Oil Crises and Recession

Published: 1974
Play Audio Archive Story - UPI

President Gerald R. Ford: "We are currently facing three serious challenges: inflation, recession and energy - inflation, which is a deadly long-range enemy that cannot be ignored; recession, which is serious -- which is a serious threat that already has hurt many, many citizens and alarms many, many more. Hopefully, it is a shorter-range evil; but neither can be ignored, nor will it be. And make no mistake. It is imperative that we fight both inflation and recession at the same time."

Announcer: The United States started the year in the midst of an energy crisis caused in part by an Arabian embargo of all crude-oil shipments to the United States. President Nixon had already asked Americans to curtail excessive driving and, when they had to drive, to keep the speed limit at 55 miles an hour, and he requested that all thermostats be kept at 68 degrees. Some states' gas supplies were harder hit than others, and they turned to a gas-rationing plan. In New Jersey, this meant being eligible for gas on every other day. The lineup of cars at gas stations became a common scene.

Brian McFadden was in New Jersey and reported what he saw.

Brian McFadden: "You just could not believe it. It's fast approaching a panic-in-the-street situation here, and I know that sounds hard to believe for people outside of northern New Jersey; but, believe me, that's what it is. It's getting to riots now. I was out early this morning. The few stations that were open were mobbed. I made it into a Sunoco just before they put up the last-car sign, and the people behind me were furious! They were out yelling and screaming at the attendant. One irate motorist took a swing at him and just missed. It's like something out of a movie. It's a crazy situation; I've -- I've never seen lines like I've seen these past days. Some stations today have lines, I would estimate, well, well over a mile long, and of course there's no guarantee of gas. Almost half of the cars in the line that I was in ran out of gas before they reached the station, and we all had to pitch in and help push them to the pump."

Announcer: Then to add fuel to the consumers' wrath, most oil companies announced huge profits in the fourth quarter of 1973, some as high as 70 percent more than the previous year. A Senate Committee questioned executives of seven large oil companies who told the Committee that the fuel crisis was real and that they did not contrive it.

Independent truckers started a protest in 1973 that continued into '74. They were protesting rising fuel costs and speed restrictions. They had first protested by blocking major highways, but then came violence. One driver told of being shot at while trying to make his delivery.

Unknown Speaker: "I was meeting quite a few cars right along there, and all of a sudden I just heard explosions, sounded about like a shotgun going off. But it wasn't a shotgun, bullets and all that did it. I found out later it was -- looked like a .22. And one went through the windshield on my side, oh, probably eight inches over from where I was sitting."

Announcer: In 1974, housewives found that a trip to the supermarket was getting more expensive each week. One example was the price of sugar, which in the course of the year had gone up as much as 300 percent or 400 percent. Mrs. Beverly Rebato of Saint Clare Shores, Michigan, decided to start her own boycott of sugar.

Ms. Beverly Rebato: "I got absolutely fed up with prices in the supermarkets and decided that I was gonna make the average American heard, and I've done it in our area; I've really done it. We're being heard so loud and strong that somebody's gonna do something. So next year when the sugar industry decides to pay off dividends, they're gonna be paying it off in five-pound bags of sugar they got left over."

Announcer: One imagined shortage appeared during 1974. Someone started a rumor that toilet paper would soon be hard to get. So people started to hoard their favorite brand. The rumor proved false, and the tissue issue was left behind us.

A more real issue was the one of unemployment. The November figure showed that unemployment had reached the highest level in 13 years: 6 million workers. With the figure at 6.5% for the month, $2.5 billion in Federal funds became available for a public-works program.

The automobile industry was one of the hardest hit by the recession. By the end of the year, they expected to have over 200,000 people out to work. Auto sales were down more than 35% in November compared to the same month in 1973.

President Ford called together leading businessmen, labor leaders and economic experts to a two-day economic summit meeting. The aim was to formulate plans to fight the joint threat of inflation and economic recession. Ford's plan called for a new mobilization against inflation, which included a 1-year 5% tax surcharge on corporate and individual incomes for any family with a gross income of over $15,000. Ford also gave this warning.

President Gerald R. Ford: "Inflation, our public-enemy number one, will unless whipped destroy our country, our homes, our liberties, our property and finally our national pride as surely as any well-armed wartime enemy."

Announcer: While Inflation couldn't be held directly responsible, the largest bank collapse in U.S. history took place in 1974. The Franklin National Bank was declared insolvent and was taken over. Depositors were told they would suffer no losses and there would be no interruption of service to the public.

The largest corporation in the world got quite a surprise in 1974: they were presented with the largest antitrust suit ever to be filed in the history of the Government. The company was AT&T, and the suit was filed by the Justice Department. The Government's main goal is for AT&T to get rid of the Western Electric Company. The complaint says that MA Bell is violating the Sherman Act by monopolizing much of U.S. telecommunications.

John deButts, Chairman of AT&T, vows to fight the antitrust suit to the end.

John deButts: "I submit to you that this nation's telephone users large and small will be the losers if the Justice Department is successful in its latest round to break up the Bell system; but we do not for one single moment believe that that's going to happen. We are equally confident that when it's all over, the answer will be exactly the same as it has been in every other investigation, and that is that the integrated structure of the Bell system as it now stands is in the public interest."

Announcer: Well, as far as the business and economics were concerned in 1974, it was usually difficult to predict what was coming next. Predicting is a shaky business at best. Yet, we must be sympathetic with the weather forecasters in Seattle, Washington, who scheduled their annual picnic for one weekend in 1974. The picnic was canceled because of rain.

Next, we look at the international scene, where changes in heads of state made international politics a lot more confusing.