Topics in the News
Americans in the Air.
Between 1971 and 1973 more than half of the U.S. population boarded scheduled air-liners, and Americans were responsible for some 60 per-cent of the world's air traffic. By 1973 there were thirteen thousand flights a day as Americans took advantage of the convenience of air travel. The airlines made flying easy. Student discount fares allowed travelers under age twenty-one to buy tickets at half price; standby fares could be purchased at deep discounts on the basis of the availability of space at flight time; and other discounts attracted casual travelers who filled the seats left after business travelers bound to set schedules had purchased their seats at full fare.
Airline hijacking became a serious problem at the beginning of the decade. Between 1930 and 1970 there had been about two hundred skyjackings, as airline hijackings were called, and over half of them occurred in the eighteen months prior to June 1970, during which ninety-six persons were killed. During eleven days in September 1970 alone there were six acts of air piracy worldwide among the eighty for the year. The situation was dire. In 1970 approximately 1.7 million passengers a year flew on international routes considered by the Federal Aviation Administration (FAA) to be at high risk for skyjackings.
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Amtrak, the public/private corporation formed to operate passenger rail service in the United States, went into operation on 1 May 1971. Created by the National Railroad Passenger Act of 1970, Amtrak was made necessary by the bankruptcy in June 1970 of the Penn Central system. The Penn Central had been formed in 1968 through the merger of the New York Central and Pennsylvania railroads. Since its founding in 1971 Amtrak ridership has more than doubled, though the corporation has not been able to forgo its government subsidy.
Subsidized by the federal government—36 percent of its budget in 1986—Amtrak was to provide nationwide passenger rail service. Its route system of over twenty-four thousand miles, including over twentysix hundred miles of track that it owns, took over all noncommuter rail service in the United States. Amtrak began operation with the aging fleet of rail equipment, many without heating and air conditioning systems, inherited from the railroads. In 1975 the railway began acquiring new locomotives and passenger cars.
Limits to Profits.
While Amtrak has been successful in retaining nationwide passenger rail service, there is little evidence that the system is capable of turning a profit outside the densely populated Northeast previously...
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In spring 1970 Steven Jobs was a fifteen-year-old sophomore at Homestead High School near San Jose, California. He already had a reputation as an arrogant, intelligent "wire head" whose knowledge of electronics never quite matched his ability to talk about the subject. Jobs's genius was in impressing his visions upon people. When it came to demonstrating that vision, he turned to his friend Steve Wozniak, a true electronics wizard. While Jobs was in high school and Wozniak was at Stanford, Jobs and Wozniak conceived, Wozniak built, and Jobs sold electronic blue boxes used by "phone phreaks," as they were called, to make free long-distance telephone calls illegally. The pair made a small profit before fear of criminal prosecution inhibited their enterprise, but Jobs had seen a blurred image of the future.
By 1975 Wozniak had graduated from Stanford and had a job as an engineer at Hewlitt-Packard designing calculators during the day, and he sharpened his engineering skills with home-hobby electronics projects at night. Jobs had dropped out of college during his first year at Reed College to concentrate on the study of Zen Buddhism and to work in the electronics department at Atari, the games manufacturer. In 1974 he left Atari to study Zen for a year in India, and on his return to California he stood out, even...
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Automobile Industry in the 1970s
Economic Turmoil and Change.
The 1970s proved to be a decade of tumultuous change for the automobile industry in the United States. Caught first in the economic
turmoil of high interest rates, high inflation, and price control and then in the energy crises of 1973-1974 and 1979, the automobile industry bore the brunt of the changes brought upon the U.S. economy. In addition to the domestic economic situation, U.S. automakers also faced a changed international market, with more competition from foreign manufacturers.
A Poor Start.
The decade started badly with a paralyzing strike by the United Auto Workers (UAW) during 1970. As a result production at the four major automakers—General Motors (GM), Ford Motor Company, Chrysler, and the American Motors Corporation (AMC)—sank by one million vehicles, 10 percent below 1969 figures. In addition to the strike, automakers were faced with a buying public that was increasingly resistant to price increases and high interest rates.
