30 January 2012

Death Care Industry

The American Way of Death Revisited by Jessica Mitford, 1996, Excerpts

Of all the changes in the funeral scene over the last decades, easily the most significant is the emergence of monopolies in what the trade is pleased to call the “death care” industry. Of the three publicly traded major players – Service Corporation International [SCI], the Loewen Group, and Stewart Enterprises – SCI, incorporated in 1984, is the undisputed giant.

[Note: The Alderwoods Group formed after the Loewen Group emerged from bankruptcy on January 2, 2002. In November 2006, Alderwoods was acquired by Service Corporation International in a US$1.2 billion deal]

The Big Three of the corporate funeral world have been pitted in a worldwide race to buy up cemeteries with integrated undertaking establishments. Of the twenty-two thousand funeral homes in the United States, the vast majority are small operations doing somewhere between fifty and one hundred funerals a year. SCI entered this picture with the force of a hurricane, swept away the antiquated methods of the old-timers, and substituted “clustering,” the latest in streamlined mass production. Borrowing from the successful techniques of McDonald’s, where food preparation and management functions are centralized, SCI first buys up a carefully chosen selection of funeral homes, cemeteries, flower shops, and crematoria in a given metropolitan area. The funeral customer is totally unaware of the strategy of clustering because of the immensely successful SCI policy of anonymity.

The next step is to move the essential elements of the trade to a central depot. “Clustered” in this hive of activity are the hearses, limousines, utility cars, drivers, dispatchers, embalmers, and a spectrum of office workers from accountants to data processors, who are kept constantly busy servicing, at vast savings, the needs of a half dozen or more erstwhile independent funeral homes. Needless to say, the savings obtained via the cluster approach are not passed on to the consumer. SCI prices have risen sharply, with a targeted increase of 30 percent. Prices of the Loewen Group mortuaries tend to parallel those of SCI.

Zoellick Comments on the Funeral Business
03 Jul 2001
In a June 2001 speech to the right-wing Heritage Foundation in Washington, Zoellick made the case that there is no alternative to globalization and that U.S. companies and consumers were already benefiting in countless ways from this new wave of corporate-led economic integration. To drive his point home, Zoellick noted: “Even the funeral business has gone global, with a Houston-based company now selling funeral plots in 20 countries.”

2006 Form 10-Q
Over the long-term, we believe that our industry leadership, along with superior brand, reputation, financial strength and geographic reach, will result in expanded growth opportunities with the aging of the Baby Boom generation.
We believe we are well-positioned for long-term profitable growth. We are the largest company in the North American deathcare industry with unparalleled scale on both a national and local basis and are poised to benefit from the aging of America. We have demonstrated that we can generate significant and consistent cash flow, even in difficult economic times.

Worldwide, we have 1,417 funeral service locations and 381 cemeteries (including 218 funeral service/cemetery combination locations) covering 43 states, eight Canadian provinces, the District of Columbia, Puerto Rico, and Germany. Our funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. We provide all professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles and preparation and embalming services. Funeral-related merchandise, including caskets, casket memorialization products, burial vaults, cremation receptacles, cremation memorial products, flowers, and other ancillary products and services, is sold at funeral service locations. Our cemeteries provide cemetery property interment rights, including mausoleum spaces, lots, and lawn crypts, and sell cemetery-related merchandise and services, including stone and bronze memorials, markers, merchandise installations, and burial openings and closings.

29 January 2012

Purpose of Embalming

The American Wayof Death Revisited by Jessica Mitford, 1996, Excerpts

The primary purpose of embalming, all funeral men will tell you, is that embalming is done for reasons of sanitation and required by law. The true purpose of embalming is to facilitate an open-casket funeral – with the emphasis on casket. Embalming is a procedure that boils down to sales and profits. “Embalming is the cornerstone upon which the funeral service profession was founded and it has remained so through the years,” editorializes the American Funeral Director.

One might suppose that the whole point of embalming is the long-term preservation of the deceased. Actually, although phrases like “peace-of-mind protection” and “eternal preservation” crop up frequently in casket and vault advertising, the embalmers themselves know better. The more dilute the embalming fluid, the softer and more natural appearing the guest of honor. Therefore, the usual procedure is to embalm with about enough preservation to ensure that the body will last through the funeral – generally, a matter of a few days.

