The 1960s Business and the Economy: Topics in the News
The 1960s Business and the Economy: Topics in the NewsFARMING IN AMERICA
SMALLER CARS FROM FOREIGN LANDS
BIG BUSINESS, THE ARTS, AND PUBLIC BROADCASTING
BOOM ON WALL STREET
CHAIN STORES AND FRANCHISES
DOW CHEMICAL AND STUDENT ACTIVISTS
KENNEDY VERSUS BIG STEEL
LABOR AND THE "GREAT SOCIETY"
THE RISE OF CONGLOMERATES
WOMEN AND WORK
FARMING IN AMERICA
The nation's slow but steady change from an agrarian (farm-based) to an industrial society, and the relocation of millions from the farm to the city, was a reality of American life through much of the twentieth-century. The 1960s saw the continued evolution of rural America and the further erosion of traditional American farm life.
During the decade, 900,000 small farms disappeared. Many were consolidated into larger concerns or were swallowed up by preexisting companies. As a result, the average farm size increased from 297 acres in 1960 to 374 acres ten years later. Despite the problems of the individual farmer, breakthroughs in farm technology, including state-of-the-art machinery and new pesticides and fertilizers along with the introduction of assembly line techniques into agriculture, helped raise the value of farm output from $29 billion in 1946 to $54 billion in 1970. Chickens no longer freely roamed the farm, gobbling up whatever edibles happened to be in their path. They now were housed in controlled environments and fed special foods that would quickly fatten them up for market.
Meanwhile, the partnership between the farmer and the federal government forged during the Depression continued. Farm owners benefited from government price supports, loans, and subsidies; occasionally, in order to uphold agricultural prices, farmers were paid not to cultivate their lands. Such payments rose from $702 million in 1960 to $3.7 billion in 1970.
SMALLER CARS FROM FOREIGN LANDS
The prosperity of the 1960s allowed America to continue its love affair with automobiles. In fact, two cars per family—one for him and one for her—became a status symbol among the widening middle class. In 1960, three major American manufacturers dominated the automobile industry: General Motors, Ford, and Chrysler. At the dawn of the decade, this trio accounted for a whopping 93 percent of all cars sold in the United States, and a respectable 48 percent of global sales.
However, during the previous decade, smaller imported cars, produced by such companies as Volkswagen, Fiat, Renault, Toyota, and Datsun, began to appear on American highways. The inexpensive, easy-to-repair Volkswagen Beetle proved especially popular, particularly among the young. In 1968, Volkswagen accounted for 68 percent of all foreign car sales in the United States.
To meet the competition, Detroit automakers began producing small cars of their own—the Corvair (General Motors), Falcon (Ford), and Valiant (Chrysler)—along with sleek sports cars like the Ford Mustang. For a while in mid-decade, it appeared that the Big Three had beaten back the competition, with import sales dropping from 668,000 to 540,000 between 1959 and 1965. However, by decade's end, the foreign companies—and, in particular, Volkswagen, Toyota, and Datsun—were once again threatening American automakers. The imports were aided first by a recession, and then by two oil crises during the following decade, which made buyers want cars that were smaller and more fuel-efficient. At the close of the 1960s, 11 percent of all cars purchased in the United States were imports. By 1987, that number had risen to 31 percent.
BIG BUSINESS, THE ARTS, AND PUBLIC BROADCASTING
During the 1960s, big business and the arts became increasingly linked. In order to meet rising expenses, museums, theater companies, and dance troupes turned to corporate sponsorship. In 1962, S. S. Johnson and Son (of Johnson's Wax) paid $750,000 for 102 works by contemporary American painters. The following year, American Export and Isbrandtsen Lines gave the New York Metropolitan Opera $135,000 to stage a production of Aida, by Giuseppe Verdi (1813–1901). In 1967, the Ford Foundation funded the Public Television Laboratory, an innovative, two-hour-long news and features program that aired on educational television. In fact, between 1951 and 1977, the Ford Foundation donated almost $300 million to public television and radio.
In 1950, 5.65 million farms were in operation across the United States. The farm population numbered 23.1 million, or 15.2 percent of the population. By 1960, these numbers had fallen to 3.96 million farms and 15.6 million farmers, comprising 8.7 percent of the population. And by 1970, they had shrunk to 2.95 million farms and 9.7 million farmers, or 4.7 percent of the population.
