American Experiment (304 page)

As GM goes, so goes steel—at least Big Steel. Eager to crack U.S. Steel, inheritor of Carnegie’s policy of low wages and Frick’s anti-unionism, Lewis had established the Steel Workers Organizing Committee, CIO, under his longtime protégé and lieutenant Philip Murray. A warm and compassionate man who, as Murray Kempton wrote, touched “the love and not the fears of men,” Murray had a steely determination easily aroused to anger when his fundamental faith in unionism and industrial democracy was challenged. Working closely with ethnic and black leaders, claiming Roosevelt’s blessing with the message “The President Wants
You
to Join the Union” (he didn’t know whether they were referring to him or to President Lewis, FDR told reporters archly), Murray exploited above all the presence of a multitude of company unions throughout U.S. Steel. He would turn these “kept unions” on their heads by co-opting rebels in restless company unions and converting them into rank-and-file leaders under his own direction.

By January 1937 the SWOC claimed over 100,000 members, U.S. Steel was witnessing sit-down strikes spreading through other mass-production industries, and its chief, Myron Taylor, was reassessing his company’s whole labor strategy. His chance encounter with Lewis in Washington’s Mayflower Hotel led to a series of secret negotiations in the capital and an agreement that startled the nation. In what has been called the most important single document in the history of the American labor movement, the corporation agreed to bargain with SWOC (though only for the workers it represented), gave a 10 percent wage boost across the board, and granted the forty-hour week with time and a half for overtime. A million Carnegie and Frick workers, someone observed, might have stirred in their early graves.

Little Steel was a far different story. Led by the redoubtable Tom Girdler of Republic Steel, the heads of the smaller, independent companies not only were fiercely determined to resist unionization but had a strategy of resistance—the “Mohawk Valley formula.” Brand the union leaders as extremists, the formula prescribed. Mobilize the community by threatening to shut down the plant. Build up an anti-union armed force of police, vigilantes, and special deputies. Set up a puppet association of “loyal” employees to stage a conspicuous back-to-work movement. Have a citizens’ committee demand reopening of the plant. Resume operations to any extent possible, announce that the plant is in full operation, and denounce the remaining dissidents as thwarters of the sacred right to work.

Given such a strategy of resistance, and given a militant union flushed with victories over Big Steel, clashes and riots were inevitable. They culminated in South Chicago on Memorial Day 1937, when marchers seeking to mass-picket Republic Steel confronted police marshaled two blocks from the gate. Someone threw a tree limb at the police, a cop fired his revolver into the air, some in the crowd threw rocks—and then the police fired point-blank into the massed men, women, and children, killing ten and wounding at least eighty. Three policemen were hospitalized. By the summer of 1937 Bethlehem, Republic, and other Little Steel companies were still holding out against the SWOC. The Mohawk Valley formula was working.

Behind the great waves of unionization in auto and steel were not only pent-up demands and militant leaders but a vast expansion of production in the mid-thirties. As in the past, mass industrialization buoyed mass organization, as though capitalism and unionism American style required each other. As sales of passenger cars almost doubled from 1933 and 1934 to 1936 and 1937, the number of auto production workers rose by about a half from 1933 to 1937. Iron and steel output doubled in the same period, employment there also rising by about a half. But what rose in the great waves would drop in the troughs. In midsummer 1937 tremors of recession began spreading through the economy. The stock market slid and then a jarring series of sell orders tumbled prices to new lows.

Suddenly it seemed like 1929 all over again. People talked of “Black Tuesday”—October 19, 1937—when prices cascaded, in Henry Morgenthau’s words, “amid an hysteria resembling a mob in a theater fire.” And for a time the Roosevelt Administration reacted much in the manner of the Hoover government eight years before. The crash looked to Berle “like 1903—a rich man’s panic.” Her statisticians expected an early business upturn, Secretary Perkins reported. The President, suspecting that big business was trying to drive the market down to hurt the Administration, was cautiously hopeful. He did not yet realize that it was his own sharp cutback in federal spending that, far more than any business action, had precipitated the slump. A flurry of White House meetings resulted in little action. Then began a series of sickening drops that continued through the fall and winter as the “Roosevelt recession” deepened, with unemployment, which had been cut from 12.8 million in 1933 to 7.7 million in 1937, rising to 10.4 million in 1938.

