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What happened in 1970 in Los Angeles was the worst economic episode I’ve ever had to fight through. Unlike the post–Cold War Recession, we did not have the waves of in-migration from Mexico, nor were drug sales as great. I believe the underground economy was a silent savior of Los Angeles during 1990–94. The Kent State Massacre and the Pentagon Papers scandal didn’t help the 1970 scene. Furthermore, things didn’t get better in the early 1970s. The sharp recession of 1970 was followed by a sudden inflation caused by Vietnam spending. Nixon “slammed the gold window shut.” From 1945 to 1971, the U.S., under the Bretton Woods Agreement, had agreed to back its currency to a limited extent with gold at $35 per ounce. Other nations’ central banks were withdrawing our gold so fast that Nixon had to renege on the promise. This was followed in 1973 by the end of fixed currency exchange rates. The dollar plummeted. Traveling to the wine country of France in the summer of 1973, I was unable to cash American Express dollar-denominated traveler’s checks. Inflation jumped with the 1973 Energy Crisis. Nixon imposed wage and price controls. Then Watergate, accompanied by the Dow Jones hitting bottom in 1974. Three Initiatives to Turn the Tide Against all this, Trader Joe’s mounted three initiatives. In chronological order: We launched the Fearless Flyer early in 1970. We broke the price of imported wines in late 1970 thanks to a loophole in the Fair Trade law. Most importantly, in 1971, we married the health food store to the Good Time Charley party store, which had been the 1967–70 version of Trader Joe’s. Together these three elements comprised the second version of Trader Joe’s, Whole Earth Harry.
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Joe Coulombe (Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys)