Hal Draper

Truman’s Fair Deal: Gear for War,
Hamstring Labor, Promise Reforms

Economic Reports Show
State of the Union
Is Based on War Economy

(17 January 1949)

From Labor Action, Vol. 13 No. 3, 17 January 1949, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

In his State of the Union message to Congress, President Truman has carried out a number of his campaign promises by – repeating the promises.

Naturally, not much more than this is expected from these presidential messages, which are traditionally couched in generalities and are not supposed to get concrete. Everyone knows that the battle over the payoff on the pledges will come in the course of the congressional session.

Presenting them in the same general terms as during the election campaign – in some cases, a good deal more vaguely – Truman’s message reminded the people that he is supposed to do something about: his civil-rights program, a 75 cent minimum wage, raising social-security benefits, extension of rent control, lowering prices, rural electrifications, housing, etc. What will be done to implement these promises (let alone how much steam the Democratic Congress will put behind whatever they propose) is still as much in the air as before.

On two points in particular – and the most important two – the messages (State of the Union, economic message and budget message) were somewhat more enlightening. These are: labor policy and the economics of Truman’s “cold-war deal.”

Shows His Hand

While it was well known that Truman was going to ask for the repeal of Taft-Hartley and the adoption of a castrated Wagner Act, his message on this point contained small comfort for the more optimistic labor leaders who were all prepared for a ‘’compromise.” The crux of the question lies, in the nature of the “improvements” to be made on the Wagner Act. And on this subject Truman indicated his hand most clearly by saying:

“The Wagner Act should be reenacted. However, certain improvements, WHICH I RECOMMENDED TO CONGRESS TWO YEARS AGO, are needed.”

The grossly anti-labor program which President Truman presented to Congress only a few years ago was, as a matter of fact, the occasion for the first open break with the administration on the part of the heads of the labor movement, particularly Philip Murray. It was in the midst of the famous General Motors strike that Truman ran to Congress with the proposal for “fact- finding boards in major industries” accompanied by a thirty-day “cooling-off” period. Speaking over the radio on December 4, 1945, Murray blasted the Truman intervention from stem to stern and declared flatly: “The CIO is ... opposed to the basic policies pursued by the administration.”

William Green joined in the unanimous protest of labor against Truman on the point. John L. Lewis called his proposal a “fooler bill to straitjacket American industrial relations.”

Murray’s radio speech further went on to say that “The administration has given lip service” to a lot of good things but “the complete failure to obtain such legislation has proved that the activities have been limited to a mere gesture,” while the “sole answer of the federal administration is to seek legislation against labor.” The Truman proposal, he added, can only result in the “weakening of labor unions – the curtailment of the right of free men to refrain from working when they choose to do so,” and this amounts to the “appeasement of American industry.”

Injunction Machinery

This little story of the reaction of labor to Truman’s “improvements which I recommended to Congress two years ago” is instructive. The proposition of fact-finding boards and a cooling-off period is comparatively mild compared with Truman’s later activities in breaking strikes through the use of the injunction. Yet at that time it led to such an explosion. Today, AFTER labor has won its “famous victory” in re-electing Truman, these same labor leaders are falling all over themselves to claim that Truman’s message gives them what they want!

The rest of Truman’s remarks on this crucial question of labor policy go beyond the two-year-old proposal; clearly indicated is the retention of presidential power to use the injunction of strike-breaking. The message said:

“Jurisdictional strikes and unjustifiable secondary boycotts should be prohibited. The use of economic force [that is, strikes] to decide issues arising out of the interpretation of existing contracts should be prevented. Without endangering our democratic freedoms, means should be provided for setting up machinery for preventing strikes in vital industries which affect the public interest.”

It was this latter “machinery for preventing strikes” (the injunction) which Truman used so viciously three times that he earned the applause of the Taft-Hartleyites and the hatred of every section of labor.

“Package” Approach

The groveling attitude of the leaders of the AFL and CIO has brought them to the point today where they are apparently willing to accept – or at least make no fight against – anything “their” President proposes, as long as it does not go over the name of Taft and Hartley. The one point upon which they have been yelling – actually a minor one, though not without significance – is the matter of a “one-package deal” versus a “two-package deal.” And it looks as if, on this too, Fair-Deal Harry is going to kick them in the face.

The question here is: Shall the T-H Law be repealed and the Wagner Act be re-enacted FIRST, and THEN the “improvements” taken up – or shall both be done at the same time? In the latter case (the so-called “one-package deal”) the wrangling may be protracted, while all the while the T-H Law itself stands on the books. The labor leaders would like to wipe off Taft-Hartley first and then have Congress spend as much time as it wants on discussing amendments to the Wagner Act.

