Eve of Destruction

When Barry McGuire sung those lyrics back in 1965, voracious firestorms and radioactive mushroom clouds loomed on the horizon, passive resistance had erupted into violence, and escalating body counts in Southeast Asia were signaling a prolonged agony.

A nuclear holocaust never materialized. The Civil Rights Movement was successful in dismantling the walls imprisoning many African-Americans in a second-class citizenship, although the promise of genuine equality remained unfulfilled. The Vietnam legacy of lives and treasure squandered in a futile attempt at nation-building never faded from the public consciousness.

The turmoil of that period, not to mention the Great Recession of 2008-2009, has been swiftly eclipsed by the onset of the Covid-19 pandemic to such an extent that, if McGuire's words resonated then, they sound an alarm now that is unrelenting and deafening.

In fact, Barry McGuire never knew what destruction really meant.

I fear for the future of America.

This sentiment stems not from the clinical aspects of the disease but from the concomitant shock waves that have shattered the foundations of civil order like a continental earthquake.

Granted, without the implementation of effective defensive measures, the death toll could be staggering. Case fatality rates -- the number of deaths attributed to the disease divided by the number of infections -- vary from as high as 13.4% in Italy to as low as 3.5% in Germany. Focusing on this calculation is problematic, however, since the true number of infections, the denominator, is unknown; many infected persons have not been diagnosed due to an absence of symptoms and a lack of testing. Also, the number of deaths, the numerator, is a function of the quality of care available to acutely ill patients, and will be inflated when Covid-19 is incorrectly reported as the cause of death, which may explain the aberrant statistics coming out of Italy.

Another factor to consider, according to British epidemiologist Neil Ferguson, is to what extent Covid-19 will increase deaths above the otherwise expected level. "By the end of the year . . . as much as half to two-thirds of the deaths we're seeing from Covid-19" might have occurred anyhow "as it's affecting people who are either at the end of their lives or in poor health."

Because of these variances, it might be more useful to measure deaths as a percent of total population rather than of total infections.

The most vicious pandemic of modern times was the outbreak of Spanish flu, which began in January 1918 and lasted until December 1920. The disease infected 500 million people (out of a world population of 1.8 billion), of whom 50 million died. Of 100 million living in the United States, twenty-five million fell ill, of whom about 675,000 died, an overall death rate of 0.675%, one-quarter of the worldwide figure.

A Europe devastated by World War I may account for some of the difference. Also, many cities in the United States were successful in controlling the disease by adopting non-pharmaceutical interventions similar to current public health measures though not nearly as stringent. Absent any federal or state mandates, those cities closed churches, theaters, schools, and places of public gathering. Restaurants, factories, and retail establishments were permitted to remain open as long as they prevented "patrons and employees from loitering or congregating in groups." (City of Cleveland Ordinance, 10/15/1918)

Interventions were deployed sporadically and inconsistently; cities which acted faster had better results. Philadelphia waited sixteen days, two weeks longer than St. Louis, and recorded a death rate at its peak five times higher. But Chicago's health commissioner refused to close businesses, saying, "It is our duty to keep the people from fear. Fear kills more people than the epidemic." (WSJ, March 21-22, 2020)

A lack of effectiveness can also be attributed to a health care system not only deficient by today's standards but compromised by a shortage of nurses, many of whom had been sent to the European war theater.

In contrast to the current upheaval, the economic repercussions were mild. In a 2006 paper for Canada's Department of Finance, two researchers found little change in international trade, retail sales, railroad passenger traffic, and stock prices. While factory employment dipped 18% when the flu peaked, annual output declined only 0.5%. (WSJ, March 21-22, 2020)

Applying the Spanish flu death rate of 0.675% to the current U.S. population of 325 million yields a mortality of 2.2 million citizens, which suggests to me that, considering comparable mitigation efforts, the 1918 disease was at least twice as virulent as today's scourge. Interestingly enough, using far more sophisticated models (or maybe not), that is the exact same number Professor Ferguson arrived at in his initial analysis of the impact of the coronavirus.

