In March 1943, as they had for three and a half grim years, men across much of the world fought and killed each other on fields of battle, while others brutalized innocents beyond the normal pale of war. Early in the month, US and Australian aircraft bombed a crucial Japanese supply convoy in the Bismarck Sea, prevailing in what Gen. Douglas MacArthur would single out as “the decisive aerial engagement” in the southwest Pacific theater. A few weeks later, the British Eighth Army overran German and Italian forces along the Mareth Line in southern Tunisia, a bloody struggle punctuated by torrential shelling and heavy machine-gun fire. Hitler’s SS rounded up the remaining Jews in Poland’s Krakow ghetto, sending 8,000 men, women, and children to the Plaszow concentration camp and murdering 2,000 more on the streets. Aboard the Japanese destroyer Akikaze, the crew matter-of-factly gunned down some sixty Germans—Protestant missionaries and Catholic priests and nuns—accused, speciously, of being spies. Then they flung the dead over the side of the ship into the waters off New Guinea.
Meanwhile, at month’s end, thousands of miles from the combat and the mayhem, nineteen American businessmen gathered at the Harvard Club in New York to plan for peace. This mission didn’t sit well with everyone. Some people found it unseemly to be talking about postwar America while husbands and brothers and sons were still dying halfway around the globe. They fretted that corporate interests were jumping the gun—literally.
The group went by the bureaucratic-sounding name of the Industrial Advisory Board of the Committee for Economic Development, yet their assignment was anything but humdrum: Once the war was over and America’s factories were no longer churning out tens of billions of dollars in armaments, how could they prevent the country from falling back into the crippled economic state it had experienced in the 1930s? How could they make sure that legions of servicemen wouldn’t find themselves jobless, impoverished, and forced to queue up in bread lines upon their return home? How could they render misguided all of the forecasters who were predicting that as many as 30 million people would soon find themselves unemployed while, in the words of one observer, “the worst depression in history would sweep the land”?
The Committee for Economic Development was far from the only organization trying to grapple with these thorny questions. Over the next two years, the federal War Production Board, the National Resources Planning Board, the Senate’s Special Committee on Postwar Economic Policy and Planning, and dozens of other public bodies would all wrestle with these same difficult issues. The United Auto Workers union and various business lobbies, including the US Chamber of Commerce and the National Association of Manufacturers, would take them on as well. But the CED, more than any other entity, gained a reputation for the thoroughness of its analysis, the boldness of its action, and the progressive nature of its thinking—progressive, at least, for a bunch of businessmen.
Some dubbed their worldview “enlightened capitalism.” Others called it “liberal conservatism.” Still others affixed harsher labels: one Detroit industrialist went so far as to brand the CED’s leaders “the most dangerous men in America.” What prompted such contempt was that the CED was far more accepting of organized labor than either the Chamber or the Manufacturers, asserting that unions can, in fact, “serve the common good.” The CED also endorsed the idea that federal debt could be added in service of “promoting and maintaining high levels of productive employment”—a perspective at odds with the deficit hawks more commonly found in the corporate community. Taken aback by the CED’s position, the Nation ran an article headlined “Heresy in High Places,” in which it declared: “Some of the basic concepts of Keynesian economics have at last penetrated into the upper stratum of American business society.”
Despite taking such unconventional stances, those shepherding the CED didn’t fit the profile of rebels. Many of the executives instrumental in the organization’s early days were big bosses at some of the nation’s largest corporations. Among them were Eastman Kodak’s treasurer, Marion Folsom, a technocrat of the first order; the inventor of the all-electrical car ignition (and holder of 139 other patents) and General Motors vice president, Charles Kettering; and Coca-Cola chairman Harrison Jones, a man so silver-tongued he once boasted that he “could sell bottled horse piss.” Charles Wilson, General Electric’s president, would join the CED board by the war’s end.
For each of these men, generating more jobs was a top priority. To Kettering, or “Boss Ket” as he was known within the corridors of GM, employment and innovation were inextricably linked. “In the future,” he said, a major corporation “must accept as a moral obligation the task of propagating new industries. It must pay more and more attention not alone to the improvement of old things but to the development of new things.” To Folsom, “well-organized statistical and planning departments” were the vehicles through which companies could project sales fluctuations, regulate inventories, and thus keep employee turnover to a minimum. “If management applies brains and effort to this problem of stabilizing employment,” he said, “real progress can be made.” To Jones, the trick was to get enough companies to start hiring so that the nation’s economic flywheel would begin to turn—workers becoming consumers, leading to demand for more products made by more workers. “The furnishing of jobs starts the cycle, which builds and gathers momentum, and the more men employed, the greater the prosperity,” he said. And to Wilson, the idea was similar: companies must consciously keep prices low and paychecks high so that “the common man” would trigger a virtuous circle of economic growth. This was the “dynamic logic of mass production” that Henry Ford had famously dramatized in 1914, when he had instantly doubled his workers’ income by decreeing the five-dollar day. “How am I going to sell my refrigerators if we don’t give ’em wages to buy with?” Wilson asked.
