By Stephen Mihm / Bloomberg Opinion
The last time the U.S. endured inflation rates as high as they are today, homemakers, newspaper columnists and well-meaning government officials dispensed torrents of advice on how to cope with eye-popping price increases.
It’s worth re-reading those recommendations today, but not because they provide much useful contemporary guidance. For the majority of Americans, who are too young to recall the inflation-fighting tactics of the 1970s, the collective wisdom amassed during that era instead underscores the gravity of problem confronting everyone; and the limits of even the most ingenious coping strategies.
As ordinary citizens and the federal government grappled with spiraling prices beginning in the late 1960s, much of the advice focused on the mundane business of budgeting. This was a grim necessity. As the purchasing power of the dollar declined, people tightened their belts to make ends meet.
The government was there to help, sort of. Throughout the 1970s, it dressed up individual frugality as a kind of patriotic war on inflation. From President Gerald Ford’s Whip Inflation Now campaign — including buttons — to President Jimmy Carter’s lectures about living within one’s means, politicians and policy makers peddled the fiction that bargain hunting, frugality and conspicuous non-consumption would ease the pain of inflation.
Newspaper columnists joined the chorus, sharing perky wisdom on pinching pennies. “Inflation may be taking its bite,” declared the Chicago Tribune in a typical specimen of the genre from 1974, “but it need not wipe out your plans for decorating your home.”
And what sage advice did this columnist offer? Among the insights: “Use imagination. Consider a bath mat for a wall hanging or a sheet for draperies.” And: “A new bedspread can stave off the urge to replace the bedroom furniture.” Best of all: “In a pinch, move everything around. … You’ll be surprised how fresh it makes everything look.”
But it was at the grocery store where inflation hit the hardest, generating the most commentary. One newspaper captured the supermarket zeitgeist when it asked readers, “The moment you pass through the automatic doors, do the swollen hands of inflation beckon ominously, leaving you defensively checking your purse?”
For most Americans, the answer was a resounding “yes.” In one profile of families struggling with inflation, the Los Angeles Times reported that homemakers cooked smaller portions (“to guard against waste”) and began shopping more selectively. Rather than let recipes drive what they purchased in grocery stores, they bought what was cheapest, and then tried to find a way to serve it to their families.
One housewife described how price increases had left her feeling pinched, even when it came to potatoes, rice, pinto beans and other pedestrian items. “Most fruits are out,” she said. “Most vegetables are out. You’re left with chicken. That’s it!”
Poultry was indeed one of the few sources of protein that proved resistant to inflationary pressures. Between 1950 and 1980, the cost of beef went up 138 percent, while chicken only went up 12 percent; a function of increasingly efficient farming. A typical breathless account of this “inflation-fighting meal” trumpeted that chicken was so versatile, one could serve it “365 days a year without repetition.”
Beef eaters didn’t go down without a fight. General Mills rode to the rescue, introducing its iconic “Hamburger Helper” in 1971. This miraculous product could turn a pound of ground beef into a filling, carbohydrate-fueled dinner for a multitude. Next came — shudder — “Tuna Helper,” which performed the same miracle with canned fish.
By 1975, Hamburger Helper came in many different lines: “9 delicious ways to fight inflation,” one television advertisement proudly proclaimed that year. By then Americans had embraced other stomach-churning ways to cut costs. Mothers — mine included — surreptitiously bought cheap powdered milk and blended it with conventional milk to create an execrable drink that any child with taste buds could detect. Still others tried to pawn off margarine as butter.
Do-it-yourself adulteration was but the beginning of the fun. Food co-ops became a thing in the 1970s with their promise of cutting out the middleman in exchange for some unpaid labor stocking shelves. Other consumers took to buying meats from wholesalers and shadowy sources. Home vegetable gardens became increasingly commonplace.
If inflation fueled frugality, it could also nudge people to spend money on food: a dollar in the present had more purchasing power than it would a week, a month or a year in the future. Anyone with a chest freezer could hedge against inflation by purchasing a side of beef. This might not have been as ambitious as buying bullion — gold bullion, not beef buillon — a strategy favored by the well-heeled after Congress repealed New-Deal era restrictions on owning gold in 1974. Yet filling a chest freezer with steak was animated by much the same logic.
For those with enough cash on hand, collectibles offered a more enduring, if less edible, hedge against inflation. Coins, stamps, baseball cards, antiquarian books, gemstones, antique furniture and presidential autographs all became popular hedges in the 1970s. Some also became the focus of speculative bubbles, though these invariably collapsed by the early 1980s.
The era taught other, more arcane lessons on how to outwit inflation. Those who obtained fixed-rate mortgages in the low-inflation 1960s watched in wonderment as inflation devoured their debt.
By the late 1970s, many consumers concluded they could pull off a similar trick using credit cards, with help from the era’s antiquated usury laws. These capped the rates that banks could charge their customers, meaning that people who went on a spending spree with a capped interest rate lower than the inflation rate came out of ahead as the value of their debt declined. Credit-card companies knew this, of course. Citibank took the lead in solving the problem, relocating its operations to South Dakota, which helpfully lifted its interest-rate cap.
In the end, a decade of battling endless price increases left the country in a foul mood. No amount of powdered milk or coupon-clipping could change that. It’s a lesson worth heeding as we confront the ugly possibility that today’s inflation is just like yesterday’s; and tomorrow’s.
Stephen Mihm, a professor of history at the University of Georgia, is a contributor to Bloomberg Opinion.