“Heading for Crash”

Late in 1973, the New York Times carried this headline: “Boom Economy in Europe Feared Heading for Crash.” At about the same time U.S. News & World Report stated: “Fears are widespread among bankers, economists and politicians all over Europe that governments are losing control over the wage-price spiral, and that runaway inflation is leading toward economic disaster.”

Whereas just a few years ago the number of economists making such dire predictions would have been few, now there are more and more. Nicholas L. Deak, president of a large foreign money exchange in North America, said that ‘inflation will lead to a world-wide depression that will make the 1930s look like a summer holiday.’ He also said: “Inflation creates a boom that ends in disaster. The trend can’t be reversed without a major depression.”

London’s Financial Times called the prospects for the near future “spine-chilling,” commenting:

“When Dr. Schaefer, the highly respected chairman of Switzerland’s largest bank, recently warned of the danger of the [world’s] entire economic system ‘meeting with a tragic end,’ he was not exaggerating.

“He was merely ringing round a worry that even the most sober observers of the international scene no longer find it easy to dismiss​—that . . . inflation has now reached the point at which nothing can stop it [from] completely destroying the world’s monetary base, with consequences too frightful to contemplate.

“Dr. Schultz, the international monetary chronicler, puts it bluntly when he says in his latest news letter that . . . ‘Money is dying.’”

A member of Britain’s parliament, Sir Henry d’Avigdor-Goldsmid, a banker whom the London Sunday Telegraph of July 22, 1973, described as “a very model of judicial caution,” warned:

“When [Mount] Vesuvius erupted the citizens of Pompeii were probably discussing plans for new public baths. No doubt that was a matter of great moment to them, but they were completely unconscious of the deluge of death and destruction that was about to descend upon them. . .

“We are facing what amounts to an eruption of Vesuvius. Price inflation all over the world in the last 18 months is something which will bring much of the Western world as we know it to an end.”

The Financial Times of London remarked:

“The fact that the so-called monetary managers are almost everywhere behaving as though they see the problem as having got far too big for them to tackle, either individually or collectively, inevitably adds weight to these spine-chilling [indications of coming disaster].”

Consider this too: In an editorial in the London Sunday Telegraph, P. Worsthorne said that inflation “represents instincts of human greed and selfishness so primitive and fundamental as to challenge the confines of common sense.” This observer went on to say:

“Could it be that inflation is also a form of mass madness, rooted in evil, no more curable and controllable by economic rationality and political common sense than Nazism was curable and controllable by the normal therapy of international diplomacy? . . .

“When one talks in private to people who know about such things, their description of the challenge of inflation is so dark and ominous, almost so apocalyptic, as to suggest that the cure of it must require truly painful remedies.”