A lot of people, particularly those serving up the nightly news, were horrified -- until Ferguson explained that his projection was based on the premise that "nothing is done to contain, suppress, or mitigate the epidemic." As the appropriate policies were phased in and the level of fatality, while still sobering, took on a more moderate pattern, the professor went back to his computer, and issued a revised estimate of 100,000.

The nasty novelty of this coronavirus is that it can plant itself undetected in innocent individuals who don't cough, develop a fever, lose their sense of taste or smell, become fatigued, or have difficulty breathing but who "without malice aforethought" can pass it to as many as three unsuspecting contacts who may have a much more severe reaction. So implausible was this rumor when it first surfaced back in January that no less an authority than Dr. Anthony Fauci, then merely the director of the National Institute of Allergy and Infectious Disease and not yet a media star, debunked it, saying that "in all the history of respiratory viruses, asymptomatic transmission has never been the driver of outbreaks."

When the blackness of the swan was indeed confirmed, the good doctor deftly pivoted to the Ferguson agenda.

Whether suppression and mitigation are subsets of containment or unique approaches is a matter of semantics, but for my purposes I prefer to define containment as the use of any available tools to prevent the spread of the disease beyond a specific geographical area. Effective containment would require the imposition of controls much more harsh than those now in use and not acceptable practically or legally in a democratic society.

The Trump administration's attempt to contain the virus on February 2nd by barring entry into the U.S. by foreign nationals who had traveled to China within the previous fourteen days was destined to fail because it excluded immediate family members of American citizens and permanent residents. Further, research has indicated that the infection in New York came from Europe, not China. Restricting all entry into the U.S. at a certain point in time was obviously unworkable, but it was the only recourse with any chance of success. Similarly, to contain the virus within a city, county, or state would encompass the closure of all land, water, and air borders.

The governors of several states -- Texas, Florida, Maryland, South Carolina, and Rhode Island -- are erecting their own barriers in self-defense. They have ordered all persons arriving from the New York area to self-quarantine for fourteen days upon arrival.

In an influential report ("Impact of  Non-Pharmaceutical Interventions to Reduce COVID-19 Deaths and Health Care Demand") issued on March 16th, the Imperial College London elucidated the two remaining strategies for attacking the disease.

Mitigation consists of confining suspect cases and members of their household to their residence and isolating those with a high risk of dying should they become ill, mainly the elderly. Its aim is to slow but not necessarily stop the spread of the disease (and thus foster the incubation of herd immunity), to ease the burden imposed on the health care system, and to protect the most vulnerable. The result should be reductions of one-third (from three to two) in the disease transmission rate (the secondary cases each infected person generates), of one-half (from 2.2 million to 1.1 million) in the number of deaths, and of two-thirds in the peak demand for critical care beds.

Recognizing that such a level of mortality was still intolerable, the Imperial College recommended  suppression as the preferred course of action. Its more extreme physical distancing (the correct terminology, in my opinion) would include shuttering schools and universities and directing the general population to "stay at home": to forgo unnecessary travel, to refrain from socializing with family and friends, and to avoid restaurants and bars. The goal of suppression is to reduce virus transmissions to under one per person and the death toll to less than 100,000.

While the Imperial College report did not address it, rigorous testing has been utilized successfully in several countries to suppress transmissions to near zero. Theoretically, when a potential infection is identified in specific macro or micro community -- a city, a workplace, a neighborhood -- the suspect case, his social contacts if they can be traced, and all other members of the community are tested. Positives are quarantined for fourteen days; negatives are permitted free movement, although they may be retested at a later date. Fast, reliable tests must be available in sufficient quantities at the outbreak of contagion for such a program to have any value -- essentially foreclosing it in the U.S.

The Imperial College did not advocate "a complete lock down" of businesses, factories, and offices. "Suppression," it cautioned, "carries with it enormous social and economic costs which may themselves have significant impact on health and well-being in the short and longer term." (Peter Smith, Quadrant Online, March 23, 2020)

Yet within hours, across the globe -- relying on incomplete and conflicting data, preferring to accept inevitable hardship and tragedy rather than reject speculative scenarios, exacerbating their constituents' state of fear, spurred by a media intent on sensationalism, and seduced by the temptation of unrestrained power -- government officials launched an unprecedented experiment in economic and social engineering. Never before in mankind's intermittent struggles with plague and epidemic had healthy persons been stigmatized and forbidden to cross their own thresholds. Never before in world history had civilized nations voluntarily orchestrated their own disintegration.

