by Hardy Green
Altogether, the Sparrows Point formula seemed to work even without offering home ownership, which seemed to be a key to worker contentment in Vandergrift. When pent-up wartime demands and grinding, dangerous work shifts combined to explode in the form of a national 1919 steel strike, only five hundred Sparrows Point men walked out.16
During the 1910s, the steel industry seemed to arrive at a formula for avoiding industrial strife. The corporations were not above coal-industry-like repression, albeit of a less violent nature: Many workers were required to sign “yellow-dog” contracts vowing not to join unions, and suspected violators were discharged and blacklisted. Companies maintained elaborate and efficient departments for spying on employees. But equally important, the steel towns themselves, along with other corporate welfare measures, seemed to reconcile workers to lives of nearly ceaseless, low-paid toil.
Steelworkers likely viewed home ownership or even low rents, as in Sparrows Point or the Carnegie-built dwellings at Munhall, as a pay subsidy. Moreover, the central place of the factories in the towns, and of the guiding and beneficent hand of the plant managers, probably shaped residents’ sensibilities. Company largesse was evident: Over a twelve-year period ending in 1924, U.S. Steel spent more than $22 million on playgrounds, schools, gardens, clubs, and a visiting-nurse program. Town sanitation facilities were another big expense. U.S. Steel funded Boy Scout troops and sports teams, and Bethlehem Steel, a ninety-piece, touring military band. Such efforts built a sense of pride and company loyalty among workers and a positive attitude toward these corporations among the public at large.17
There were other corporate welfare measures, too. In 1903, U.S. Steel began a stock-purchase plan that allowed model employees to buy shares on installment at below-market prices, and more than 26,000 employees immediately took part. Republic Steel, Cambria, and Youngstown Sheet and Tube copied the program. By 1921, Bethlehem Steel workers owned company stock worth $40 million. Under Schwab, that company particularly favored paying monthly bonuses tied to productivity increases—“a cash premium on personal efficacy and endeavor,” in his words. These bonuses went to managers and skilled workers only, however. As in most regards, the semiskilled and particularly the unskilled, who got a flat 37 cents per hour at Bethlehem, were neglected. 18
Skilled workers were also made aware that there were clear avenues for promotion and that they were ever being prepared to ascend the job ladder. The unskilled received little in the way of pay or perks, as most seemed content with what they got. Before World War I, the immigrant ranks included a great many unmarried men who believed they were in the United States only temporarily, just long enough to gather sufficient funds to buy property back in their home countries. They expected to endure a period of harsh sacrifice, doing unpleasant and even dangerous work, and their greatest complaint came when they felt there was not sufficient work to go around.
Perhaps the biggest problem for the steel companies before World War I came from the period’s influential social critics and reformers. The 1909 Pittsburgh Survey, and a series of articles for American Magazine summarizing the survey findings, exposed the industry’s relentlessly long work hours, speed-up, low pay, and repressive attitude that “stifles initiative and destroys healthy citizenship.” The U.S. Senate’s labor committee denounced U.S. Steel’s “brutal system of industrial slavery,” while the New York World ran a series of articles on steel-town conditions, which the newspaper called “a crime against humanity.”
Judge Gary, for one, was contrite—at least a little bit. He responded by enhancing the corporation’s social welfare programs. The company initiated a new “boost for safety” program in the mills, adopting a variety of effective safety devices and practices along with a generous compensation plan for the injured. But despite the fact that much of the criticism was focused on the steel industry’s long workdays, U.S. Steel clung to the two-shift, seven-day system.
