The View From 1776

This is a reprint of an essay posted on this website five years ago, on January 26, 2005.  It is timely because of the strangling influence today of labor unions that drove GM and Chrysler into bankruptcy and the public employees unions that control state budgets and are pushing big-union states like California, New York, New Jersey, and Connecticut toward bankruptcy. 

Many people, even conservatives, will be much offended by the characterization of labor unions as socialistic shock troops.  And it is true that labor unions have improved the lot of their members, bringing factory and mining employees into the economic middle class.

It’s not the improved lives of union members, however, that is the evil necessarily associated with unionism.  It’s both the fact that improvement of union member status is a transfer payment from non-union employees and consumers that impels inflation, and that government regulatory involvement is essential to the process of union extortion.

Let’s stipulate in unions’ favor, however, that absent the extortionate tactics of strikes and boycotts (and in earlier days, violence ranging from physical assault to property destruction and murder), abetted by support from politicians seeking to buy union votes, wages and working conditions of labor might have remained very dismal.  In short, there was a true dilemma: reduce individualism and initiative via collectivization of government power, or see labor’s wages ground down to rock bottom.

Several factors in the United States determined the process.  After the industrial revolution spread from England to the United States in the 1820s, there was pressure to expand markets , both domestically and internationally, because building mills and machinery required a large amount of capital funds that had to be recaptured out of growing sales and profits.  The Erie Canal, completed in 1825, connected New York City with the vast farmlands and potential market of the Midwest via the Great Lakes, and made New York City the largest and most important seaport and financial center in the United States.  Cyrus McCormick and others developed by 1834 the modern reaper and other mechanical farming equipment that vastly increased the productivity of farm labor, enabling the Midwest to become the food supplier for the growing East Coast cities.  Then the expansion of railroads, especially after the Civil War in the 1860s, facilitated rapid expansion westward toward California. 

In the huge growth of manufacturing and distribution capacity after the Civil War, industrialists, typified by steel magnate Andrew Carnegie, had one guiding principle to business success: continually to reduce unit costs; get the labor, capital equipment, and transportation costs, in Carnegie’s case, per ton of steel, to the lowest possible level.  Make manufactured goods as cheap and plentiful as possible, so that everyone could afford them.

What facilitated low wages more than anything else was the tsunami of immigration that brought more than 20 million poorly educated, non-English-speaking people here from southern and eastern Europe.  Big industry pushed for liberal immigration policies, because of the insatiable demand for labor to mine coal, produce coke and steel, build railroads, and to manufacture the products needed for the burgeoning United States.

Immigrants from Continental Europe, who by the 1870s greatly outnumbered those from the British Isles, came from a social and political environment quite unlike the individualism and constitutional order of England and the United States.  Not all of them were believers in socialism, but most of them viewed property owners as an oppressive aristocracy.  Thus was laid the ground work for later radical labor union and political activity.

In England in the 1820s the trade union movement became much more powerful than was to be the case in the United States for another century.  English trade unions became organized forces agitating for Reform acts to enlarge the voting franchise, which was not an issue here.  From earliest colonial times, more than 90 percent of all adult males were enfranchised to vote in local elections.

In the United States, the preponderance of union activity was among the skilled crafts.  Not until 1880 was there a movement (the Knights of Labor) to organize all of labor into one gigantic union.  The Knights collapsed after several unsuccessful strikes.  At about the same time the predecessor of the American Federation of Labor (AF of L) gathered force, built entirely around crafts unions.  Unlike the British trade unions or the Knights of Labor, the crafts unions had no larger social or political ambitions; they wanted only collective bargaining with individual companies over wages and hours.  There was no significant element of socialist or anarchistic ideology involved.  When early leader Samuel Gompers was asked the objectives of labor, he famously replied, “More.”

The prominent exception was the Industrial Workers of the World (I.W.W., or “wobblies"), who were political radicals intent upon destroying private ownership and imposing industrial control by workers’ councils.  They engaged in bombing, assassination, and property destruction.  These radicals captured the imagination of east coast intellectuals, California radical politicians, and New York’s Greenwich Village literati.  One of the heroic background figures in Eugene O’Neil’s celebrated play “The Iceman Cometh” is an I.W. W. anarchist.  They were the force behind propagandizing the Sacco-Vanzetti cases in Massachusetts into a world-wide socialist cause, much as the liberal-socialists did with regard to our invasion of Iraq (for details on this vastly overblown case, see TThe Decline of Western Civilization: Explanatory Notes - Part Four).