Truman’s message says nothing about this at all. (Consequently, Murray greeted the message as ... giving labor all it wants!) The Democrat who is slated to be the head of the House Labor Committee, however, has been less close-mouthed. This administration spokesman, Representative Lesinski, has told reporters that Truman favors the “one- package” approach, as does Lesinski himself. (Lesinski also announced that Truman is against putting the National Labor Relations Board under the Labor Department – another slap in the face to the “labor statesmen.”)


The Economic Report

In his economic report Truman raises the question why “our economy showed strength sufficient to withstand shock of a kind which had ended earlier inflations with collapse,” that is, why the United States has been able to avoid a post-war depression, at least so far. The section is interesting, since it points exactly to that aspect of the “state of the Union” which the message is written to conceal.

The reasons given by Truman immediately after raising the question can be almost brushed aside if one is seeking fundamental reasons rather than mere contributory factors; these reasons are: “affirmative national policies,” “greater caution in the business community,” the farm pricesupport program, the greater strength and resilience of “our whole financial and banking structure,” the socialsecurity set-up, and finally: “Our working groups [by which is presumably meant those sections of the population that work for a living] were better supplied with current income and accumulated savings” than in 1920.

One other one, and a rich one: “Our businessmen, having become better informed, were more prudent.” This in particular is so much hogwash. The very same report, a few hundred words later under a different heading, has a word to say on the main way in which “our businessmen” showed their “prudence”:

“Profits in 1948 again surpassed all previous records and were rising throughout the year. Corporate profits after taxes amounted to about 21 billion dollars, contrasted with a record level of about 18 billion dollars in 1947. With sales booming, the ratio of profits to sales was again maintained at around 5 per cent after taxes. As I pointed out a year ago, such profits are in excess of the levels needed to furnish incentives and equity funds for industrial expansion and to promote sustained economic health [undoubtedly the greatest understatement of the year – H.D.] although some businesses have not thrived nearly so well as others”

for, example, we add, the corner grocery store as compared with U.S. Steel.

This is the greater caution in the “business community,” which Truman cites as a factor in preventing collapse. There is not much point in going into the others either.

War Economy

The real and effective factor is referred to in a sideswipe in an entirely different place in the economic message. This passage reads as follows:

“Expectations of continued inflation have added to the incentive for business investment, while the price rise has acted as a brake on the demand of consumers with relatively fixed incomes. The proportion of consumer expenditures in the total national product has never been lower in any peacetime year for which statistics are available. This is not an immediate problem so long as the sum of government expenditures, and net foreign investment is still rising. It could become a critical problem as those other factors begin to turn down or even to assume a declining relative importance in a constantly growing total economy.”

And so despite the long list of anti-depression factors cited by Truman, the low proportion of consumer expenditures (what you and I are able to buy) could become “critical” for the economy if the three other factors were to fall. These three other factors, one sees above, are: government expenditures, business expenditures and net foreign investment. The heart of these factors, in turn, is highlighted by a statement in the Annual Economic Report by Nourse and Keyserling, transmitted by the president together with his own message:

“Needs engendered by war and its aftermath of international tension continued during 1948 to overshadow the civil programs of the government and to exert crucial influence throughout the economy. It was necessary to hold back government programs urgently needed for peacetime growth and progress, while extraordinary activities to meet world responsibilities prolonged and strengthened the general forces of inflation. The enlarged expenditures for national security and foreign aid authorized in 1948 will impinge in 1949 upon a private economy still sensitive to inflationary pressures. Not only will total government spending be rising, but its impact in critical areas will be intensified.”

What has shored up the economic structure has, then, not been the “prudence” and “caution” of “our businessmen” – who, as usual, are still concerned primarily with grabbing the greatest amount of profits ever recorded in the face of a situation characterized by the lowest proportion of consumer expenditures ever recorded. What has shored up the structure of American capitalism has been its increasingly large sector devoted to building an economy for war preparation as well as expenditures for past wars. If the United States has not run into economic crisis, it is because it is gearing for another and more catastrophic crisis: the third world war.

In an editorial in U.S. News & World Report, Editor David Lawrence puts the finger on this fundamental economic fact about the “state of the union.” (Lawrence’s biases are on the reactionary side, and his conclusions seem to be in the direction of a sort of isolationism and return to laissez-faire economy – less government in business, etc. – but the fact he points to is another matter.)

“It is obvious that armament expenditures,” writes Lawrence, “have given America a false prosperity ... Hence the paradox that the biggest economic danger faced by America is the danger of a sudden turn to peace by Russia.”

And asserting that our economy is based on the present cold war, Lawrence opines that:

“President Truman’s message is written on the assumption that American production will be supported by a continuance of the existing set of circumstances.”

This last statement is not true certainly of the Nourse-Keyserling Annual Economic Report, which specifically raises the question of what to do to support prosperity outside of cold-war economy, but the important thing is that the present economic situation does have the cold war as its main prop.

Depression or war, unemployment or mass slaughter, hunger or blood, collapse of economy or collapse of peace – these are the alternatives presented by American capitalism.

Last updated on 30 December 2018