The Atlantic and Its Enemies (28 page)

In some ways, what followed was a natural enough outcome of the sheer silliness with which conservatives defended their not indefensible world. They had been, in a way, spoiled by their own success against Communism. There was of course a conservatism that the following decade sneered at - churches got a billion dollars for building, twice what public hospitals got. The fifties ended with optimism and in retrospect seem to have been the last gasp of the old world. Families stayed together, women in the home or aiming to be, and the laws governing divorce or contraception were sometimes ridiculously difficult. A Catholic hierarch in Paris remarked that it was all very well to say that an extra child might break the family’s budget and starve; it would die surrounded by love. This business of course provoked unthought-out reactions. Republican women in Connecticut had to fight a (Catholic-inspired) law against birth control all the way to the Supreme Court and that resulted in the easy-abortion arrangements of
Roe
v.
Wade
in 1973. Homosexuals in England faced worse persecution than in the days of Oscar Wilde, as the police could gain promotion points if they provoked an approach in a public place, and got more convictions from magistrates’ courts than they had in the 1930s. There was still censorship, at a comic level, as when a lawyer, prosecuting Penguin for publishing D. H. Lawrence’s (unreadable)
Lady Chatterley’s Lover
, enquired in what he thought was a devastating way as to whether such a book could be read by the servants. Education was also rigidly unchanging, and everywhere operated unpredictably and unfairly, with, in most universities, a hierarchical professoriate that was all-powerful and old-fashioned. Sexual differences were enforced with ridiculous pinpricks. As late as 1968, at Trinity College, Cambridge, a 28-year-old graduate student was expelled when he was found by the porters ‘with a woman in his room’, and even in the 1970s, at Corpus Christi College, the Master’s wife was refused a key. When a distinguished French historian, Marc Ferro, wanted to bring his wife to stay at Jesus College, Cambridge, two seniors found an argument to stop them from using the main (and splendid) guestroom. The room was used for Boat Club breakfasts. Breakfasts meant toastcrumbs, difficult to vacuum-clean away. Men getting out of bed with bare feet might be expected to put up with the discomfort; women, not. Therefore no Madame Ferro. In the United States, such conservatism, picturesquely tiresome elsewhere, was deadly, because it worsened what was already the worst blot on the country, its treatment of Negroes, as they were then generally called. In New York, if you took a Negro friend to dinner in a restaurant, you telephoned the management beforehand. Even when Kennedy’s Vice-President went round Texas with his cook in a motor car, she could not use the roadside lavatories, and had to squat at the side of the road. Such things bred rebellion on the one side, contempt on the other, and guilty consciences in the middle.

Towards the end of the decade there was an international exhibition in Moscow, and the Americans showed off their kitchens. Vice-President Richard Nixon appeared, and there was a famous row between him and the Soviet leader, Nikita Khrushchev, who said that such things had nothing to do with justice or culture. Though he was not himself an expert in either field, a good part of the intelligentsia might have agreed with him. There was no question about it: Soviet high culture was far richer than American. There was now a Soviet challenge, in that the Soviet space effort appeared to be more successful than the USA’s where science, applied to space and weaponry, was concerned.
Sputnik
caused national alarm, and a new national effort by America (in Great Britain the alarm was similar if less effectual) was apparently needed. This coincided with a two-year slow-down in the economy, when it grew by 2 per cent and unemployment came close to 6 per cent, then thought excessive. These questions gave Kennedy his narrow margin at the end of 1960, and when he took over, early in 1961, ambitious academics advised as to how the challenge was to be met. There were some famous and influential books, and conservatism had a bad time. These new writers analysed problems, and often suggested easy-sounding solutions, one mark of the sixties. John Kenneth Galbraith’s
Affluent Society
(1957) noted that private people had money and governments none the less produced squalor: New York gorged with money, yet the roads were potholed and a good part of the population lived in poor conditions. Two decades later governments had a great deal more money and were still producing squalor: what conclusion was to be drawn, that governments should have even more, or that they just could not help producing squalor? Vance Packard’s
Status Seekers
(1960) described the American business rat race. Jane Jacobs, looking at the wreckage caused by the San Francisco freeway system, wrote
The Death and Life of Great American Cities
(1961) and she foresaw that housing estates for the poor would turn into sinks of hopelessness worse than the slums that they were to replace; she also foresaw that city centres would become empty, inhabited only by tramps. Betty Friedan’s
The Feminine Mystique
(1963) spoke for the bored housewife. Michael Harrington discovered that there were many poor Americans:
The Other America
(1962). David Riesman looked at the American rat race in
The Lonely Crowd
(1961) and shook his head at the two-dimensional misery of it all. René Dumont considered international aid, and thought that there should be much more of it; Gunnar Myrdal saw American race relations in the same light. Germaine Greer wrote
The Female Eunuch
(1970) saying that for women life was a bitter picture from the cradle to the tomb.