28 January 2012

Egyptian Origins of Embalming

The American Way of Death Revisited by Jessica Mitford, 1996, Excerpts

Embalming is indeed a most extraordinary procedure, and one must wonder at the docility of Americans who each year pay hundreds of millions of dollars for its perpetuation, blissfully ignorant of what it is all about, what is done, and how it is done. Embalming and restorative art is so universally employed in the United States and Canada that for years the funeral director did it routinely, without consulting corpse or kin.

The practice of preserving dead bodies with chemicals, decorating them with paint and powder, and arranging them for a public showing has its origin in antiquity – but not in Judaeo-Christian antiquity. The Jews frowned upon embalming, as did the early Christians, who regarded it as a pagan custom. This incongruous behavior towards the human dead originated with the pagan Egyptians and reached its high point in the second millennium B.C. Thereafter, embalming suffered a decline from which it did not recover until it was made part of the standard funeral service in twentieth-century America.

The Egyptian method of embalming as described by Herodotus sounds like a rather crude exercise in human taxidermy. The entrails and brain were removed, the body scoured with palm wine and purified with spices. After being soaked for seventy days in a saline solution, the corpse was washed and wrapped in strips of fine linen, then placed in a “wooden case of human shape” which in turn was put in a sepulchral chamber. It was by no means so universally employed in ancient Egypt as it is today in the USA. The ordinary peasant was not embalmed.

King Tut

27 January 2012

Modern America Funeral Customs

The American Way of Death Revisited by Jessica Mitford, 1996, Excerpts

If the undertaker is the stage manager of the fabulous production that is the modern American funeral, the stellar role is reserved for the occupant of the open casket. The decor, the stagehands, the supporting cast are all arranged for the most advantageous display of the deceased, without which the rest of the paraphernalia would lose its fantastic array of costly merchandise and services is pyramided to dazzle the mourners and facilitate the plunder of the next of kin.

The uninitiated, entering a casket-selection room for the first time, may think he is looking at a random grouping of variously priced merchandise. Actually, endless thought and care are lavished on the development of new and better selection-room arrangements, for it has been found that the placing of the caskets materially affects the amount of the sale. The decor and lighting of the selection room and particularly the arrangement of merchandise are matters of greatest importance, for these materially condition and affect the conduct of the transaction itself. As an interior decorator writes, “Being the financial foundation of mortuary income, caution should be exercised in every detail and appointment, employing the finest selling qualities or floor lighting effects, proper placement of caskets and special background features; the psychological effect producing a feeling of security and confidence that results in the sale of higher grade caskets, and the return of families for additional service when needed.” Behind the scenes, waiting for their cue, are the cemeteries, florists, monument makers, vault manufacturers and the casket-making companies.

The funeral home “chapel” has begun to assume more and more importance as the focal point of the establishment. The chapel proper is a simulated place of worship. Because it has to be all things to all people, it is subject to a quick change by wheeling into place a “devotional chapel set” appropriate to the religion being catered to at the moment – a Star of David, a cross, a statue of the Virgin, and so on.

Inevitably, some thirtieth-century archaeologists will labor to reconstruct our present-day level of civilization from a study of our burial practices. They might rashly conclude that twentieth-century America was a nation of abjectly imitative conformists, devoted to machine-made gadgetry and mass-produced art of debased quality; that its dominant theology was a weird mixture of primitive superstitions and superficial attitudes towards death, overlaid with a distinct tendency towards necrophilism.

26 January 2012

Colonial America Funeral Customs

The American Way of Death Revisited by Jessica Mitford, 1996

The cemetery as a moneymaking proposition is new in this century. The earliest type of burial ground in America was the churchyard. This gave way in the nineteenth century to graveyards at the town limits, largely municipality owned and operated. Whether owned by church or municipality, the burial ground was considered a community facility; charges for graves were nominal, and the burial ground was generally not expected to show a profit.

From colonial days until the nineteenth century, the American funeral was almost exclusively a family affair, in the sense that the family and close friends performed most of the duties in connection with the dead body itself. Until the eighteenth century, few people except the very rich were buried in coffins. The “casket,” and particularly the metal casket, is a phenomenon of modern America, unknown in past days and in other parts of the world. Funeral flowers, today the major mourning symbol and a huge item of national expenditure, did not make their appearance in England or America until after the middle of the nineteenth century, and only then over the opposition of church leaders.

