Iron Empires

by Michael Hiltzik

  * * *

  Centerpiece of the company town of Pullman, Illinois, the Arcade building housed the community’s library, bank, newspaper, and retail shops, all controlled by the Pullman company. To the left is the greenstone church: George Pullman intended it to host all denominations, but local congregations judged it too expensive to lease and useless for practical church purposes.

  * * *

  What was especially oppressive about life behind the scenes in Pullman was that everything in town came with a price tag posted by the company, with the exception of the public school. (Schoolbooks, however, had to be purchased by the parents.) The school board was an elected body, but the candidates invariably were officers of the Pullman Palace Car Company or other affiliates that bore his name. That was true also of the town clerk and treasurer and officers of the community’s water and gas company.

  The Pullman’s Company’s authority reached everywhere. Observed a visiting reporter from Pittsburgh, “the corporation trims your lawn and attends to your trees; the corporation sweeps your street, and sends a man around to pick up every cigar stump, every bit of paper, every straw or leaf; . . . the corporation does practically everything but sweep your room and make your bed, and the corporation expects you to enjoy it and hold your tongue.” The company employed a physician to treat injured employees free of charge; but the doctor in place at the time of the strike, John McLean, was also expected to obtain a statement from every patient of the cause of the injury, which invariably shifted blame away from the company and on to the individual. It was McLean’s habit to urge upon injured workers the wisdom of accepting any settlement offered by the company instead of placing their fate in the hands of lawyers. If a lawsuit followed, McLean was expected to testify for the company.

  “This is a corporation made and a corporation governed town, and is utterly un-American in its tendencies,” Carwardine wrote in his book. Pullman’s dominance fostered not only corporate arrogance, but indifference. The company rotated its own executives through municipal offices, where “each new superior appears to have his own friends, whom he appoints to desirable positions,” Ely reported. “Favoritism and nepotism, out of place as they are in an ideal society, are oft-repeated and apparently well-substantiated charges . . . The power of Bismarck in Germany is utterly insignificant when compared with the power of the ruling authority of the Pullman Palace Car Company in Pullman . . . Every man, woman, and child in the town is completely at its mercy, and it can be avoided only by emigration.” That was more easily said than done, however, for it was widely understood that the town’s residents gained preference for promotion or for reemployment after layoffs—indeed, during slack periods, workers living outside the town limits were required to move into Pullman if they wished to keep their jobs. (The exceptions were Pullman’s sleeping car porters, who were all African Americans and often former slaves and were not welcome in his company town. The job of porter was the only employment open to black workers in the Pullman company.)

  This situation might have been marginally tolerable, had the company not expected a minimum return of 6 percent a year on all its investments in the community, including the houses it built and the utilities it provided. The company’s position was that its residences were superior to those available in neighboring suburbs such as Kensington, and cheaper too. Hundreds of apartments were available for rent in Pullman for six to nine dollars per month, plus two dollars for cooking gas; the company claimed it was supplying water to its tenants at a loss, based on what it was paying to the local public waterworks. The company was earning only 3.82 percent on its investment in the residences—“a manifestly inadequate return,” George Pullman told a government commission empaneled by President Grover Cleveland in July 1894 to investigate the strike’s causes. Pullman spoke as though the accommodations he provided to his workers for a fee were tantamount to philanthropy.

  But Pullman’s figures were highly dubious. The commission determined that rents in neighboring communities were typically 20 to 25 percent lower than equivalent lodgings in Pullman—and during the post-1893 depression, as much as 50 percent less. The company was reselling water to its residents not at a loss but at five times its cost, and gas at a threefold gain. Pullman’s relentless rent-seeking from his own employees would soon prove to be the flashpoint for a historic conflagration.

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  GEORGE PULLMAN HAD had reason for concern about the effect of the Panic of 1893 and the ensuing depression on his business. Orders for new sleeping cars had evaporated, leaving only the Pullman repair shops busy. For efficiency’s sake, the company closed its Detroit maintenance shops, idling about eight hundred workers, and shifted all remaining repair activity to Pullman.

  But the company also instituted wage cuts that piled almost all the burden of lost business on the rank and file. By April 1894, Pullman employees were earning 30 percent less per hour on average than they earned in May 1893. On May 7, 1894, a committee of forty-six workers from the Pullman plant met with Vice President Thomas H. Wickes to request that wages be restored to the levels of June 1893. Wickes was in the process of explaining the “absolute necessity” of the wage cuts when Pullman himself strode into the room. He informed the workers that restoring the old wage scale would be “a most unfortunate thing for the men,” because no one would place an order for cars at prices based on the wages of mid-1893. Under those conditions “the works would necessarily close down and the great majority of the employees be put in idleness, a contingency I am using my best effort to avoid.”

  But wages were not the workers’ only concern. There was also the matter of rents, which the company flatly refused to lower. Pullman maintained that the portion of the company that managed the residential properties was entirely independent from the car shops—“The renting of the dwellings and the employment of workmen at Pullman are in no way tied together,” he told the disbelieving delegation—adding that in any case the company was losing money on rent.

