Gerald Ford's economic legacy
Former president was forced to deal with massive inflation and unemployment during his term.
NEW YORK (CNNMoney.com) -- Gerald Ford's presidential term was as much marked by the economic forces of inflation as it was by the political fortunes of the time.
Ford, who was sworn in as president on Aug. 9, 1974, after the resignation of Richard Nixon, faced inflation that was already surging at a 10.9 percent annual rate in that month. It was thrust into overdrive by the OPEC oil embargo of 1974 and the elimination of wage/price controls instituted in the Nixon administration.
As energy constituted more of the nation's GDP in the early 1970s, soaring gas prices had an even more profound effect on the U.S. economy than recent gas price hikes have.
Rising energy prices also contributed to higher unemployment by slowing consumer demand for companies' products, according to Mark Ratkus, economics professor at LaSalle University in Philadelphia.
Ford's approach to controlling inflation, according to his White House biography, was through modest tax cuts and spending restraints. He also sought to "decontrol" energy prices in order to stimulate production.
One of Ford's more memorable attempts to restrain inflation at the time was an initiative called Whip Inflation Now. In a televised speech given Oct. 8, 1974, Ford described the plan that was to enable Americans to personally remedy rising costs:
"Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less; to help save scarce fuel in the energy crisis, drive less, heat less.
"Every housewife knows almost exactly how much she spent for food last week. If you cannot spare a penny from your food budget - and I know there are many -surely you can cut the food that you waste by 5 percent."
Buttons with the initials 'WIN' were distributed, and people were encouraged to wear them to help raise the public's awareness of the effort.
The idea was for inflation to be contained and combated on the individual level.
WIN proved to be an ineffective step, "both from the public relations aspect and an economic one," said Daniel Mitchell, professor of management and public policy at UCLA.
"Buttons on lapels weren't going to deal with this sort of thing," Mitchell said.
"Up to that time, we'd never had inflation and higher unemployment," Ratkus explained. "It created a stagnant economy and a term that has since entered into textbooks: 'stagflation.'"
President Ford, who inherited many of the nation's economic problems from the previous administration, was defeated in the following presidential election.
Jimmy Carter was sworn in as president in 1977.
Inflation remained a problem throughout the 1970s, finally peaking at an annual rate of 13.5 percent in 1980.
It wasn't until the early 1980s that inflation was brought fully under control.
Many credit the Federal Reserve, led by Carter-appointed chairman Paul Volcker with his "tough monetary policy," for that.
Volcker limited the growth of the money supply, which resulted in a recession and high lending rates.
Volcker "wrung inflationary psychology out of the economy," said Ratkus, who explained that until then people expected a certain amount of inflation in prices.
The expectation of inflation set the stage for sharp rises in costs and "helped create a self-fulfilling prophecy of sorts," said Ratkus.
Since then interest rates and inflation have remained relatively low.
"Jerry Ford was the most decent man I ever encountered in public life," Alan Greenspan said in a statement. The former Fed chairman served under Ford as chairman of the Council of Economic Advisers from 1974 to 1977. "His reputation has risen year by year since he left office. I expect that to continue."
"It was a great privilege to work for him. I will miss him," he said.
Greenspan was chairman of the Federal Reserve Board from 1987 to 2006.