The CED was the ideal megaphone to amplify these viewpoints. The US Commerce Department had launched the CED as an independent, self-financed organization in September 1942 in a bid to combine the best in economic scholarship with the real-world input of those in industry. The mix proved powerful. “When I started this job, I thought we were going to hatch a hen egg,” Paul Hoffman, the president of the automobile company Studebaker and the CED’s chairman, confided to the executive committee of the organization six months after its founding. “It has turned out to be an eagle.” With the CED’s momentum building, its agenda quickly formed. “We are being pressed to go off on a dozen tangents,” Hoffman said. “We shall have to hold enthusiasm in check a bit in order to stick to our main purpose—jobs.”
On this day, March 29, the man in charge of winning the peace was David Prince, a vice president of General Electric, who called to order the meeting at the Harvard Club at 9:45 a.m. Bespectacled and mostly bald, with stray wisps of gray hair, Prince looked every bit like the engineer he was. His specialty was switchgears. But GE had directed him to concentrate on a switchover of a different sort: the eventual transition to a peacetime economy. Indeed, GE was widely seen as the most advanced company in the nation when it came to postwar planning, having meticulously estimated the output of its products under a host of possible circumstances, and the CED had tapped Prince to spread this know-how.
Much of GE’s blueprint involved straightforward, if exhausting, legwork—methodically surveying producers and consumers to gauge supply and demand market by market. “There is nothing mystic or magic or revolutionary about advance planning,” said GE’s Charlie Wilson. The process was, however, inherently controversial. Some businesspeople worried that the CED’s approach was synonymous with centralized control. “To many Americans economic planning denotes totalitarianism,” Prince admitted. “They visualize an economic system in which individuals and corporations would follow the dictates of a super economic bureau, and they therefore quite properly suspect it because it is opposed to their ideas of personal liberty.”
Yet to Prince and his CED colleagues, this logic was totally backward. Minus sound planning, Prince cautioned, “we will certainly develop overproduction” in a raft of industries, “and I doubt whether we can weather another case of that sort without the government taking over.” To the CED, the very best way to keep Washington from exerting too heavy a hand was for companies to plan assiduously and thereby prevent a relapse of the 30 percent jobless rate that had bedeviled the country in the preceding decade. “In the absence of such activity on our part,” Prince said, “I fear government will take over by default.” Later, he added: “This expectation of mass unemployment gives a perfect charter for all of the crackpots to promote government regulation… make-work projects, etc.” By getting out in front of the problem, “this should be an opportunity for the business community to be the champions of courage and optimism,” rather than getting dragged down by “the counsel of despair.”
Much of the Harvard Club meeting—attended by officials from Kodak; Firestone Tire & Rubber; Sears, Roebuck; the Automobile Manufacturers Association; and other companies and trade groups—focused on selling this vision through a variety of industry handbooks and other publications. One report they discussed at length, “Markets After the War,” turned out to be so popular that more than 1,000 requests a day poured in for it. The study, which relied on extensive data crunching by the Commerce Department, revealed a huge gulf between prospective employment one year after the end of the war and the anticipated size of the peacetime labor force. The only way to close the gap, remarked Gardiner Means, the eminent economist who joined the CED staff in 1943, was to spur “a radical change in business attitudes.”
Casting itself as “a merchant of ideas,” the CED urged managers to jot down the new goods they were hoping to sell after the war, while it also gave advice on how to leverage knowledge gained from military production. In the future, both consumer and industrial offerings “will contain many ‘hidden values’ resulting from the use of new materials and better methods,” the CED suggested in a treatise called “Planning the Future of Your Business.” “They will reflect wartime experience, which companies will put to good use to provide the public with products having greater value in performance, in lasting qualities, in appearance and, most important, in price.”
