AND ANOTHER THING
The end may be nigh but the bacchanals will soon be here again
PAUL JOHNSON
M ost people innocently assume we are gouging our way slowly out of recession because that is what the media tells them. But a powerful band of experts believes the world is about to plunge far more deeply into it. Two of the richest men I know, Jimmy Goldsmith and George Soros, have been buying gold. I also hear that Indian ladies are stocking up on chunky anklets and bracelets, always a bad sign. Last week I lunched at Boodle's with three City seers and the leading authority on cycles, and all preached unmitigated woe.
I like a good gloomy conversation myself, just as I prefer funerals to weddings, and I enjoyed fuelling their fears. And indeed there is good statistical cause for dismay. The United States, the world's largest economy, has what now appears to be a permanent budget deficit and a structural trade imbalance, both of colossal propor- tions, and is run by an administration chiefly worried about skin pigmentation and gender. Britain has the biggest budget deficit in its history and an unbridgeable trading gap, with a bunch of demonstrably failed corner-boys in charge. The Japanese banks are technically insolvent, and as for Germany — but I won't go on. William Rees-Mogg has recently published a book giving hundreds of excellent reasons why we are about to experience a financial melt- down, and you can read all about it therein.
But while I relish probing the gloomy entrails, my own prognosis is cheerful, and for good reason. In the first place I have lived with these doom-sayings a long time. I first attended the annual conference held in New York by that admirable publication, the Bank Credit Analyst, which keeps a beady, independent eye on bank-lending, in the early 1970s. There I heard, from immensely learned persons, dire tales of reckless bankers and profligate spenders and a coming apocalypse. So these financial sandwich-board men, with their slogan 'The End Is Nigh!' have been parading for at least 20 years.
Then again, my approach to the future is always historical, and the first question I ask is: What did people do on previous occasions? And I have yet to come across a financial catastrophe which was preceded by widespread doom-mongering. Quite the contrary. Right up to the eve of the first international market crash, which began in December 1825, everyone was very cheer- ful indeed. The Chancellor of the Exche- quer, a lachrymose booby, was known as `Prosperity' Robinson. Charles Lamb rejoiced when he slashed liquor duties: `Gin reduced four shilling in the gallon, wine two shilling in the quart. This comes home to men's minds and bosoms.' He called the government 'the best ministry we ever stumbled upon'. Mrs Arbuthnot, whose husband was a member of it, was furious with him for not alloWing her, as a matter of propriety, to speculate in shares like everyone else. It's true her diary also records her friend the Iron Duke warning against 'the bubble'; but then he was also prophesying that the latest invention, the steam railway, 'would never answer'.
Everyone else was on the roller-coaster, Palmerston joining boards of gimcrack mining companies; Disraeli, not yet 21 but already a City shark, using the publisher Murray's fortune to set up a new daily which would 'beat the Times hollow', recruiting Sir Walter Scott as its patron and Lockhart as its editor. A few weeks later, all was dust, but right up to the eve the carousing went on.
It was the same in 1929. Winston Churchill was touring Canada and the United States just before the Wall Street debacle. He had recently spent five years as Chancellor, so he was neither innocent nor ill-informed. He was speculating 'on mar- gin' and wrote to his wife a few weeks before the crash: 'Now my darling I must tell you that vy gt & extraordinary good for- tune has attended me lately in finances.' He urged her to go ahead with her spending plans — 'you shd be able to do the nursery wing all right' — and boasted that they would all be 'well-mounted in London this autumn'. In America, everyone was not only buying bigger and better cars — just before the crash, Detroit had turned out 5.3 million and Ford had just sold its mil- lionth Model A — but enjoying mass air travel for the first time. Posters insisted `Air Mail Is Socially Correct'. That summer Transcontinental Airlines flew the first reg- ular coast-to-coast air passenger service, and three weeks before the market broke Charles Lindbergh took a Pan-Am plane to Panama with the inaugural cargo of mail. Pilots were practising instrument-only
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flights and Universal Air Lines were just beginning to treat passengers to regular in- flight movies. All was innovation, optimism and action. Keynes's first reaction to the crash was flippant: 'Wall Street did have a go yesterday!' and he promptly dictated an article to the New York Evening Post proph- esying a rosy future for industrialists and farmers, with low interest rates and high commodity prices.
Well. Things are very different today. Not everyone is as lugubrious as my Boo- dle's friends, but not a soul I know is singing hallelujah either. Most are psycho- logically prepared for bad news. No one is splashing out. There are few shindigs. The Ascot attire was pawnshop quality. London builders and decorators are on their best behaviour — I have never seen anything like it — a sure sign of deep-rooted fear among the mechanicals. Estate agents are humble. Smart restaurants answer the phone. Cabbies are touchingly grateful for modest gratuities. What does all this por- tend? If historical parallels are any guide, then we are beginning a slow but sure recovery, happy days will be here again by mid-decade and we shall enter the 21st cen- tury with rip-roaring bravado.
People notice the violent swings of mood, the ups and downs of the economic indicators, but only objective historians are fully aware of the gradually but absolutely unswerving long-term trend upwards. This has been a characteristic feature of the western economy since at least the 11th century (with a blip in the 14th), and there have been no recent developments to sug- gest that a trend now evident for almost a millennium is about to be inexplicably reversed.
Looking back, it is hard to think of any generation which, on balance, has been worse off than their parents. Of course divine providence may now be forming dif- ferent ideas. Recently I heard a senior prelate (a papist, of course) warn and elec- trify a lunch party by stating, almost as a self-evident fact, that unless the outrageous depravities of the world were fundamental- ly reformed in this decade — something he judged unlikely — then he expected Almighty God to wind up the universe early in the next century. I rather agree with him. But that is a speculation in meta- physics. So far as the physical world is con- cerned, we will soon be dancing ourselves to damnation again.
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