Finance/Who's Minding the Mint?
Grant, James
struggle for legitimacy a century after the founding of the American Federation of Labor poses a dilemma for our democratic system. Unions not only protect the rights of workers - - a n d we...
...Altogether, a New York stockbroker explained, the world went short of the dollar...
...There are more people today who recognize instantly the names and heroic achievements of Ruth, Dempsey, and Grange than the more recent DiMaggio, All, and Unitas...
...The prophet was James Dines who had long since been ignored by respectable analysts...
...Last fall the Chicago Board of Trade unveiled a master creation for this time of financial volatility: an options contract on Treasury-bond futures...
...In addition, he set extant records in the field and on the bases...
...This policy has never wavered, even during the salad days of d~tente, and even though it has not endeared labor to other forces in our society...
...Nevertheless, it is an unwritten law that left-of-center parties and movements inevitably divide over questions of international affairs...
...F o r whatever reason nowadays, the value of hundred dollar bills in circulation is g r e a t e r than the total of all currency outstanding in .1967...
...Any of...
...There were some luminescent stars afterward to be worshipped: Hubbell, DiMaggio, Williams, Joe Louis, Baugh, Huff, Brown, Hull, Howe, Cousy, Russell, and others, not forgetting Budge in tennis and Palmer in golf...
...Yields on high-grade corporate bonds, according to the historian Sidney Homer, were higher than they had been since 1920...
...The unions, it was said, supported the Cold War because of the prospect of increased employment in the armaments industry...
...The thought of Streisand, Redford, and Eastwood walking where once walked the great and the mighty is enough to bring on the black bile...
...The AFL-CIO's decision to become more intensely involved in Democratic affairs reflects a judicious evaluation that the party cannot revive i t s e l f without the moderating and disciplining influence of the unions...
...Whether a long-term consensus on foreign policy issues can be realized has yet to be demonstrated...
...Today, of course, only the most obtuse Marxist sectarian would advance these arguments...
...Sports heroes assuredly didn't die with the twenties...
...In 1973 there was lhe Arab oil embargo...
...In 1967 there was $9 billion worth of hundred-dollar bills in circulation...
...right-wing authoritarianism...
...The military is no better in this respect...
...The 1970s began inauspiciously: On April 22, 1970-Earth Day--H...
...Nor can we look any longer to the republic of letters, arts, and sciences...
...people, governments, and businesses were led to borrow...
...The closing of the gold window (as the move was called) amounted to a gift of monetary Lebensraum...
...Business as such has never been a fertile bed for heroes...
...Spokesmen from the "progressive camp" have been reduced to advancing the shabby argument that labor should refrain from lending any support to the A d m i n i s t r a t i o n ' s military and foreign policy positions because to do" otherwise is to extend aid and comfort to the enemynthat is, Reagan...
...Over the short term, labor's determination to help rebuild the party has been a success...
...In the United States the public debt staged a fifteen-year rise from $343 billion to more than $1 trillion...
...was issuing bonds at 17 p e r c e n t and the United States Treasury was paying more than 14 percent...
...The reason for this no doubt has something to do with the prosperity of the world drug trade and with the unrest among foreigners, but surely a more fundamental cause is domestic inflation...
...and has become corporate, composed literally of hundreds of White House bureauRobert Nisbet is Adjunct Scholar at the American Enterprise Institute and author, most recently, of Prejudices: A Philosophical Dictionary (Harvard University Press...
...For any nation in this century needs all the heroes it can get for its pantheon...
...He generated five of them, and there wouldn't be another until Joe Louis...
...AMERICAN SPECTATOR DECEMBER 1982 a pretty free hand...
...Behold Hollywood...
...This is no small matter in a society where wealth and, even more significantly, education play the crucial roles in our social and political life...
...It is highly unlikely that there will be any more Pattons, MacArthurs, and Eisenhowers...
...the recen...
...Pan American Airways coined a slogan: " L i v e Today...
...Tomorrow it will cost more...
...He was unique...
...Each made his sport national in the popular mind, created followings and fans, and forged a whole new body of symbols in American culture...
...Again, the triumph of committees, councils, and staffs over soldiers...
...Politics and war are old seedbeds of heroes, but both have become desiccate under the sterilizing influences of bureaucracy, mechanization, and, in the case of the former, judicial imperialism that sucks the very marrow out of elective politics...
...It is almost inconceivable that we shall have another Thomas Edison' and Albert Einstein in our midst, each a household name...
...It is probably good to have a professional actor in the White House every so often...
...Only with the greatest difficulty can individual heroes breathe and prosper in such an atmosphere...
...Generally, the amount that it did print was in excess of the amount demanded for the noninflationary conduct of business...
...It naturally followed that it was better to borrow and spend than to save, because money saved today would be worth less tomorrow...
...Or that l a b o r ' s "knee-jerk" anti-Communism was a result of the large proportion of Roman Catholics within the rankand-file...
...The abrogation of these rights is perceived as a violation of the rights of fellow workers...
...Back in 1967, when the Treasury paid an average of only 4.5 percent on the public debt (as compared to I1.5 percent today) and the prime rate was 6 percent (vs...
