The great influenza – the story of the greatest modern pandemic and its lessons for 2020 and beyond


Masked Red Cross Motor Corps women hold stretchers near ambulances for transport of severe influenza cases.

The world now faces another major pandemic. While the death toll in the current pandemic is still but a fraction of the greatest modern pandemic – the 1918 Spanish flu – there are valuable lessons from a century ago that can put our current predicament in perspective. In this article, from the economics team at fixed income specialist Payden & Rygel, these lessons are explored.

“If anything kills over 10 million people in the next few decades, it’s most likely to be a highly infectious virus, rather than a war. Not missiles, but microbes[1].”

These prescient words were spoken in 2015 by none other than Bill Gates, the co-founder of Microsoft. In a TED Talk, Gates lamented humanity’s misplaced focus. While we have invested heavily in nuclear deterrents, he opined, we have invested very little to stop a pandemic. He concluded, “We’re not ready for the next epidemic[2].”

Gates was right. A pandemic has now enveloped the world, roiled financial markets, brought the global economy to its knees – and caught almost everyone unprepared. SARS- CoV-2, the virus that causes COVID-19, has already surpassed the 2009 H1N1 pandemic in terms of case count and global deaths (see Figure 1). The current pandemic also could rival the 1957 and 1968 episodes.



Rare events pose particular challenges for investors. Are they just random occurrences? How do we put current events into the proper perspective? Our response is that history teaches those who inquire with an open mind. We provide a few lessons from the Great Influenza, its magnitude, its origins, its uncontrolled spread, and some of its consequences. Pandemics are not random events.

The shadow of 1918

Although accounts vary, an estimated one-third of the world’s population, or roughly 500 million people, were infected during the 1918-1920 ‘Great Influenza’ pandemic. The pandemic was not your regular seasonal flu – the illness was far more severe than the average seasonal flu variety. Total death estimates range from 50 million to 100 million of the global population at the time[3]. A comparable death toll today implies around 240-480 million deaths – simply  staggering and unfathomable. So, the first lesson is that the tragedy now unfolding is not the Great Influenza (or the Black Death for that matter).

DID YOU KNOW? The Spanish Flu Misnomer

According to the author John Barry, Spain is unfairly pinned with the Spanish flu name due to happenstance. Spain had few cases but was a neutral nation in World War I, one of the few countries with a free press. Whereas other countries suppressed influenza stories so as not to stoke fears, Spanish papers reported on the disease, and the Spanish King, Alfonso XIII, fell ill. For this piece, we adopt Barry’s nomenclature and refer to the episode as the Great Influenza[4].

In addition to the death toll, there was the speed with which the destruction was inflicted on the population in 1918. The Great Influenza killed swiftly, often within hours of infection. One army report from 1918 described it as “fulminating pneumonia, with wet haemorrhagic lungs” that proved “fatal in 24 to 48 hours.”

An estimated two-thirds of total deaths occurred in just 24 weeks in 1918, “and more than half of those deaths occurred” in less than three months, from mid-September to early December. In sum, the Great Influenza took more lives than the ongoing, decades-long AIDS epidemic—in a manner of mere weeks.

Frightening? It gets worse. Typically, the flu befalls the very old and the very weak. With the Great Influenza, young adults, aged 20-40 years, fared the worst, accounting for nearly half of all deaths. Furthermore, an estimated 47% of all deaths in the United States in 1918-1919—that includes all deaths from everything from cancer to accidents—were due to the influenza.

However, the worst part of all is that, amid the pandemic, scientists didn’t even know the enemy at hand.

“No one could find the guilty bug, no one could see it, no one could name it or comprehend it, because virology itself had scarcely begun to exist. The virus responsible, which turned out to be a variant of H1N1, wasn’t precisely identified until …2005![5]” Humanity was in the dark.

Viruses: wait, what are they?

Viruses have been around on Earth for billions of years, meaning the viruses on Earth today are formidable foes as ‘only the fittest have survived’. We tend to imagine large predators as our primary competitors for survival, such as the lions of the Serengeti, but tiny terrors lurk everywhere. You are undoubtedly surrounded by plenty of viruses right now – don’t touch your face!

For millennia, humans were surrounded by viruses, yet ignorant of them. Why? First, viruses were not likely an issue for humans until modern cities allowed for dense enough populations to sustain a virus and promote its spread to plenty of nearby victims. For most of human history, our hunter-gatherer brethren roamed about; only very recently (~2,000 years) have we humans confined ourselves to dense cities[6].

Once in close contact, humans, and viruses have been at war. History is punctuated by repeated, devastating epidemics. In China alone, records show that “between 37 A.D. and 1718  A.D.,  234 outbreaks were severe enough to count as plagues—that’s one  every  seven  years.[7]”  Figure 1 shows the most devastating tolls in recorded global history.