With the passage of the Public Broadcasting Act of 1967, the federal government became involved in funneling money to educational television stations and underwriting noncommercial programming. However, such programming still depended upon financial support from organizations like the Ford Foundation and corporate sponsors.
All parties benefited from such arrangements. Individual artists and their affiliated organizations secured the funds that allowed them to continue their endeavors; viewers benefited from the availability of increased cultural and education-oriented programming; and corporations earned free publicity and the goodwill of artists and arts patrons.
BOOM ON WALL STREET
In 1949, the Dow Jones Industrial Average, a composite of the prices of thirty top U.S. industrial stocks, and the figure most often quoted when evaluating stock market activity, stood at 161. It rose steadily during the
following decade, topping out at 685 in 1959. Then in the early 1960s, the Dow flattened. In 1962, it endured its worst year since 1931, which had been the height of the Great Depression. By June of that year, its value had declined by 27 percent over the previous six months.
Happily, the future of the Dow was rosy. From mid-1962 through 1966, it shot up 460 points. In January 1966, the Dow even rose above 1,000. All told, the market increase from 1962 through 1968 was even greater than during the economic boom years of the 1920s.
During the decade, almost thirty million Americans owned stocks. Despite this, few understood the inner workings of the market, preferring to invest in mutual funds (diversified investment funds, managed by professionals, whose shares can be bought and sold at any time, at a price that reflects their total value). In 1965, one-quarter of all New York Stock Exchange transactions involved mutual funds. Three years later, financial concerns were introducing new mutual funds at the rate of one-per-week. Fund managers were controlling assets worth more than $51 billion.
One of the more noteworthy mutual funds was the Fidelity Capital Fund, which started in 1957. Unlike the more traditional mutual funds, which invested in a range of stocks, Fidelity concentrated on the emerging technology-oriented companies, among them Polaroid, Litton, Xerox, and Texas Instruments. It quickly became one of the fastest-growing mutual funds. After some difficult times during the 1962 stock market crisis, the Fidelity Capital Fund became one of the most successful measures of a strong economy.
CHAIN STORES AND FRANCHISES
During the nineteenth century, small, single-proprietor businesses, otherwise known as "mom-and-pop" enterprises, competed with each other for the consumer dollar. Consumers could choose from a limited range of goods in a "general store," which stocked food, clothing, appliances, and basic household items. There were also shops that specialized in such products as hardware and tools, toys, or men's and women's clothing. Food was purchased from shopkeepers who made their living by focusing on one type of food: meat products were sold directly to consumers in butcher shops and bakers created breads, cookies, and cakes and sold them in bakeries.
In the twentieth century, larger all-purpose stores began to take the place of these smaller, more individualized shops. Single-store owners had difficulty competing with supermarket chains, which stocked their shelves with a variety of foods all in one store, and department stores, which sold many types of merchandise, allowing customers a convenient, one-stop-shopping experience.
The 1960s gave birth to yet another retail revolution: the arrival of the all-purpose discount chain store. These featured the same array of products found elsewhere. However, prices usually were lower because the chain stores purchased goods in bulk, enabling them to under-price the competition while still maintaining profitability.
The first discount retailer was Kmart, which debuted in 1962 in Garden City, Michigan, a Detroit suburb. By 1970, more than four hundred Kmarts were in operation across the United States; in future decades, that number would expand into the thousands. Other successful discount chains included Wal-Mart and Target, which also began business in 1962, but Kmart was the first to open stores across the United States.
Meanwhile, franchises such as McDonald's and Holiday Inn began sprouting up across the country. For the individual entrepreneur, franchising combined the benefits of small and large businesses. Franchise holders
worked for themselves, operating a legally independent business, yet they were offering "name-brand" goods or services. Often, the parent company trained them. At McDonald's, new franchise holders attended "Hamburger University" to learn to operate the business to McDonald's standards. They also benefited from Madison Avenue advertising campaigns designed and paid for by the national office. Indeed, "McDonald's" and "Holiday Inn" were brand names as well as locations that customers chose for a particular and predictable outcome. Consumers choosing to dine at a McDonald's or spend a night at a Holiday Inn did so expecting a certain consistency in the product or service they were purchasing, not to mention value for their dollar.
