Hostility to immigrants took many other forms as well. It fueled the spectacularly unsuccessful experiment with the prohibition of alcohol, inaugurated in January 1920 under the Constitution’s Eighteenth Amendment. Many advocates of prohibition had touted it a means of controlling unruly immigrant communities, and enforcement of the ban was now aimed disproportionately at immigrants. Immigrants were also subject to vigilante attack. Coal miners in West Frankfort, Illinois, were on strike when rumors circulated in August 1920 that Italians had committed some local bank robberies and murders. Striking miners joined nativist mobs in a three-day rampage against foreigners and drove hundreds of immigrants—including fellow strikers—out of town. Anti-immigrant sentiment passed into law at every level. An Alabama statute called for state inspection of Roman Catholic convents, said to imprison kidnapped Protestant girls. In 1913, California had barred Asian immigrants from owning land; now they were barred from leasing it. Federal immigration laws passed in 1921, 1924, and 1927 altogether excluded Asians and reduced arrivals from eastern and southern Europe to a few thousand a year. The annual number of deportations climbed from 3,600 in 1923 to 16,000 in 1929.
Employers still needed new workers, and Congress did not restrict immigration from the Americas or U.S. colonies. Filipinos on the U.S. mainland, mostly young men working in agriculture, rose in number from about 5,600 in 1920 to 45,300 in 1926. The numbers of Mexican immigrants in the border states expanded from 423,000 in 1920 to 1.2 million in 1930. But the U.S. Border Patrol, established in 1924, helped to define a new category of employee, the undocumented worker.
That most AFL members were white U.S. citizens did not shield their unions from attack. Inspired by the steel strike’s defeat, employers in industry after industry formed associations to drive out unions. Corporate publicists called the open shop “the spirit of the Constitution.” The Tampa Morning Tribune declared in August 1920, “The greatest menace today to the perpetuation of the free institutions of the United States is to be found in the destructive propaganda, aims and practices of the American Federation of Labor.” More than a hundred detective agencies meanwhile supplied companies with operatives to spy on employees, identify activists for dismissal, start fights at union meetings, beat up strikers—anything to disrupt union organizing.
Unions fought back by every means available, including gigantic strikes by textile workers, railroad workers, and coal miners in 1922. But the hopes of 1919 had evaporated. The 1920 elections brought Republicans into office. A short, sharp depression in 1921–22 threw close to a fifth of the nation’s labor force out of work. Strike after strike went down to defeat, and unions were crushed or crippled. By 1923, total union membership had dropped to about 3.6 million. Unions had disintegrated in meatpacking and textiles, the United Mine Workers and Machinists had suffered major losses, and the AFL had lost a quarter of its members.
Labor’s postwar changes included the passing of the three men who had long dominated the movement—Sam Gompers, Eugene Debs, and Bill Haywood. Gompers went first. Though already sick, he went to Mexico City in 1924 for the Fourth Congress of the Pan-American Federation of Labor (PAFL). Originally proposed to improve relations among labor federations in the Americas, the PAFL had actually started (with secret funding from the U.S. government) when Gompers wanted to enlist labor support for ending Mexico’s neutrality in the Great War. Its first meeting, in November 1918, came too late for that, and the PAFL did little to redress Latin American grievances against the U.S. government or North American unions. In 1923, Mexico’s labor federation asked for help defending the national government against a rebellion. Gompers denounced the rebels as “red” imposters and directed AFL affiliates to watch for arms shipments to the insurgents. The rebellion crushed, the Fourth Congress welcomed Gompers in triumph. But his journey had destroyed what remained of his health. Carried back to San Antonio, he died on December 13, 1924.
