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James M. Fenwick

The War and Priorities

(December 1941)

From The New International, Vol. VII No. 11, December 1941, pp. 295–9.
Transcribed & marked up by Einde O’Callaghan for the ETOL.

AMID THE FLESHLY DELIGHTS of the Waldorf-Astoria Hotel in New York City, God was enthusiastically chosen as an honorary member of the National Association of Manufacturers at its 1941 convention held in December. God was able to make the grade after all these years because, in the words of Dr. George B. Cutten, president of Colgate University, who made the proposal, “God is a reactionary.” If any one has any doubts as to the qualifications of the learned Dr. Cutten to determine the class sympathies of the Lord, no one, certainly, can question the credentials of Tom Girdler, who introduced Dr. Cutten to the members of the convention.

(Note: In view of the current drive for the seven day work week, it is to be doubted if God is the type of person the capitalist class wants as an honorary member of the National Association of Manufacturers. The reader may perhaps recall what Paul Lafargue once pointed out – namely, that God himself worked for only six days creating the earth and then rested for all eternity!)

More than one pointed lesson could be drawn from this small but brazen incident in the activity of the capitalist class. To invest one’s mercenary activities with the aura of divine concurrence, even if, as in this case, it looks suspiciously as if God had been dragooned into the job, is a time-hallowed practice. Viewed broadly, however, the incident is merely a part of the mobilization of the mind of the capitalist class for the prosecution of the war, and therefore, as a corollary, the similar mobilization of the mind of the working class.

Underlying, and determining, the character of this very necessary “head-fixing,” as the old socialists in the United States used to put it, goes the basic material necessity of converting the “peacetime” economy of the United States into a total war economy. This conversion had begun, if in a temporizing fashion, prior to the outbreak of open hostilities. With the opening of the war in the Pacific, however, and the accompanying revelation of the strength of United States imperialism as consisting of not too much material and a great deal of incompetency and braggadocio, the tempo of conversion will accelerate tremendously.

Naturally, this change-over will produce severe dislocations in the economic structure of the country. When one of the business men’s confidential letter services predicts “economic dislocations as yet undreamed of,” it is stating nothing but an obvious truth.

The conversion will complete the victory of the colossus of finance capital over the small business man. The armaments industry will dominate the whole industrial horizon. Consumers’ industries will be operating on an “iron rations” basis whose level will be determined largely by the militancy of the working class in resisting the lowering of its standard of living.

It is practically certain, likewise, that taking into account the manpower necessary to oppose the Axis powers, and the production workers needed to equip such a force, unemployment will virtually reach zero under the conditions of a total war economy. Such a condition obtains in England today, where there is, in fact, a shortage of labor.

The qualified benefits of this prospect, however, lie entirely in the future. Confronting the working class today is not only the unemployment typical of capitalism in even the best of times but a phenomenon new to the United States known as “priorities unemployment.”

Priorities unemployment is not, however, uniquely a property of that best of all possible capitalisms which exists in the United States. It occurs whenever there is a sudden acceleration in the conversion of a “peacetime” into a war economy. England, for instance, felt its effects at the beginning of the intensification of the war effort in September, 1939. Of this period the magazine United States News recently said: “In England this transition lasted for a number of months and brought with it a good deal of hardship, both for individuals and for industries.”

The same magazine added: “There is nothing to suggest that the transition in the United States will be less painful or less disruptive than in England. High officials are warning that it may be more so, because fewer plans have been made to cushion the shock.” Such has proved to be the case. And it can be expected that in the near future the acuteness of priorities unemployment will be accentuated. The reason for this lies in the industrial dislocations which will be caused by the stepping up of armaments production as a result of the opening up of the war in the Pacific.

The Origin of Priorities Unemployment

What is priorities unemployment? It may be defined as a more or less temporary form of unemployment occurring in the period between the curtailment of civilian production and the expansion of armaments production to the point where it will absorb all of the workers laid off as a result of the curtailment of civilian production made necessary by the capitalist preparation for total war.