  Employees were under no illusion that there was any distinction between Pullman the employer and Pullman the landlord. On payday, anyone in a Pullman house or tenement received two checks—one for the rent (payable in advance), and one for anything left over. At the bank, they were required to sign the rent check over to the company on the spot.

  Thomas Heathcote, a sleeping car builder who would become one of the labor leaders at Pullman, would later tell of having seen family men weeping at the pay window “because they only got 3 or 4 cents after paying their rent . . . I have seen them stand by the window and cry for money enough to enable them to keep their families; I have been insulted at that window time and time again by the clerks when I tried to get money enough to support my family, even after working every day and overtime.”

  The employees were painfully aware that no company executives, officers, or forepersons had suffered any reduction in pay, nor had the shareholders suffered a reduction in their annual dividend of 8 percent. From July 1893 through July 1894, wages had fallen from $7.2 million to $4.5 million, but the dividends paid had actually risen, to $2.9 million from $2.5 million.

  The railroad industry’s habit of imposing the costs of economic downturns largely on its workforce had inspired a surge in labor activism dating back to the mid-1880s. But it also exposed the vacuum of leadership among workers: The traditional railroad brotherhoods were not designed to directly challenge management prerogatives, and by 1890 the Knights of Labor were already in eclipse. The desire to counter the policies of the tycoons was hamstrung by the absence of instruments to do so.

  The way was open for a new approach, and a new leader. He would appear in the person of Eugene Victor Debs. The Pullman Strike would catapult him into worldwide fame.

  A native of Terre Haute, Indiana, the thirty-eight-year-old Debs had worked as a railroad painter and fireman—that is, a stoker of locomotive boilers—before moving into the public sphere and labor leadership, first as a Democratic state legislator in Indiana,
and then as leader of the Brotherhood of Locomotive Firemen, one of the old-style mutual-aid organizations. Having witnessed the disaster of the Knights of Labor’s strike against the Gould system at close hand, he drew from it some useful lessons about organization and strategy when he founded the American Railway Union in June 1893.

  In personality and outlook, Debs was the polar opposite of Terence Powderly, the Knights’ bookish grand master workman. He was a spellbinding orator and charismatic leader of working men; throughout his career he braved unstinting vituperation from railroad executives and conservative politicians while commanding the admiration of his members and such luminaries as Clarence Darrow, who would serve Debs as defense counsel during his trial on conspiracy charges arising from the Pullman Strike. “There may have lived some time, somewhere, a kindlier, gentler, more generous man than Eugene V. Debs,” Darrow would write in his memoirs, “but I have never known him. Nor have I ever read or heard of another.”

  Debs was not opposed in principle to strikes or other job actions aimed at securing recognition for his organization and its members. But the Great Southwest strike had shown him the hazards of staging a walkout before the workers and the union were ready. His ARU aimed to avoid an error that had weakened the Knights from the start—the division of railroad workers into individual brotherhoods that destroyed any sense of cohesiveness, making the differences among the workers more important than their similarities, obscuring their common interests and handing railroad managements a wedge with which to set worker against worker. The ARU’s goal was to unite the nation’s 850,000 railroad workers into a single great brotherhood so they could negotiate as one for wages, work conditions, and hours. (The cause was unfortunately qualified, for unlike the Knights, the ARU’s membership was restricted to whites—a policy enacted by ARU convention delegates ostensibly against the wishes of Debs.) By the beginning of 1894 the ARU already had 150,000 members. That was enough to ignite genuine panic among railroad presidents who perceived that, at last, a force may have emerged that could challenge their unassailable power over the workplace. The panic would soon spread to their friends in politics.

  To Debs, however, a large-scale strike seemed premature. That was so even though in April 1894, less than a year after its founding, the ARU had staged a strike on James J. Hill’s Great Northern Railway over a wage cut, managing to bring its freight service to a complete halt and—somewhat to its surprise—forcing the pugnacious Hill to agree to arbitration. It was a clear union victory, but in Debs’s reckoning the time was not yet ripe for turning it into a broader campaign.

  Debs sensed the same overconfidence that had forced the Knights into their disastrous strike against Jay Gould. At a meeting of union officers in late April, he recounted, “we concluded that many of our members might possibly be flushed with the triumph of that strike [i.e., on the Great Northern], and if we were not extremely careful we would be precipitated into other disturbances.” Debs was anxious “to avoid any strike if it was possible to do so.” So he was perturbed when, days later, on May 11, he received word that the Pullman workers, acting one step ahead of a rumored lockout by Pullman, had walked off the job.

  * * *

  “THE GREAT TROUBLE with the Chicago strike,” opined Carroll D. Wright, the chairman of the presidential commission, “was that it was a pig-headed affair all around.”

  Wright’s judgment was unfair, in that the outstanding pigheadedness belonged to the railroad bosses. Their instrument was a body known as the General Managers’ Association, which had been formed in 1886 to coordinate the operations of the twenty-four railroads serving Chicago. The GMA initially confined itself to organizing switching and loading schedules, and livestock weighing and transfers. But it presently assumed the role of establishing regionwide wage rates, the better to suppress pay demands by one railroad’s workers that might force raises upon the others.