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In 1970 one in every thirty-four households in the United States subscribed to Consumer Reports, and many more had access to the publication in public libraries. American consumers, people who bought goods sold in the United States, had become a demanding lot. Stirred to protest by consumer activist Ralph Nader, whose 1965 book Unsafe at Any Speed: The Designed-in Dangers of The American Automobile indicted General Motors in particular for producing the Corvair and the auto industry in general for indifference to the safety of their cars, Americans were becoming finicky purchasers. Because the economic fortunes of the nation depended on the reliability of American goods, the government was quick to support measures that ensured the safety and integrity of products in the marketplace.
Desire for Truth.
Specifically, consumer groups wanted assurances that advertising claims were truthful, that product weights and measures were accurate, and that the goods they bought were safe. They wanted a means of voicing their concerns and their complaints, assurances that prices were fair, and protection against fraud. In 1971 Nader's Center for the Study of Responsive Law in Washington, D.C., set a fund-raising goal of one hundred thousand dollars from individuals sending in fifteen-dollar contributions. With their...
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Decade of Crisis.
The decade of the 1970s was the most traumatic for the American economy since the Great Depression. Coming after nearly a quarter century of sustained prosperity and growth, the downturn of the 1970s hit with especially powerful force. Productivity was down, costs were up, unemployment soared, inflation was high, exports were low, imports swamped the market—nearly every economic indicator went south during the decade. The Nixon, Ford, and Carter administrations tried a variety of innovative approaches to resuscitate the economy, but most failed, and the solutions often burdened the nation with new, unintended problems. In 1972, for example, the United States sold the Soviet Union millions of tons of wheat in an effort to reduce the trade deficit; the sale, however, precipitated a 32 percent jump in food prices and much consumer anger in 1973. Although the causes of the economic decline of the 1970s are numerous and controversial, two economic problems are of primary importance: the federal deficit and trade balances.
The Federal Deficit.
The growing federal deficit of the 1960s destabilized the private sector in the 1970s. The Vietnam War badly burdened the American economy. To avoid fueling opposition to the war by financing it through unpopular taxes, the Johnson administration funded the war by borrowing and...
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Energy in the 1970s
The Source of Change.
A major source of the instability and change of the economy during the 1970s was energy. In early 1973 the United States faced shortages of electricity, gasoline, and heating oil, leading to the shutdown of factories and schools, the cancellation of some commercial airline flights, electrical brownouts, and lines at gasoline service stations. Blackouts plagued cities and industries, most spectacularly in New York City on 13-14 July 1977. High fuel prices reduced the productivity of American industry. Heavy imports of fuel harmed the U.S. balance of payments and destabilized the international monetary system.
On 6 October 1973 the Yom Kippur War between Israel and its Arab neighbors broke out. When the United States moved to support Israel, several of the oil-exporting nations of the Middle East cut off exports of oil on 19 October. The price of oil in December 1973 rocketed to between fourteen dollars and nineteen dollars per barrel, up from two and three dollars a year earlier. The energy problem quickly became an energy crisis. President Nixon addressed the nation on 7 November 1973 about the energy crisis and spoke about the trends that had caused the shortages:
The average American will consume as much energy in the next seven days as most other people in...
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William Henry Gates was fifteen in 1970 and, by his own admission, the smartest kid in Seattle, Washington. He attended the progressive Lake-side School, a private high school that had a computer club. There Gates met the principal figures with whom he worked during the 1970s to form what arguably became within twenty years the most successful corporation in the world.
Lakeside Programmers Group.