Debs died on October 20, 1926. He had started his ten-year sentence for sedition in April 1919; running as “Prisoner 9653,” he won over 900,000 votes in the presidential election of 1920. Pardoned on Christmas Day 1921, he could not revive the Socialist Party. It lost labor influence virtually everywhere except New York garment unions, and its membership dropped from less than 27,000 in 1920 to under 8,000 in 1928. Already sick with diabetes, Bill Haywood jumped bail after his conviction for sedition and fled to the Soviet Union, where he died on May 18, 1928. The IWW became little more than a shadow, losing members to mechanization in mining, timber and longshore work, and splitting in 1924 in a fight over central authority versus local autonomy.
All three men lived long enough to see the organizations to which they had given so much of their lives battered or broken entirely. Gompers had come to trust the government that Debs hoped to take over and Haywood planned to smash. The government turned on them all—not all at once or with equal fury, but in the end without much differentiation. Corporations dominated the political landscape. Just as the military protected their interests abroad, lawmakers, courts, and police protected them at home. As American historian W. E. B. Du Bois observed in 1924, “Modern imperialism and modern industrialism are one and the same system.”
* “International” unions had Canadian locals.
CHAPTER
7
AMERICA, INC.
The postwar depression gave way to a spectacular economic boom, one of the biggest in U.S. history. The boom was based on industrial production and business profits. From 1924 to 1929, auto and steel production rose by nearly 50 percent; chemicals and electrical equipment by even more. Total pretax corporate profits increased by more than half, from $7.6 billion in 1924 to $11.7 billion in 1929. Profits financed more mergers and consolidations. More than 300,000 industrial corporations operated in 1929: the largest 200—giants like U.S. Steel, Anaconda Copper, General Motors, and Westinghouse Electric—made more profits than all the rest combined. Capital itself was concentrated: more than 4,000 bank mergers and acquisitions took place between 1923 and 1929. Speculators did very well. Average stock prices nearly tripled between 1922 and 1929. By 1929, there were 486 investment corporations—stocks and bonds their only assets—and one new one started (on the average) every day.
Many workers shared in this prosperity. Average wages rose modestly but steadily during the boom years, while the cost of food and other necessities remained relatively constant. Consumer credit magnified the purchasing power of personal incomes. People of even moderate means could buy goods from clothing to radios to vacuum cleaners to automobiles, all on the installment plan. Homes too: the best-paid workers found mortgages easier to get. More and more families could afford to keep their children in school past the eighth grade.
For the labor movement, however, times were lean. Corporations elaborated their campaign to undermine unionism, with the continuing collaboration of politicians, judges, and police. During the 1920s, state and federal courts issued 921 labor injunctions, about the same number used from 1877 to 1919. Police routinely arrested strikers—7,500 during a 1926 garment workers’ strike in New York City; 2,400 during a 1928 textile strike in New Bedford, Massachusetts. In major cities, special “Red Squad” police units surveilled and harassed labor radicals, identifying activists for employer blacklists and aliens for deportation. Fewer and smaller strikes failed more often—almost always, in fact. Most leaders of the AFL and railroad brotherhoods slid into a downright paralyzing conservatism, renouncing militancy and giving up on efforts to organize the unorganized. In spring 1929, William Green, Samuel Gompers’s successor as AFL president, declared that the “appalling indifference of the workers themselves” ruled out the unionization of mass production.
But even as Green wrote these words, strikes for higher pay, shorter hours, and union recognition were starting to sweep through southern textile mills. And such uprisings, which occurred in other settings too, were not the only cracks in the regime of corporate America during the boom years. Throughout those years, work
ers engaged in many forms of subtle resistance to corporate power as well as sporadic outbreaks of open defiance. If William Green failed to take these rumblings seriously, he was scarcely alone. The labor movement’s decline combined with rising prosperity to persuade many observers that worker militancy was on its deathbed. As 1929 drew to a close, however, the stock market went bust and prosperity gave way to a depression that would be the worst the U.S. had ever seen. By 1933—just a decade after the spectacular boom had begun—a third of the nation was destitute and, though unions were weaker than ever, the rumblings of discontent in working-class communities had grown too loud for anyone to ignore.
