Kennedy: The Classic Biography (81 page)

The publicity accorded Secretary Goldberg’s activities in this area, making mediation proposals “on behalf of the President” in labor disputes ranging from toilets at General Motors to musicians at the Metropolitan Opera, led to still more charges of too much government intervention. Actually neither the Secretary nor the President wanted either labor or management to look to Washington for help in every dispute, and their formula was to act only when both sides in a major industry remained far apart after all other steps had been exhausted. They encouraged both sides to adopt new techniques for labor peace, more use of outside arbitrators and mediators, more machinery for constant contact and study (instead of at contract time only) and more voluntary recognition of the public interest (and the public’s impatience).

But when all else failed, the President felt an active Federal role was justified in any dispute with nationwide impact. The Metropolitan Opera was a unique exception, and when the President, after receiving wires from top opera performers such as Rise Stevens and Leontyne Price, asked Goldberg to intervene, he replied to his Secretary’s warning of criticism, “We’ll have to take that risk. Bricks and mortar are not the only assets of America.” “I was often termed in praise and criticism a very activist Secretary of Labor,” Justice Goldberg later recalled. “But really I was a Secretary of Labor for a very activist President.”

The activism worked, aided once again by some executive ingenuity and initiative, including the establishment by Executive Order of a Missile Sites Labor Commission to head off restrictive legislation, Presidential appeals by wire or in person to both labor and management representatives, mediation and arbitration by Secretaries Goldberg and Wirtz, and a variety of special boards, commissions and panels. Man-hours lost due to strikes during the Kennedy years were the lowest in any three peacetime years since the war, less than half of their previous rate. The public, to be sure, was aware of the trouble areas. But while a few strikes were making headlines, the number of peaceful settlements was making history.

This is not to say that labor relations were everywhere rosy. In the maritime trades they continued to be chaotic. In the building trades they were restless. Unreasonable demands by a New York Printers Union and by the Flight Engineers Union were publicly denounced by the President at press conferences. A Presidential commission in the latter case finally succeeded in abolishing certain inefficient work rules—sometimes called “featherbedding”—by finding that three men instead of four were adequate for the cockpit of commercial jet aircraft.

As the tide of automation replacing men with machines rolled across the country, disputes over work rules and cries of “featherbedding” threatened to drown out the usual economic issues of collective bargaining. They also threatened the Kennedy administration with its most serious disruption of labor peace and its most difficult challenge from the labor movement—the railway labor dispute.

Throughout most of Kennedy’s term, the persistent threat of a nationwide rail shutdown obscured the labor peace which elsewhere prevailed. The problem was principally one of work rules and labor utilization in an industry where rigid jurisdictional lines and job guarantees had been carried over from the prediesel age.

Five unions representing the men who operate the nation’s railroads, beset by declining employment and membership and rising internal strains, presented for nearly four years a solid front of resistance to changes in their work rules necessitated by automation, demanded by the railroads and approved in whole or in part by a series of Presidential commissions, panels and Labor Secretaries. Collective bargaining had completely failed, with each side accusing the other of intransigence. The nation’s railroads were ready and eager to put their rules changes into effect, reducing the number of firemen in diesels, changing the roles of brakemen and similar moves. The unions, in turn, were ready to shut down all rail transportation if the rules were changed.

Some said, “Let them strike.” The unions accused the administration of encouraging management resistance by making clear no strike would be allowed. Management warned that it would accept no further government postponement of its right to lay off men. Both sides moved steadily toward a final showdown and strike.

But President Kennedy would not stand idly by and let the strike occur. He doubted those who said a walkout would bring both parties to their senses in a hurry. “This is no dollar-and-cents issue they can split down the middle,” he said. “This is do or die for both sides, and they’ll stay out and stand it a lot longer than the country can stand it.” A strike of 200,000 union members would immediately idle 500,000 other railroad employees, and by its thirtieth day, his economic advisers estimated, the shutdown of affected industries would have idled some six million nonrailroad workers in the worst unemployment since 1930.

Consequently, in June of 1963, with the final “final” rules change and strike deadline approaching, the President asked both sides to try again, with a further postponement of any action. Labor Secretary Wirtz, who devoted night and day to the problem for months along with Assistant Secretary James Reynolds, made his own recommendations for a solution. As was true of each previous impartial recommendation, the railroads accepted and the brotherhoods would not.

With only one day remaining before a new deadline, the President, after consultation with the then Supreme Court Justice Arthur Goldberg on the alternatives to legislation, recommended that the parties accept arbitration by the Justice. It was a drastic move, and Chief Justice Warren, whom I reached in Athens at the World Bar Association Conference, expressed his traditional reluctance to see Court members involved in other endeavors, a reluctance which the President shared but felt obligated to shed in this emergency. The railroads accepted the proposal; the unions foolishly did not. Not many weeks later, a union leader confided to me that they had made a mistake in rejecting Goldberg.

But that dramatic proposal at least served the purpose of awakening the nation and Congress to the crisis about to engulf them. A stormy session in the Cabinet Room with Democratic Congressional leaders convinced the President that they were wholly unwilling to face up to any legislation preventing a strike and obviously unable to pass it that day. That afternoon in a private meeting with the chief railroad negotiator, only hours before the deadline, the President obtained one more postponement to enable a special subcommittee of his Labor-Management Advisory Committee to report on the issues. His hopes for a new breakthrough in the interim were based on his appointment to that subcommittee of both a responsible rail union leader not involved in the strike and a progressive railroad president suspected of being “soft” by some of his colleagues. In the days that followed, agreement seemed several times within reach, and then faded each time.