The major Western faiths have remarkably little to say about how funerals should be conducted. Such doctrinal statements as have been enunciated concerning disposal of the dead invariably stress simplicity, the equality of all men in death, emphasis on the spiritual rather than on the physical remains. The Roman Catholic Church requires that the following, simple instructions be observed: “[1] That the body be decently laid out; [2] that lights be placed beside the body; [3] that a cross be laid upon the breast, or failing that, the hands laid on the breast in the form of a cross; [4] that the body be sprinkled with holy water and incense at stated times; [5] that it be buried in consecrated ground.” The Jewish religion specifically prohibits display in connection with funerals: “It is strictly ordained that there must be no adornment of the plain wooden coffin used by the Jew, nor may flowers be placed inside or outside.  Plumes, velvet palls and the like are strictly prohibited, and all show and display of wealth discouraged; moreover, the synagogue holds itself responsible for the arrangements for burial, dispensing with the services of the “Dismal Trade.” In Israel today, unconfined burial is the rule, and the deceased is returned to the earth in a simple shroud.


23 January 2012

Fictional Billboard Burner – Monkey Wrench Gang

The Monkey Wrench Gang by Edward Abbey, 1975, Excerpts

The Highway Patrol arrived promptly fifteen minutes late, radioing the report of an inexplicable billboard fire to a causally scornful dispatcher at headquarters, then ejecting self from vehicle, extinguisher in gloved hand, to ply the flames for a while with little limp gushes of liquid sodium hydrochloride to the pyre. Dehydrated by months, sometimes years of desert winds and thirsty desert air, the pine and paper of the noblest most magnificent of billboards yearned in every molecule for quick combustion, wrapped itself in fire with the mad lust, the rapt intensity, of lovers fecundating.
Doc Sarvis by this time had descended the crumbly bank of the roadside under a billowing glare from his handiwork, dumped his gas can into trunk of car, slammed the lid and slumped down in the front seat beside his driver. “Next?” she [Abbzug] says.

Introduction to 2000 Edition by Douglas Brinkley

The Monkey Wrench Gang is far more than just a controversial book – it is revolutionary, anarchic, seditious, and, in the wrong hands, dangerous. Although Abbey claimed it was just a work of fiction written to “entertain and amuse,” the novel was swiftly embraced by eco-activists frustrated with the timid approaches of mainstream environmental groups like the Sierra Club and the Audubon Society.

Earth First! Rankled the public and even other environmentalists from the start. The group announced itself in 1981 by unfurling a hundred-yard-long black plastic streamer to look like a deep crack down the face of Glen Canyon Dam – a scene taken straight from the opening pages of The Monkey Wrench Gang.

Glen Canyon Earth First

22 January 2012

Billboards Promoting a Public Opinion

On the way to the Grand Canyon for a family vacation in summer of 2010, we passed through Kingman, Arizona on the old Route 66. Pictured is a billboard promoting the governor of Arizona, Jan Brewer, “doing the job the feds won’t do” with the ‘o’ in ‘won’t’ depicting the Obama symbol. Using a popular WWII poster, a much younger Jan Brewer is pictured as Rosie the Riveter. “Doing the job the feds won’t do” is in reference to Arizona’s controversial immigration policy regarding the protection of its borders. Whether one agrees with Arizona’s immigration policy or not, Governor Jan Brewer's billboard demonstrates that billboards still play a key role in the promotion of a public opinion.

20 January 2012

Billboard Opposition

Buyways by Catherine Gudis, 2004, Excerpts

Opposition to outdoor advertising began in the late-nineteenth-century urban arena and then stretched into the countryside along with cars, highways, and national advertising campaigns. By the 1920s and 1930s, resistance to outdoor advertising became a national battle over aesthetic rights to the roadside environment.

If the roadside vista was public space and thereby open to democratic access, then billboards comprised both a physical and a conceptual blight. They blocked the view from the road, that was obvious enough, but they also blocked the notion that the American landscape was held commonly, without property borders and free to all. Advertising interrupted the ideal conception of the imperial eye that this landscape was somehow owned by all, and reminded motorists that not they, the people, but rather the market was in possession of even the most remote American vista.