At Lakeside, Gates, with his friends Paul Allen and Ric Wieland, had time-sharing access to a mainframe computer. Using a programming language called BASIC, developed at Dart-mouth University in the late 1950s, they could type in a set of instructions and have the machine run routines that displayed results on a teletype terminal. When he was in the eighth grade Gates and his friends wrote programs in BASIC for simple games, such as ticktacktoe, and for more useful computations, such as a conversion of a number from a base-ten system into a binary, hexadecimal, or any other base-number configuration. By the time Gates was a senior in high school, it was commonly accepted that the Lakeside Programmers Group, the school computer club, included students with remarkable ability to understand computer logic and turn it to practical uses. Gates was regarded as the best of the Lakeside programmers, followed closely by Allen and Wieland....
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Minorities and Women in the Workplace
The Call for Equality.
White males dominated American business before 1970 largely because of social patterns and cultural values. The domination was challenged after World War II, and slowly women and minorities began to establish a presence in American business. During World War II the war effort required women to enter the workforce in unprecedented numbers. After the war many female workers were unwilling to turn over their jobs to returning soldiers and revert to domestic roles. At the same time the incipient social upheaval of the 1950s and the outright revolution of the 1960s had provided new rights to blacks in education and in the workplace by legislation and by judicial order. Equal opportunity was a phrase that resonated throughout the post-World War II decades. To minorities the phrase offered hope; to employers it threatened stifling regulation. While equal opportunity was a concept first intended to redress racial injustice, the laws that resulted frequently applied to sexual as well as racial discrimination.
The Civil Rights Act.
The key piece of legislation prohibiting racial or sexual inequity was the Civil Rights Act of 1964. It addressed discrimination on the basis of race, color, religion, national origin, and, particularly in matters of employment, gender. Among the major provision in the act was broad authority for...
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Nike was born in 1970 as the corporate incarnation of an eight-year-old sideline begun by a former track-and-field athlete bored with his work as a certified public accountant (CPA). Philip Knight had been a middle-distance runner at the University of Oregon in the late 1950s. Under the tutelage of his demanding and inspiring coach, William Bowerman, Knight once ran a 4:09 mile, but he realized that while his interests lay in track and field, he did not have the talent to participate in the sport at the national level. He went to graduate business school at Stanford, where for a class assignment he designed a plan to capitalize on his interest in sports. He knew that Japanese running shoes were both superior to and cheaper than the German Adidas shoes that dominated the American market. Knight proposed to import Japanese shoes for sale to American track-and-field athletes.
Go for It.
Bored with life as a CPA, Knight decided in 1963 to try his business-school plan. He formed a company called Blue Ribbon Sports and bought Japanese Tiger shoes which he sold from the trunk of his car to runners at track meets in Oregon. His first order in 1963 was for two hundred pairs of shoes, which he stored in his father's basement and peddled at local track meets. Bowerman, Knight's former track coach, saw the need for an improved track...
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Unions in the 1970s
Changing Labor Market.
In the 1970s labor unions priced themselves out of a radically changing labor market. Too long during the decade unions continued to strike and bargain for wage increases without regard to the health of the industries whose workers they represented. In 1970 the railroad unions struck for two hours and received wage raises far above the rate of inflation without any increases in productivity. In the inflationary mid 1970s the United Auto Workers and the United Steelworkers demanded and received large increases in wages and benefits that did not recognize the severe cost pressures and profit squeezes that their respective indus-tries were undergoing. In the recession of 1979-1981 those industries responded to those pressures by laying off hundreds of thousands of workers. Also, several major unions—the Teamsters and the United Mine Workers among them—were caught up in corruption scandals that eroded the goodwill of Americans. One sign of the declining leverage of labor unions was the average number of workers involved in work stoppages, which declined from over 1.3 million during 1973-1977 to fewer than 850,000 during 1978-1982.
Early in the decade unions were still seen as major players in setting economic and political policy. In 1970 an eight-week strike by the United Auto Workers crippled...
