Kennedy

by Ted Sorensen

  The antitrust and Defense procurement actions were the only two tangible items on the list I drew up for Thursday’s meeting in the Cabinet Room, and, although both contributed to the general atmosphere of concern, neither provided a means of rescission. Among those present at 8:50 that morning, in addition to the President and myself, were Messrs. Robert Kennedy, Goldberg, McNamara, Hodges, Under Secretary of the Treasury Fowler, FTC Chairman Dixon, Walter Heller, Larry O’Brien and several sub-Cabinet members and assistants. Roughly the same strategy group met the following day as well.

  The only other concrete action available, it appeared, would be new legislation. The President regarded this as a difficult route, despite early Democratic support for his stand on the Hill. Remembering Truman’s ill-fated move to draft railroad strikers, and having reconsidered his position of the previous morning, he did not want to act in haste. The Steelworkers having fulfilled their obligations, he did not want to take action against the industry—on its tariffs or tax proposals, for example—that would diminish its employment. Secretary Dillon, on vacation in Florida, argued against any change for the time being in the proposed investment tax credit and depreciation reform. But if rescission could not be obtained soon, said the President, he would go to Congress. His press conference statement had not been an act.

  But the legislative alternatives, canvassed in a meeting in my office Friday morning, were not too promising. They ranged all the way from a simple resolution condemning the price rise to permanent legislation placing steel and similar price and wage decisions under various degrees of governmental supervision. A proposed ninety-day “Steel Price Emergency Act of 1962” would have temporarily rolled back prices to their April 9 level until a Presidential board of inquiry could report on what increase, if any, was proper and in the national interest; and the industry, though not bound to accept the Board’s recommendations, would be on notice that further legislation was the alternative. A proposed amendment to the existing Defense Production Act would have revived Presidential authority to stabilize, with a March, 1962, base, prices and wages either in all industries or in those producing basic commodities. Other suggestions called for a variety of Executive Orders, Presidential panels, court reviews or temporary roll-backs and controls. Most suggestions were too little, too late or too much. They either failed to assure correction of the immediate problem or went so far as to be undesirable.

  The President was left chiefly with his effort to obtain a voluntary rescission without legislation through both public and private appeals. At our Thursday morning meeting Secretary of Commerce Hodges was designated to hold a press conference in reply to one scheduled by Roger Blough that afternoon. Arrangements were made to supply Hodges with rebuttal material, and to supply a few friendly reporters at the Blough conference with pertinent questions. Other Cabinet members and agency heads were asked to hold press conferences on the impact of a steel price increase on their various concerns—defense, balance of payments, farmers, small businessmen.

  All the economists in government were to pull together a “Fact Book” or “White Paper” on steel to be widely distributed. Democratic governors were asked through the National Committee to deplore the increase and request local steel men not to join in it. Administration spokesmen were to be supplied to the various TV interview shows.

  On Capitol Hill Senator Kefauver had already welcomed the President’s call to arms and scheduled an investigation by his Anti-Trust Subcommittee. The House Anti-Trust Subcommittee, the Small Business Committees in both houses and other committees and individual members threw their weight behind the President. The Republican candidates for Senator and Governor of Pennsylvania, Congressmen Van Zandt and Scranton, wired Roger Blough that the increase was “wrong for Pennsylvania, wrong for America and wrong for the free world.” With a handful of expected exceptions, the nation’s editorial writers and columnists refused to support the price rise and most supported the President.

  Blough’s press conference statements that afternoon were defensive but mild. Hodges in his reply struck back hard against a “handful of men who said in effect that United States Steel comes first, the United States of America second.” He ridiculed Blough’s contention that price increases were justified by foreign competition, and refuted the corporation’s plea that increasing the cost of everyone else’s machinery was the only way U.S. Steel could obtain enough funds to modernize its own.

  But while the public barrage continued, the President was exploring private avenues of persuasion as well. He had early in the fight asked all those in his administration with business ties—including Hodges, Gudeman, Heller, McNamara, Gilpatric, Fowler, Dillon, Goldberg, Roosa and others—to place calls to any contacts they had among steel companies still holding the price line, among steel companies who might consider rescinding, among steel bankers and steel buyers and steel lawyers. No threats were made, no inducements were offered, but the nation’s interest in price stability and a better balance of payments was made clear, and reliable channels of communication between the government and the steel companies were established.

  There was little time, very little time. When steel prices had last been increased in 1958, all the major companies had been in line two days after the first company’s announcement. The rush of other companies to join U.S. Steel on Wednesday, both before and after the Kennedy press conference, cast gloom over the possibility we had discussed the previous night of bringing U.S. Steel back by persuading the others to hold fast. “I am hopeful,” the President said at his press conference, “that there will be those who will not participate in this parade…. But we have to wait and see on that, because they are coming in very fast.”