Roadside reformer’s, drawn from the ranks of women’s clubs, garden clubs, and other civic associations, set out to rid the public highways of the signs of commerce. Outdoor advertisers comprised their foe, men who asserted their private commercial right to broadcast across public space. The billboard war thus emerged as a struggle as much over the public roles of women and men as it was over the shape and appearance of the road and the roadside. A woman emerged from this club scene of activism who would come to dominate the arena of roadside reform for forty years until her death in 1952. A graduate of Vassar College, Elizabeth Boyd Lawton dedicated her life to obliterating “billboard blight.”

19 January 2012

Billboards and the Highway Beautification Act 1965

Buyways by Catherine Gudis, 2004, Excerpts

For Lyndon Johnson, the decision to fight for highway beautification was not sympathy for the cause, but love for his wife, Lady Bird. Even as he hit brick walls in Congress, Johnson persisted, telling his staff, “You know I love that woman and she wants that Highway Beautification Act. By God, we’re going to get it for her.” Attention to beauty, no matter what the burly Texan in the White House said, was woman’s work and the highway beautification act was “Lady Bird’s Bill,” “a frivolous frill, and woman’s whim,” as some senators took to calling it.

What finally passed as the Highway Beautification Act of 1965 could hardly be called a victory for the roadside beautifiers. The act called for controls on federally funded primary and interstate highways, restricting billboards to within 600 feet of highways but permitting them in areas zoned commercial and industrial. The billboard brethren achieved, essentially, what they had been proposing for forty years. The act actually recognized the outdoor advertising industry as a “legitimate business use of land.” It also helped put the outdoor advertising industry in the hands of fewer and bigger companies.

Even federal standards for the size and height of billboards had been left to the billboard industry to decide. Sure enough, the maximum size finally specified was twelve hundred square feet; no height restrictions were included. The absence of height restrictions left open to the industry a huge now species of billboard, the monopole. Monster billboards resting atop a single galvanized steel pole whose height “was limited only by the law of physics” had begun popping up across the country.

17 January 2012

Billboard Industry Consolidation

Buyways by Catherine Gudis, 2004, Excerpts

By the mid-1920s, many of the smaller billposting firms were already subsumed by larger companies. In 1925, Foster and Kleiser agreed to sit on General’s board of directors, and also agreed that Foster and Kleiser would limit its operations to the region west of the Rocky Mountains. Between these two behemoths, this put them in control of approximately 90 percent of all poster and point plants in the United States located in cities, towns, and villages having a population of 10,000 people or more.

By the 1950s and 1960s, the outdoor advertising industry had become a devastatingly effective lobbying machine. A reform sympathizer explained that “this lobby shrewdly puts many legislators in its debt by giving them free sign space during election time, and it is savage against the legislator who dares opposes it. It subsidizes his opposition, foments political trouble in his home district, donates sign space to his opponents and sends agents to spread rumors among his constituents.”

The banner year of 1996-1997, Clear Channel Communications bought Eller Media for a whopping $1.15 billion, and three billboard companies – Outdoor Systems, Lamar Advertising, and Universal Outdoor – went public, making their CEOs multimillionaires. Together the “Big Three” outdoor companies – Viacom, Clear Channel, and Lamar – came to control 40 percent of the revenues generated by the approximately 400,000 billboards across America. No longer recognizable as the successor to the rough-and-tumble world of the itinerant billsticker, the outdoor industry is now a multimedia, global operation.

16 January 2012

Billboards and the Culture of Mobility

Buyways by Catherine Gudis, 2004, Excerpts

The cooperative spirit between government and business during WWI directed attention to the construction of highways, which was greatly aided by the passage of the Federal Aid to Roads Acts of 1916 and 1921. This, of course, was a godsend to outdoor advertising. Outdoor advertisers were among those for whom automobility spelled prosperity.

The car had expanded the stock and trade of the outdoor advertising industry, the mobile market. The mobile market now consisted of a mass of wage earners and every other upwardly striving group. Outdoor advertisers claimed that billboards appealed to both the “masses” and the “classes,” “a select clientele of everyone who passes.” The job of the advertisers was to capitalize on the culture of mobility as well as its attendant national mythology of the democratic and open road.

Federal Aid Road Act of 1956: After World War II, plans for a national system of interstate and defense highways resumed. President Dwight D. Eisenhower signed the Federal-Aid Road Act of 1956, authorizing a 41,000-mile system of highways at an estimated cost of $25 billion. Envisioned as a modern, safe, and efficient solution to roadways that had long been ill equipped to accommodate the swollen ranks of motoring Americans, the system was comprised of limited-access, high-speed expressways built according to uniform design standards.