The answer was: spend money. Here, the presiding genius was Maynard Keynes. He had been contemptuous of the orthodox balance-the-budget financiers who had run things in the 1930s (and who were still running them in the 1950s): they reduced the National Debt and tried to run a budget surplus. An enlightened State, borrowing and spending, could easily be beneficial, especially if it helped poor people at the expense of the better-off. ‘Demand’ - the ability to buy - would stimulate supply, the provision of goods. It was just selfishness on the part of the rich that got in the way, and a measure of sheer stupidity. The great Slump of 1929 had discredited capitalism and especially bankers in many intelligent eyes, and Keynes had made easy conquests of intelligent young men and women, who would probably have agreed with the grandfather of a well-known Italian journalist, Indro Montanelli, in the sentiment that ‘it is possible for an honest man to have dealings with whores, but with bankers, never’. If making life better for people beyond the prosperous circles of the fifties meant spending money, then that was a worthy cause. Galbraith had been involved in price control during the Second World War and never did understand why his critics regarded the State as wasteful, corrupt and inefficient. The war economy had been extraordinarily successful, thought he and his like: even petrol rationing, which made life very difficult in the more isolated places, had been very widely accepted. Why bother with out-of-date economic rules?

Economists of the younger generation were convinced that they were the legislators for mankind, and even that they had abolished all problems. Keynes himself would never have agreed with this, but his younger disciples, among them splendid writers such as Galbraith, did not have doubts. Economists were the Druids of the age, and the message that, overall, they gave was very comforting: if governments spent money, problems would be solved and the good life (whatever that meant) would duly happen. As a profession, economists had been rather caught out in the interwar Slump, because they had preached austerity and virtue - saving, cuts in welfare spending. That had not cured the Slump - far from it, at least in the popular mind. On the contrary, it had worsened matters, to the point where, in Germany, Hitler came to power. Galbraith wrote a book on the Slump that blamed bankers, and it was a bestseller. Now, economists were associated, on the whole, with easy answers. How widespread their effect was can be seen from an aside by the English historian A. J. P. Taylor, in his book about the origins of the Second World War. Hitler’s economy had produced mild inflation, he said, and had thereby produced full employment in a country that, in 1933, had had 8 million men out of work; Taylor added that everyone now knew that mild inflation was a cause for prosperity. A dozen years after writing this, when, nearing old age, he saw his savings consumed by inflation, and the streets outside scattered with litter, he told a different story. But the essence of the sixties was a belief that there were easy answers, so long as grumbling old men got out of the way. Kennedy was inspired by Roosevelt, but the ghost of Keynes stalked his corridors (although when Keynes met Roosevelt in the 1930s, and tried to discuss his theory, the meeting was not a success). It is strange, looking back, how easy the solutions appeared to be. Cambridge, where Keynes had reigned, was still the leading centre in the world for economics, and one of the few dissidents with a sense of publicity, the young Milton Friedman, from Chicago, went there for a spell. He was a good mathematician, and his work might have proved useful to the economists there. Instead, he was in effect frozen out by a grand old dame of Cambridge economics, Joan Robinson (who padded around King’s College in a bizarre Chinese peasant costume: but she was the daughter of a reactionary general who had fallen foul of Lloyd George in 1918, and the granddaughter of a considerable Victorian poet). There were of course dissident voices, but they were few, and they were unfashionable. Milton Friedman published a key article, ‘The Quantity Theory of Money’, which warned that there was a danger of inflation with the then current practices. He was waved aside, and when in the early 1960s Alan Walters - much later on, a recognized authority on both sides of the Atlantic - applied for a grant to develop statistics as to how much money was being created in England, he was turned down. At the time, economists were fighting their last war, in this case against unemployment, and an engineer-turned-economist, Alban Phillips, who had worked on a long run of data, produced one of the great symbols of the decade, the Phillips Curve. Wage rises and unemployment were related, with only one variable, import costs (as in the Korean War). In England, welfare benefits stopped wages from falling too low, and so demand for goods was kept up; government must surely maintain that demand to the point at which unemployment would never rise above 2.5 per cent. That way, there would be price stability, and men such as Alan Walters, wanting to make complicated calculations as to how much credit there was in the system were simply wasting time. The Phillips Curve dominated academic economics (or ‘discourse’). If anything went wrong, ran a further assumption, then price controls could be used - after all, they had been so used during the war, and operated, even by J. K. Galbraith. In ultra-prosperous Sweden, prices and wages were controlled by law. Why not elsewhere? So the economists, on the whole, assumed that they either had the answers or would have them.

