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This dissertation has been microfilmed exactly as received ® 8492 MOODY, Jr., Jesse Carroll, 1934- THE STEEL INDUSTRY AND THE NATIONAL RECOVERY ADMINISTRATION: AN EXPERIMENT IN INDUSTRIAL SELF-GOVERNMENT. The University of Oklahoma, Ph.D., 1965 History, modem University Microfilms, Inc.. Ann Arbor, Michigan © Copyright ty JESSE CARROLL MOODY, JR. 1967 THE UNIVERSITY OF OKLAHOMA GRADUATE COLLEGE THE STEEL INDUSTRY AND THE NATIONAL RECOVERY AIMINISTRATIONi AN EXPERIMENT IN INDUSTRIAL SELF-GOVERNMENT A DISSERTATION SUBMITTED TO THE GRADUATE FACULTY in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY BY JESSE CARROLL MOODY, JR. Norman, Oklahoma 1965 THE STEEL INDUSTRY AND THE NATIONAL RECOVERY AEMINISTRATION: AN EXPERIMENT IN INDUSTRIAL SELF-GOVERNMENT S, Y' ( é d ’\ c â > DISSERTATION CCMHITTE TABLE OF CONTENTS Page PREFACE......... iii Chapter I, THE STEEL INDUSTRY ENTERS THE GREAT DEPRESSION . ' 1 II. THE INDUSTRY DRIVE FOR PLANNING .......... 31 III. THE BIRTH OF THE NRA ............... 57 IV. THE STEEL INDUSTRY JOINS THE N R A ........ 92 V. THE STEEL CODE AUTHORITY AND THE NRA ....... IJl VI. THE STEEL INDUSTRY AEMINISTERS ITS C O D E ........... I70 VII. THE STEEL CODE LABOR PROVISIONS................... 210 VIII, LABOR RELATIONS IN THE STEELINDUSTRY ............. 235 IX. THE REVOLT OF THE"LITTLE FELLOW"................. 264 X. THE DECLINE AND FALL OF THE NRA AND THE STEEL C O D E ................................ 295 APPENDIX ....................................... 328 BIBLIOGRAPHY......................................... 36I PREFACE The Great Crash of 1929 and the ensuing depression found nel-Uier business leader», government officials, nor political eeonoodsts pre pared to meet the exigencies of that economic holocaust. The major reason for the lack of public leadership vas the absence of precedents for concerted action during the dovn-awing of the business cycle. Franklin Roosevelt enqphasized during the 1932 campaign and immediately upon assuming office that he intended to-provide active and experis^R- tal leadership. Eÿ 1933 many business leaders and economists had also arrived at the conclusion that the old laissez-faire policies of both government and industry would not restore the natiw to economic health as it had in the past. Some type of planning was necessary, they said, although there was a wide divergence of opinion on what sort of plan ning could be carried on and still stay within the traditional American free enterprise system. The prevailing view which emerged called for some kind of government-industry cooperation designed to end the eco nomic distress. The National Industrial Recovery Act was the legislative result of this change in economic thought. Roosevelt deemed the act one of the most important and far-reaching laws ever passed by Congress, and the Blue Eagle became the symbol of the New Deal recovery efforts. With the volatile Hugh Johnson as NRA chief, a nationwide patriotic cam paign was conducted to raise wages and reduce hours, and to increase employment and purchasing power. The law also provided for industries t s s u W L t cod w of fair competition which would end the era of cut iii throat compétition hy outlawing unfair trade praotieea. Finally, the NIRA containod the famous Section ?a which established labor's r i ^ t to organ» iae and to bargain collectively* The steel industry, dwËLnated by twe^ or three giant produeers* ha4 seai^t to end industrial iwfare within its ranks ever since^ the turn of the oentury* And ^wice stability was the key to industriaL- peace for that industry* The Raco^ry Act allowed the steel industry to govern itself without the restraints of ^le Sherman Antitrust Act* ■This always had-been a threat to aiy previous project of steel exeou» tlvha in sacking indust%y-#de agreements to fix prices or limit pro duction* The administration knew that steel- was all-important to the nation's recovery and allowed the industry to write certain provisions into its code which were certain to cause a fluxry of public condemnation and to^ create future troubles for the administration* On the other hand, the steel industry was willing to accept the collective bargaining pro vision in return for a code which would allow industrial self-government* The story of the Steel Code and the NRA is thus the account of perhaps the strongest industry in the United States being allowed almost unfettered power over its industrial and business practices which had long been re cognized as illegal under existing law* Neither the NRA, organized labor, nor consumers were able to exercise much control over the steel industry during the life of the Blue Eagle, There is a paucity of literature on the NRA, This is surprising not only because of its importance in contemporary