...The structure of science today discourages individual achievement...
...The only stars today are supplied by imitation galaxies...
...issued long-term bonds at the then-startling rate of 6 p e r c e n t , I was sure (I had been a clerk on Wall Street for four months) that nothing like it would be seen again...
...On Wall Street a sense of foreboding came over the market in the late 1960s, a time when the brokers themselves were so engorged with paperwork that the New York Stock Exchange had to be closed for a succession of Wednesdays in order to give the clerks a chance to catch up with the salesmen...
...In i979 gold bullion hit $.300 an ounce, having scraped $104 in the summer of 1976...
...At last report they were trying to get out...
...Recently the rumor was hatched that the Treasury Department was going to print new hundred-dollar bills in yellow, declare the green ones void, offer to exchange the old for the new, and carefully take down the names and Social Security numbers of the people who came forward...
...We are thus down to, and fast losing, the world of sports as the spawning bed of heroes in America...
...Desert I in Iran might have produced heroes, but it has instead become one more symbol of the nonheroic, forever associated with the Joint Chiefs...
...In a way I was r i g h t - - i n September 1981, the Indiana Bell Telephone Co...
...The year 1980 brought credit controls, recession, and the first $500 billion budget...
...It was that prices were bound to rise and the purchasing power of money to fall...
...Today it is better to go to the dry-cleaning industry for heroes than to the writers of our books...
...1982, an epidemic of corporate bankruptcies, still more recession, and numerous debt " r e - schedulings" by sovereign borrowers, which, so Walter Wriston, chairman of Citicorp, recently assured the readers of the New York Times, can't go broke (and the first $700 billion budget...
...Corporations, forsaking the equity market, took out loans...
...he can add at least hero-luster...
...Such are the rewards of being first and at exactly the right historical moment...
...This is an astonishing leap...
...Alternatively, American workers were said to have benefited from our imperialist domination of the Third World, and thus opposed the Soviets out of fear of surrendering the fruits of this domination...
...In 1967, for example, the average checking account in a New York City bank was emptied and refilled 130 times a year...
...Ty Cobb led the major leagues twelve years in a row and his lifetime batting average was .367...
...Succeeded by jerks, monsters, and robots...
...Ever since the end of World War II, the unions have maintained a consistent policy of opposing Communist totalitarianism and Soviet expansionism, and, a s well...
...is the author of a biography of Bernard M. Baruch (forthcoming next f all from Simon and Schuster...
...We look in virtual awe today at any baseball player who can hit .300 (the live ball, mind you) for two or three years running...
...James Grant, who writes a weekly column on the credit markets in Barton's...
...Not only was more money printed during this time but also people spent and invested what they had more nimbly...
...There are almost two-and-ahalf C-notes for every man, woman, and child in the Republic, enough to be laid twice around the globe, end to end, if t h e wind d i d n ' t blow them away...
...Fending off the Confederacy, the Union had raised money for less than 6 p e r c e n t . ) in 1967, the cost of servicing the public debt amounted to $14.5 billion...
...During the past fifteen years we have seen in American professional sports what Gibbon saw in secondcentury imperial Rome: zenith of prosperity but also the sharp signs of beginning decline...
...Old sources have dried up in too many cases...
...Not feeling particularly rich, some of these people have unilaterally adopted lower brackets by seekingpayment in large bills...
...Even leaving nuclear war to one side, the conditions of war, at least for large nations, are antagonistic to emergence of heroes...
...it is also seen as an institutional and economic threat to workers in the free world...
...is the closest to hero in popular adulation in his time...
...Central to labor's view is the right of work'ers everywhere to free trade-unions...
...At the time, this proposition seemed self-evident...
...Today there is $57 billion worth...
...Unions not only protect the rights of workers - - a n d we need look only to the dramatic events in Poland to understand just how seriously workers take these r i g h t s - - t h e y also provide people of relatively humble origin with the means to achieve positions of influence and respect...
...The tumult of the past fifteen years of American finance--the age of the Great Inflationncan be clarified with two facts...
...Then, in the summer, after passage of what was described as the largest tax increase in history, the stock market vaulted by 150 points...
...By 1974, the stock market, by one measure, had fallen by about 70 percent from its heights THE AMERICAN SPECTATOR DECEMBER 1982 41 of the Go-Go year of 1968...
...For various reasons, labor's anti-Communism has earned the scorn of the Left, the business community, and the foreign-policy Establishment...
...There is, in addition, an international dimension to labor's role as bulwark of American democracy...
...The presidency has already ceased to be individual, as it was down through FDR...
...To put that feat in perspective, however, the Dow Jones Industrial Average at this writing stands at roughly 940, which is where it was fifteen years ago...
...Once such eminences as Longfellow, Lowell, Mark Twain, William James, William Lyon Phelps, and H. L. Mencken were authentic heroes, household names...
...The golden age of sports heroes is the 1920s--comparable in its way with the Age of Pericles m when Dempsey, Ruth, Cobb, Grange, Tilden, Rockne, and Bobby Jones were veritable demigods...
...Certainly the Democrats have not resolved their internal differences over America's future world role...