Trading stamps, which were collected by patrons who purchased goods and services and placed in blank books that were filled and redeemed for prizes, had been in existence since the 1890s. But it was during the 1960s that they soared in popularity. Trading stamp companies such as Sperry and Hutchinson (S&H Green Stamps) sold their stamps to retailers, who used them to induce customer purchases. Patrons eventually traded the stamps for a range of items, including furniture, sheets, blankets, appliances, and sporting goods.
In 1966, more than three hundred trading stamp companies were in business across the nation, and it was reported that 83 percent of all American households collected the stamps.
By 1967, sales from franchises accounted for 10 percent of the nation's Gross National Product (GNP; a measure of the total value of goods and services produced by a nation during a year). Just as had happened earlier with general stores and butcher shops, the steady increase in such franchises as McDonald's and Holiday Inn led to a decline in the number of nonfranchised, family-owned hamburger parlors and roadside motels, while the popularity of such ice cream franchises as Baskin-Robbins and Dairy Queen led to the demise of the corner ice cream parlor. Eventually, the goods and services offered by franchises came to include everything from car repair (Midas Muffler) to moving equipment rental (U-Haul) to tax preparation (H & R Block).
DOW CHEMICAL AND STUDENT ACTIVISTS
During the 1960s, peace activists and civil rights advocates used the forum of public protest to express their views to the powers-that-be and win publicity for their cause. As the war in Vietnam escalated from mid-decade on, increasing numbers of college students became actively involved in marching against the war. At the time, Dow Chemical had secured a government contract to produce napalm, a gasoline gel which was packed in canisters and dropped by bombers on the Vietnam countryside. Napalm was devised to stick to the skin and burn those who came in contact with it. For this reason, it, and Dow Chemical, became a symbol of the inhumanity of war in general and U.S. foreign policy in Vietnam in particular.
On May 28, 1966, one hundred demonstrators paraded outside a Dow Chemical plant in Torrance, California. Meanwhile, seventy-five protesters lined up in front of the company's New York office and chanted, "Napalm burns babies. Dow makes money." However, not all anti-Dow protests were peaceful. The following year, student activists harassed a Dow employment recruiter at the University of Wisconsin-Madison. The resulting scuffle left sixty-five students and seven police personnel hospitalized. At other times, company offices were vandalized and records were destroyed.
At first, Dow justified its napalm production by stating, "Our position on the manufacture of napalm is that we are a supplier of goods to the Defense Department and not a policymaker. We do not and should not try to decide military strategy or policy." Yet public protests and an increasing awareness of the potency and purpose of napalm resulted in a negative public image for the company. Dow elected not to aggressively pursue its government contract for napalm production when it came up for renewal. The company eventually lost the contract to a lower bidder.
The 1960s was the dawn of the Information Age. Spearheading this evolution was the development of high-tech electronics. Wang Laboratories, founded by electronics and computer industry pioneer An Wang (1920–1990), became a high-tech giant. In 1955, Wang patented the magnetic "Pulse Transfer Controlling Device," which regulated the flow of magnetic energy. A decade later, he introduced "LOCI," the initial desktop computer that generated logarithms (the exponent of the power to which a fixed number must be raised in order to produce a given number) with a single key-stroke. Wang later incorporated this technology into the creation of the electronic desk calculator. In the 1970s and 1980s, Wang became a leading producer of word processors and desktop computers, which then primarily were used in laboratories, businesses, and schools.
Despite Wang's innovations, the corporate name most often identified with the computer industry was IBM (International Business Machines). The company's president, Thomas J. Watson Jr. (1914–1993), like An Wang, sensed the potential of computer technology as an essential business tool. By the mid-1960s, IBM so dominated the computer business that critics often referred to the industry's top manufacturers as "IBM and the Seven Dwarfs." In 1965, IBM controlled a whopping 65.3 percent of the market computer manufacturing market. Sperry Rand came in a distant second, at 12.1 percent. The five corporations that followed all had single-digit percentages: Control Data (5.4); Honeywell (3.8); Burroughs (3.5); General Electric (3.4); RCA (2.9); and NCR (2.9).