Our own administration's declaration of war was more frightening than reassuring, considering its predecessors' dismal track record: the aforementioned Vietnam War, which left in its wake 55,000 Americans and over 2.5 million Vietnamese dead, two presidencies undone, and the government's credibility in ruins; the War on Drugs, which bequeathed us rogue countries, exorbitant underground wealth creation, corrupted law enforcement, criminalization of the innocent, and mass minority incarceration; and the War on Terror, during which apparent victory hardly came cheap: billions scattered across the desert in a futile search for weapons of mass destruction, civil liberties surrendered for the sake of national security, and private movement and transactions subjected to scrutiny, surveillance, and investigation.

The collateral damage from today's novel warfare was immediate, predictable, and devastating: trillions of dollars of life savings and retirement accounts erased with the stroke of a pen; twenty million workers whose pride would have never allowed them to seek a handout suddenly without a job; thousands of entrepreneurs and small business owners compelled to shut down and stand by in shock while their hopes, dreams, and working capital dissolved; major retailers, manufacturers, and service providers brought to the brink of bankruptcy as their cash flow slowed to a trickle; lower-income and poverty-stricken multi-generational families ordered to shelter in walk-up apartments while politicians, talking heads, and scientists touted the benefits of bonding from their twelve-room mansions.

Like a placid river struck by a hurricane, the rising water rapidly overflowed its banks, and inundated all that lay before it, every individual and institution, until all one could see was a huge expanse of brown sludge, mirroring the vacant streetscape of New York City.

For me there were several significant markers.

The first was March 11th when Rudy Gobert of the Denver Nuggets tested positive for Covid-19, and the NBA suspended all games "until further notice," which of course has yet to be forthcoming. The next day Major League Baseball canceled Spring Training, and delayed indefinitely the opening of the 2020 season, a move greatly disappointing to me; Spring Training had long been on my bucket list, and I had planned a trip to Phoenix on March 20th to see my beloved Oakland A's take on the White Sox and the Cubs. Also on March 12th, after briefly considering playing before empty seats, the NCAA canceled all postseason tournaments, including Division I March Madness. In a curious footnote, the Big East suspended a quarterfinals conference tournament game between St. John's and Creighton at halftime, too late certainly to stifle any virus that may have been wafting through the arena.

Those sports commissioners had no doubt overlooked this sentence in the Imperial College report: "Stopping mass gatherings is predicted to have little impact because the contact time at such events is relatively small compared to the time spent at home, school, workplaces . . . bars, and restaurants."

The second marker was March 13th when Governor Ralph Northam closed Virginia schools for two weeks and ultimately, ten days later, for the remainder of the academic year. Because the school system is the cornerstone of contemporary society, this drastic step was a harbinger of further disruption, and had far-reaching implications. Working parents had to scramble to find caregivers for their children; with half of children receiving their only nutritional meal at school, arrangements had to made for continued distribution of food; a shift to online and home schooling became increasingly problematic with many households lacking adequate skills and technology. Numerous officials would subsequently question a policy that might bring at-risk older persons into close proximity to their grandchildren for extended periods of time.

The third marker was March 20th when, while driving to Orange, Va., I listened to New York Governor Andrew Cuomo announce a state shutdown and all that it entailed: banning all non-essential gatherings, requiring most employees to work from home, quarantining persons over the age of seventy. His dictatorial tone was a little unsettling, but when he ventured into the purely oratorical and proclaimed, "If everything we do saves just one life, I'll be happy," I was dumbfounded. The statement sounds noble, but is patently absurd and irresponsible. Governing involves weighing values and analyzing costs and benefits. Many lives could be saved if speed limits were reduced twenty percent, tobacco was outlawed, and all troops on foreign soil were recalled, but such acts would run counter to majority opinion and undermine national priorities.