There would in ordinary circumstances have been something of a problem with foreign exchange. If governments produced paper money in excess of other governments’ production of it, then the rate of exchange between the virtuous currency and the vicious one would clearly be affected. Why should Germans, their money prudently run by the Bundesbank, have to exchange their solid Mark at twelve to the dollar? The answer lay in the post-war system loosely (and not altogether accurately) known as Bretton Woods. The dollar was the anchor currency, taking most of the role of the British pound in its imperial days, and it had a fixed value in terms of gold: if foreigners wanted to exchange their dollars for gold, they were (in theory) free to do so, and the Americans, at Fort Knox, had laid up an enormous treasure of it. The fixed dollar had been associated not just with the fifties trade boom, but with the recovery of western Europe; the system therefore seemed sacrosanct, the more so as the American military undertook the burden of defence in western Europe.

With Kennedy, there was the first small step towards the weakening of this structure. He began the debauching of the dollar - what would have been called coin-clipping in earlier times, as rulers surreptitiously reduced the amount of silver in their coins (the milled edge around some modern ones is a survival from that era, showing that the coins had not been clipped). Quite outside the economists’ advice, there was temptation towards this course, because the dollar was in such a strong position that the USA could in effect just pay its foreign bills by printing pieces of paper. There was a minor recession in 1958-9 and the government’s finances were dented. A deficit appeared. Kennedy did not reduce spending, and reduced taxes that were still remarkably high, because of post-war responsibilities and the level of arms-spending. The pound sterling was by now being moved closely in concert with the dollar. They were the world’s trading currencies, and in the past the pound had been a true anchor. It could be exchanged, on demand, for gold, and the world’s prices had on the whole been stable while the gold standard was in force. Now, the pound followed the dollar, and in 1958 the Macmillan government also took an unorthodox financial course, of spending when there was no money to back it. Three Treasury ministers resigned in protest, and this was dismissed by Macmillan as ‘a little local difficulty’. It was, but it was a sign of great crises to come. By 1971 the post-war economic order, the very underpinning of fifties prosperity, was in disarray.

Even in 1960 the dollar was the victim of its own success. The real problem was to get the Americans to let the dollar be used as the world’s currency. That meant the printing of dollars for world (especially European) purposes. If any country bought more abroad - mainly of course in the USA - than it sold, its currency might become weak, and an International Monetary Fund came into existence, mainly with American contributions, to lend that country money to tide it over while it managed its affairs better, and sold more. The classic case of that was Germany, though the money came not from the International Monetary Fund but from other sources such as the Marshall Plan or the European Payments Union. There was also, from Bretton Woods, a World Bank (‘International Bank for Reconstruction and Development’) with, at the time, very limited resources. These institutions were meant to encourage world trade, made a brave start, encountered the Cold War and the troubles of western Europe, and stalled. Under the European Payments Union, a more limited system did emerge, and trade between the recovering (or booming) European countries was greatly promoted by it. If any country was in deficit on trade, its currency was supported by the country with the surplus. That way, the weaker country could go on buying. That system worked in the 1950s only in Europe. At the time, European currencies were still weak, and there was very limited credit; neither Frankfurt, the German financial capital, nor Paris had well-developed financial institutions such as a stock exchange, and in Germany most firms notoriously raised their own money from a bank or even from family savings. The system was closed to the dollar, as the European currencies could not be converted into dollars without enormous bureaucratic involvement. However, as trade grew, and as European prosperity rose, these restrictions came under pressure. In the first place, the Americans, using paper dollars, invested in Europe - in 1956 private dollars more than government ones. Conversion was therefore much easier for Europeans, especially Germans. But there were also easy ways round the restrictions: false invoicing, for instance, by which buyers and sellers agreed as to the recording of a figure for a purchase that was not true, the hidden balance then transferred, in dollars or Swiss francs, to some bank outside the system, in Switzerland for preference, though Luxemburg also made itself useful.