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Wow!
There are a number of factors that led to the HP numbers spiraling down. As S Bolt stated emmissions control was at the heart of most of it. Probably the biggest culprit was lowered compression so they'd run better on cheaper gas and also produce lower emmissions as regular leaded fuel was phased out in favor of unleaded. Fuel prices were starting to climb and some of these changes were to help increase milage. When catalytic converters appeared so did the air pump so now you've got another accessory for the engine to spin and that takes horsepower that would otherwise go to the wheels. Power steering started getting popular around this time so now you've got *two* new accessories bolted to the engine and PS pumps take some juice to spin. Most of the engines were also "detuned" meaning they were setup by the factory for low emmission numbers not high HP numbers and the cam was an early casualty of the new priorities. The carbs were also changed and you had a host of odd equipment tossed under the hood (coffee cans, EGR valves and the like) and power brakes started showing up. All these things were vacuum operated, so once again, the cam took a hit because they needed cams that would produce a lot of vacuum not HP, so HP was traded for vacuum. Somewhere in this timeframe the regulations for reporting HP were also changed. Early on the manufacturers used the HP at the flywheel as their refrence point because it gave an accurate picture of what the engine produced and it also had the benefit of being the highest number available and made for great advertising. SAE (at least I think it was SAE anyways, might have been DOT) switched from flywheel HP to net HP and started measuring it at the rear wheels. That dropped the ratings by approx 20% due to the power lost in the transmission & axle. During the 60's & 70's the factories were notorious for screwing around with HP numbers, sometimes it was to fool competators (like intentionally underrating the 396 SS Chevelles to surprise GTO owners at the redlight) and sometimes it was to ***** with the insurance companies (it costs a whole lot less to insure a 320HP car than it does a 475HP car). It wasn't any single change that did it which is why you can see a steady progression of lower & lower numbers as the changes kept coming.