THE ROARING TWENTIES
The 1920s are usually portrayed as a light-hearted time when flappers, bootleggers, and entertainers set the trends in American life. But big businessmen were the era’s biggest celebrities. Reporters interviewed them, photographers pursued them, newspapers and magazines featured their thoughts on every topic from business and national and international politics to sports and culture. Economist Stuart Chase later observed of the boom years that the business magnate had become “the dictator of our destinies,” replacing “the statesman, the priest, the philosopher, as the creator of standards of ethics and behavior,” and reigning as “the final authority on the conduct of American society.”
In the workplace the employer ruled absolutely, his rights protected by courts and enforced by police or private operatives. But as immigration restrictions tightened over the decade, employers spent more on efficiency experts than on detectives. More and more firms adopted scientific management, not so much to break craft control of work but to get more work out of each employee. Likewise labor-saving machinery. Mechanization was better than immigrant labor: “Machinery ‘stays put,’” declared one business journal in 1923. “It does not decide to go out on strike . . . go to Europe . . . or take a job in the next town.” Technology and workflow design got assembly lines moving four times faster in 1928 than in 1918. Workers’ average output in manufacturing rose by more than a fifth from 1923 to 1929;by more than a quarter in mining. The Aetna Life Insurance Company’s scientific management of clerical work raised the output of typists and billing clerks by as much as 50 percent.
The drive for productivity prompted new attention to employee welfare programs, designed, in the words of an American Telephone and Telegraph executive, “to help our workers get their worries out of their minds so they can get on the job ‘rarin’ to go.’” Employers invested in workplace safety, lighting, and ventilation. They financed recreational and educational programs and medical services for employees (and sometimes their families too). They arranged mortgage loans and stock options, group insurance against illness, accident, and death, and retirement pensions (provided by more than 350 companies nationwide in 1929). There were limits. Only the largest and most prosperous companies operated extensive welfare plans, and the most generous benefits were the least common—a survey of large firms found only a fifth offering stock options or pensions. Benefits were not equally distributed within the workforce. The better the pay, the better the benefits.
Such corporate benevolence was predicated on corporate control, typically described in benevolent terms. Charles Schwab—then president of Bethlehem Steel—told a gathering of steel executives that the industry’s workers counted on them to provide “welfare, progress and happiness.” A U.S. Rubber spokesman put it more bluntly: “Management must lead.”
Nevertheless, some show of democracy could be expedient. Perhaps the most innovative feature of the corporate labor policies in the 1920s was the Employee Representation Plan (ERP), first developed by the Colorado Fuel & Iron Company (CFI) after the defeat of the 1913–14 strike. The War Labor Board endorsed the concept—by summer 1919, there were 225 ERPs; by early 1922 about 725. By the end of the decade, ERPs covered more than 1.5 million workers, most of them employees of the industrial giants.
ERPs represented a new management philosophy, the “citizenship theory of labor relations.” In contrast to unions, they allowed workers to help manage their work without fighting their employers. The joint labor-management committees established under ERPs had very limited jurisdictions. They discussed employee welfare programs, developed schemes for improving efficiency and eliminating waste, adjudicated minor disputes, grievances, and complaints about unfair dismissals. And not much more. An immigrant coal miner who participated in CFI’s ERP later said: “Under union, miners have educated men who no work for the company, but give all their time to take up grievances. Pretty hard for a man who works for the company to take up grievances because he afraid that if he make the boss mad, maybe he be fired, or given a bad place.” Schwab himself said, “I will not permit myself to be put in a position of having labor dictate to management.”
The concern for employee welfare and the respect for employee rights expressed in welfare capitalism supposedly demonstrated that, as one business magazine proclaimed in 1929, “the interests of the employer and employee are mutual and at bottom identical.” Just in case this persuasion failed, many employers also required workers to sign contracts pledging they did not belong to any union, would not join a union, and would neither strike nor encourage others to strike. By the end of the decade, over 1.25 million people worked under these “yellow dog contracts,” and dozens of court injunctions directed union organizers to avoid even talking to them.
