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Susan Green

Steel Union Reps Prove Workers
Have Not Shared in Record Profits

(29 August 1949)

From Labor Action, Vol. 13 No. 35, 29 August 1949, pp. 1 & 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The week of August 15, at the federal courthouse in Foley Square, New York City, the representatives of the steel industry used every trick in the bag to prove to the president’s fact-finding board – and to the public – that (1) to grant the union’s demands would bring immediate economic catastrophe to the whole nation, and (2) that the establishment of the fact-finding board was a step toward totalitarianism.

Such are the fantastic claims made by the steel companies in their determination not to pass on to their workers any of their blllion-dollar profits.

The background:

The United Steel Workers (CIO) are asking for a 12% cent an hour wage increase, social-insurance items adding another 6.27 cents an hour, and a pension plan equivalent to 11.23 cents, or a total of 30 cents an hour increase. The big steel companies absolutely refused to negotiate the pension issue, claiming that it cannot properly come under collective bargaining – this in spite of the ruling of the National Labor Board to the contrary. The companies not budging on this issue, the union took a strike vote and the men voted to strike for their demands.

Fact Board Is Set Up

At this point President Truman stepped into the picture to avert a strike and proposed to both the union and the industry the three-man fact-finding board. Philip Murray, as president of the Steel Workers, promptly accepted the president’s proposal, but the bosses rejected it. The latter claimed that the president was not acting under the law of the land, namely, Taft-Hartley. The president replied that “the present situation in the steel industry does not constitute such an immediate peril to the national health or safety as to authorize the appointment of a Board of Inquiry under Section 206 of the Labor Management Relations Act, 1947” but “Nevertheless, an interruption in steel production would have serious consequences to the whole nation,” warranting in his opinion the appointment of a fact-finding board with power to recommend a settlement.

This could be termed a clever dodge on the part of Truman. But in the eye of public opinion, the steel industries were on the spot. If they refused to appear before the board, the onus of a strike would be squarely on them. Since these days it is important to capitalists not merely to make record profits but to do so with “public approval,” the companies finally consented, avowing that they were acting out of respect for the exalted office of the president of the United States. So now they are strutting their stuff.

Union Gives the Facts

The union presented its case to the board first. It was based largely on the report of the union’s economic adviser, Robert Nathan. The points made by the union to prove that the companies can pay its demands can be summarized as follows:

Costs to the steel industry are lower, while prices are higher than before the war. All along prices had been raised more than was needed to offset higher costs of labor and material. In the first half of this year, 1949, the cost of fuel oil and of all important raw materials fell enough to pay the 30 cents an hour wage increase asked by the union. Profits, the union claims, would’ not suffer by the 30 cents increase because of this lower cost of raw material.

In the words of Economist Nathan: “Material and labor costs have fallen almost 15 per cent in the last six months. Yet bar-steel prices have remained virtually unchanged. This pattern can certainly not be characterized as a healthy adjustment ... Historically and currently the steel industry has resisted price declines. There is no basis for confidence that failure to increase wages in the steel industry will have any other effect than to add to its already huge profits. In other words, the windfall of lower costs will merely augment already swollen profits.”

Steel Profits Ahead

The union pointed out that profits in steel increased far more rapidly than those in manufacturing in general. From 1946 to 1948 profits in all manufacture doubled, while in steel they increased three and a half times. In the first half of 1949, with profits elsewhere going down, steel, profits rose to new heights. The profits for 1949 are going to be far above the high of 1948 and two and a half times the huge wartime take. The profits for the first quarter of this year constitute a 15 per cent annual rate of return on investment, whereas a return of 6 per cent to 8 per cent is considered very good.

The union holds that the steel worker has not shared in the profitability of the steel industry. While the productivity of the steel worker has risen 50 per cent in the 1939–49 period, the buying power of hourly earnings has increased only 14 per cent. Against the 14 per cent increase the return of the industry on investment skyrocketed 165 per cent, making allowances for price changes. Furthermore, in this industry where profits rose much more than in manufacturing as a whole, the wages of steel workers went up much less than in manufacture in general.

Arguing for a social-insurance program, union spokesmen dwelt upon the inability of workers to pay for sickness emergencies. Philip Murray quoted the American Medical Association “which is not noted for its progressiveness,” to the effect that in 1939 an annual income of $3,000 was not adequate to enable a family to pay for the costs of a major or chronic illness. Since the value of the dollar has declined, a family today would need more than $5,000 to have the same spending power that $3,000 gave in 1939.

They Treat Machines Better

Eighty per cent of the families of this country earn less than $5,000 and would consequently have difficulty in meeting the costs of a serious or prolonged illness. Needless to say, almost 100 per cent of the steelworkers in this country earn less than $5,000.

The pension expert testifying for the union on its demand for a pension plan of $125 a month for workers retiring at age of sixty-five, underscored the lack of old-age security in the industry. For instance, since June 1947 United States Steel retired 722 workers, of whom 384 received no pension payments at all. In United States Steel the average monthly payment is $9.35, while some of the companies do better. The $21 and $31 a month paid by Bethlehem and Jones & Laughlin respectively are still picayune. Republic Steel pays none at all.

In contrast, the chairman of the board of directors of Republic Steel will retire on a pension of 563,815 a year, and Benjamin Fairless of U.S. Steel will worry along on 570,323 after retirement.