“Everything will work out all right if we just sit tight and keep quiet,” the President had told his cabinet three weeks before Black Tuesday. He asked Commerce Secretary Roper to stop “giving out so many Hooverish statements.” But sitting tight worked no better for FDR than it had for Hoover. His cabinet members brought him more bad news. “We are headed right into another depression,” Morgenthau told him. “The question is, Mr. President—what are we going to do about it?”

The President did not know what to do about it. Berle found him “ill, tired and obviously confused.” Morgenthau found him worried about fascism abroad and the possibility that it would come to America in the form of big businessmen organizing to put their own man into the White House.
And at a cabinet meeting early in November, FDR betrayed his irritation and anxiety.

“Of course, I am glad to hear from the various members of the Cabinet their sad story of how bad business conditions are,” Roosevelt began cuttingly, as Morgenthau recalled in his diary. “Last night when I went to bed, alongside of my bed was the darnedest letter you ever saw from Henry.” The President’s anger was rising.

“I am sick and tired of being told by the Cabinet, by Henry and by everybody else for the last two weeks what’s the matter with the country and nobody suggests what I should do.”

Morgenthau spoke up. “You can do something about public utilities. You can do something about the railroads. You could do something about housing. Above all, you must do something to reassure business.”

“You want me to turn on the old record.”

What business wanted to know, the secretary said, was “Are we headed toward state Socialism or are we going to continue on a capitalistic basis?”

“I have told them that again and again.”

“All right, Mr. President, tell them for the fifteenth time. That’s what they want to know.”

Wallace, for his part, thought the President should do something about labor, while Farley urged him to tell the country that he was going to reduce the cost of government.

“All right, Jim; I will turn on the old record.”

More desperately than ever the President reached out for advice, but the advice he received was still sharply conflicting. Morgenthau used the slump to urge the President almost daily to retrench even further and balance the budget. But while he and Farley wanted to conciliate business, Ickes, Perkins, and sometimes Wallace sought an expansion of New Deal social programs. Staff people were even more divided. Many in the Treasury backed Morgenthau, but throughout the Administration economists of Keynesian persuasion were pointing to the recession as evidence that the Administration had spent too little, not too much. The most powerful advocates of spending were Marriner Eccles at the Federal Reserve and Harry Hopkins, but Hopkins was ill during the critical days. A brilliant assortment of economists and lawyers scattered through the government—Herman Oliphant in Treasury, Mordecai Ezekiel in Agriculture, Lauchlin Currie under Eccles, Leon Henderson under Hopkins—fought their daily battles with memos and mimeograph machines.

The opposition was busy too. Early in December the National Association of Manufacturers, meeting at the Waldorf-Astoria Hotel in New York, adopted resolutions that to New Dealers indicated big business had
learned nothing and forgotten nothing. Manufacturing was “shackled by restrictive legislation, burdened with excessive taxes, continually in doubt as to the nature and permanency of government policies, crippled by labor difficulties and handicapped by inability to secure funds from investors.” When factories prospered, America prospered. The recommendations were no fresher than the plaints: Reduce taxes on business. Stop laws that reduced incentive to invest funds. Repeal laws that incited labor controversies. Produce more wealth rather than redistribute it. Above all, bolster “business confidence.”

It was a dismal December, with Roosevelt still beset and uncertain, little clusters of New Dealers meeting secretly for feverish discussion, and the recession worsening. Differences over solutions remained acute in both cabinet and staffs. The old conflict between central planners and trustbusters broke out again. Keynesians pressed for much larger spending, but they were divided over proposals for modest pump priming, heavy compensatory spending, and an attack on “secular stagnation” that would call for massive controls, planning, and long-run spending. Morgenthau stuck to his budget-balancing pitch like a man obsessed. Some advisers wanted a comprehensive approach; others would concentrate on rejuvenating specific industries, such as railroads and housing.

Amidst it all the President fretted and pondered. Never had people seen him reach out so far for advice and counsel. During early 1938 businessmen streamed into the White House on the President’s invitation to press their ideas on him. The Administration sponsored in Washington a conference of small businessmen that became so turbulent that police had to be called. The Business Advisory Council, through its spokesman, Averell Harriman, asked the President to provide leadership around which they could rally. A hundred thousand Detroiters turned out for a relief demonstration; three thousand youth delegates convened in Washington to demand a “youth act” that would provide part-time jobs.

“There is in Chicago,” Grace Abbott wrote Molly Dewson at the Democratic National Committee, “and in a very large part of the country, more suffering than there was in 1933 when the President came into office. It is a common sight to see children salvaging food from garbage cans.”

Bitterly Roosevelt attacked his critics who came up with no constructive proposals of their own. At a press conference with editors of trade papers he complained of people whose advice was in the form of “Yes, but—.” “They will say, ‘Oh, yes, we are in favor of flood control, but we do not like this way of doing it.’ Or, ‘We do not like this party doing it, or this President doing it.’ ” They were all for this or that but not if it cost money.

It was a set of conditions, not a theoretical breakthrough, that finally
moved the President out of his faineancy. In March the stock market’s halting decline suddenly turned into a panicky drop; unemployment and relief rolls were still growing. The economic decline since September had become the sharpest the nation had ever known. And a critical set of congressional elections would be coming in November. On a train trip back from Georgia in the spring Roosevelt looked out the window at the nondescript men and women who—five years after his inauguration—were still waiting for him along the track to wave and smile. He turned to an aide. “
They
understand what we’re trying to do.” He knew that now he must act for them.

Once FDR decided, there was no looking back. In mid-April 1938 he asked Congress for a three-billion-dollar spending bill. Over a billion dollars would go to the WPA; smaller sums would go to the CCC, the National Youth Administration, and the Farm Security Administration. He did not forsake the Brandeisians; a bit later he agreed with congressional leaders on a full-scale investigation of concentrated economic power through what would become the Temporary National Economic Committee. An anguished Morgenthau threatened to resign when he saw his last chance at budget-balancing go glimmering. His boss was tough, warning him that he would go down through history as having quit under fire. Morgenthau stayed, reflecting that the ties that bound him and the President together transcended even this issue.

In his message to Congress the President stressed that the situation called for an act of collective will by the nation’s leadership, under the “discipline of democracy.” In his fireside chat he repeated this point. “Our capacity is limited only by our ability to work together. What is needed is the will.” Obviously the President had summoned that will, after being almost immobilized by the shock of the steep and sudden slump. Once again he might mobilize the will of the people. But could he summon the political leadership and followership of the nation?

The answer lay in a tangle of leadership elements—the President’s own morale and determination, the attitudes of key members of Congress who were both his followers and yet leaders in their own right—and in the nation’s voters, who would exert their own leadership in the elections of 1938 and 1940. The answer lay also in the linkages between President and people—most notably in the organized interests of the nation and in the political parties. And by the summer of 1938 all these elements lay in a state of discord and disarray.

Angered by opposition in Congress, embittered by the savage attacks of
business leaders, frustrated by the intractability of the economic situation, Roosevelt was more determined than ever to protect the New Deal from conservative counterattacks and if possible to extend it. While he was as willing as ever to horse-trade with Congress, he was now taking the most militant and radical stance of his entire public career; more than ever before, he would use the stratagems of the fox but only to augment the power of the lion. Repeatedly during 1937 and early 1938 he tried to rally his forces in Congress and country.

Roosevelt’s inept handling of the Court bill, and above all his defeat on the issue, had made him seem vulnerable within a few months of his great mandate of 1936. While many members of Congress had sympathized with FDR’s objectives, in the light of the reactionary Supreme Court decisions of 1935 and 1936, they had been appalled by his methods. Above all, in this sixth year of the New Deal, and after sixteen months of the Court fight and other grueling conflicts, they were tired of “must bills,” tired of crises, tired of being called “rubber-stamp yes-men,” tired of bustling, pushing young zealots from the White House. Their attitudes could be summed up in the anguished phone call of one congressman to the White House in April 1938: “For God’s sake, don’t send us any more controversial legislation!” An index to the congressional mind of 1937-38 was the fate of the President’s bill to reorganize the executive branch.