From that point my personal markers were swamped in rapid succession: the Bridge Club (understandable, as at seventy-one, I'm one of the youngest members); the YMCA (debatable, as mental and physical well-being are just as critical to warding off a virus as quarantine); the library (incomprehensible, as some people still like to read books, and what are they and their children to do when their home supply is exhausted); and finally, the barbershop (incredible, no explanation necessary).

In this dystopian nightmare, ironies abound.

Farmers destroy millions of pounds of lettuce, tomatoes, and beans, and dump millions of gallons of milk as demand from schools and restaurants dries up while food pantries are overwhelmed by the homeless and hungry.

Ordered to stay at home, thousands of defiant citizens jam the streets of Lansing, Michigan to protest the directive that allows them to buy marijuana and lottery tickets but not furniture, plants, fertilizer, or paint.

Paper towels and toilet tissue vanish from supermarket shelves as panic-stricken shoppers stock up for the Apocalypse, intent on scrubbing all soil, stain, and vestige of virus from their bodies and habitats.

GE and Ford ramp up to manufacture 50,000 ventilators in one hundred days while physicians on the front lines report that, for many Covid-19 patients who exhibit altitude sickness rather than pneumonia symptoms, ventilator intubation may not be helpful and may even be harmful.

Liberty University, the poster child for online education and no stranger to controversy, summons two thousands residential students back to campus after Spring Break in the midst of the pandemic.

To conserve supplies of personal protection equipment and prepare for the onslaught of Covid-19 patients, hospitals across the country halt elective surgeries and procedures, forcing them to layoff millions of health care workers and generating billions of dollars of losses.

Spousal abuse, child abuse, alcohol and drug abuse, and depression escalate alongside rising unemployment as millions locked in their homes succumb to emotional distress; if past statistics are any indication, as many as 50,000 could die from despair.

In stunning reversals of ideology, with moral hazard (high risk at little cost) the order of the day, rugged individualists salivate at the government trough; Medicare-for-all repudiators champion cash-for-all stimulus; laissez-faire capitalists embrace Sanders-style socialism.

Which brings me to the remedy.

Staring at an unfathomable economic collapse, Congress and the administration reacted with "all deliberate speed." Speed is the operative word here; deliberation was an afterthought.

When I envision Donald Trump, Mitch McConnell, Charles Schumer, Nancy Pelosi, and their 532 minions as the saviors of American civilization, I break out in a Covid-19 sweat. When the numbers on their blank check soar into the stratosphere, like virus victims doubling by the hour, my throat tightens up. When the president trumpets how "incredibly hard" they are all working to reach a deal, amusement and cynicism displace fear and trembling. Why is it so difficult to give away $2.2 trillion of other people's money? "Because," says my son, a former Capitol Hill reporter, "every favored cause and special interest group is crying foul and demanding recompense."

Which is how the invoice on a rescue edifice that broke ground at $1 trillion came in at over twice that amount. For legislators unchecked by budgetary constraints, negotiation was a matter of guaranteeing that a change order for the left would be matched by one for the right, and vice-versa.

Perhaps Representative James Clyburn (D., SC) said it best when he brazenly exhorted, "This is a tremendous opportunity to restructure things to fit our vision." One doesn't know whether to be outraged or complimentary; a politician rarely comes forth with such an honest, transparent statement. And couldn't one interpret the vociferous protests from the other side of the aisle as a distraction from its own culpability in stuffing the beast with a comparable ton of pork?

Some of the lesser-known appropriations in the Coronavirus Aid, Relief, and Economic Security (CARES) Act include, in addition to current funding, $25 billion for food stamps and child nutrition; $5 billion for Community Development Block Grants (one-and-a-half times their 2020 total); $4 billion for Homeless Assistance Grants; $30 billion for education, equally divided between K-12 schools and colleges (many of whom boast multi-billion-dollar endowments); $130 billion for struggling hospitals; and $40 billion for forgiveness (not deferment) of six months of student loan principal and interest.