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Founded in Bentonville, Arkansas, in 1962, the Wal-Mart chain of discount stores helped revolutionize the retail industry. Disregarding the conventional wisdom of retailing, that a store must be located in an area with a population of at least one hundred thousand, Wal-Mart in the 1970s opened its stores in markets with less than twenty-five thousand potential customers. This unusual approach took advantage of the growth of small towns in the South and the concentration of larger retailers, such as K-Mart and Sears, on locating in larger cities and suburbs. As these larger markets became saturated with stores, the retailing giants began to move to the smaller markets where Wal-Mart was now preeminent. Not accustomed to the aggressive marketing and pricing strategy of Wal-Mart, the larger chains found it difficult to compete.
In the late 1970s Wal-Mart entered into an aggressively ambitious expansion program, planning to add 60 stores per year. In 1979 the 252-store chain had sales of $1.2 billion and earnings of $38 million. By the early 1990s Wal-Mart had displaced Sears as the number one retailer in the country. In 1992 Wal-Mart expanded into Mexico with joint efforts with Cifra, the leading Mexican retailer.
Independent of Genius.
The brainchild of...
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Boyle, W. A. ("Tony") 1904-1985
UNITED MINE WORKERS PRESIDENT
Symbol of Corruption.
As president of the United Mine Workers (UMW) from 1963 to 1972, W. A. ("Tony") Boyle came to represent the increasingly corrupt and ineffective nature of many labor unions in the United States.
A longtime member of the UMW, Boyle rose quickly through the leader-ship ranks. In 1948 Boyle moved to Washington, D.C., to be administrative assistant to union president John L. Lewis, who took Boyle as his protégé. When Lewis retired as president in 1960, Boyle became vice-president under President Thomas Kennedy. Kennedy was old and sick when he became president, and Boyle exercised most of the power in the union. In 1963 Kennedy died, and Boyle finally became president of the UMW.
Like Lewis before him, Boyle ran a centralized, authoritarian union, which had little patience with worker democracy or power sharing. All of the union's district leaders were chosen by Boyle and the union hierarchy, and negotiations were held with little input from the rank and file. In 1968 the union and the Consolidated Coal Company were fined $7.3 million for collusion in bargaining, a finding that led to revolt in the ranks.
Death of Yablonski.
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Burns, Arthur F. 1904-
CHAIRMAN FEDERAL RESERVE BOARD
The 1960s and 1970s saw the rise of the government technocrat, who wielded great influence over the U.S. economy. Arthur Burns is a prime example of the species. Nonpartisan in the strictest sense, Burns served eight U.S. presidents—Dwight Eisenhower through Ronald Reagan—in various posts and became one of the most important influences in the post-World War II American economy.
Burns was born in Stanislau, Austria, and immigrated as a child to Bayonne, New Jersey. An intellectually ambitious young man, Burns obtained a scholar-ship to Columbia University in 1921. He graduated in 1925 with both a B.A. and an M.A. in economics. He received his Ph.D. from Columbia in 1934, the same year his dissertation, Production Trends in the United States Since 1870, was published. In 1944 Burns returned to Columbia University as a professor. In 1948 he became the director of research at the National Bureau of Economic Research, becoming its president in 1957.
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Femina, Jerry Della 1936-
In a business world long dominated by staid, Ivy League men in gray flannel suits, Jerry Delia Femina exploded like a grenade in the late 1960s and 1970s. Not only did he propose a slogan for Panasonic, the Japanese electronic company, proclaiming, "From Those Wonderful Folks Who Gave You Pearl Harbor," but he made that campaign a financial success. (He recycled the title for his insider's book on advertising.)
Every bit of sassiness, iconoclasm, and aggressiveness that he had learned growing up in blue-collar Brooklyn erupted in a business long renowned for its prudence and respectability. Della Femina turned all that on its head in the name of creativity. No one else dared produce a zipper ad with a baseball catcher telling his pitcher, "Your fly is open." A campaign for Pretty Feet had as its headline, "What's the ugliest part of your body?"
On His Own.
Delia Femina was no less outrageous in dealing with his superiors, needling and confronting those whom he saw as blocking creativity, even as he picked up awards from advertising associations. His stance appealed to the creative side of the industry, which inevitably had disagreements with the senior executives. So Delia Femina went his own way, forming an...
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Murphy, Thomas 1915-
EXECUTIVE, GENERAL MOTORS
Thomas Aquinas Murphy was chairman and chief executive officer of General Motors (GM) from 1974 to 1980, arguably one of the most difficult times in the company's history.
Lifetime of Preparation.
Beginning his career with GM in 1938, Murphy worked his way up the corporate ladder through the financial department. An accountant by training, Murphy was chosen in 1959 by then-chairman Frederick C. Donner as a possible future chairman. His subsequent positions—controller, treasurer, vice-president and group executive of the car and truck division, vice-chairman—were expected promotions for a man intended to lead the company.
When Murphy took the helm in 1974, replacing Richard Gerstenberg, GM was reeling from the Arab oil embargo of 1973 and the ensuing economic slowdown. The heart of the product line, the profitable big cars, were sitting unsold on dealership lots. The rising price of gasoline was generating a shift in consumer preference in favor of smaller, more fuel-efficient cars. The shift played against American manufacturers, all of whom had concentrated on larger vehicles, and benefited Japanese carmakers. Industrywide, domestic auto production fell by 22 percent in 1973 and a further 24...
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Nader, Ralph 1934-
Image Pop-UpA group of women from Miss Porter's Finishing School work with Nader's Raiders for a summer study of nursing home abuses.
Ralph Nader is both a reformer and a visionary. His roots extended to the early-twentieth-century muckrakers, to Ida Tarbell, Upton Sinclair, and others who roused the nation against business exploitation. So he launched fact-filled thunder-bolts from the 1960s onward against hazardous automobiles and natural gas pipelines, unsafe mining methods, unwholesome meat processing, and other dangers to the consumers.
David versus Goliath.
Nader was a virtually monkish idealist who was single, lived ascetically, owned no property, and cared only for the truth he was uncovering. Nader's assaults fitted the temper of the Vietnam War era and the growing assumption that the country's leaders and institutions were self-centered and deceitful. Nader's Unsafe at Any Speed: the Designed-in Dangers of the American Automobile (1965) was a smash hit, and the thin, thirtyish man became an overnight folk hero.
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Simon, William 1927-
ENERGY CZAR, 1973-1974; SECRETARY OF THE TREASURY, 1974-1977
A Relative Unknown.
When William Simon was appointed chief of the new Federal Energy Office on 4 December 1973, he was a relatively unknown Wall Street bond trader stepping into one of the most important jobs in the country. His decisiveness and candor in allocating American energy resources during the Arab oil embargo—and during the winter of 1973-1974—soon made him a house-hold name. Unlike fellow Nixon administration officials, Simon made a habit of openness with the press and responsiveness to the public, which lessened, perhaps, the seeming omnipotence of the "energy czar." And while William Simon did not end the energy crisis, his level-headed administration of the emergency made him one of the most respected bureaucrats among the various governmental agencies overseeing American industry, paving the way for his appointment as secretary of the treasury in 1974.
Grandson of a French-immigrant textile tycoon...
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People in the News
On 11 May 1977 John D. Backe, 44, succeeded the powerful William S. Paley, 77, as chief executive officer of the Columbia Broadcasting System (CBS), a $2 billion multimedia conglomerate, as part of a long-planned change of top leadership which did not, however, prove successful; Backe was pushed out in 1980.
On 3 February 1975 Eli M. Black, the president and chief executive officer of the $2 billion United Brands multinational conglomerate, committed suicide in New York. The company had suffered severe losses, and the news was surfacing that it had tried to get a tax reduced by offering a bribe to the president of Honduras.
On 11 September 1975 W. A. ("Tony") Boyle, the head of the United Mine Workers of America, received three consecutive life terms for ordering the murder of union rival Joseph Yablonski, his wife, and his daughter, whose bodies were found on 5 January 1970.