At one of the regular, lavish dinners that industry executives held for the purpose of praising themselves (and fixing prices), Gary announced: “The man who has the intelligence and the success and the capital to employ labor has placed upon himself voluntarily a responsibility with reference to his men. We have the advantage of them in education, in experience, in wealth, in many ways, and we must make it absolutely certain under all circumstances that we treat them right.” Such a responsibility, it almost goes without saying, did not extend to permitting unionism. There, too, a matter of principle was at stake, the steel companies argued before a congressional investigation of the steel industry: No man’s right to work should be abridged by a requirement that he join any organization. 19
During the run-up to the war, maintaining wages rather than cutting them had become a consensus policy within the industry, even during financial downswings. The question of unionism seemed largely moot: Outside of U.S. Steel, all steel mills were nonunion after 1908, and Gary’s corporation adopted a policy of starving the union out, regularly idling mills where the union had any membership. The war, however, changed all that. In Gary, 11,896 men were employed in steelmaking by 1917. Although wages increased by 21 percent by 1916, growing demand for steel first from Europe and then from the U.S. government led profits to double, then to triple. A persistent scarcity of labor and of living space—Gary experienced a shortfall of 4,000 housing units, according to its Daily Tribune—led to worker restiveness and even a revival of the Amalgamated Association. By war’s end, that organization had a membership of 15,000, up from 6,500 in 1914 .20
Organized labor seemed to have an ally in the Wilson administration. Its National War Labor Board—which primarily sought labor peace to guarantee industrial productivity—asserted that workers had a right to organize in unions without interference. It ordered Bethlehem Steel to stop blocking the union and to organize shop committees. As a halfway measure and in what they hoped the government would regard as a show of good faith, the companies threw ever more energy into organizing employee-representation plans, notably at Midvale, Bethlehem, Youngstown Sheet and Tube, Inland Steel, and more. U.S. Steel held back from employee-representation plans, saying that its wage policies and welfare spending, which had tripled during the war, should be sufficient to satisfy employees. Meanwhile, companies stepped up their patriotic-propaganda efforts: Illinois Steel asked its workers to sign a “pledge of patriotism” vowing to oppose disruptive actions; flag days and patriotic signs were common; in Gary, there were dramatic patriotic parades through the streets, one featuring 25,000 marchers and delegations from Greek, Romanian, Hungarian, Serb, Croat, and Russian societies.21
By 1919, with the war over, the workers were ready to reap the reward for their patriotic efforts. The American Federation of Labor’s National Committee for Organizing Iron and Steel Workers demanded improved wages, an eight-hour day and a six-day week, abolition of the twenty-four-hour shift, and collective bargaining. It set a strike date of September 22.
Reporting on how steelmakers were gearing up for the strike in the Pittsburgh area, the New York World wrote: “It is as though preparations were made for actual war.” The sheriff of Allegheny County mobilized 5,000 deputies on the eve of the strike, and 3,000 more were sworn in at McKeesport, Pennsylvania. Publicly, steel company executives said they expected few workers to back the walkout. However, by the union’s count, 365,000 men, or perhaps half of U.S. steelworkers and many more than the companies expected, responded, shutting down about half of the industry.
Across the land, police broke up workers’ meetings and beat and jailed strikers, and the steelmakers brought in strikebreakers, including some 30,000 southern blacks, to run the mills.
In Gary, patriotism—that last refuge of a scoundrel—showed its usefulness again. With 85 percent of the city’s 18,000 steelworkers honoring the strike, there was calm at first, then clashes with black strikebreakers on October 4, prompting intervention by 1,500 federal troops under General Leonard Wood. The military declared martial law, prohibited all outdoor meetin
gs, and began arresting pickets and strike leaders, putting the miscreants to work sweeping the city’s streets. Wood—who incidentally as a U.S. presidential candidate enjoyed the backing of Judge Gary as well as Morgan partner and U.S. Steel board member George W. Perkins—ardently fell to his work, repeatedly identifying the union with radicalism. “Gary is a hotbed of anarchy,” he announced. The strike, he found, had been instigated by a “dangerous and extremely active group of IWW and the Red anarchist element.” Wood was joined in his scare campaign by the Loyal American League, a business-backed group that worked to sway native-born workers away from the “Hunky” strike, and the Tribune, which ran banner headlines declaring RED PLOT UNCOVERED and REDS’ BOMBS MADE HERE. By November, most Gary strikers had returned to work.
The strike served as a catalyst for a national “red scare,” with the U.S. Justice Department under Attorney General A. Mitchell Palmer raiding political meetings and arresting nearly 10,000 alleged radicals across the country. The government deported dozens of recent immigrants. Meanwhile, the steel strike lagged under the combined corporate-government attack, and the union called off the walkout in January.22
With that conflagration over, both the company and the city of Gary looked ahead to the 1920s, which they saw as fat times. In reality, the two were headed in different directions: The city, already a flawed effort, would by the end of the decade enter a period of decline; the steel industry would revive after the Great Depression and emerge in a period of unmatched productivity and prosperity.
As the original city infrastructure no longer sufficed, Gary authorities called for a raft of new building, including new streets and sanitation facilities and a new civic center. The city went so far as to contract for a professional city plan that would allow improved transportation, street layouts, and zoning—but the move came to a halt when U.S. Steel, the railroads, and real estate interests showed a distinct lack of interest. Even so, a building boom brought new skyscrapers, office buildings, hotels, and apartment buildings. The large Gary State Bank Building was erected at the corner of Broadway and Fifth Avenue; not far away were the twin Gary City Hall and County buildings.
In addition to being the home of the Gary Works, the city was becoming a commercial center for the region. By the end of the 1920s, there were 1,300 retail stores employing 4,000 workers. The presence of 1,800 hotel rooms facilitated convention business, and thirteen movie houses provided distraction from the world of toil.23
For steelworkers, the long workday gradually shortened despite the company’s best efforts to fight off change. The U.S. Labor Department reported in 1920 that the twelve-hour shift was still as prevalent as it had been in 1910, while 25 percent of blast-furnace, Bessemer, and open-hearth workers were enduring seven-day weeks. Christian reformers at the Interchurch World Movement issued a voluminous report criticizing the long hours. U.S. Steel responded by circulating a pamphlet written by Reverend E. Victor Bigelow of Andover, Massachusetts, calling demands to shorten the workday “the hobo doctrine . . . [that] glorifies leisure and denounces toil.” In 1921, U.S. Steel stockholder Charles M. Cabot of Boston financed an engineering report that considered the impact of switching to a three-shift system of eight-hour days. It found that although the change would raise costs, it would also result in a better finished product. U.S. President Warren G. Harding endorsed the Cabot report and called steel men to the White House to discuss the matter. But once again Judge Gary and U.S. Steel were unmoved: The corporation issued its own study showing that 60,000 more workers would be needed to make the change, and besides, workers didn’t really want shorter days if that meant lower wages. U.S. Steel’s seeming callousness and disrespect for a presidential request roused a further storm of public protest—and adoption by 1923 of a three-shift day across the steel industry.24
Gary’s foreign-born workers still smarted from the harsh verbal attacks they’d received during the 1919 strike. Even those who had fought for the Allies or marched in the World War I-era patriotic parades had been branded as radicals and Bolsheviks. By 1920, immigrants represented 60 percent of the city’s population of 55,000, with the largest groups being Polish, Slovaks, Serbs, Croatians, Italians, Greeks, Russians, and Hungarians. Some returned to Europe and warned their compatriots against coming to America. Then in 1924 Congress passed a law restricting further European immigration. The company turned to African-American émigrés from the Deep South—more than 2,000 were employed in Gary by 1920, and by 1930 they represented 18 percent of the population, the largest percentage of any northern industrial city. The Gary Works recruited workers from Mexico as well: Mexicans held 19 percent of semi-skilled jobs by 1928. Throughout the 1920s, steel production increased in Gary, where there were more than 24,000 industrial workers by 1930.
Meanwhile, the old problems continued: In 1922, the Indiana state housing department called conditions in the city’s South Side among the worst in the state, citing overcrowding in the area’s shacks and unsanitary conditions. The following year, a U.S. Labor Department report also decried South Side conditions. Gary began condemning some of the worst slums, but end-of-the-decade prosperity meant a further rise in population and even worse congestion. African Americans settled in what became known as the Central District—the old Patch and a new area created by draining the Little Calumet River. Segregated, slum housing predominated. Mexicans settled nearby in some of the worst housing in town; most of these newcomers were young, unmarried men employed as laborers at the steelworks. 25
The corporation, which had built 1,250 housing units and advanced $4 million in building loans to employees before World War I, withdrew from construction altogether. In the 1920s, private interests built 14,000 new residential units.