KENNEDY VERSUS BIG STEEL
One of the early major domestic crises faced by President John F. Kennedy (1917–1963) after his inauguration in 1961 involved the American steel industry. Labor negotiations between the industry and its workers had been ongoing. The president intervened in the hope of keeping industry costs down, and in March 1962 a deal was reached whereby steel-workers would receive added fringe benefits but no salary increase. Kennedy believed that, with the settlement agreed upon, the industry would not raise prices. Yet almost immediately, U.S. Steel proclaimed that it would hike prices by 3.5 percent ($6 per ton). Other major steel companies did the same, and the president believed he had been deceived. He denounced the increases in a televised speech and initiated a grand jury investigation into industry price-fixing. Congress hinted that it too might inquire into industry business practices, while the Pentagon, an important steel industry customer, threatened to purchase the material only from companies that had not raised prices. Three days after the hikes were reported, several steel firms cancelled them. U.S. Steel soon followed suit.
While the steel-industry crisis had been averted, its aftereffects lingered and damaged relations between big business and the Democratic Party. Upon entering office, Kennedy had determined to work to obliterate American industry's long-standing apprehension of the party. However, this incident only further convinced the private sector that Kennedy and the Democrats were antibig business.
LABOR AND THE "GREAT SOCIETY"
Through the mid-1960s, in a carryover from the previous decade, American workers kept realizing their American dreams. Union membership was holding steady or increasing and so were wages. Labor-friendly Democrats were in the White House: John F. Kennedy (1917–1963) ended eight years of Republican control of the government's executive branch when he was elected president in 1960, and Lyndon Johnson (1908–1973),
who took office upon Kennedy's assassination, won reelection in 1964. Johnson's ambitious plans for a "Great Society," first revealed in a 1964 speech at the University of Michigan commencement ceremony, certainly pleased the American worker. Johnson's aim was to fashion a nation that offered "abundance and liberty for all," not to mention an "end to poverty and racial injustice." Liberal Democrats lauded Johnson's vision, which included such social reform concepts as health care for the lower classes, medical care for the aged, federal support for education, and legal refuge for blacks deprived of their right to vote because of state regulations. It was the most extensive proposal for social-oriented federal legislation since the New Deal of President Franklin Roosevelt (1882–1945) during the 1930s.
However, as the decade wore on, it became obvious that the power of American labor was in decline. For one thing, more manufacturers were relocating their plants either away from the Northeast or Midwest to the South, where many states were not union-friendly, or to foreign countries, where workers could be paid salaries fractions of those expected by American workers. Between 1966 and 1976, northeastern states lost one million manufacturing jobs, while 860,000 became available down south; by the early 1970s, more than one-third of the labor force employed by such major American corporations as Ford, Kodak, International Telephone and Telegraph (ITT), and Procter and Gamble was foreign-based. The AFL-CIO (American Federation of Labor-Congress of Industrial Organizations, an umbrella association of unions) calculated that, between 1966 and 1971, foreign branches of American firms were employing one million additional workers. All of this resulted in the mass closings of northern manufacturing plants. Once-bustling industrial cities, mill towns, and manufacturing centers became ghost towns, where poverty and unemployment reigned.
The bottom line was that there were fewer higher-paying industrial jobs available for unskilled American workers. The dawn of the Information Age did create millions of service-oriented positions that did not require skills or education. However, these jobs, many of which were clerical in nature, or involved fast-food preparation, did not pay as well as the manufacturing and industrial jobs had paid. By 1970, jobs for blue-collar workers had declined to the point where they were outnumbered by white-collar positions. One AFL-CIO official lamented that the United States was evolving into "a country stripped of industrial capacity and meaningful work…a service economy…a nation of citizens busily buying and selling cheeseburgers and root beer floats."
The public-sector union movement was negatively affected by these job shifts and was further eroded by the era's social upheaval. Many American union leaders supported the war in Vietnam and were slow to back the efforts of African Americans to gain their civil rights. These developments resulted in a generation of young Americans coming to perceive unions and their leaders as reactionary. At one time, union activists were acknowledged to be battlers against those in power for the rights of workers. Now, those very same labor leaders were viewed as having secret partnerships with corporate America.
THE RISE OF CONGLOMERATES
Along with the decline of the blue-collar American workforce and the power of the unions that represented them came a rapid rise in corporate expansion and an increase in company mergers. Unlike other periods in American history in which mergers were dominant, for the first time companies that offered unrelated products or services began linking. They chose this corporate strategy figuring that the resulting diversification would protect them from economic downturns in specific industries.