“The time has come,” declares the union, “for the industry to stop treating its machines better than its workers!”

This is the case of the union and, it will enable the reader to properly evaluate the case of the companies. It will become clear why Murray burst out with his characterization of the steel magnates as “the most sanctimonious band of racketeers I ever saw in my life.”

The Tycoons Rave and Rant

The first witness for the companies was Clarence Randall, president of Inland Steel. His abusive and angry exaggerations were directed against President Truman’s proposal for the fact-finding board. Here is the cream of Randall’s crop: “By doing so he [President Truman] has declared himself as favoring a new social order ... Collective bargaining has been destroyed. It has been repealed by the president ... [it] would commit us to boards and government wage-fixing forever ...” Randall also raged against the union’s “global strategy” and declared that Murray “possesses the power to induce the president of the United States to take extra-legal action at his request.”

This diatribe against the fact-finding board is at first hard to understand. Such boards have been used to avert or to break a strike for many and many a year. The recommendations of such boards never, never grant the union’s demands. In this case the composition of the board is certainly not unfavorable to the companies.

The chairman, Carroll S. Daugherty, was Wage Stabilization Director of the War Labor Board when the obnoxious “Little Steel” formula was clamped down on wages, and labor had no love for Daugherty. David L. Cole, a second member of the board, is a lawyer, son of a Paterson silk manufacturer, has acted for the Silk & Rayon Manufacturers Association, considers himself a “genuine middle-of-the-roader.” The United States News & World Report says Cole “is counted on by industry to exercise a restraining influence on the board.” The third board member is Samuel I. Rosenman, famous as President Roosevelt’s adviser and reputed to be a New Dealer. However, we saw time and again how the prince of New Dealers himself, FDR, sold the workers down the river in a strike situation. So why not his disciple?

Method in the Madness

Why then have the captains of steel gotten so excited over this time-honored procedure for breaking strikes? Ira Mosher, ex-president of the National Association of Manufacturers, cast a bit more light on the subject because he made his language more definite. He too raved against “the tactics of those who are trying to bring about a complete totalitarian state.”

But he also stated clearly that the president should have allowed the Taft-Hartley law to operate. Further, he openly declared: “We have consistently and with all the vigor at our command opposed industry-wide bargaining.” Motives are clear now. By “global strategy” Randall of Inland Steel means industry-wide bargaining.

Yes, NAM is opposed to the union’s fight against a fragmentation of their forces, and NAM always has been. It also becomes apparent why Inland Steel was willing to negotiate with the union while U.S. Steel refused. The objective was to deal a blow at industry-wide bargaining, and NAM and the steel industrialists were counting on T-H to help them beat the unions. Therefore their ire; therefore their shouting about “totalitarian wage-fixing”; therefore their accusations of “extra-legal action.”

Perhaps we find here also the motivation of the union in accepting the proposal of the president for the fact finding board. The principle, of nation-wide bargaining is thereby acknowledged, and for the present the T-H Law has been circumvented – both of which points Mr. Truman no doubt stressed to the union leaders.

Unions Want It Now

Against the economic arguments of the Union, the companies’ representative claimed that the profit picture painted by the union is false.

They asserted that the business recession that started in other industries hit steel later. They sought to show that profits in steel fall at a faster rate than the decline in the volume of business and stated that there was a 25 per cent drop in profits for the second quarter of 1949 when production fell from 101 to 91 per cent of capacity or only 10 per cent.

Robert Nathan claimed for the union that the steel industry could grant 10 cents an hour and, operating at only 80 per cent of capacity, would still net the record high profits of 1948; or it could grant 20 cents and, at a 90 per cent operating capacity; would net twice as much in profits as during the war. It must also be pointed out that no one really expects more recession at the present time and the question must be asked the steel industry: “When should the working people put in their demands for a better life, with a bit more now and a bit of security for the future – when, if not when profits are at their height? Will industry come across during a depression?

There was considerable dispute between the union and the industry as to the point of operating capacity at which the industry breaks even and profits begin. The union claimed that at June 1949 prices, wages and material costs, the break-even point of the industry would be at 32 per cent of capacity, that if wages were increased 20 cents an hour the breakeven point would be at 42 per cent of capacity, and if the 30 per cent an hour demanded by the union were granted the break-even point would be at 48 per cent of capacity. A spokesman for the industry countered that the break-even point for his company was 60 per cent of capacity at 1948 figures for wages, prices and material costs.

“Chronic and Insatiable”

The fact-finding board is to make its recommendation to the president by September 15. Industry spokesmen have tried to impress the board that “The issue facing the country and this board is: Does America want more inflation?” If this is the issue, then it is so only because the profit-bloated steel companies refuse to increase wages out of profits, and insist on raising prices instead.

If capitalist industry cannot, at the height of its prosperity, give workers earning between 550 and 560 a week a modest raise of 12½ cents an hour, if it cannot provide some backlog for its workers against ruinous illnesses, if if cannot assure them some Small measure of old-age pension security such as the $125 a month asked by the steel workers’ union, then it must make way for another system of production – not by any means the “totalitarianism” with which the industrialists now try to scare children, but a system of full industrial and social democracy.

When the president of Bethlehem Steel Corporation self-righteously states that the requests for higher wages “have become chronic and insatiable,” it is time to take note that the insatiable profitmakers are forgetting that the human being will indeed never cease in his struggle for a better life.

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