Secondly, the direct human-to-human spread was not always observed, so scientists remained in the dark about transmission. Malaria, for example, spreads from person-to-person via mosquito bites, not direct human contact.

Thirdly, humankind did not yet have the scientific tools to discover viruses. Viruses are small. Much smaller than the average bacteria. The Roman writer Varro (116-26 BC) speculated about tiny invisible germs, but scientists didn’t see a virus under a microscope until the 1930s.

We aren’t in Kansas anymore

Aside from not being able to see the enemy, humanity in 1918 was also blind to its origins. Again, speculation abounds, and the science remains unsettled, but one plausible theory is that the Great Influenza began, not in Spain, despite the moniker, but in Kansas.

Yes, Kansas. Haskell, Kansas.

What was so special about Haskell? Well, for starters, a man named Loring Miner. A doctor, he saw many patients in early 1918 suffering from  a worrisome illness and alerted the US Public Health Service on his findings of “influenza of the severe type.” His reports were the only influenza mentions from anywhere in the world at that early point in the outbreak.

Haskell was also close to a military camp: Camp Funston, Kansas. The frigid winter of 1917-1918 forced recruits to huddle together in makeshift tents and overcrowded barracks, awaiting dispatch to Europe and World War I. As people with influenza can transmit the virus before symptoms appear, close quarters provide ripe conditions for a viral outbreak.

Influenza’s high infectivity preceded symptoms, a characteristic that probably helped account for the scale of worldwide misery and death during the Great Influenza.

Haskell added one  other vital  ingredient to the story: animals (it was an agricultural area). Scientists now use the term ‘spillover’ to designate the moment a pathogen jumps from a host or reservoir species—say, birds or pigs—where the genetic backdrop is similar enough to humans, and the virus has a chance to survive and replicate, to humans. AIDS and influenza are examples of these “zoonoses” – and, indeed, most viruses we know of infect humans through such an avenue. The jump was possibly made in Haskell.

All that was needed was a spark

If Kansas was indeed the epicentre, the virus wasted little time in spreading across the world. It was the rapid build-up of US involvement in World War I that provided the perfect kindling for a pandemic. Public health took a backseat to politics (shocking, we know!). President Wilson made no statements on the influenza, in public or, it seems, in private, and the federal government focused on mobilising for war.

With the benefit of hindsight, by the fall of 1918, little more than a month remained in the conflict. However, the US was determined to ramp up troops for the war. From Funston, troops went to other army bases and then off to France.

Influenza cases sprung up in the following weeks in Georgia, and then twenty-four of the thirty- six largest army camps experienced an influenza outbreak that spring.

Further, thirty of the fifty largest cities in the country, most of them adjacent to military facilities, also suffered an April spike in “excess mortality” from influenza, most of which were not realised at the time.

The virus then ripped around the globe, from Portugal to Greece, back to England, Scotland, and Wales, then Calcutta, Madras, and Rangoon after Bombay, and on to Karachi. Shanghai and Sydney followed. It’s worth noting that the global spread occurred in an era long before the hyperconnected travel and trade networks that now define the global economy. The mere presence of a mail carrier seemed to be enough to spread the virus city-by-city.

The bad news continued, though. Many are already talking about a “second wave” of the coronavirus in 2020. The Great Influenza hibernated over the summer of 1918 and returned with a vengeance in the fall when it did most of its killing.

In the words of the Australian virologist Frank Macfarlane Burnet, “It is convenient to follow the story of influenza at this period mainly in regard to the army experiences in America and Europe[8].” On September 29, a group of 9,000 soldiers left for France on the USS Leviathan—2,000 died en route.

With nurses and doctors pressed into war service, cities and states left mostly to their own devices employed a wide array of strategies to arrest the virus. Some cities enforced strict social distancing measures. Others, such as Philadelphia, were much more lenient. In an analysis of 1914 and 1919 Census data, researchers at the New York Federal Reserve discovered that certain cities that implemented stricter interventions (like social distancing) saw lower mortality rates and better employment outcomes during the pandemic (see Figure 2). Such findings present hope for our present predicament, in which we see a global, synchronised use of social distancing measures to stem the virus.



Better off today

Can a brief tour of history relieve any of our present anxiety? The lesson of 1918 is that humanity was largely in the dark. Ignorant of the virus, its origins, its piggyback spread on the waves of war, humanity was left extremely vulnerable. Medical capacity was overrun quickly, and scientists didn’t even catch their first glimpse at a virus for more than a decade.

And while there is much we still do not know about SARS-CoV-2, we do know the world is a much better place in 2020. Indeed, perhaps one of the reasons we are so startled by the virus is because we have become accustomed to dying of other things: heart disease, cancer, or just old age. But that’s a modern luxury. In 1918, life expectancy at birth did not exceed 50 in the US and Europe, with far worse prospects for the rest of the globe.