The United States is being placed on a full war economy basis as quickly as capitalist idealism and an infallible sense of where the profits lie can do it. In the era of total war this means the building up of armaments goods at the expense of consumers goods. Business Week, a magazine for industrialists, recognized this early last fall, when it stated: “And seemingly the question of butter versus guns has finally been resolved ... Clearly, defense now comes first, civilian needs second.”

(Note: The reader will perhaps remember with what scornful hoots the bourgeois press greeted this program when Hitler first advanced it. Other times, other customs.)

In addition to placing armaments needs first, the putting of the United States on a war economy basis means that the conversion be accomplished as quickly as possible. So far as heavy industry – the decisive sector of United States capitalism – is concerned, there is no advantage from the point of view of either profits or military strategy in tapering oft civilian production and concurrently absorbing laid-off workers in armaments production as the tempo of production increases. To think that big business would attempt to solve the priorities unemployment problem in this fashion can hardly be called thinking.

Consequently, if the supply of any given raw material is insufficient to serve the needs of both armaments and civilian production, civilian production is cut the requisite degree. For instance, as was pointed out in Forbes for September 15, the copper available in the country in August was 110,000 tons. Armaments production took 88,000, leaving 22,000 tons for a market which ordinarily takes 75,000 tons. As this difference has to be absorbed by civilian production, obviously unemployment results, because the pickup in armaments work does not necessarily have to occur in the location where the layoffs were made, or result in an equivalent number of workers being hired. This is the situation which produced the recent unemployment among the zipper workers in Meadeville, Pa.

Similarly, 21,000,000 tons of nickel is needed annually; 15,000,000 tons is available. The demand for zinc is 1,200,000 tons annually; 900,000 tons is available. Business Week has listed no less than 260 critical items ranging from acetone to zinc – and all of them are taking their toll in unemployment.

There are other factors which increase priorities unemployment. In spite of the fact, so well known until recently at least, to our rear-admirals of the Navy and to our (truth to tell) hardly less qualified naval experts of the newspaper syndicates, that the Japanese are congenitally poor marksmen who would be quickly defeated in any full-scale modern war, rubber imports from the Far East will be non-existent in the future. This circumstance brought to an even keener edge the sharpness of the priorities unemployment crisis confronting the rubber workers.

The necessities of maintaining the Roosevelt “good neighbor” policy in Latin America, founded, alas, on such material considerations, further aggravate the priorities unemployment problem. Despite the fact that tin is a scarce commodity, thousands of tons are being shipped to Latin America for use in making tin cans, and for other civilian purposes.

The monopolist control of heavy industry is a large factor in the creation of shortages which brought quick curtailment of consumer goods production. Alcoa, for instance, opposed the erection of aluminum reduction plants by rival concerns out of fear of post-war competition. Big industry likewise declined to add to present plant capacity out of its own resources because it did not want an unproductive and gigantic elephant on its hands following the war. Hence the construction of plants out of government funds, with private corporations operating them on a lease basis. These plants being government property, it is guaranteed that they will become neither competitors in the post-war period, nor useless, idle instruments.

Big industry likewise piled up huge inventories of basic materials, in this fashion freezing out smaller concerns, which had to curtail production – and thus augment the number of unemployed. Big business has likewise piled up fantastic backlogs of orders which it has refused to sub-contract, an act which would serve to take up some of the unemployment slack. The Vultee-Consolidated merger, for instance, placed at the disposal of Tom Girdler, the newly chosen chairman of the board, over a billion dollars in unfilled orders, a sum achieved, no doubt, as a result of Girdler’s thrift and abstinence in early youth.

In armaments production big business is in the saddle and is riding hard. Last November, Phillip Murray pointed out in the CIO News that according to government figures for May 1941 just six companies held 31.3 per cent of the armaments contracts, and that 56 of the nation’s 200,000 corporations held approximately 75 per cent of the dollar value of all armaments contracts. This control of armaments production by big business makes it very difficult for small business men to land armaments contracts. Since their production for civilian needs has been curtailed, layoffs of workers result.