In time, the CED set up a massive field operation, with a presence in nearly 3,000 communities all over the United States, through which some 250,000 local trade-association members regularly received information. A relentless push for 58 million private-sector jobs propelled the entire effort. This, said Hoffman, was the target that America would need to hit to avoid catastrophe. His math went like this: in 1940, the year before Pearl Harbor, some 49 million people were employed in the United States, turning out $98 billion dollars worth of goods and services. Thanks to the war, 62 million people now had jobs, and US economic output had soared more than 50 percent. If the country were merely to fall back to where it had been in 1940, the ranks of the unemployed could reach 15 million—an “intolerable” situation in Hoffman’s mind. He thought 58 million jobs was the total required to keep the nation humming.
Unpretentious and self-deprecating, Hoffman liked to portray himself as a “simple-minded man with simple objectives.” But an explicit goal of 58 million employed—with private industry on the hook for 50 million of those jobs—was, in many eyes, downright audacious. “I don’t believe that you made this statement. I hope you didn’t,” George Sloan, a prominent New York businessman, told Hoffman. “I am strongly of the opinion that we, as representatives of industry, must be very careful that we do not make statements or implied promises that will be thrown back at us when the war is over by enemies of a free economy… that while they were fighting in Tunisia or Guadalcanal, industry, through its spokesman Paul Hoffman, had assumed the responsibility of supplying 58 million full-time jobs when they returned—and that industry had failed completely in living up to this responsibility.”
What Hoffman and the others at the CED knew, however, was that anything less would deprive Americans of the thing they craved most in the wake of the Great Depression—perhaps even more than peace: a strong sense of security. “We believe in the American system of free enterprise,” the CED proclaimed. “By that we do not mean that the government should let business alone, nor that economic opportunity should take precedence over political liberty, nor that the ‘good old days’ of the twenties should return.
“By free enterprise,” it continued, “we mean freedom of opportunity, opportunity to work, to live decently, to educate children in the arts of citizenship and human happiness and in the skills of a trade or profession to provide against sickness and old age. We stress opportunity, not contrasted with security, but identified with security.”
In the years to follow, members of the CED would work earnestly toward achieving these principles. They pursued them, in large measure, by analyzing and opining upon the proper federal role in shaping and steering the nation’s economy. Specifically, they encouraged the government to manipulate the levers of fiscal and monetary policy so as to put an end to the boom-bust cycles that had long roiled American businesses and their workers.
The CED would also support select pieces of social legislation. Most contentious was the Employment Act of 1946. When the bill was first introduced in the Senate, it was titled the Full Employment Act, and it held that “every American able to work and willing to work has the right to a useful and remunerative job in the industries, or shops, or offices, or farms, or mines of the nation.” This language, which echoed President Roosevelt’s 1944 Economic Bill of Rights, set off alarm bells among many business groups. The US Chamber of Commerce derided the legislation’s “Utopian objective,” while the National Association of Manufacturers said it would lead to “state socialism.” The ultraconservative Committee for Constitutional Government, which had substantial corporate backing, attacked the bill as “Russian spawn” whose other “ancestors” included Adolf Hitler and Benito Mussolini.
When the bill finally crossed President Truman’s desk, ready to be signed into law, it was vastly watered down, going only so far as to say that the government should “draw on all of its resources and functions to promote maximum employment.” Any hint that the government guaranteed full employment, or that individuals had an absolute right to work, had been erased. Still, the fact that the legislation didn’t die outright in the face of such virulent opposition was itself remarkable. And its survival was due, in no small way, to the CED’s general approval of its aims.
Regarding full employment, “I like the phrase as an expression of a goal for national policy,” Beardsley Ruml, the treasurer of the retailer R.H. Macy, told Congress on behalf of the CED. “Why not leave the term ‘full employment,’ like ‘liberty’ and ‘justice,’ to stand as a goal of democratic government, and to derive its specific content from the will of the people as expressed from time to time by their free institutions.” Paul Hoffman likewise slammed the notion that the bill would somehow transform the government into an employer for masses of Americans. “The crucial role, the most vital function of government in fostering employment,” he said, “is to establish conditions under which the free enterprise system can operate most effectively and to counteract the tendencies in the system toward booms and depressions.”
Yet even with all this, those in the CED saw clear limits as to what Uncle Sam could and should do. Ultimately, they believed, it was up to corporate America to offer pensions, health insurance, and an array of other benefits to its workers. It was up to corporate America to create jobs. “We speak of ‘full employment.’ But, under any name, it doesn’t happen automatically or in response to government fiat,” said Ralph Hayes, a Coca-Cola executive. The CED wasn’t suggesting that government was an insignificant player. Beyond nurturing an environment in which business could flourish, with regulations and rates of taxation that were sensible, the government had an obligation to erect a safety net for all citizens. But this was meant to be only “the basic floor of protection,” said Kodak’s Marion Folsom, who was influential in the passage of the Social Security Act in 1935. At the end of the day, most working people would find the security they were looking for as participants in the private sector, not as wards of the public sector. Companies practicing modern forms of “welfare capitalism”—and not the welfare state—would meet the bulk of their needs. It was industry that should “lend a helping hand to its workers,” said General Motors chairman Alfred Sloan, shielding them “against the vicissitudes of life.”