...crats rivaling such hopelessly unfecund areas as State, Defense, and HHS...
...Sensing that the shelf life of money was approaching that of fresh bread, people rushed to exchange dollars for things...
...Now it is interesting to recall how these critics explained labor's persisting anti-Communist approach...
...Ross Perot, a Texas computer e n t r e p r e n e u r , lost $450 million in the shares of his own company~ Electronic Data Systems...
...and ten-thousands rolled off the presses in 1969...
...Each was what the Greeks called a culturehero, that is, a creator or bringer and bestower...
...Henry Ford, St...
...Whatever the case, democracy's s u p p o r t e r s can be thankful t h a t at least one institution in American society has had the courage to withstand the opprobrium of powerful and influential critics...
...Even before the last tenuous link of the dollar to gold was cut by President Nixon in 1971, the Federal Reserve System enjoyed 40 THE...
...Last spring, the annual rate of turnover, thanks to new technology as well as to inflation, had jumped to 1,300 times...
...The share of GNP appropriated by the federal government has risen from 20 percent or so to 23 p e r c e n t . Yet the volume of bills with the picture of Benjamin Franklin on the front and the zeros on the corners has soared by 533 percent...
...1981, another recession (and the first $600 billion budget...
...The last five-hundreds, thousands, fivethousands...
...the Catholic Church is shifting from its once consistent hard-line stance...
...In 1975 came the first $300 billion budget...
...Particular _9 attention is thus paid to the practices in Communist countries because Communism, as a system, rejects the very legitimacy of free trade-unions and promotes the concept of partystate hegemony over labor unions as a matter of high principle...
...Everywhere people borrowed with the one thought that money would be cheaper and more plentiful at repayment time than it had been when they'd gone into debt...
...In June 1967, when the Illinois Bell Telephone Co...
...What was bound to happen did...
...teams and task forces are the thing...
...Starting in the late 1960s, the value of bills of all sizes deteriorated, which gave rise to an article of faith...
...radical Third World regimes are eagerly seeking capitalist investment...
...13 percent), the cost of funds was considered outlandishly high...
...Also in 1977 came the first $400 billion budget...
...Beginning with the legendary John L. Sullivan at the turn of the century, there have been many heroes in boxing, baseball, football, tennis, golf, and, recently, basketball and hockey...
...Had others not caved in so easily when the going was difficult, the prospects for world democracy might be notably better...
...The numbers scarcely seem credible, but there they are...
...Through the 1970s, as noted, people got into debt...
...In the past decade and a half, the inflationadjusted gross national product has risen by 46 percent and the consumer price index by 193 percent...
...Where are the Swansons, Chaplins, Garbos, and Gables...
...And therein lies the greatest harm done to this country by the boundlessly self-aggrandizing owners and players...
...Gone...
...And what heroes we have had...
...There had never been a million-dollar gate before Dempsey...
...Whatever the regard for the Croesuses, Fuggers, Rothschilds, Morgans, and Rockefellers in Western history, it was the very opposite of hero-regard...
...The Vietnam war having ended, and the image of the valiant Polish workers defying a Communist police s t a t e dominating the free world's political consciousness, criticism of labor's international perspective of necessity has been muted...
...The business community is clamoring for reductions in defense spending...
...A Long Island bank recently was said to have done a brisk bu~siness of breaking large bills for people who'd heard the story and wanted to be on the safe side...
...Recently the cost approached the annual rate of $124 billion, a sum larger than the federal budget for any year prior to 1965...
...Inevitably...
...In 1971 the nation was treated to two firsts: a $200 billion federal bridget (the $100 billion mark had been cleared in 1962) and peacetime price controls...
...Hundreds, by the way, are the largest bills currently printed...
...On average, for example, one year to the next in the 1970s, the Fed expanded the volume of credit by 9 percent, ot more than twice as fast as the rate of inflationadjusted economic growth...
...In fact, l a b o r ' s foreign policy orientation is dictated by a compelling combination of principle and self-interest...
...In 1977 trading began in contracts for future delivery of Treasury bonds, thereby placing the solemn obligations of the United States government on a speculative par with pork bellies, plywood, and soybean meal...
...The perennial rise of prices and incomes has t h r u s t millions of ordinary Americans into rarefied tax brackets...
...Real estate and the "collectibles" markets boomed and an inflationary hedonism was born...
...midterm party conference was the most united and noncontroversial party gathering in years...
...Thereafter the Fed was free to create as much credit as it deemed prudent, or necessary, or thought it could get away with...
...In this period we have seen professional sports industrialized, computerized, sl~ecialized, politicized, and egregiously over-publicized...
...For example, the tax-wise plumber who charges $150 for a new washer might e n t e r t a i n an offer of $100 in cold cash...
...There will be no more Lincolns, Teddy Roosevelts, and Woodrow Wilsons in American politics...
...And it was...
...On January 23, 1980, it momentarily reached $875, thereby validating one of the most audacious financial forecasts ever made, namely, that the gold price would one day exceed the Dow Jones Industrial Average...
Vol. 15 • December 1982 • No. 12