Between 1900 and the 1914 outbreak of World War I, crafts union membership roughly tripled, to more than 2.5 million.  But there was little unionization among the big manufacturing industries.

The socialization of the union movement came with the New Deal after 1933, when President Franklin Roosevelt took office.  The President had campaigned on the promise to introduce state planning, modeled upon Mussolini’s Fascist Italy and Stalin’s Soviet Union.  His “Brains Trust” of university professors provided the socialistic concepts that were enacted into new Deal legislative programs. 

The tenor of the “Brains Trust” thinking was exemplified by one of its prominent members, Rexford Guy Tugwell, a Columbia University economics professor.  In a 1932 essay, “The Principle of Planning and the Institution of Laissez Faire,” he wrote:

“...The disasters of recent years have caused us to ask again how the ancient paradox of business - conflict to produce order - can be resolved; the interest of the liberals among us in the institutions of the new Russia of the Soviets, spreading gradually among puzzled business men, has created wide popular interest in “planning” as a possible refuge from persistent insecurity...... Most of those who say so easily that this is our way out do not, I am convinced, understand that fundamental changes of attitude, new disciplines, revised legal structures, unaccustomed limitations on activity, are all necessary if we are to plan.  This amounts, in fact, to the abandonment, finally, of laissez faire.  It amounts, practically, to the abolition of “business.”.....But it would certainly be one of the characteristics of any planned economy that the few who fare so well as things are now. would be required to give up nearly all of the exclusive perquisites that they have come to consider theirs of right, and that these should be in some sense socialized..... Furthermore we shall have to progress sufficiently far in elementary realism to recognize that only the federal area, and often not even that, is large enough to be coextensive with modern industry; and that consequently the states are wholly ineffective instruments for control.

“....Planning also implies adjustment of production to consumption; and there is no way of accomplishing this except through a control of prices and of profit margins.... New industries will not just happen as the automobile industry did; they will have to be foreseen, to be argued for, to seem probably desirable features of the whole economy before they can be entered upon....”

Another prominent New Dealer was Harvard lawyer David E. Lilienthal, appointed by President Roosevelt to head the Tennessee Valley Authority (TVA).  In “TVA: Democracy on the March,” he wrote:

“This is admittedly a grave defect of planning by the businessman.  For his legitimate object, namely a profitable business, is not necessarily consistent with the object of society, that is, a prosperous and happy people..... Here is the life principle of the democratic process - an awakening in the whole people of a sense of this common moral purpose.  Not one goal, but a direction.  Not one plan, once and for all, but the conscious selection by the people of successive plans.”

Mr. Lilienthal did his best for “a prosperous and happy people.” TVA was certainly not businesslike; it never made a profit, despite a Federally-granted monopoly in its geographic area, the benefits of below-market interest rates on debt, and without the necessity facing private businesses to amortize capital costs of its huge hydroelectric dams, generators, and power-distribution lines.  It has always survived only on annual supplemental appropriations in the Federal budget.  TVA is a true Soviet planning “miracle;” a state enterprise that could never survive in the real world on its own.

But, how to get from the theoretical ideas of planners to implementation in the real world?

Politically and economically, the New Deal’s answer was mass organization of labor, which would both get out the voters for liberal-socialism, bringing traditionalist Congressmen to heel, and would be powerful enough, with Federal backing, to force big business to its financial knees.

President Roosevelt therefore made labor unions central to the New Deal.  John T. Flynn, an economist and syndicated columnist at the time, described it this way in “The Roosevelt Myth:”

“There were men around the President at this time who saw the tremendous possibilities of organizing labor as a political force.  They knew the history of the labor movement in England, which had grown so great that it completely wiped out the old Liberal party as a political force.  They believed that something like that could be done in America and they wanted the President to use his vast powers and great funds to encourage the formation of labor into a great political force.  To do this it was necessary to enlarge the field of labor organization.”