Big Business Tightens the Noose

Murray’s figures also show very sharply how the war economy is hastening the consolidation of monopoly capitalism at the expense of small business. Big business is winning all down the line. That small business is uncomfortably aware of what is being done to it is reflected in an editorial by the New York Times, which says of certain of the small business men who went to Washington in an effort to hook some of the tempting contracts being landed by heavy industry: “Some of those who made the attempt have returned convinced that the big business men in OPM were deliberately trying to freeze out small business.”

Peter R. Nehemkis, one of those bright young men of the OPM who, having a warm little nest in the government bureaucracy, can view things sub specie aeternitatis, as it were, cheerily announced recently: “It is one of the profound ironies of our defense effort that its total effect may well be to move toward obliterating smaller business enterprises from the American scene.”

It is, of course, due not only to the more complete control of the government and to the more complete access to government offices that gives big business its virtual monopoly of armaments contracts. Its political power and its industrial dominance over small business are both due to basic economic factors. Big business has inestimable competitive advantages over small scale production. Big business possesses its own sources of raw materials, machine tool departments, shipping lines, railroads, research laboratories, training schools, marketing outlets, etc. Generally speaking, in relation to these important necessities small business can be squeezed out in any number of obvious ways: machine tool companies may be occupied with other orders, raw materials may be subject to priorities, etc. Small business has a fatally dependent character. Overshadowing everything, of course, is the simple but all important economic fact that as a general rule, unit for unit, small industry cannot produce as cheaply as big business.

Small business, however, is not an unimportant factor in the economic life of the nation. And it has been squealing like a pig caught under the fence, as even a cursory glance at business journals will show. Certain concessions are being made to it. This is the meaning of the appointment of Floyd B. Odlum of the Atlas Corporation as the head of the OPM’s defense contract service. It is Odlum’s job to farm out judicious amounts of armaments work to small business, in order to stop the worst of the screaming. Anyone familiar with Odlum’s record – and it is fully in the best tradition of capitalist legalized piracy – need have no fears as to the amount of relief Odlum will afford small business.

(Note: Readers of The New International who are interested in the genesis of a modern capitalist are earnestly advised to read the biographical sketch of Odlum contained in the November issue of Nation’s Business, the organ of the Chamber of Commerce of the United States. This Wall Street wolf, who is to shepherd the lambs of little business, has a personal fortune estimated at between $4,500,000 and $5,000,000. He annually creams off $100,000 from the Atlas Corporation alone. “If he had paid much attention to public opinion,” the article significantly says, “he would not have the $5,000,000.”

(His career begins in the traditional Horatio Alger style with Odlum as a boy riding an ostrich against a horse at the Grand Rapids fair, at fifty cents a race. In college Odlum engaged in such enterprises as taking over fraternity houses during the summer and running them as tourist homes. In the depression years 1930 to 1933 Odium took over 22 investment trusts. “He seldom paid more than fifty cents on the dollar, sometimes as low as twenty cents.” He wound up controlling or having a hand in Bonwit Teller, Warner Brothers, Loew’s, TWA, Greyhound Bus Lines, and Madison Square Garden, to name a few businesses he muscled into. It might be remarked, parenthetically, that he almost got into Curtiss-Wright, but, in the scientific terminology of the article, “the stockholders rallied and warded him off.” We can well believe it.

(“For relaxation,” says the article, “he makes clay models, which he generally destroys.” Odlum, as may be imagined, is surrounded with a fine circle of sycophants. “Associated with Odlum in the new job” – as head of the defense contract service – “are Sidney Weinberg, a partner in Goldman Sachs, and Ed Weisel, Chicago lawyer. Weinberg is not only an inseparable companion but a vocative admirer. He was tremendously impressed when Odlum picked up the $22,500,000 Goldman Sachs Trading Corp. at a bargain price. Now, at every opportunity in a business meeting or a social gathering, he points admiringly at his boss and chants: ‘Fifty-Cents-on-ihe-Dollar Odlum.’” A man, one sees, for the ages!)