What Things Cost
In the early 1960s, New Yorkers paid $.15 to ride a subway or bus. A slice of pizza cost $.15 or $.20, while a tuna fish sandwich would set you back between $.45 and $.65. The price of a ticket to a first-run feature in an upscale Manhattan movie house was between $2 and $2.50. At a "five-and-dime store" such as Woolworth's, a consumer could still find scores of items that actually cost five or ten cents.
In 1967, the average price nationally for a three-bedroom house was $17,000. A new Cadillac cost $6,700, while the latest Volkswagen cost $1,497. Regular gas was $.39 per gallon. The purchase of a gray flannel suit cost a man $60. A portable typewriter (this was nearly two decades before the age of the personal computer) cost $39, while a pound of sirloin steak was $.89, and a Hershey chocolate bar cost a whopping $.5!
One example of how this strategy was implemented is the manner in which International Telephone and Telegraph (ITT) diversified its holdings. ITT originally was a telecommunications company that operated in foreign countries. Between 1961 and 1968, ITT purchased 52 companies with total assets of $1.5 billion. Among them: Avis (rental cars); Continental Baking (bread and cake producers); Canteen Corporation (food sales); Levitt and Sons (home builders); Sheraton Corporation (hotels), and Hartford Fire Insurance. By 1974, only 20 percent of ITT's revenues came from its telecommunications division.
Tobacco companies in particular began purchasing nontobacco-related concerns. During the decade, the industry began to be threatened by increasing publicity surrounding medical research determining that smoking was a serious health hazard. Fearing a decrease in product sales, the tobacco giants diversified their holdings. American Tobacco bought Jim Beam, Master Lock, Franklin Life Insurance, and Sunshine Biscuits, and in 1969 changed its name to American Brands. The R.J. Reynolds tobacco company purchased American Independent Oil and several food producers (Chun King, Del Monte, and Morton Foods). P. Lorillard became part of the Loews motion picture theater chain. Liggett and Myers acquired Alpo dog food and Izmira vodka. The Philip Morris company purchased Seven-Up and the Miller Brewing Company.
Corporate expansion began to decline in the decade's final years, because the Justice Department began scrutinizing corporate takeovers and company profits generally were not as high as expected. A recession during the early 1970s ended the wave of mergers, which did not start up again until the 1980s.
Working Women and the U.S. Labor Force
In 1936, a Gallup poll reported that 18 percent of Americans approved of married women working outside the home. By the end of the 1970s, that figure had risen to 68 percent.
In 1950, approximately three of every ten American workers were women. However, many were young and single, and would quit their jobs upon marrying. By 1980, that figure had risen to over four of every ten workers. Many of these were more educated, were business and career-oriented, and were determined to balance their professional and personal lives.
WOMEN AND WORK
Before the 1960s, the male was the traditional family breadwinner. The husband/father rose every weekday morning and went off to work, whether in an office or a factory, while the wife/mother remained at home where she cleaned the house, cooked the meals, and raised the children. However, during this decade, an ever-increasing number of older, married women entered the workforce. In certain cases, for example, as jobs in northern cities became more scarce, a second income was needed to pay the monthly bills. Among younger and more educated women, a desire to work was directly related to the growing feminist movement and the craving for professional careers and economic independence.
The increasing presence of women in the workforce did not deter the amount of sexism they encountered. Often, women only could find part-time jobs, and at salaries well below those paid to men who did comparable work. Many professions still were male-dominated; there were few women lawyers, for example, or doctors, business managers, or entrepreneurs. A woman journalist might be limited to working on what then was known as the "Woman's Page," writing about fashion or recipes, instead of covering politics, business, or sports. Before founding her own cosmetics company in 1963, Mary Kay Ash (c.1915–2001) spent a quarter-century working in sales. During this time, she experienced sexism first-hand. Ash's rationale for forming what came to be known as Mary Kay Cosmetics, she explained, was that she "just couldn't believe that a woman's brain was worth only 50 cents on the dollar."
During the 1960s, a high school girl who was the brightest in her class still was expected to attend college primarily to meet and marry her male counterpart. Among the careers open to her were teacher, nurse, or librarian. These jobs generally were lower-paid and could be left when the woman became pregnant and returned to when her children were grown.
As feminism took hold in American society in the 1970s and 1980s, a gap grew between two opposing forces: those who insisted the proper place for women was in the home rearing children, and those who believed women deserved the very same professional opportunities as men.