  The railroads tried to conceal their collusion but it was no secret to the ARU, which could not help noticing that wage cuts were always applied in concert by railroads across the region. Since Chicago rates influenced those of all connecting lines, moreover, the cuts rapidly propagated nationwide. By late 1893, with labor discontent spreading, the GMA became the agency through which the railroads colluded on lockouts of workers and the recruitment of strikebreakers. “Today there is no more air-tight railroad organization on the face of the earth,” the unabashedly pro-business Chicago Herald declared admiringly in May 1893, a year before the Pullman Strike was launched. “All the roads have bound themselves to act exactly as if the strike were on their own line.”

  The labor leaders saw other intolerable conditions clearly. A few days after the strike began, Debs arrived in Pullman for a personal inspection tour. Reluctant as he had been to countenance a job action, he determined that in this case, the employees were “fully justified . . . in the course they had taken.” Their wages and expenses were “so adjusted that every dollar the employees earned found its way back into the Pullman coffers” and “they were daily getting deeper into the debt of the Pullman company. . . . I made up my mind, as president of the American Railway Union, of which these employees were members, to do everything in my power that was within law and within justice to right the wrongs of those employees.”

  For the first few weeks of the Pullman Strike, or until the beginning of June, it remained possible to reach a settlement and keep it from spreading. The strikers sought chiefly to arbitrate their grievances, which in addition to the pay cuts and the rent charges included the firing of three of their organizers on the eve of the walkout. George Pullman, however, seemed intent on exacerbating the situation. The moment the strike was declared, he shut his shops and laid off six hundred employees who were not themselves strikers, thus spreading pain across his company town and the larger community. He flatly refused to arbitrate; a delegation from the Civic Federation of Chicago, composed of eminent citizens from “all grades of respectable society,” tried twice to bring Pullman to the table. Both times his reply was that there was “nothing to arbitrate.” He scorned the ARU as illegitimate, refusing to meet with anyone representing the union or to consider appeals from anyone retaining membership. Debs, still hoping to keep the walkout from expanding, leaned over backwards to allow the company to arbitrate on its own terms, even waiving the right to name any member of the arbitration panel, “virtually permitting them to select three out of five representatives,” he recounted later. (The other two would be selected by the other arbitrators.) Pullman rejected the overture.

  Pullman’s stubbornness—his pigheadedness, so to speak—pushed the situation toward a nationwide crisis. The tinderbox was the first national convention of the ARU, which opened in Chicago on June 9, barely a month before the strike began, with four hundred delegates in attendance. The sessions were open to the press and public. On June 15, the delegates heard from a procession of Pullman workers, including Jennie Curtiss, who repeated what she had told Carwardine and pleaded for the ARU’s support. The convention appointed a committee to meet with Wickes, the Pullman vice president, but he refused to make any concessions. On June 21, the convention voted to give the company five days to agree to arbitrate. If not, ARU members nationwide would refuse to operate any locomotive hauling a Pullman sleeping car. There was not a single dissenting vote. With no response having arrived from the company, the boycott began on June 26.

  The stage was now set for the entry of the US government into the conflict. But its intercession would be far from evenhanded.

  No one could have been surprised that in his second term President Grover Cleveland would favor the railroads, for his cabinet could have passed for any railroad company’s board of directors. Cleveland himself had made a fortune in the four-year interregnum between his terms by practicing law in partnership with Francis Lynde Stetson, who was Pierpont Morgan’s attorney. Secretary of State Walter Q. Gresham, in his pre-cabinet post as a federal judge, had issued a string of pro-railroad rulings in l
abor disputes dating back to 1877. Secretary of War Daniel S. Lamont had been an active investor in urban railways on Wall Street. Postmaster General Wilson S. Bissell had been an executive, director, and counsel of at least three railroads operating out of Buffalo, ties that he refused to sever upon joining the cabinet.

  The outstanding railroad man in the cabinet was Attorney General Richard Olney, who had spent a decade as a director and counsel of the Boston & Maine and almost as long with the Chicago, Burlington, and Quincy. The latter kept Olney on its payroll for $10,000 a year even after he assumed his duties as attorney general, which paid only $8,000.

  As if this was not enough to stack the deck against the strikers, popular sentiment was starting to turn against labor. The public was growing weary of worker unrest, as the myriad strikes following the Panic of 1893 evolved from small, localized disputes into regional work stoppages and threatened to spread even further. In April 1894 an Ohio reformer named Jacob Coxey assembled a band of one hundred unemployed men to march on Washington. His call reverberated across the country, and soon platoons of jobless men, including many laid-off railway workers, were heading east. They demanded free transport on the rails and, when refused, commandeered trains and turned them toward the capital. At first they won considerable public support. But as demonstrations yielded to violence, the fellow feeling of unemployed onlookers began to dissipate. (The “army,” which reached an estimated five hundred men, dissipated after Coxey was arrested and charged with trespassing for walking on the grass of the US Capitol.)