This wasn’t a matter of business being altruistic. Many executives were concerned that unless they made sure there were enough jobs to go around, and unless the benefits that came with them were sufficiently abundant, communism or socialism might well take root on America’s shores. “Any nation with a great unemployment wave becomes a seedbed for -isms,” said Harrison Jones of Coca-Cola.
Nor did companies look at this as a one-way deal. They would give a lot to their employees as well as insist on much in return: diligence, productivity, good morale, and above all, devotion to the corporation—or, as Kodak president Frank Lovejoy characterized it, “the whole-hearted interest and cooperation of the worker.” General Electric codified the expectations on both sides, listing the following among its primary corporate objectives: “to provide good jobs, wages, working conditions, work satisfactions, and opportunities for advancement conducive of most productive performance and also the stablest possible employment, all in exchange for loyalty, initiative, skill, care, effort, attendance, and teamwork on the part of employees.”
For most of American history, there had been no such give-and-take. Through much of the nineteenth century, companies kept a distant relationship with their workers. Many used skilled contractors rather than hiring too many full-timers. Clothiers and shoemakers favored a “putting-out” system in which they would give people the materials they needed and then have them produce the finished goods at home. By the early twentieth century, businesses were bringing more and more workers in-house as they sought to gain new efficiencies and to better control quality. Mass production supplanted artisan labor. But just because companies now wanted their own employees didn’t mean they were going to coddle them; management led by intimidation, not accommodation. “Bill, has anyone been fired from this shop today?” the assistant superintendent of one factory asked his foreman. Told no, he shot back: “Well, then fire a couple of ’em. It’ll put the fear of God in their hearts.” Members of the working class were typically unemployed for long stretches of the year, and decisions about whom to hire and fire were often capricious and cruel. The best way to ensure job security was to bribe your boss—and many did.
The new social contract emerging between employer and employee in the United States represented a drastic departure from this punishing past. It was forged between men and women—some of them unionized, some of them not; some of them blue collar, some of them white collar—and corporations such as Kodak, GM, Coca-Cola, and GE. These four giants, as well as thousands of other large businesses, would affect job security, pay, benefits, and worker engagement through this compact. In other words, not only would they make cameras and cars, refreshments and refrigerators; over the next seventy years, they would also make, and sometimes break, millions of lives.
In March 1932, George Eastman smoked a Lucky Strike cigarette, lay down in his bed, pointed a Luger automatic to his heart, and squeezed the trigger. The great man—who in 1885 had given America and the world the first transparent photographic film and later birthed amateur snapshot picture-taking by introducing the Kodak camera to the market—had been in ill health for more than a year. A condition affecting the nerves in his spinal cord had made walking difficult and painful. At age seventy-seven, Eastman had had enough. His suicide note, written on a piece of yellow-lined paper, read:
To my friends
My work is done—
Why wait?
GE
Notably, Eastman’s body of work included not just stupendous technological feats but equally impressive accomplishments in the realm of human relations. The instinct to do well by his workers stemmed from an incident that occurred when he was a young employee at a bank and was passed over for a promotion that unquestionably should have been his; the job went instead to a relative of one of the bank’s directors. “It wasn’t right. It wasn’t fair,” Eastman recalled. “It was against every principle of justice.” Insulted, he struck out on his own, resolving that everybody who worked for him “should feel, under every condition relative to employment, that the fair thing, the just thing is being done by him or her.… There is no panacea that can cover all the wounds that must necessarily come in a relationship of employer to employee. But there is such a thing as making a worker feel that his contribution to the success of the organization is important and deserving of recognition.”
In 1911, Eastman established the Kodak Welfare Fund with an initial infusion of $500,000 to assist those employees who couldn’t work because of illness or accident or might have to retire because of their age. “We have got to be prepared to do something for men who have grown old in our service,” Eastman stated, adding that “now while we are making so much money is the time to provide such a fund.”
