INFLATION AND THE ENERGY CRISIS TAKE THEIR TOLL

American baby boomers experience tough economic times for the first time and ask, incredulously, "Where did the good times go?" Great expectations are diminished by inflation, stagflation, the energy crisis, Watergate, Three Mile Island and, as President Jimmy Carter lamented, a general feeling of "malaise."

America's leaders realize the dependence of the U.S. economy on the rest of the world.

The first energy crisis begins in 1973, after Arab oil-producing states embargo oil to the United States. The OPEC cartel appears capable of controlling the price of oil worldwide. U.S. consumers are shocked by high oil company profits, and a "windfall profits" tax on oil companies is passed. Not surprisingly, Exxon is number one on the Fortune 500 in 1974.

Inflation persists for the decade, reaching double digits by the late '70s. The term "stagflation" is coined to describe high inflation coupled with economic stagnation.

The 1974 recession is the worst since 1940, as the Dow Jones Industrial Average falls by nearly 400 points. An excerpt from the Ralston 1974 Annual Report testifies that, "Today's business is tough, fluid and competitive. Conditions are more difficult than at any time in recent years. While we are cognizant of the uncertainties that the world economy holds, we are not intimidated by them."

High commodity prices from poor harvests worldwide encourage domestic farm production. Government removes acreage controls and encourages farmers to plant "fence row to fence row." Farmers in turn borrow money to buy more land, which leads to a farm crisis in the early 1980s when prices fall. This dismal era ends appropriately with the United States facing chronic trade and budget deficits.

Ralston Purina continues to navigate through these turbulent waters, buoyed by the Grocery Products Division and consistent sales and earnings from agricultural products. In 1973, Grocery Products contributes 39.9 percent of Ralston profits, while agricultural earnings equate to 35.5 percent. Diversification continues, with Ralston buying the St. Louis Blues hockey franchise as well as floriculture, mariculture and mushroom-farming operations.

Ralston Purina International expands to 55 feed plants operating in 17 countries by 1974.

Despite tough times, Ralston racks up seven consecutive years of record earnings and sales. That stretch ends in 1979, when earnings are down because of restaurant issues and poor performances from the new diversified operations.

Ralston creates the soft-moist cat food category in 1971 with Tender Vittles® brand cat food.