A few days ago, the last paragraph of the District Line quoted Bob Orben as saying, "Going ahead with the neutron bomb would be sheer waste. We already have something that destroys people and leaves the buildings intact. It's called a 9 3/4 percent mortgage."
Gaetano Gentile responded: "I fail to understand why he is so appalled by the 9 3/4 percent mortgage rate.
"In 1926, I bought a home. The interest rate on my mortgage was 6 percent. Today 9 3/4 percent interest rate is therefore about 50 percent over the 1926 rate.
"The enclosed picture, which appeared in your Business and Finance section recently, shows the George hyman Construction Co. sign on building site, and under it is the legend, 'Bricklayers Wanted, $13.25 an hour.' In 1926, bricklayers were getting $2.50 to $3 an hour.
"So lenders are not the only guys in black hats."
You'll get no argument from me on that proposition. I think borrowers, lenders and all the rest of us have gone off our fiscal rockers.
While you're marveling at a $13.25 rate for bricklayers, let me tell you about a word carpenter named Gold whose pay rate used to be $14.
The twon was Springfield, Ohio. The year was 1934. And the $14 was for a 6-day week, not for each hour.
At 5:45 each morning, I began editing sports copy and writing headlines. At 9, I went to the composing room to supervise the makeup of the sports pages. Later I made my rounds looking for new: hunting and fishing hangouts, public and private recreation centers, high school and university athletic departments. There were also amateur and professional games to cover. And boxing and racing. And a column to write for the next day.
On Saturdays, I had to work an extra shift. At 4 p.m. - quitting time on normal days - I was farmed out to the city editor and worked for him until the big Sunday paper was rolling. I got off at 2 a.m. Sunday. Then at 5:45 Monday morning the cycle began anew.
After I had worked my way up to $18 a week, I told the managing editor that the next raise would have to be $25 because I was getting married. He threw his head back and laughed heartily. He was still laughing when I left his office. I left because I had the distinct feeling that when he stopped laughing he wasn't going to say "yes." For all I know, he's still sitting there laughing. I haven't been back.
But I have done a lot of wondering about us poor slobs who broke our backs to earn that kind of money and saved a little of it for our old age. What we saved has been debased and devalued with every subsequent increase in wages and prices.
I have seen inflation steal the savings of several generations, and today I am watching a new generation of workers being robbed by accelerating inflation. Husbands and wives both work and save their money because some day they want to be able to afford a home of their own, an education for their children and a nest egg that will make their futures more secure.
What they'll discover is that prices will always stay a little bit ahead of wages. Whatever you want, it costs a little more than you can really afford. So you wait for wages to catch up - but by the time wages rise, the price of what you want has also gone up. You can't win.
Yes, $13.25, an hour for bricklayers seems a mite high to a fellow who used to earn $14 for a 6-day week. But it doesn't seem at all to a fellow who is trying to provide for a family at today's prices.
Those who lend money, whether for mortgages or any other purpose, are also caught in inflation's trap. Picture yourself as the owner of a house that cost you $18,000 but will bring an inflated $60,000 on today's market. You sell your house for $10,000 down and $50,000 to be paid to you over a period of 25 years with 9 3/4 percent interest. That sounds like a smart move on your part, doesn't it? For once in your life, you're going to be a lender, not a borrower.
However, if inflation steals 8 or 9 percent of your money each year, what is your true rate of return at 9 3/4 percent? And what will your children do with your "vast wealth" if they inherit $50,000 from you? One thing they will not be able to do is buy back the house you sold.By that time, your $18,000 house will be selling for $180,000.
Meanwhile, if you sell your house at an inflated price you will have several choices, all bad. You can buy another house at even higher price. You can pay an outrageous rent for an apartment. Or you can live in a tree.