15 January 2012

Billboards and Modern Art

Buyways by Catherine Gudis, 2004, Excerpts

As motoring speeds increased, from 35 mph in the mid 1920s, to 45 mph and 55 mph in the 1930s, just how to communicate with moving audiences became a pressing question. Just as the text-heavy billboard of the nineteenth century had slowly given way to pictorially based posters in the twentieth century, so did the complicated and ornate scenes that featured panoramic landscapes, history, and pastoralism progressively give way to more simplified, abstract, and streamlined means of representing and selling the lessons of mobility.

To accomplish this, an aesthetics of speed was required that could deliver messages yielding unblinking recognition. This set of aesthetic practices, which incorporated what we today consider logos. Advertisers wished to make superficial correspondences graspable without requiring focus, without calling upon the conscious reasoning powers of their audiences. An image, a logo, and few words were the ideal forms of communicating to mobile audiences in a state of distraction.

By flattening and reducing the number of forms employed in the advertisement, these techniques offered ways in which meaning might be left open. With the logo as the tool of communication, greater numbers of products and advertisements can be distributed without loss in legibility. As time wears on, readership may recognize with greater speed the even slighter variations, especially notable when viewed with less time and attention. These aesthetics of speed and powers of pictualization were strategies by which outdoor advertisers could both represent and induce mobility.

Not everyone agreed that advertising and mass culture were suitable subjects for an art that would express the essence of the American character. Critics Van Wyck Brooks, Waldo Frank, and Paul Rosenfeld, along with Alfred Stieglitz and the circle of artists gathered around him, were among those cultural nationalists who believed art should be an antidote to, and not a celebrant of, the unremitting materialism, spiritual torpor, and political conservatism of the machine age. Art, it was felt, should transcend base material existence and restore a humanism eviscerated by soulless technocracy and the controlling hands of efficiency engineers and time clocks.

Figure of 5 in Gold - 1928: Artist Charles Demuth 1883-1935

14 January 2012

Billboards and World War I

Buyways by Catherine Gudis, 2004, Excerpts

President Woodrow Wilson issued an executive order establishing a Committee on Public Information [CPI], headed by progressive-minded journalist and muckraker George Creel, to rally Americans to war and to use the most modern means of mass persuasion to do so. The CPI was a propaganda bureau aimed to reach all Americans and to infiltrate all arenas of their lives. Its very existence testified to the recognition by America’s political and business leaders of the importance of public opinion and the techniques of manipulating it through images, text, and moving pictures.

World War I thus served as a massive and comprehensive promotional campaign for the field of advertising at large, and for outdoor advertising especially. No event contributed more to the selling of advertising as a legitimate profession and a public service than World War I, which allowed them to prove the value of advertising as a centralized force in mass persuasion that could sell the idea of democracy. Most important, the wartime activities of advertisers granted them entry into the most exclusive fraternity – the federal government – and no more authoritative endorsement for legitimacy could be had than that. What better way to send the masses the message than with advertising?

Some twenty-eight million posters selling five series of Liberty Bonds were distributed to cities and towns across the United States, while combined campaigns for the war effort, including the Food Savings campaign, the Red Cross campaign, and others reached upwards of forty million posters. Both the U.S. Army and the U.S. Navy made liberal use of outdoor advertising for recruitment purposes.

For outdoor advertisers, wartime use of their medium meant more than a boost in legitimacy. It meant a reversal of losses they had experienced at the hands of reformers and municipal lawmakers who, in the preceding few years, had succeeded in galvanizing opposition to billboard advertising and passing ordinances in several cities restricting billboards to industrial and commercial areas.

The approach exemplified by the war poster was what would define the coming decades of advertising production, in which thinking was subordinated to sentiment, and reasoning became but a lowly misfit to the instinctual appeal.

Joan of Arc used to sell War Bonds

13 January 2012

Billboards Formulate Public Opinion

Buyways by Catherine Gudis, 2004, Excerpts

The American poster craze of the 1890s coincided with the rise of vocal opposition to billboard advertising as an immoral and corrupting influence. The increasing use of images of women in a variety of advertisements was central to the debate.