Parts of Gary were becoming increasingly dangerous. In 1925, the city experienced thirty-two murders, a rate that encouraged comparisons to Al Capone’s Chicago. Businesses complained that it was impossible to get theft insurance for properties along Broadway south of the Wabash tracks.
The company’s executives seemed to take as a given the town’s uneven development—pockets of prosperity surrounded by larger pockets of poverty. Through the end of the 1920s, the corporation wielded considerable power in the city. Its power base was a gentlemen’s organization known as the Commercial Club, and among the many company officials holding posts in the city government was mill assistant superintendent Ralph Rowley, who between 1910 and 1935 served continuously on the city council, was council president, and controlled the city budget after 1913. Land Co. chief Horace Norton, who was also head of the town’s chamber of commerce, was a top leader of the city’s Republican Party, which remained dominant even though its policies hardly favored the Catholics, immigrants, and blacks who constituted half of the population. In 1925, the victorious mayoral candidate Floyd Williams was backed by both the corporation and another increasingly powerful force, the Ku Klux Klan.
Judge Gary also took a keen interest in city affairs and during his occasional visits had many words of advice for Gary’s political and economic leaders. He would tour the city with his wife and bask in the way his name was featured in many institutions’ titles, including the imposing new Gary National Bank Building. In 1927, though, Gary died, a victim of the heart troubles that had plagued him for some years.26
In 1932, Myron Taylor, a tall, stern-faced, and equally formal gentleman of patrician ancestry, took over as chairman and CEO of U.S. Steel after serving for several years as part of a ruling triumvirate that included J. P. Morgan and financier George F. Baker. Although Gary and Taylor were both lawyers, their business careers differed greatly, mirroring the changing times. Judge Gary had risen as a skilled merger-and-acquisitions man, but Taylor’s specialty was in helping streamline and rationalize operations at long-established companies, including textile firms in Lowell and Newburyport, Massachusetts. With the onset of the Great Depression, Taylor brought in younger managers who encouraged innovation in finance, production, and employee relations.
/> In 1934, U.S. Steel’s Chicago-area plants, including the Gary Works, turned out as much steel as was generated in all of Germany, the world’s number-two steelmaking country. But behind that startling statistic lay an unhappy reality: Many U.S. Steel plants were obsolete and expensive to run. The company’s managerial approach was antique, as centralized as the Vatican, and practically oblivious to such essential matters as cost accounting and technical innovation. Taylor responded by closing some obsolete facilities and forcing a merger of the corporation’s two big subsidiaries, Carnegie Steel and Illinois Steel (which included the Gary Works), forming Carnegie-Illinois, but he also pioneered a change in employee relations. At first this involved developing a company union, an organization Judge Gary had shown no interest in. But following the 1933 National Industrial Recovery Act with its pro-labor Section 7(a), Taylor brought in a leading exponent of employee-representation plans, Arthur H. Young of the Rockefeller-subsidized Industrial Relations Counselors Inc., to produce such a plan for U.S. Steel. “Word has been passed around that company unions will suffice in meeting the requirements of 7a,” reported industry trade journal Steel. Questioned by a U.S. Senate committee, Young strongly advocated for the U.S. Steel program: “The works council plan is a supplement to the Golden Rule as given to us by the Carpenter of Nazareth,” he declared.
The company-union approach backfired. Under John L. Lewis, the new industrial-union umbrella organization, the Congress of Industrial Organizations, placed a priority on steelworker unionization, turning the task over to its Steel Worker Organizing Committee (SWOC). And SWOC adopted the crafty approach of encouraging militants to take over employee-representation plans. Many aggressive union leaders emerged within the supposedly tame groups, including at the Gary Works. By the end of 1936, it was evident that the company unions were either dysfunctional or surprisingly confrontational.