One can argue that such grants are critical to their recipients' ability to "prevent, prepare for, and respond to the coronavius," but less convincing to me are $25 billion for transit systems, $11 billion for three African development funds, $60 million for NASA, $100 million for the Department of Energy, $37 million for the Forest Service, $75 million each for the National Endowment for the Arts and the National Endowment for the Humanities (about one-half their annual budgets), and $25 million for the Kennedy Center for the Performing Arts (the same sum as its operating budget). The last expressed its gratitude for Congressional largess by promptly laying off 750 employees.

Three centerpieces of the CARES Act are designed to provide immediate assistance to persons harmed by the crisis. The $350 billion Paycheck Protection Program, through the Small Business Administration, makes loans of up to $10 million available to small businesses or nonprofits with fewer than 500 employees to cover two-and-a-half months of payroll costs. The loan is forgivable as long as the borrower avoids layoffs and uses 75% of the funds for payroll.

The program's popularity was only exceeded by its inherent flaws. Congress carved out an exception for hospitality and dining establishments which enabled them to count their employees by "physical location" rather than in the aggregate. Consequently, national chains like Ruth's Chris Steakhouse ($20 million through two subsidiaries), Potbelly Sandwich Shop ($10 million), and Kara Sushi USA ($6 million) raked in huge amounts of cash, leaving many independent restaurateurs who lacked banking relationships and financial expertise in a holding pattern while the funds were depleted.

Furthermore, lawmakers erred in trusting businessmen to abide by a self-policing honor system. The vague, unenforceable stipulation that borrowers must certify in good faith that "economic uncertainty makes the loan necessary to support ongoing operations" left the vault wide open for companies and organizations flush with assets, not impaired by the shutdown, and conducting business as usual at full staffing levels: law firms, accountants, investment advisers, consultants, physician offices, foundations, nonprofits, and colleges. One naive columnist warned that an ombudsman would be compiling a roster of greedy abusers for the purpose of exposing their audacity to the public.

Among those sinners certain to be on the list are Intellinetics ($800,000), which is using $300,000 of its loan to purchase a rival firm; AutoWeb ($1.4 million), which compensated its CEO $1.7 million in 2019; Manning & Napier ($6.7 million), which has $20 billion in assets under management and will pay a quarterly dividend this month; Escalade Sports ($5.6 million), which reported strong demand for its ping-pong tables and basketball hoops and a $50 million line of credit; and MiMedx Group ($10 million), which recently settled two lawsuits, one with the Department of Justice for overcharging the Department of Veterans Affairs, the other with the SEC for falsifying financial statements.

Having received their loan proceeds, owners hustling to recall laid-off workers may find themselves stymied by the CARES Act's $260 billion second centerpiece, which adds a federal weekly subsidy of $600 to any state unemployment stipend. In Virginia, where the July 1st minimum wage will be $9.75 an hour, a person drawing unemployment insurance will be able to take home the equivalent of $20 an hour for the next four months. Self-esteem and self-reliance are powerful motivators, but are they worth a fifty percent pay cut and giving up an extended vacation? When four Republican senators lobbied for an adjustment to the blatant disincentive, they were crucified by Speaker Pelosi and the New York Times for their cruelty and heartlessness.

The third relief component of the CARES Act is the $300 billion that is being distributed by direct deposit, cash, or debit card to individuals who earn less than $75,000 ($1200 each plus $500 per child under seventeen). Far be it from me to disparage what amounts to a tax rebate, but it's hard to see this one as nothing more than an illogical, superfluous, egregious vote-buying scheme concocted by a political cohort that once again has demonstrated its inability to see beyond the next election cycle. I won't deny that there are millions of folks in dire straits and in desperate need of this money to pay rent and utility bills and to purchase food. Send it to them, even more if necessary, but not to the millions who are either on a company payroll or receiving generous unemployment benefits.

In their rush to reelection, legislators forgot one of the fundamental facts of life: dead people can't vote (at least not until universal mail-in balloting becomes the law of the land). When my executive assistant, a woman of impeccable integrity, received a check addressed to her deceased mother, she inquired (by way of the omniscient Google) how to go about returning it. "Don't bother," she was told. "Just cash it; heirs are entitled to the money."