Microbes, not missiles, had caused most deaths throughout recorded human history. We are the lucky ones who have lately gained the upper hand.

Seen in that light, we can’t treat the current pandemic as an isolated, random event, chalking it up to bad luck. Pandemics do not just happen. Humanity has battled viruses for centuries—most of the time, with devastating results due to overwhelming ignorance. While denser populations build up a resistance to familiar viruses, they are vulnerable to ‘novel’  ones. Given enough time and proximity to nature, novel viruses will make the leap into humans again. Aside from the ever-present threat of the influenza virus, we have now experienced three coronavirus outbreaks in the last 20 years: SARS- CoV-1 in 2003–2004, MERS in 2015, and now SARS-CoV-2.



Our best chance today and in the future is to push progress forward relentlessly. How do we measure medical progress? One way is to gauge the information sharing among scientists collaborating to develop treatments and vaccines in real-time. A surge in science ‘preprints’ in March and April 2020 (see Figure 3) shows researchers are rushing to share information with the world, with the growth rate in preprints more than doubling in the last two months[9]. The efforts could yield results in a shorter timespan than ever before.

What does this mean for your clients?

There a several positive client outcomes from this tour of history. As well as the medical positives, there are the economic.

Firstly, as figure two shows, those cities that locked down the hardest had the fastest rebound. Given the tough stance taken in Australia (particularly Victoria), this suggests that the economy will return to a position of strength.

Secondly, despite the fall in the value of most superannuation accounts earlier in the pandemic, most ended the financial year 2020 flat, unexpectedly regaining lost ground.

Thirdly, there are a number of sectors experiencing strong growth in this environment:

  • Technology stocks as people move to online working and meeting environments
  • Biotech and medical research, as the race for a COVID-19 vaccine continues
  • Healthcare stocks
  • Retail stocks focused on home office and technology.

Finally, although dividend income will be reduced this year, APRA’s change in advice to banks allowing them to pay reduced dividends rather than no dividends is a positive indicator.

Bill Gates, who opened our story with a warning, closes it with a hint of optimism. “Although eighteen months [to a vaccine] might sound like a long time, this would be the fastest scientists have created a new vaccine.[10]” Perhaps never before in history has humanity been so united in finding a solution.

Let’s count ourselves fortunate that the current pandemic pales in comparison to the Great Influenza—but let’s also use this opportunity to learn how to prevent the next one—because it’s inevitable.

[1] “The New Outbreak? We’re Not Ready.” Bill Gates. TedTalk. March 2015.
[2] An epidemic is defined by Merriam-Webster as “an outbreak of disease that spreads quickly and affects many individuals at the  same  time.” A  pandemic is a type of epidemic (one with greater range and coverage), an outbreak of a disease that occurs over a wide geographic area and affects an exceptionally high proportion of the population.
[3] 1918 Influenza: the Mother of All Pandemics, Jeffery K. Taubenberger and David M. Morens, Emerging Infectious Diseases. 2006 Jan; 12(1): 15–22.
[4] John Barry. The Great Influenza: The Story of the Greatest Pandemic In History. New York: Penguin Books, 2005.
[5] David Quammen. Spillover: Animal Infections and the Next Human Pandemic. W.W. Norton & Company, October 2012.
[6] See for example our Point of View, The Story of World History Through The Most Populous Cities, Winter 2016, page 10,
[7] David P. Clark. Germs, Genes, & Civilization. How Epidemics Shaped Who We Are Today. FT Press: Upper Saddle River, New Jersey, 2010.=11
[8] Barry 120.
[9] Kai Kupferschmidt, ‘A completely new culture of doing research.’ Coronavirus outbreak changes how scientists communicate, Science, February 26, 2020.[10] Bill Gates, What you need to know about the COVID-19 vaccine, Gates Notes, April 30, 2020.
The information included in this article is provided for informational purposes only. The information contained in this article reflects, as of the date of publication, the current opinion of Payden & Rygel and is subject to change without notice. Sources for the material contained in this article are deemed reliable but cannot be guaranteed. We do not represent that this information is accurate and complete, and it should not be relied upon as such. Any opinions expressed in this material reflect our judgment at this date, are subject to change and should not be relied upon as the basis of your investment decisions. All reasonable care has been taken in producing the information set out in this article however subsequent changes in circumstances may occur at any time and may impact on the accuracy of the information. Neither Payden & Rygel, GSFM Pty Ltd, their related bodies nor associates gives any warranty nor makes any representation nor accepts responsibility for the accuracy or completeness of the information contained in this article. ©2020 Payden & Rygel.

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