Of course, small business will be pulled into the armaments effort because of the demands of total war. But it will be done on a modest scale, in no wise comparable to the tremendous and increased activity which big business will be engaged in. Should United States capitalism weather the war, small business will find itself utterly dependent on big business, with no resources, a vanished market, a plant worn out and tooled solely for armaments work, and faced with the cold realities of a competitive market which had been foregone to a certain degree at least, during the hectic war days. Small business will collapse, never to be revived. Naked monopoly capital will hold undisputed sway.

The Extent of Priorities Unemployment

It is difficult to state the exact extent of priorities unemployment as it exists now or is anticipated in the near future. No real breakdown of national statistics on this problem has been made. The government, of course, is quite willing to let the whole problem be forgotten amid the pandemonium of the war. In mid-year, 1941, Leon Henderson, the Administration’s general utility man, estimated that priorities unemployment might reach 2,500,000. Shortly afterward, in August, Barron’s stated: “One thing seems probable on the basis of our investigation: Mr. Henderson’s estimate is low.” Since the issuance of these figures there have been few official statements on the subject.

A tew concrete cases of priorities unemployment serve to illumine the situation. The United States News notes, for instance, that 175,000 silk workers were thrown out of work last July when the silk processing industry was shut down by government order. There were 16,000 workers in the aluminum cooking utensil industry which was wiped out altogether when priorities were imposed. According to government figures, priorities unemployment in the automobile industry was to reach 130,000 workers in Detroit alone at the end of 1941. The figure for the state of Michigan was set at 206,000. Current statements by the government on the unemployment situation in the badly hit rubber industry contain nothing but a great deal of rosy optimism and a too typical absence of concrete data.

Among industries already hit by priorities unemployment are the following: home construction, refrigerator, vacuum cleaner, washing machine, automobile, rubber, aluminum utensil, zipper, etc. And the list will increase.

Mention should be made of another aspect of priorities unemployment – what might be called secondary priorities unemployment. This unemployment does not occur at the point of production but occurs at the point of distribution as a result of curtailment of production at the factory proper. For instance, the Wall Street Journal pointed out last July, when the curtailment of automobile production was first broached, that the effects would immediately be felt by 44,000 dealers and 380,000 salesmen, auto mechanics and office workers. To this list can be added the gasoline station attendants and other workers servicing automobiles, who will be hit in the future when the supply of tires runs out.

It should be noted that the sharpness of priorities unemployment is often masked by the spreading of work down to three or fewer days per week per worker.

A few weeks prior to the war in the Pacific, Representative John H. Tolan, chairman of a congressional committee investigating unemployment throughout the Midwest, stated that “the situation ... is apparently going to take a turn for the worse in the near future.” Some authorities expect the real crisis to occur this spring. The intensification of the war effort as a result of the opening of actual hostilities can have only a sharpening effect upon the crisis, as has already been demonstrated in the case of the rubber industry.

The Effect Upon the Working Class

In the long run, priorities unemployment will, of course, disappear because of the huge armaments output which will be necessary. The National Resources Planning Board estimates that by 1944 there will be no unemployment, that the entire 60,000,000 available labor force will be employed at that time. Some industrial sources, however, are already predicting the exhaustion of the reserve labor supply in 1942, if for no other reason than because of the drafting of additional men into the armed forces.

All things, however, are resolved – in one fashion or another – “in the long run.” But, unfortunately, the gas bill, the rent bill, the grocery bill and all the other insistent big and little bills have to be settled in the very much here and now. The one to eight months, or longer, of unemployment necessitated because of the imposition of priorities, has severe consequences for a worker who has travelled the rocky path out of a depression, into a recession, and out of a recession into the ethereal price levels of a war economy. In addition to the prospect of eviction – in a time when housing is extremely scarce – the danger of repossession of his furniture and car, and the scrambling to find money for food, clothing, rent and coal, the average worker will be saddled with a debt burden that will take him many months to discharge.

