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From the NS archive: Living with inflation

18 August 1972: Save those old tenners, they’ll do for wallpaper.

By Andrew Cockburn

In 1972 food prices were up 64 per cent from 1962. The cost of public transport had doubled, and the prices of fuel and light had increased by 68 per cent. What might the average person do, asked Andrew Cockburn? Inflation means the most to the lowest paid. If the rate of price increases became evident on a daily level, shopping in the morning would be the best bet. Those who lived through the periods of high inflation in central Europe following both world wars reported that, while browsing, say, “the Budapest 1920 equivalent of Marks & Spencer”, they “would be rudely interrupted by a bell, indicating that all prices had doubled”. How would Brits cope? “Mushrooming house prices”, meanwhile, may not have been such a worry for those who already owned property but those not yet on the ladder weren’t quite so relaxed.

“If inflation carries on at this present rate we’ll be carrying our wages home in wheelbarrows” – voice on World at One discussing inflation.

Wheelbarrows eh? Some people already need wheelbarrows to cart the stuff home, but he wasn’t talking about them. Food prices up 64 per cent on 1962, public transport doubled, fuel and light sprinting ahead at 68 per cent. Do you remember when you could have 20 cigarettes, a pint of beer and a bus up West to see the lights and still have change out of a £50 note? Those were the days; save those old tenners, they’ll do for wallpaper.

Read the business supplements, of course, and you’ll recognise inflation for the boon that it is. All any sensible man has to do is to borrow, borrow, borrow, and then spend, spend, spend. The banks, bless them, are falling over themselves to lash it out at a mere 10 per cent. Scoop it up, invest it in what we in the middle of the Sunday Times refer to as a tangible asset, and by the time you repay your loan it’s only worth 40 Rothmans anyway. Come to think, it’ll soon be time to invest in cigarettes; back in Vienna ’46 you could buy a night club and a line of chorus girls for two cartons.

To him that hath shall be given. Don’t bother asking for an overdraft if you are that well-known TV personality – The Lower-paid Worker: your friendly neighbourhood bank manager won’t be willing to boost you – even to the £31 a week currently deemed necessary to support the average family. Nor will you have much to spare to get out of cash into goods, though a junk shop in the Fulham Road last week sold an empty toffee tin for 50p. The tin new, with toffees, had cost 20p the week before.

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In future, however, some small relief might be offered to the low paid, to whom inflation means so much, by advancing the opening hours of shops. If, as seems possible, the rate of price increases becomes evident on a daily level, then shopping in the morning will become an important tactic in beating the price spiral. Survivors of the Central European inflations that followed both world wars report that browsing amongst the counters of, say, the Budapest 1920 equivalent of Marks & Spencer would be rudely interrupted by a bell, indicating that all prices had doubled.

Getting back to those circles where they talk about hedges against, or beating, inflation, instead of just keeping up with the thing, there is comfort to be had from that long-running hit – the mushrooming rise in house prices. Visitors from Mars or the minimum wage level may justifiably conclude that large sections of the population think and talk of nothing else. Once upon a time it was the weather, now it’s the rise in property values. Everyone is aghast at the spectacle, only those who haven’t got even one house are actually worried about it. House owners naturally enough enjoy being continually reminded by politicians and the newspapers that they are squatting on an oil gusher. Not that they would admit it of course, no one is publicly in favour of such a thing.

“Aha,” says the property owning democrat, “the 150-per-cent profit I make on my house in Holland Park is eaten up by the commensurate sum I have to pay to get a foothold in Ealing.” Neat, except that the house in Ealing is bought, of course, on a mortgage, and after putting down the deposit there is an agreeable tax-free gain with which to buy tangible assets like shares, toffee tins, or even, for the pessimistically minded, hard currency.

A would-be speculator who had read too many speeches about currency speculators recently tried to interest me in a scheme to give sterling a final shove into the monetary ashcan, down among the escudos and zlotys. Urchins, he suggested, should be commissioned to hang around Heathrow, soliciting visiting Swiss or West Germans to buy pounds at black-market rates. Third World scenes of this sort would, he rightly calculated, be enough to send foreign businessmen haring to a telephone to instruct Zurich to get out of sterling, fast and forever. How long will it be before London waiters shake their heads at an English £5 note? During the German inflation – the boot was on the other foot then, by God – English students used to stay at the Berlin Adlon hotel for the price of a Cambridge bed and breakfast. Shall we see the Ritz populated by dreary foreign students, beneficiaries of an inflation accelerating past the rate of exchange? How much has the royal family got stashed away abroad? Peseta wise, pound foolish.

Meanwhile there remains the example of Naples in 1648. In that year the people of that city rose and established, temporarily, a revolutionary regime. Among other things they decreed a freeze on the price of bread. One baker nevertheless upped his prices. The indignant populace baked him in his own oven. A useful guideline for the CBI?

Read more from the NS archive here. A selection of pieces spanning the New Statesman’s history has recently been published as Statesmanship (Weidenfeld & Nicolson).

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