Corporate clout in government reached such heights in the 1920s that it was hard to tell where business left off and government began. The Republican Party held the White House and dominated Capitol Hill throughout the decade. All three presidents were great fans of business. Warren Harding (elected 1920, died in office 1923) presided over an administration famous for graft, corruption, and fraudulent sales of government property. Businessmen appreciated his strong support for protective tariffs, and opposition to government regulation of business. Calvin Coolidge inherited the office from Harding and was elected in his own right in 1924, promising to lower taxes and reduce the federal budget. Congress cut income taxes in half in 1926, and sharply reduced estate taxes; businessmen loved it. President Herbert Hoover had worked as a mining engineer in China, Africa, and Latin America, and served both Harding and Coolidge as Secretary of Commerce before his election in 1928. He promoted trade associations and helped U.S. companies expand their overseas markets. Andrew Mellon, whose family was worth about $450 million, was Secretary of the Treasury in all three administrations.
The Democrats were just as friendly to business, but less successful. In 1924, they nominated John Davis, chief attorney for the Morgan banking companies, for President. Their 1928 candidate—New York governor Alfred Smith—picked investor John J. Raskob to chair his campaign and head the Democratic National Committee. Raskob moved the party headquarters to the General Motors building in New York City, where it operated, in the words of one visitor, with the “efficiency which distinguishes the loftier interiors of American business enterprise.”
Government took care of business in many ways. The Supreme Court voided minimum wage laws as unconstitutional, since “there can be no difference between the case of selling labor and the case of selling goods.” The Justice Department gave up applying antitrust laws to corporations. The Bureau of Indian Affairs—especially under Harding’s Interior Secretary Albert Fall—helped loot Native Americans. After the Midwest Refining Company found oil in the San Juan district of the Navajo reservation in 1921, the BIA appointed a Navajo Business Council to sign oil leases. Its legality was quite dubious, so the next year the Bureau held elections for a new Tribal Council, which signed the leases, while the investigation of the scandal involving Teapot Dome (a Navy oil reserve field opened to the Mammoth Oil Company) exposed Fall’s regular receipt of cash gifts from oil companies. In the Oklahoma “Oilpatch,” state courts adjudicated disputes over mineral rights on Indian Territory allotments. When a local banker became court-appointed guardian of Choctaw orphan Ledcie Stechi, he received the in
come from leasing her twenty acres of oil fields, while she died of malnutrition.
U.S. foreign policy likewise promoted U.S. business. The State Department helped broker foreign loans to increase demand for U.S. exports. After U.S. banks loaned $110 million to the German government, Ford, General Motors, General Electric, Standard Oil, Dow Chemical, the Du Pont gunpowder company, and other U.S. corporations set up German operations. State Department support for Wall Street loans to foreign governments persuaded many American bondholders that the U.S. backed the foreign bonds, which helped to sell the bonds. That turned out not to be true, but U.S. troops did stand ready to protect American investments overseas. From 1922, Marines landed in China again and again. The occupation of the Dominican Republic ended in 1924, but Haiti remained under U.S. control until 1934. In 1924 and 1925, U.S. soldiers went to Honduras to protect American property. In 1925, U.S. troops put down a general strike in Panama. In 1926, U.S. troops returned to Nicaragua, beginning a new series of interventions that continued until 1933.
In short, every level of government operated on the principle that whatever benefitted corporations would benefit Americans one and all. As President Coolidge put it, “The business of America is business.”
Business values permeated society, spread by mass media and education. Colleges and universities expanded courses in business administration, accounting, marketing, and related subjects. High schools beefed up vocational curricula to match corporate labor requirements. Corporate handouts were used in elementary school courses on science, personal hygiene, and social studies.
From the Folks Who Brought You the Weekend Page 23