On 22 July 1971 Edgar M. Bronfman took over as president and treasurer of the Distillers Corporation Seagrams and its chief U.S. subsidiary, Joseph E. Seagram and Sons, following the death of his father, Samuel, who was the company's founder.
On 6 November 1973 Malcolm Forbes, publisher of the business magazine Forbes, landed at Gwynn Island in-Chesapeake Bay after a monthlong flight in a custom-designed hot-air...
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Winthrop W. Aldrich, 88, banker, president, and board chairman of Chase Manhattan Bank; ambassador to Great Britain (1953-1957), 25 February 1974.
Stanley C. Allyn, 79, president and board chairman of National Cash Register Company, which he expanded overseas and diversified into manufacturing office machines, 31 October 1970.
John A. Barr, 70, retailer who worked his way up the ladder in Montgomery Ward for over twenty-five years, expanding the company and becoming board chairman and president (1961-1964), 16 January 1979.
Elmer H. Bobst, 93, executive in vitamins and pharmaceuticals with Warner-Lambert Pharmaceuticals, 2 August 1978.
Harold Boeschenstein, 76, executive who promoted new products using glass fibers as president and board chairman of Owens-Corning Fiberglass Company, 23 October 1972.
Ernest R. Breech, 80, president of Bendix Aviation Corporation and, after World War II, a key Ford senior executive, 3 July 1978.
Edward G. Budd, 69, president and board chairman of Philadelphia's Budd Company, one of the few remaining American locomotive and railroad-car builders, 20 May 1971.
Herbert P. Buetow, 73, president of the Minnesota Mining and Manufacturing Company (3M), famous for Scotch Tape...
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Stanley Aronowitz, False Promises (New York: McGraw-Hill, 1973);
C. Fred Bergsten, Thomas Horst, and Theodore H. Horan, American Multinationals and American Interests (Washington, D.C.: Brookings Institution, 1978);
Derek C. Bok and John T. Dunlap, Labor and the American Community (New York: Simon & Schuster, 1970);
Robert F. Buckhorn, Nader: The People's Lawyer (Englewood Cliffs, N.J.: Prentice-Hall, 1972);
Barry Commoner, The Poverty of Power: Energy and the Economic Crisis (New York: Knopf, 1976);
Congressional Quarterly, Inc., The U.S. Economy: Challenged in the '70s (Washington, D.C.: Congressional Quarterly, 1972);
Jerry Delia Femina, From Those Wonderful Folks Who Gave You Pearl Harbor: Frontline Dispatches from the Advertising War (New York: Simon & Schuster, 1970).
John Kenneth Galbraith, The Age of Uncertainty (Boston: Hogghton Mifflin, 1977);
Galbraith, Almost Everyone's Guide to Economics (Boston: Houghton Mifflin, 1978);
Galbraith, Economics and the Public Purpose (Boston: Houghton Mifflin, 1973);
Galbraith, Money, Whence It Carney Where It Went (Boston: Houghton Mifflin, 1973);...
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Business and the Economy
WILLIAM L. PEPER,
PATRICK D. REAGAN
Entries are arranged in chronological order by date of primary source. For entries with one primary source, the entry title is the same as the primary source title. Entries with more than one primary source have an overall entry title, followed by the titles of the primary sources.
CHRONOLOGYImportant Events in Business and the Economy, 1970–1979 … 64
PRIMARY SOURCES"Franchising's Troubled Dream World"
Charles G. Burck, March 1970 … 69"World Trade in the 1970s"
AFL-CIO Economic Policy Committee,
May 1970 … 73"More Companies Hire Workers They Once Spurned—The Elderly"
Bill Paul, November 2, 1970 … 77"The Surge of Public Employee Unionism"
David L. Perlman, June 1971 … 80"The Post Freeze-Economic Stabilization Program"
John B. Connally, October 8, 1971 … 83"H. Ross Perot: America's First Welfare...
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