history but also because of tt^e great abundance of documentary records now available* iv Perhaps the reason lies In a warning which Donald Riehberg- gave that "the stoiy of the NRA must be written as one chapter in the big book of social history or it will be meaningless— or worse, it will appear to be a silly tragedy or an heroic folly. ^ Recently, however, his torians and- economists have suggested that valid generalizations about the NRA cannot be made until there are studies available of the indi vidual industiy codes. The history- of the Steel Code-and the NRA should afford a further step-in the final evaluation of the National Indus trial Recovery Act. While my interest in the IQIA goes much further than its relation ship with the steel industry, I am greatly indebted to Dr. Gilbert C. Fite who convinced me that a general history of industrial organization symbolized by the Blue Eagle was too large a subject for a doctoral dissertation if it were to be based primarily upon unpublished manu script sources. Professor Fite has also given unstintingly of his time and his advice in the direction of this study. I am also grateful to Dr. Donald J. Berthrong for his criticisms. I received help and advice from Professors John S. Ezell, Alexander Kondonassis, and Brison D. Gooch, the other members of my committee. I also wish to acknowledge the aid of Mrs. Jane Smith, Chief of the Social and Economic Branch of the National Archives, and her able assistant, Mrs. Jeanne V. McDonald; the staff of the manuscripts division of the Library of Congress; and Miss Opal M. Carr and Jack D. Haley of the University of Oklahoma Library. Finally, it is nearly impossible to thank my wife, Carolyn, for her aid, pàtiënce and comfort in my long task. THE STEEL INDUSTRY AND THE N A T I O m HEOOVSIY AIKENISTRATION; AN EXPERIMENT IN INDUSTRIAL SELF-GOVERNMENT CHAPTER I t h e STEEL INDUSTRY ENTERS THE GREAT DEPRESSION On Friday»- May -24^ 1929» the members -of the American- Iron and Steel Institnte gathered in- the Grand Ballroom of tho Hotel Gtmaodore in New York City for their thirty-fifth semi-annual meeting* Charles M, Schwab»- president of the Institute and ehairman of the board of the Bethlehem Steel Corporation, delivered the traditional opening presi dential address* Schwab radiated-his usual optimism and confidence over the general condition of the steel industry when he said: The steel industry meets today under conditions distinctly favorable to the continuance of general prosperity* Since we last met» Herbert Hoover has become President of the United States* Mr* Hoover has taken office at a moment of fundamental prosperity in our country that is unparalleled* As good citizens and as representatives of one of the greatest of industries, we pledge him our support and coopera tion, feeling as we do that our country is singularly fortunate in having as its chief executive a man of such great ability and bus iness e:q)erience under whose leadership I am sure nothing will be done to disturb the sound business structure upon which our present prosperity is founded*1 Following this optimistic assessment of the present and future condition of the industry, several other officials came to the rostrum to concur in Schwab's remarks* Again on October 25, 1929* Schwab told the Institute: "In ray long association with the steel industry I have never known it to 2 enjoy a greater stability or more promising outlook than it does today*" ^American Iron and Steel Institute, Yearbook of the American Iron and Steel Institute. 1929 (New York, 1930), p* 28* ^Ibid*é p. 295* 2 This optimism s^m@d justified, Steel-mills-wep& <^»3P®ting- at *n average of 88 percent of capacity~up 5 percent from 1928 and 5^-percent abovi) the postwar recession year-of- 1^21.^ A-total of -56,433^*4-73 tons of steel ingots and castings were produced in 1929» In addition 41,069*416 l<mg tons of finished rolled products poured froie the ndlls that same year-.^ This production, totaling $4,137,214,000 came from 591 establishments, employing 419,534 men with total yearly wages-nf $730,974,000.* Schwab was no doubt echoing the sentiments of almost everyone connected with the steel industry, because 1929 was truly a profitable year. His own oon^any, Bethlehem Steel Corporation, had shown a net pro fit for the first quarter of operations of $9,045,590, compared with $3,384,718 during the same period in 1928.^ The giant of the industry, the United States Steel Corporation, reported net earnings of $60,105,381, equivalent to $5.04 a share on the company's 7,116,235 shares of common stock* These figures compared with $40,934,032 or $2,11 a share earned during the last quarter of 1926, 0, S, Steel's 1929 earnings were close to a record high and were attributable to the high demand for steel and to a stable price situation.