Other branches of the advertising industry were similarly engaged in self-regulatory and self-promotional efforts at the turn of the century, as they organized clubs and associations, rationalized their business, and sought to mitigate public criticism that advertising was untruthful and unproductive. Equally important was the articulation of the benefit of advertising to industry, to the economy, and to society itself, Advertising served as an educational and civilizing force, “teaching the masses not what to think but how to think, and thus to find out how to behave like human beings in the machine age.” Other proponents of advertising also claimed the “the right kind of advertising, the advertising of the right kind of goods, is one of the great factors of civilization.”

Marketers frequently describe the mass of consumers as either childlike or primitive in their intellectual and emotional development. Consumers had only instinctive and visceral reactions to stimuli. The masses, it was deemed, live in the present. They are open to impressions. The idea was that the “impression” made by the poster artist was immediate, superficial, lacking in depth, and that the mind was like a sensitive piece of film onto which images were imprinted with barely any time exposure.

The billboard industry had turned its sights on the consumer, and begun to recognize the importance of public opinion. It sought to prove that the industry had come a long way from the ad hoc, anarchic, and sometimes violent practices of its nineteenth-century forebears. In 1912, the association formally established an education committee whose task was to create a central network for public service campaigns using open advertising space. General Ulysses S. Grant, the Boy Scouts of America, and the merits of churchgoing were among the symbols of moral rectitude that filled the boards of 1914.

One 1928 Foster and Kleiser Company advertisement for the billboard industry illustrated this point. Using an authoritative quote from President Calvin Coolidge, it depicts the engines of industry churning out massed of identical packages, stick figures lined up and standing at rapt attention, mass consumers who are the commodities ready for distribution and sale. “The man who build a factory builds a temple,” pronounced Calvin Coolidge, while advertising man Bruce Barton’s parable of Jesus as a businessman topped the best-seller list of the decade.

12 January 2012

Billboards - Late 1800s

Buyways by Catherine Gudis, 2004, Excerpts

Until the 1900s, the use of billboards remained an uneven and unchecked practice. Advertising space was not yet construed as real estate. Outdoor advertising was still considered a public spectacle that encompassed all imaginable territory, from chimney tops to curbstones, and from romantic glens to roadside rocks. A fundamental development for the billposting industry came with the novel idea to formally lease space on which to advertise, and to construct special boards on which to do so.

The first recorded instance of specially built and leased outdoor advertising was in 1869. They began to construct their own boards on which to paste bills – hence the name ‘billboards.’ The formation of billboard companies and their more formal claims to urban and rural space meant that outdoor advertising had begun to carve out a legitimate place in the rapidly changing commercial landscape of the industrial age.

The first tenuous step to turn billposting into a respectable profession came in 1872, when eleven concerned billposters decided to form the International Billposters’ Association of North America, the first association of advertisers in the country. The Billposters’ Association assured advertisers that their members were the only ones able to provide reliable and certifiable billposting services. They followed through on this promise by having members pledge with bonds that they would fulfill contracts for billposting, and then by penalizing those who reneged on contracts.

In cities across the nation, advertising extended the skyward reach of construction, especially in the first years of the 1900s. Rooftop signs, now illuminated with electricity, created a new spectacle and skyline. Like the buildings rising in growing metropolises, billboards contributed to the accretion of commercial centers and formalized the incursion of pictures and texts in the public sphere.

Metropole, New York, 1909

10 January 2012

French Revolution Hyper-Inflation Described by A.D. White, 1914


Fiat Money Inflation in France by A.D. White, 1914, Excerpts
A.D White LL.D. [Yale, St. Andrews and John Hopkins], Ph.D. [Jena], D.C.L. [Oxford], Late President and Professor of History at Cornell University

From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; but, the dyke once broken, the current of irredeemable currency poured through was soon swollen beyond control. It was urged on by speculators for a rise in values by demagogues who persuaded the mob that a notion, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid.

Manufactures at first received a great impulse, but this overproduction and over stimulus proved as fatal to them as to commerce. From time to time there was revival of hope caused by an apparent revival of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and while the prices of products thus rose, wages, which had at first gone up, under the general stimulus, lagged behind. The demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low at the time preceding the first issue of irredeemable currency.

The mercantile classes at first thought themselves exempt from the general misfortune. They were delighted at the apparent advance in the value of the goods upon their shelves. But they soon found that, as they increased prices to cover the inflation of currency and the risk from fluctuation and uncertainty, purchases became less in amount and payments, less sure; a feeling of insecurity spread throughout the country; enterprise was deadened and stagnation followed.

Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all businessmen, gamblers. In city centers came a quick growth of stockjobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashion. To feed it, there came cheatery in the nation at large and corruption among officials and persons holding trusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to the incentives to corruption. Faith in moral considerations, or even in good impulses, yielded to general distrust. National honor was thought a fiction cherished only by hypocrites. Patriotism was eaten out by cynicism.

When Bonaparte took the consulship the condition of fiscal affairs was appalling. The government was bankrupt; an immense debt was unpaid. The further collection of taxes seemed impossible; the assessments were in hopeless confusion. War was going on in the East, on the Rhine, and in Italy, and civil war, in LaVendee. All the armies had long been unpaid, and the largest loan that could for the moment be affected was for a sum hardly meeting the expenses of the government for a single day.

When the first great European coalition was formed against the Empire, Napoleon was hard pressed financially, and it was proposed to resort to paper money; but he wrote to his minister, “While I live I will never resort to irredeemable paper.” He never did, and France, under this determination, commanded all the gold she needed.

There is a lesson in all this that behooves every thinking man to ponder.

France unveils huge stimulus plan
04 December 2008
French President Nicolas Sarkozy has unveiled a 26bn-euro ($33bn; £23bn) stimulus plan to help France fend off financial crisis.

US Fed announces $800bn stimulus
25 November 2008
The Federal Reserve is to inject another $800bn (£526.8bn) into the US economy in a further effort to stabilize the financial system.

India unveils $4bn stimulus plan
7 December 2008
India has announced $4bn (£2.72bn) in extra spending to boost its economy as the global financial crisis unfolds.

05 January 2012

Zimbabwe Series

I started tracking articles on Zimbabwe's currency crisis starting in August 2006 when their old banknotes ceased to be legal tender, inflation reached the million percent, a 100 billion note bought a loaf of bread, and cholera became epidemic. As Zimbabwe money became completely useless in this hyper-inflation mode, an underground economy emerged using commodities, notably blood diamonds, and other national currencies, especially the USA dollar. In March 2009, Zimbabwe agreed to peg its currency to the U.S. dollar which brought the hyper-inflation under control.

During this hyper-inflation debacle, Western powers demonized Mugabe as the inflationary culprit, and Mugabe accused Western powers of currency sabotage. As a result, Zimbabwe has now allied itself with a new shrewd master – China.

This is not the first time a country has experienced hyper-inflation. There’s the French Revolution and the more recent experience of hyper-inflation in 1930s Germany. Whether through incompetence or deliberate interference, the outcome of hyper-inflation is the same - severe societal disruption. And now, in America, trillion is the new billion. Buyers beware of billion dollar bailouts and stimulants.

America's trillion dollar question
28 Feb 2009
In the world of American government, the trillion is the new billion. There was a time when only astral-physicists and accountants practicing in Zimbabwe had any use for a word which means a million millions. The speed of that verbal inflation is staggering. Most of us still use the word millionaire to describe someone of enormous wealth, but it has actually been around since the mid-19th century in its current form and once conjured an image of someone with limitless spending power.

04 January 2012

Plutonomy Consumption

Citigroup Plutonomy Report, 2005, Excerpts
Understanding how the plutonomy impacts consumption is key. There is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer. There are rich consumers, and there are the rest. The rich are getting richer, and they dominate consumption. Their trend of getting richer looks unlikely to end anytime soon.

In plutonomies, the rich absorb a disproportionate chunk of the economy and have a massive impact on reported aggregate numbers like savings rates, current account deficits, consumption levels, etc. The top 1% of households in the U.S. accounted for about 20% of overall U.S. income in 2000. The top 1% of households also account for 33% of net worth, greater than the bottom 90% of households put together. The top 1% of households account for 40% of financial net worth, more than the bottom 95% of households put together.

Clearly, the analysis of the top 1% of U.S. households is paramount. The usual analysis of the “average” U.S. consumer is flawed from the start.

Luxury carmaker Bentley sees sales rise 37% in 2011
03 Jan 2012
Luxury carmaker Bentley has reported a 37% rise in sales in 2011, saying demand has returned to pre-recession levels. The US continues to be Bentley's number one market with 2,021 cars sold in 2011, an increase of 32%. However, China took second spot with sales almost doubling to 1,839, surpassing the previous year's record. December's figures were the best since Bentley's record year of 2007 and the second best month in its history.