  Many of the hopes for this divide-and-conquer strategy focused on the Inland Steel Company of Chicago. Inland’s President, Joseph Block, was regarded as an “industry statesmen” and served on the President’s Labor-Management Advisory Committee. Block was in Japan, but a series of administration calls reached other Inland officials. Recognizing the national interest in preventing a worsening in balance of payments and inflation, and recognizing the administration’s role in helping obtain a noninflationary labor settlement, Inland agreed that April, 1964, was no time to be raising prices, and announced Friday morning that it would not. Promptly the President called another friend, Edgar Kaiser of Kaiser Steel, and that much smaller company made a similar announcement. Still another company, Colorado Fuel and Iron, announced that it would consider at most only selective price increases on some items in the future.

  A note of optimism entered our Friday meeting in the Cabinet Room. The companies announcing no price raise, along with an as yet uncertain holdout, Armco, probably had no more than 15 percent of the industry’s capacity and could, by holding out, increase it to no more than 25 percent. “But,” said Robert McNamara, on the basis of his days with Ford, “none of the others will be willing to give up any part of that additional 10 percent, and they’ll all have to come down.” We agreed that a primary effort should be made to reach Armco.

  Absent from this Friday conference was Arthur Goldberg, on his way to New York for the last of three secret meetings with U.S. Steel officials. The President, after the first blush of anger, had no animosity toward either the company or the industry which had challenged him. He sought not revenge but rescission. Those with a more oversimplified class warfare view of big business argued that the steel industry had deliberately abused him and should be the object of punishment, not negotiations. But my own belief is that the industry’s misdeeds—which resulted in the President of the United States being misled as to its intentions, informed too late of its action and made to look bad by its timing—were the product of thoughtlessness rather than malicious intent; and, while most steel executives, having held the line in 1960 after a far more expensive settlement, might have been a little less thoughtless had the occupant of the White House been Richard Nixon, 3I believe their motivations were based primarily on narrow and shortsighted
economic grounds rather than political ones.

  U.S. Steel, unlike most of those imitating its action, had in fact suffered a decline in profits, although it had maintained its usual dividends; and Roger Blough, the man whom it paid each year several times the amount the United States people paid their Chief Executive, impressed Kennedy as a sincere, if somewhat dull, individual. Some of Blough’s colleagues in the industry may well have had a “let’s show that man in the White House who’s boss” attitude, but Blough and others seemed genuinely surprised and concerned by the President’s response.

  The President, therefore, upon learning late Wednesday night through the Charlie Bartlett channel that a meeting of the minds might be possible, directed his Secretary of Labor to meet with U.S. Steel Finance Chairman Robert Tyson; and later, when Goldberg’s history as an adversary seemed to prevent the company from bending, Kennedy asked Clark Clifford, as a corporation lawyer with no job in the government, to represent him also. Earlier, two bankers friendly to Blough had been asked to point out to him the error of his ways. Wilbur Mills, whose Ways and Means chairmanship commanded respect in the industry, had wired Blough to revoke the increase. And Walter Heller had been removed by the President from a televised debate with Tyson when the latter suggested through intermediaries that it might only harden the lines.

  Tyson met separately with Goldberg and Clifford on Thursday afternoon, meeting the latter on board U.S. Steel’s private plane at the Washington airport. Neither meeting made any progress. But word reached the President that Blough wanted talks to continue, and a luncheon meeting of Goldberg, Clifford, Tyson, Blough and U.S. Steel President Worthington was scheduled for Friday.

  Goldberg—who had not, contrary to Blough’s later report, initiated the negotiations—pressed hard on both days for a rescission of the increase and for the appointment of a high-level Presidential review committee. Both Goldberg and Clifford stressed that the timing of the increase, after Blough had failed to use many opportunities to warn the President of his intention, looked like a double cross, whether it was or not. Under instruction from the President, they warned of the darkening climate between steel and government, expressed doubt that Kennedy could restrain the more fiery members of Congress intent on harsh legislation, and insisted that there was one, and only one, action acceptable to the President: a complete rescission.

  But by the time lunch was served on Friday, their arguments were largely unnecessary. The holdouts in the industry had prevailed. During the luncheon both Blough and Goldberg received telephone calls with the same message: Bethlehem Steel, the nation’s second largest producer, a rival of Inland’s in Midwest markets and of Kaiser’s on the West Coast, and a major Defense Department contractor, had rescinded its increase.

  Back in the White House the Bethlehem announcement caused jubilation. Already on his way to a review of the Atlantic Fleet off the Carolina coast, the President asked me, first, to prepare a brief statement thanking, on behalf of all consumers and businessmen, those companies who had held the line, and, second, to check with the others with whom we had worked as to whether any Presidential statement was desirable. Late that Friday afternoon, as I reported on this by telephone through Andy Hatcher at a Norfolk, Virginia, naval base, a secretary from the Press Office placed a scrap torn from the wire service ticker in front of me:

  Bulletin—New York, A.P.—United States Steel Corporation rescinded today the steel price increase it initiated Tuesday.