Finally, all postponements, existing procedures and personal appeals having been exhausted, the only alternative to a catastrophic strike was legislation. All the legislative choices looked bad. Some would still permit a strike and some would merely freeze the status quo. Some wanted labor punished and some wanted it rewarded. Some proposed Presidential seizure of the railroads, a solution which neither solved the work rules problem nor recognized the railroad’s cooperative attitude. One agent of the rail unions, who had channeled many a campaign contribution to members of the Senate Labor Committee, wanted that committee to arbitrate. Some management representatives wanted permanent amendments to the Railway Labor Act incorporating compulsory arbitration.

The President, hoping to avoid a precedent for undiluted compulsory arbitration in this or any other industry, decided in the end on a temporary resolution requiring the Interstate Commerce Commission to pass on employment security rules in dispute, weighing their effects on the parties and the public service. The Commission was already empowered to judge the employment security arrangements of railroad mergers. It was a logical and orderly solution which fulfilled the request of our legislative leaders that we send them no “pure” compulsory arbitration bill. But the rail unions, convinced of bias on the part of the ICC, lobbied vehemently against the proposal, and ultimately the ICC features were ripped out and a straight compulsory arbitration law passed and signed, the first in the nation’s peacetime history. No one was happy, and the rail unions blamed the President—but there was no strike, and the economy continued to grow.

THE 1962 STEEL PRICE DISPUTE

The most direct and dangerous challenge by a powerful private interest group to the President’s anti-inflation efforts—and to the President’s office and trust—came from the steel industry in 1962.

While the dramatic confrontation between John Kennedy and United States Steel reached its climax in April of that year, the President’s own concern went back more than a year earlier. In one of his first post-inaugural conversations with Secretary Goldberg, a former counsel to the Steelworkers Union, he expressed concern over the effects any steel price rise would have on his balance of payments and anti-inflation efforts.

The President’s concern was well founded. Not only was steel one of our largest industries; its prices were also a direct or indirect cost in almost every other commodity. It played so large a part in the American economy, and its products were an essential part of so many other capital and consumer products, that its price actions had long been a bellwether for all industry. “As goes steel, so goes inflation” had long been the epigram which accurately summarized this nation’s price movements.

Senator Robert Taft of Ohio, in Senate hearings of 1948, scolded the industry for raising its prices, predicting that such an increase would force up other prices and encourage further wage demands by labor. His scolding was in vain, but his forecast was unfortunately accurate. Between 1947 and 1958 steel prices more than doubled, increasing more than three times as fast as other industrial prices. Economists estimated that the largest single cause of the rise in the Wholesale Price Index prior to 1958 was inflation in steel.

Labor was partly to blame. Because of the dominant influence of a comparative handful of companies, both sides in steel labor negotiations privately assumed that management would be able to adjust its prices to pay for whatever wage bargain was reached. As a result, steel wages had been rising between 1947 and 1958 faster than productivity, and steel prices had been rising even faster than labor costs.

Since 1958 steel prices had been stable, and so had wholesale prices as a whole. But, as earlier noted, our balance of payments and gold supply were far from stable. American steel prices having risen in earlier years far more rapidly than those of our competitors overseas, this country’s share of world steel export markets had steadily declined, while foreign imports into this country more than tripled, accounting for nearly one-fourth of the rise in our payments deficit between 1957 and 1961. American machinery, machine tools, equipment and vehicles, which comprised the bulk of our durable goods exports, also depended on steel products and prices—as did our exports of most other important commodities—and it was clear to President Kennedy in 1961 that another major price rise in steel could potentially spark not only a new inflationary spiral but a disastrous payments deficit and gold outflow.

His immediate concern that year was an automatic increase in steel wages scheduled to take place on October 1 and the growing talk in the steel industry, as reported in the press, of a price increase at that time. The October 1 wage rise was the third and final increase promised under a 1960 settlement which had ended the longest steel strike in history. That settlement, under the auspices of Vice President Nixon, was accompanied by solid rumors that the companies had agreed not to increase prices until after the election. Kennedy asked Goldberg, who had helped negotiate the contract, whether the Steelworkers Union should be asked to forego the October 1 wage increase in the national interest. But this would have been a dubious precedent for the stability of collective bargaining contracts, and analysis by the Council of Economic Advisers showed that the October 1 step was within the range of rising productivity and could be absorbed without a price increase. Labor costs per ton of steel, said the CEA, in figures the industry would later dispute, were no higher than they were in 1958. The real problem, warned Secretary Goldberg, would be the 1962 negotiations for a new contract.

On September 6 the President wrote an open letter to the presidents of the twelve largest steel companies, urging that prices not be increased on October 1 or thereafter, detailing the damage higher steel prices would do to the nation’s balance of payments and price stability in general and to steel exports in particular, pointing out the excellent profit and income position of their stockholders, and reminding them that the restrictive monetary and fiscal measures required to halt any inflationary spiral they started would retard our nation’s recovery from recession and steel’s hopes for greater capacity utilization. He then made this key point:

I do not wish to minimize the urgency of preventing inflationary movements in steel wages…the steel industry has demonstrated a will to halt the price-wage spiral in steel. If the industry were now to forego a price increase, it would enter collective bargaining negotiations next spring with a record of three and a half years of price stability. It would clearly then be the turn of the labor representatives to limit wage demands to a level consistent with continued price stability. The moral position of the steel industry next spring—and its claim to the support of public opinion—will be strengthened by the exercise of price restraint now.

Some of the replies were thoughtful, some were rude, none made any promises—but prices were not raised. A week later the President wrote an old friend, President David McDonald of the Steelworkers, emphasizing the need in 1962 for a steel-labor settlement “within the limits of advances in productivity and price stability…in the interests of all of the American people.” Republicans protested that Presidents should concern themselves with “inflation,” not with price rises in particular industries. But no one misunderstood the President’s desire that the 1962 settlement neither necessitate nor lead to a price increase.