When Richard Nixon turned over the reins of Government to Gerald Ford last week, the U.S. business community —long filled with fervent Nixon supporters—burst into a prolonged round of applause. It was a reaction of relief rather than celebration. A long-threatening cloud of uncertainty had been suddenly and dramatically blown away. Executives were infused with hope that public faith in White House leadership, and thus Government management of a sorely troubled economy, now stood at least a chance of being rekindled. “This is the best thing that could happen at the present time,” says George Strichman, chairman of Colt Industries, a huge conglomerate. “There will be a mood of release, a feeling of Thank God, let’s get going.’ ” Charles W. Moore, research director of William C. Roney & Co., a Michigan brokerage house, adds, “Any change has to be an improvement over the present.”
Persistent Problems. But the relief was tempered by a realization that the transfer of power by itself would do little to solve the economy’s persistent problems of rampant inflation, sky-high interest rates and declining output. Both sides of the mood were successively illustrated on Wall Street, where the Nixon years have been mostly bearish; though the Dow Jones industrial average hit its alltime high of 1052 in January 1973, at the beginning of last week it stood 180 points below its level on Nixon’s Inauguration Day in 1969. In the first three days of last week, the Dow shot up 45 points in anticipation of Nixon’s resignation. Then it dropped 20 points Thursday and Friday, to close the week at 777. One reason: an explosive rise in wholesale prices (see box next page) that gave fresh evidence of how difficult inflation will be to defeat. But brokers widely feel that the long-oversold stock market is about to enjoy at least a short-term psychological rise that might push the Dow to 830 or 850 before heavy profit taking pulls it back.
Outside Wall Street, the lifting of uncertainty could spur some new spending by both consumers and businessmen. Ford Motor Chairman Henry Ford II wryly wondered what the President’s problems “have to do with selling cars,” but added that “generally speaking, there is a lack of confidence on the part of the consumers in this country, and we believe that it has affected car sales in 1974. We would hope this confidence could be rebuilt.” Chairman Henry Walker Jr., of the Honolulu-based Amfac, Inc., says that, “with Nixon safely out of the way,” his company plans to move ahead on delayed plans to expand food-processing plants in Alaska and on the West Coast.
European government officials hope that another quick result of Nixon’s resignation will be Senate passage of a bill giving the White House new authority to negotiate a lowering of trade barriers. That would enable a round of world trade talks to get under way. An impeachment trial in the Senate could well have killed all chances for passage of the trade bill this year, and the global negotiations then probably would have been scrapped.
Honeymoon Atmosphere. Any lift to the U.S. economy out of relief over Nixon’s resignation, however, will be both minor and temporary. In the longer run, everything will depend on the economic policies adopted by the new Ford Administration (see THE NATION). Businessmen and economists agree, though, that Ford’s high public credibility and the certainty of a presidential honeymoon with Congress give him the chance to wage a far more vigorous attack on the nation’s economic ills than could be made by Nixon operating in an atmosphere poisoned by Watergate.
Almost to a man, businessmen expect the new President to continue the basic anti-inflationary policies advocated in recent months by Administration officials, and outlined by Nixon last month in a speech to Los Angeles businessmen. They include trimming federal spending by at least $5 billion in fiscal 1975 and aiming for a balanced budget in fiscal ’76, encouraging the Federal Reserve to keep a tight rein on credit and stimulating consumer saving in order to reduce demand. Ford also has announced that he will keep William Simon as Secretary of the Treasury and reaffirmed the appointment of Alan Greenspan, who is on his way to speedy Senate confirmation as chairman of the Council of Economic Advisers. Office of Management and Budget Director Roy Ash and Nixon Economic Counselor Kenneth Rush, however, are not expected to stay on.
At minimum, Ford is in a position to breathe new life into the old policies. For example, presidential advisers have been wrangling inconclusively for three months over just where to cut the budget, and have received little guidance from Nixon, who was preoccupied with his defense against impeachment. Ford could quickly cut through the debate and, if he wished, start some new policies. Federal Reserve Chairman Arthur Burns, pleading just before Nixon’s resignation for “more energetic action” by the White House against inflation, called once more for a budget cut of $10 billion rather than $5 billion. He also advocated starting a new $4 billion program to put 800,000 of the unemployed to work in public-service jobs if the jobless rate hits 6%; it would have to be financed by some selective tax increases. Ford’s vice-presidential staff favored the idea in principle, and Ford himself is believed to be more inclined than Nixon was to back more help for people thrown out of work by anti-inflationary budget cuts and credit restraint.
Some members of TIME’s Board of Economists voice especially high hope that Ford, coming into office on a wave of intense public desire that he succeed, will be able to conciliate warring economic interests. Arthur Okun, chairman of the Council of Economic Advisers under Lyndon Johnson, says: “Ford displays a willingness to engage in dialogue. He could approach labor and business successfully and raise the issues of inflation and self-restraint.” Harvard’s Otto Eckstein thinks that Ford could negotiate quietly and successfully with businessmen to hold price increases over the next twelve months to perhaps 5% and use his cordial relationship with AFL-CIO President George Meany to get labor to moderate wage demands too. Says Eckstein: “He is a new man with a reservoir of leadership.”
Economists and businessmen also point out that Ford takes office unfettered by economic campaign promises. For example, he need pay no attention to Nixon’s 1972 campaign pledge not to raise taxes throughout his term in the White House. Nor will he be under the pressure that Nixon was to court popularity at the expense of an anti-inflationary program. While talking about the need for budget restraint, Nixon signed into law such measures as a $700 million extension of veterans’ benefits and a $2 billion loan guarantee for financially distressed cattlemen.
There are some pessimistic voices about the economic prospects of a Ford Administration. Daniel Fitz-Gerald, chairman of San Diego-based Wickes Corp., a big retailer of furniture and building supplies, predicts that Congress will not long remain pliant if Ford starts whacking away at the budget in earnest: “He will discover that once he starts tampering with everyone’s favorite pork barrel, you can lose some friends fast.” Milwaukee Banker Neil Johnston predicts that double-digit inflation will continue for some years, no matter who is President. But Ford has at least a chance to make a fresh start, and will benefit for a while from business and congressional eagerness to forgive any economic mistakes. In economics as well as in politics, the nation needs a spirit of healing and cooperation, and Ford has a unique chance to promote it.
