The Locomotive Loses Power:
Jimmy Carter's Industrial
and Trade Policies
Industry confidence in 1973 and 1974 was built upon a solid foundation of steel orders. Many businessmen and investors even feared that the nation was short of industrial capacity. In March 1973, U.S. Steel president Edgar Speer assured the nation that the industry possessed sufficient capacity to fill foreseeable demand. The industry, operating at 97 percent of capacity, shipped a record 151 million tons during that year. But after the Israeli-Arab war in October, OPEC nations quadrupled crude oil prices. 1 Steel output declined slightly to 146 million in 1974, but tumbled to 117 million tons, 74.5 percent of capacity, in 1975. Still, Fortune crowned the American industry "king among the crippled." The Japanese operated at 68.2 percent and the Europeans 64.0 percent of capacity. 2
As steel went, so went the nation and most of the world. Expensive oil precipitated an international inflation, which was quickly followed by an international recession. Higher energy costs siphoned wealth from industrial nations to oil-producing nations, causing the severest downturn since the 1930s. In the United States, the GNP fell 7.5 percent in the last quarter of 1974, and a year later unemployment hit 9 percent.
When growth resumed, it was tepid. From 1974 to 1980, GNP in the United States grew 2.8 percent annually; from 1950 to 1973, it had advanced 3.9 percent each year. Germany's growth rate was 2.7, falling from 6.3; Japan's 4.9 percent was much better than the others, but it had dropped from 9.8 percent. The United Kingdom and Italy did even worse. Despite the poor economic perfor&