Business Offers Its Solution

To expect business to worry over the problem of priorities unemployment as it affects the worker is like expecting rain to fall upward. What business is worried about is business. What happens to labor is no serious concern of business. Consequently, all its proposals consist merely of plans to land armaments contracts. When business touches upon priorities unemployment directly it is only to moan about its effect upon retail trade. The Wall Street Journal, which clasps all the poor and suffering capitalists to its bosom, even has tears for the plight of the bloodsucking finance companies in Michigan, which are going to be so cruelly hit as a consequence of priorities unemployment among the workers. It’s enough, no doubt, to make the Wall Street Journal question the equity of the present order. Whenever the problem of priorities unemployment is otherwise dealt with by business it is to assure the public that it is really not unemployment but disemployment (Business Week) or to point out that everything will come out all right in the end – just wait and see (Barron’s).

Occasionally government and business pool their rich experience and produce something like the seven-day wonder known as the Buffalo Plan. The Buffalo Plan was brought forward as the answer to the layoff of 3,200 men at the Chevrolet plant in Buffalo as a result of an eight-month retooling program for armaments production. The essence of the plan was the payment to each worker of $15.00 per week for retraining, pending absorption in the aircraft industry. At the end of two months – the period necessary to absorb the laid-off workers, according to business spokesmen – the box score stood as follows: 650 workers were still unemployed, 1,000 did not register for the plan at all (presumably preferring to look for work elsewhere rather than to attempt to exist on $15.00 a week), and the union movement was making vigorous protests over the discrimination against union men in the operation of the plan.

The Program of the Government

The government has pursued an eclectic course, each phase having the common attribute of affording no real relief for the worker during the period of unemployment.

One method employed is to award armaments contracts to “distressed areas,” usually one-industry towns in which business activity was threatened with complete cessation as a result of priorities rulings. Manitowoc, Wis., for instance, received $3,000,000 in orders. The washing machine industry as a whole received a $12,000,000 armaments order. These contracts are let within a 15 per cent upward tolerance of the lowest bid received, since, generally speaking, small industry is at a competitive disadvantage with big industry. By early December, eleven distressed areas, involving 125 plants and $135,000,000 in contracts, had been certified by government agencies.

Another step taken by the government is the changing over to a system of allocating materials, rather than letting the system of priorities determine their distribution. Under the system of priority ratings, concerns having higher ratings would pile up huge surpluses of materials at the expense of the smaller firms. Under the system of allocations small firms are thus to be allowed a certain minimum of production. How seriously the allocation system can and will benefit small business is another question.

Further than this, the government maintains a madhouse of boards, bureaus, offices, committees, agencies, directors and investigators – all singing like sirens in an effort to lull an alarmed labor movement, and all trying to devise ways-painless to everybody but the workers involved – of transferring laid-off workers into armaments production. It’s a field day for the career boys.

The AFL and the CIO Programs

The program of the American Federation of Labor was announced in detail in the October issue of The American Federationist. Basic to the plan is the demand for labor representation on government boards to run industry which would, in the opinion of the AFL, facilitate the achieving of labor’s objectives during the war period.

The second aspect of their program concerns itself with proposals for “rationalizing” production, so that (1) the production of armaments will be speeded up and (2) priorities unemployment eliminated. Objectively, the program is one for the rescuing of small industry. It provides for the breaking up and sub-contracting of huge Army and Navy contracts now held by a few giant corporations. It proposes to institute negotiated contracts instead of the present competitive ones which work to the advantage of big business. The program proposes that scarce materials be allocated. Under the plan, armaments contracts are to be let in areas where the priorities unemployment pinch is being felt. Plant conversions are to be less sharp in character. Small business is to be involved in the armaments effort. In sum, planning is to be more thorough and more smoothly done, thus cushioning the shock of priorities unemployment.

For labor, the AFL proposes retraining for armaments jobs without loss of pay, the preservation of jobs and seniority rights when the worker’s plant begins armaments production, surverys of the unemployed labor market, labor intervention in the securing of armaments contracts, etc.