  Roughly seventy-two hours had passed since Roger Blough’s visit to the White House—seventy-two hours in which nearly every waking moment of the President, regardless of whether he was toasting the visiting Shah and Empress of Iran, preparing for his press conference and trip, hosting the Congressional reception or fulfilling a dozen other duties, had been spent in either meditation or action on how best to preserve his purpose and policies in this struggle. Even the Chicago Tribune could not avoid admiring such “decisiveness in the executive.” Foreign newspapers were almost unanimous in their praise of his victory, although the Communist press was hard put to explain how a government controlled by capitalist monopolists had cracked down on one of its masters. “Oh,” cried Robert Frost, “didn’t he do a good one! Didn’t he show the Irish all right?” But what he had shown primarily was not his Irish temper, not “naked power” as the Wall Street Journal called it, but the ability to mobilize and concentrate every talent and tool he possessed and could borrow to prevent a serious blow to his program, his prestige and his office. While steel 1962 was the key battle in John Kennedy’s war on inflation, his victory was less a victory against Big Steel than a victory for the American Presidency.

  BUSINESS RELATIONS

  Magnanimous in victory, as always, the President promptly turned his attention to the problems of reconciliation. He permitted no gloating by any administration spokesman and no talk of retribution. The “White Paper” was buried. The scheduled “tough-talk” press conferences by Dillon and others were canceled. The Grand Jury, having been called for legitimate and necessary purposes of investigation, not intimidation, could not be called off, but in a brief meeting in which the Attorney General and I participated, the President decided against seeking in the courts a break-up of U.S. Steel, as strongly recommended to him in some quarters. Nor would he support Kefauver’s attempt to cite for contempt steel industry witnesses unwilling to reveal cost data.

  He considered somewhat longer the creation of a Presidential panel to make voluntary recommendations on if, whether and how much steel prices deserved to be increased, but in the end rejected it as more likely to hurt than help relations. He made a special effort to be gracious to Roger Blough, toward whom he had no trace of bitterness. He invited him to the White House a few days later, and frequently thereafter, to confer on business confidence, and he also asked Blough to head a Business Council Presidential advisory committee on balance of payments problems.

  He utilized every opportunity to make clear that, while he had no regrets or apologies for his assertion of the public interest, he had no desire to intervene generally in either price or wage decisions—that free collective bargaining and competition, with consideration of the national interest, should fix wages and prices generally, as they ultimately had in this instance—that this industry and this situation were unique requiring a response that was unique, because the timing and context of Big Steel’s action had challenged not only his economic policies but his office and good faith as well—and, finally, that he harbored “no ill will against any individual, industry, corporation or segment of the American economy. When a mistake had been retracted,” he told his next press conference, “nothing is to be gained from further public recriminations.”

  Privately he made clear that he did not wish to be placed in that kind of situation very often, that he could not hope to repeat that kind of success very often, and that steel and every other industry had to be able to change its prices from time to time without creating a government crisis. (He also predicted privately that a violent press campaign and the traditional American sympathy for the underdog would soon swing the pendulum of public opinion away from his position in the steel dispute.) In his next press conference opening statement, and in an address shortly thereafter to the United States Chamber of Commerce, he stressed his concern for the steel industry’s and all industries’ need for higher profits, lower costs, faster modernization and greater markets in an expanding economy. “There can be no room on either side,” he said, “for any feelings of hostility or vindictiveness.”

  But the olive branch held out by the President to the steel industry in particular and all business in general was met in many instances with poisoned arrows. Roger Blough, without altering his politics or philosophy, was cooperative and constructive at all times. Had administration-business relations depended on him—and on men like Tom Watson, Jr. of IBM, who was an effective liaison—all would have been well. Even most Republican leaders had little to say about steel. But right-wing
columnists and commentators maintained a steady attack on the President’s action. And after a week or so of mixed feelings and constant agitation, many businessmen—who had, in private conversations with administration officials, condemned Big Steel’s increase as bad economics, bad public relations and bad judgment, and who had, inwardly, breathed a sigh of relief at the President’s preservation of the prices they paid for steel products—began a torrent of abuse against the President’s success. Any industry that raised prices, they said, was inviting the “steel treatment.”

  U.S. Steel’s announcement of rescission had cited as reasons “competitive developments today, and all other current circumstances, including the removal of a serious obstacle to proper relations between government and business.” But the very surprise and swiftness of Big Steel’s retreat convinced those who had thought it impossible that the government must have used excessive power, and new obstacles to proper relations between government and business soon followed.

  Amidst all the talk of “dictatorship,” “blind fury” and “socialism” among these business critics, three specific complaints on the steel incident stood out, all of them more superficial than substantive. The first was the FBI’s nighttime inquiry, already mentioned. The second was a doubt that the President would be equally stern with labor, forgetting that the whole crisis had been precipitated because the President had successfully insisted on the Steelworkers moderating their demands.4

  The third was a widely repeated story from Newsweek and the New York Times that the President, in our first conference after the Blough visit, had quoted his father as saying “all businessmen” were sons-of-bitches. Having been one of those whom the President addressed, I could not be clearer in my recollection that he was talking only about the steel industry. But the erroneous story became a cause célèbre in the business community, and arose at a press conference: