two contrasting sentences are likely to be picked up here and quoted as a sign of two conflicting approaches to the same problem. It's a pity that, by accident, they were spoken on the same day. But though Britain and America, and many other countries, share many of the same problems, the central problems are not the same. Roughly, at the moment, you could say Britain is trying to 'ginger up' productivity and stimulate the economy with tax cuts. The United States is suddenly more alarmed by a new wave of inflation. Canada, which receives a new budget on the same day, is baffled by persistent inflation by stagnant business and by a staggering, nearly 10 per cent, unemployment rate which is the worst rate they've had since the Great Depression. 

Now I must have given the impression – was bound to – that because the British government believes it has inflation under control and the American government fears it is breaking out of control, you might naturally gather that prices are higher and things getting worse here. Not so. No Briton needs to be told that if inflation goes down to, say, seven per cent a year, it's still another seven per cent piled on last year's 11 per cent and the 16 per cent, 20, and so on, of the previous years. In 1970, the end of 1970, my favourite – expensive, I admit – restaurant in London offered a succulent three-course dinner for £3.50. I used to tell Americans it was the best food bargain in Europe. At the going rate, that was about $9. Over here, young couples went on reconnaissance around town to find some hole-in-the-wall offering a $9 dinner. 

Well, in the intervening eight years that £3.50 dinner has gone to £14.50. Nothing like that has happened here in that time. In fact, an old American friend of mine, who sold his business seven years ago and retired to Europe, has been back here for a holiday. 'What', I asked him, 'is the main difference or, if you like, the main surprise?'

'That's easy!' he said, 'I'm staggered! Everything in America is so cheap!'

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

Letter from America audio recordings of broadcasts ©BBC

Letter from America scripts © Cooke Americas, RLLP. All rights reserved.