The CIO proposals, whether they are the generalized formulae of the Murray Plan or the more concrete proposals of the UAAAIWA – the union in the CIO which is being hardest hit by priorities unemployment – are basically the same as those of the AFL: (1) Labor participation on boards, along with representatives of government and business, which will run industry, (2) more efficient organization of armaments production to soften the effects of plant conversion upon employment, and (3) protection of workers’ job rights.

Good and Bad of the Union Programs

The dangerous aspect of the union proposals which sprang up out of the priorities unemployment crisis, and one which will expose its reactionary character even more clearly later on, is the demand for the seating of labor representatives on war boards along with representatives from the government and from business. By participating in this fashion in the war effort labor would take an integral share of the responsibility for a war, and for the conduct of a war, in which it has absolutely nothing to gain but misery and death. As members of the joint boards, labor would be bound to participate in decisions whose effect would be the lowering of the standard of living of the masses, and to share in the responsibility for these decisions. Moreover, the abolition of strikes, the most decisive means at the disposal of labor for the enforcement of its most elementary needs, would receive official labor “governmental” endorsement and leave the trade union movement prostrate at the hands of big business. Labor would always be a minority on the boards. The government, as was amply demonstrated in the handling of the miners’ strike in the National Defense Mediation Board, is not a neutral party, but a faithful servant of its master – big business.

Today and in the future, members of the trade union movement must oppose the participation of labor on the war boards. Only by refusing to be the captive of the government and business representatives on the boards can labor begin to exert any real influence on the economic and political problems of the day.

Of the more immediate and concrete demands raised, labor is of course a thousandfold right in firmly demanding the retention of seniority rights the securing of jobs near at home, so that workers will not have to travel distances up to 50 miles from home in order to get work – or even have to move to a new town, in order to secure employment retraining at industry’s expense; hiring at armaments plants on a seniority basis; and all the other rights won by labor in many hard struggles over the course of years.

Proposals on Priorities Unemployment

Where labor has been too modest is in failing to demand that government and business jointly pay the unemployed worker his regular scale of wages until he has secured re-employment. There have been half-hearted attempts in this direction, such as the demand raised by the United Rubber Workers in Ohio, that severance pay be given to workers until unemployment compensation benefits (a miserable dole, it should be noted) begin coming in. But only by receiving full pay when he is unemployed can the worker escape the hardships which unemployment imposes in a period of rising prices. To raise demands for the breaking up and sub-contracting of the armaments orders of the trusts has only a limited utility. The time lag is too great; the worker benefits only after the contract is landed, the raw materials received, and the plant tooled up.

”And where,” we can hear the capitalist representatives crying out in genuine anguish and alarm, “can government and business get the money to make such payments?” Our reply is very simple: Those payments would consume a very minute portion of the profits on a truly Arabian Nights scale of magnificence which are pouring into the coffers of American capitalism as a result of the war boom. They would likewise consume a very minute portion of the taxes being spent by the government for armaments. And unlike armaments expenditures, these expenditures would be used for constructive, not for wholly destructive, ends. It is entirely proper that workers affected by priorities unemployment should receive this small share of the profits of industry – profits which are, in any event, possible only through the capitalist exploitation of the entire working class.

As a matter of fact, labor should demand, not only the payment of its regular scale of wages during the period of priorities unemployment, but a 100 per cent tax on all profits of the war industries. If workers are being conscripted to sacrifice their lives in the war, let business make the much less serious sacrifice of foregoing its war profits. Let there be no profit in the taking of human life! Revenue from such a tax would amply take care of workers victimized by priorities unemployment, with hundreds of millions of dollars left over to be used for socially constructive purposes.

* * *

Viewed broadly, the struggle around the question of priorities unemployment is only one of the first of a series of actions which will be precipitated by the attempts of the capitalist class to unload the whole crushing burden of the war upon the backs of the working class. The working class will resist – no doubts need be held about that. How well it resists will depend upon how well it understands the meaning of phenomena such as priorities unemployment and other similar phenomena which will arise. And flowing from the understanding of these events will come the higher understanding that the only way out for a world that is threatening to destroy itself lies in the victory of socialism.

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