Between 1935 and 1938, workers in mass-production industries like automobile manufacturing were organized into the Congress of Industrial Organizations (CIO), of which the auto workers’ union was run by members of the Communist Party, Walter and Victor Reuther.  With the backing of the New Deal, they engaged in sit-down strikes and other tactics to shut down production entirely and to take physical control of business facilities for weeks at a time.  Their tactics were legitimated by the 1935 National Labor Relations Act, popularly known as the Wagner Act. 

This legislation made socialized control of labor into a Federal policy.  One of the New Deal’s primary aims was to restore full employment, and what better mechanism to employ than organized labor, newly equipped with Federal mandates that business bargain on union terms, with a Labor Relations Board eager to punish businesses that got out of line.

John L. Lewis, head of the coal miners union and chairman of the CIO, delivered a radio address in July, 1936, titled “Industrial Democracy in Steel.” The occasion was a series of militant strikes to organize the steel industry.  Declaring war on the steel industry and Wall Street, Lewis said,

“He is a mad man or a fool who believes that this river of human sentiment, flowing as it does from the hearts of these thirty millions, who with their dependents constitute two-thirds of the population of the United States of America, can be dammed or impounded by the erection of arbitrary barriers of restraint.  Such barriers, whether they be instrumentalities of corporate control, financial intrigue or judicial interdict, will burst asunder and inevitably destroy the pernicious forces which attempt to create them.... No greater truth, of present day significance, was ever stated by a President of the United States, than the declaration made by President Roosevelt in his speech at Franklin Field to the effect that America was really ruled by an economic dictatorship which must be eliminated before the democratic and economic welfare of all classes of our people can be fully realized.”

Whereas the Department of Labor in earlier administrations had been little more than a statistics gathering office, FDR’s Labor Secretary Frances Perkins became one of the most important and powerful counsellors in the New Deal Cabinet.  Miss Perkins was a Bostonian and a graduate of Mt. Holyoke College, as well as one of the young women trained as socialists by Jane Addams at Hull House, the Chicago settlement house.  Her first act upon becoming Secretary of Labor was to disband the committee charged with monitoring illegal aliens who were Bolshevik agents.  According to an admiring 1934 book, “The New Dealers,” one of her top priorities was to cause workers’ wages to replace dividends to shareholders.

Miss Perkins was not favorably disposed toward most of the old line labor union leaders who focused on simply higher wages and fewer hours.  She wanted far-reaching structural changes in business and society, in keeping with her faith in secular socialism as the route to earthly perfection.  She was particularly close to Sidney Hillman, head of the Amalgamated Clothing Workers union, one of the champions of mass industrial unions.

Shortly before the mass-industries CIO split from the old American Federation of Labor (AF of L) crafts union in 1936, the American Communist Party was ordered by Moscow to infiltrate the AF of L in order to work with the newly organized CIO.  The purpose was to use the CIO faction to foment political revolution.  After the split from the AF of L, the CIO sought help in organizing and recruiting workers.  They found it in the Trade Union Unity League, an arm of the American Communist Party.  Sidney Hillman was not a Communist, but he had no scruples about accepting help from the Communist Party.  President Roosevelt, though aware of the connection, seemed to be concerned only about organizing votes for the Democratic Party.

By 1939, the largest labor unions were in the CIO, which was effectively directed from the White House via Labor Secretary Frances Perkins and her buddy Sidney Hillman.

Hillman became, in effect, the voice of labor within the Roosevelt administration.  By 1944, when President Roosevelt was running for an unprecedented fourth term, he was too sick even to appear at the Democratic Party convention.  When party leaders went to his bedside to ask for guidance in selecting a vice-presidential running mate, Roosevelt informed them that the choice had to be cleared first with Sidney Hillman.

POSTSCRIPT:  By the late 1950s, when Japanese and German manufacturers began penetrating the American market with steel, TV sets, electrical appliances, automobiles, and heavy equipment, labor unions had inflated the wages and benefits of unskilled labor to such heights that American manufacturers were unable to compete.  The devastation was so complete that, by the late 1970s, the Midwestern industrial heartland had become known as “the rust bowl” because of the the abandoned factories that had become the most prominent features of the landscape.