With that said, in full disclosure, I must acknowledge that all this stimulus has been an unexpected boon to Schewels Home, an essential seller of appliances, electronics, outdoor power equipment, and consumer financing. Too big for the small business bailout and too small for the big business bailout, we were cursing our calamity when the payoff slipped in through the back door. With most restaurants and clothing stores under lock down, frenzied shoppers with limited options made a beeline to our showrooms, and in two weeks converted a precipitous sales decline to break even. In an embarrassing display of self-interest, I told one of my buyers that I'm rooting for this abominable situation to last at least two more months, provided our suppliers can reopen and replenish our warehouses.

I know I'm an outlier, but my deep-seated aversion to debt makes me wonder where all the money is coming from. Fiscal discipline went the way of all flesh in the first decade of the millennium when George W. Bush slashed taxes and invaded Afghanistan and Iraq. Deficits breached the $1 trillion mark each year of Obama's first presidency as the government grappled with the Great Recession, and then retreated briefly as the recovery gained strength. Regrettably, while prosperity bloomed, the Trump administration, abetted by a compliant Congress, threw conservatism and foresightedness to the wind, combined further tax cuts with increased defense and entitlement spending, and piled on two more trillion dollar shortfalls.

Apparently the government's appetite for borrowing is insatiable, and the market's capacity for lending is unlimited. This month's emergency legislation will quadruple the annual deficit to $3.8 trillion, and increase the federal debt to $24 trillion, 108% of GDP, a level that hasn't been reached since World War II. And yet, contrary to what used to be the conventional wisdom, even with the Federal Reserve purchasing $4 trillion of its own bonds and essentially printing money, interest rates hover at zero and inflation is non-existent. One would think that at some point down the road the bill will come due, perhaps when investors flee bonds because of low returns or the risk of default and trigger a spike in interest rates and inflation. But it's pure fantasy to conceive of any circumstance in the foreseeable future which would impel our cowardly leadership, red or blue, to address the issue as disinterested statesmen and entertain an increase in taxes or a reduction in spending. Which is why I had to smirk at Treasury Secretary Steven Mnuchin who, when a reporter broached the unmentionable, blithely assured him, "In different times, we'll fix the deficit."

Just how much is $6 trillion, which is the total spent (or invested) by the Federal Reserve and the U. S. Treasury in response to the pandemic? Schewel Furniture Company's annual gross revenues are approximately $100 million. In order to accumulate $6 trillion in sales, we would have to stay in business for 60,000 years through 2400 generations.

Here's another analogy. If one assumes that the draconian measures now paralyzing society will save (or extend, since no one escapes the grim reaper) one million lives, the government will have placed a price of $6 million on each of those rescues. I'm not making a judgment as to the relative value of the figures; I'm only presenting the mathematics.

The discomfort of such a conversation, not to mention the pervasive fear engendered by the disease, writes Zachary Karabell in Newsweek (April 21, 2020), is indicative of a culture that is fixated on denial and has "forgotten that death is a natural part of the life cycle . . .Treating death as the ultimate tragedy serves none of us," and makes the discussion of how much risk we are willing to tolerate in the interest of safety so excruciating. Thinking of death in less grim terms, as a condition of being human, can assuage much of our anxiety, and foster the resilience we may need in the days ahead.

Dr. Michael Osterholm, founder of the University of Minnesota's Center for Infectious Disease and Research Policy, suspects that there could "easily be sixteen to eighteen months of substantial activity of this virus around the world, coming and going, wave after wave." Sixty to seventy percent of population will have to be infected, he says, to produce a major reduction in transmission.

Testing is not a real solution because, according to Osterholm, "We don't have adequate international manufacturing capacity and supply chains for reagents, the chemicals needed to run the tests . . . and we can't build those manufacturing facilities overnight."

This leaves three strategies, two of which Osterholm reject as too destructive: a Wuhan-like lock down of society and our economy or the opposite -- making no effort to prevent the virus from circulating freely through the population, killing millions and decimating the health care system.

The third and only viable option, he says, is to "open our economy and everyday life in a way that is capable of rapidly detecting new waves of infection" and then to employ physical distancing to limit the spread. We must allow our younger, more resistant demographic to return to work, to socialize, to shop, to dine out, while asking the more vulnerable among us to be attentive to their risk and to self-quarantine. Even so, Osterholm projects an overall infection rate of 50% (160 million people) and a potential mortality of 800,000 to 1.5 million.

We're back to where we started. Many readers will find that number unconscionable. But I believe we have no other choice. To continue along the current path is sheer madness. The obstacle we face -- and I don't know if can we overcome it -- is that the media and our political leadership are perversely allied in sending us two misleading messages that are counterproductive. The media's message is that victory can be declared only when infections and fatalities revert to zero. Our leadership's message is that physical distancing and widespread testing are effectively suppressing infections and fatalities to zero. They are both wrong.

Americans need to be told the truth. The virus is not leaving us anytime soon. If people intend to resume any semblance of normal life, they will have to accept that many are going to get sick and some are going to die.

APPENDIX

A MESSAGE TO THE SCHEWELS HOME TEAM

Next month Schewel Furniture Company will celebrate its 123rd anniversary under the same family ownership and management. Most companies don't make it past the second generation, yet by perseverance, stubbornness, or just plain good luck, this one is in the process of transitioning to the fifth.

There's no denying that civil order as we understand it has been shaken to its very foundation by the Covid-19 pandemic. But if anyone is prepared to weather this storm and pass this enterprise to a budding sixth generation, we are.

We have talented, resourceful, and inspirational leadership at every level, from the corporate office to our store and credit managers. We have a skilled, dedicated, and hard-working team providing exceptional service in all our communities. We have a loyal, diverse customer base that will continually desire and have the capacity to purchase our products. We have sizable cash reserves and accounts receivable that will enable us to meet our obligations for many months. And we have a long history of success when confronted by hard times.

Our founder, Elias Schewel, fleeing an oppressive regime in czarist Russia, came to Lynchburg as a religious scholar and teacher with little more than the clothes on his back. To supplement his income he began selling household goods from a horse and buggy. He was able to save enough money to set up a shop on Main Street and to book passage on a trans-Atlantic ship for his wife and three firstborn children.

Thirty years later his three sons, Abe, Ben, and Ike, were running the store when a disease even more deadly than Covid-19, the Spanish flu, swept through the United States. They survived, but their eighteen-year-old sister, Selma, became one of the country's 675,000 victims.

In 1929 the nation's economy collapsed under the weight of the Great Depression, leaving 25% of the workforce without jobs, causing thousands of banks and businesses to fail, and impoverishing farmers in every region. While the devastation was to linger on until World War II, the decade of the 1930's was actually a period of growth for Schewels. The owners seized opportunities where there were vacancies, and opened their first satellite stores in Altavista, Danville, and Harrisonburg.

In September 2005 a disgruntled employee ignited two sofas in our Distribution Center. The efficient deployment of the sprinkler system and a swift response by the fire department contained the blaze although the entire contents were deemed unsaleable due to smoke damage. A tremendous effort by buyers, suppliers, clean-up crews, truckers, and inside workers had new merchandise back in stock and flowing to stores and customers in three weeks. Thirty days to pay for it and full reimbursement by our insurance company generated significant cash, and enabled the company to reduce its bank debt substantially.

Three years later the Great Recession struck the company with a vengeance, shrinking sales 18% and slicing profits in half. The new reality required a paradigm shift from expansion and investment to retrenchment and frugality. All departments responded with courage, composure, and alacrity, particularly credit, which never compromised its standards, maintained steady collections, and produced a positive cash flow during the downturn. The company emerged trimmer, leaner, and smarter.

In a world that is in a constant state of flux, in which the future is measured in hours, days, and weeks, in which we are all seeking an emotional anchor, I can offer you one certainty. When the turmoil recedes, Schewels Home will be standing strong, poised for prosperity.