The following year, Eastman introduced what was to become Kodak’s signature benefit: a profit-sharing plan known as a “wage dividend.” The payout was based on the common stock dividends disbursed to the company’s shareholders, with the total pot then proportioned to reflect each employee’s individual earnings over the previous five years. For someone with at least five years of service, it was a sizable bonanza—worth about a month’s pay. Receiving that inaugural wage dividend was “like a godsend to me,” especially given “how much ground it covered,” one Kodak veteran would recount decades later of his $57 bonus—a sum equal to more than $1,300 today. Eastman wouldn’t have been surprised by such delight. “You can talk about cooperation and good feeling and friendliness from morn to midnight,” he said, “but the thing the worker appreciates is the same thing the man at the helm appreciates—dollars and cents.”
In 1919, Eastman offered employees $10 million in Kodak stock—one-third of his personal holdings—at far below the market rate, directing that all resulting proceeds be added to a supplemental welfare fund. “For fifteen or twenty years back,” Eastman said, “I have had a provision in my will to distribute this stock among the employees who have helped make the company a success, but I am so discouraged about the prospect of dying soon that I am afraid many of the possible beneficiaries will get to Heaven ahead of me, so have concluded to expedite the distribution.” The basic intent of this bounty was plain: “Our employees are well satisfied and loyal,” Eastman said, “and this can only act to make them more so.”
Year after year, Eastman’s largesse grew. Kodak added a sickness allowance in 1920, and in 1928 the company unveiled an employee benefit plan that it touted as “the most advanced yet by a corporation.” The comprehensive program featured life insurance, disability coverage, and a retirement annuity. Kodak’s reach also extended far beyond the pocketbook. The company developed two suburban housing developments right outside its home base of Rochester, New York—one for rising executives and another, with more modest housing, for rank-and-file workers. They could buy a lot from the Kodak Employees Realty Corporation and secure their mortgage from the Eastman Savings and Loan Association.
Employees’ children were educated at the Kodak Union Free School, while workers themselves could receive tuition subsidies when they took classes at the University of Rochester or other local colleges. They competed in company-sponsored sports leagues—basketball, softball, bowling, and more—and were entertained at lunch by string quartets that Eastman hired. And when they were feeling under the weather, they could depend upon the Kodak Medical Department, complete with dentist and nutrition adviser. If a worker was housebound, one of the company’s ten visiting nurses came calling, administering “hope and joy and… advice.” In all of these things, the “Kodak King,” as Eastman was known, had turned his company—alongside Procter & Gamble, DuPont, Standard Oil of New Jersey, American Telephone and Telegraph, International Business Machines, and a slew of others—into a paragon of welfare capitalism.
For many of these corporations, the Depression changed everything. As the downturn worsened, they slashed costs and curtailed the activities that had been designed to win their employees’ fealty. Some killed the personnel departments that had been in charge of dispensing goodies to their workers—and keeping them in line. Kodak was jolted too. It tried to save jobs by reducing people’s hours and putting them on part-time status. “We hoped that this would be sufficient,” Kodak president William Stuber told employees in April 1932, a month after Eastman had killed himself. But it wasn’t, and layoffs followed. That summer, the company trimmed executives’ pay by 10 percent, while those with lower salaries and wages were hit with a 5 percent cut. In 1934, Kodak failed to issue a wage dividend for the first time in the plan’s history.
Still, Kodak—and its workers—fared far better than most. The company kept its benefits largely intact through the Depression, and even added paid vacations for factory hands in 1938. With the economy in shambles, Kodak also spearheaded a private, community-wide hospital insurance program in Rochester (later integrated into the Blue Cross system), and it led an alliance of area businesses in forming a voluntary unemployment insurance plan. Fortunately for them, Kodak’s workers didn’t need to withdraw from the reserve all that often. From 1935 to 1939, the separation rate—the total of quits, retirements, layoffs, and firings—at the company’s Rochester factories averaged a mere 11 percent annually, far below the 45 percent for US manufacturing.
Much of this stability was due to the deft planning of Marion Folsom, who first exhibited his gift for statistical analysis long before he showcased these skills for the CED. The McRae, Georgia, native had stepped in and improved his father’s bookkeeping techniques at the family’s general store shortly after going to work there at the age of twelve. Folsom went on to graduate from the University of Georgia when he was just eighteen, and then enrolled at Harvard Business School. In 1914, on the recommendation of the Harvard dean, Eastman personally wooed Folsom to join Kodak. For the next forty years, before President Eisenhower picked him to be his secretary of health, education, and welfare, Folsom was central to seeing that, as he framed it, “all employees receive a ‘square deal’” at Kodak.
But as much as Eastman was genuinely humane, and as much as Folsom was sincerely interested in trying to help “the poor guy who’s always up against it,” something else compelled them to be so munificent with their employees: a desperate desire to thwart the unions.
Many companies were engaged in similar efforts, yet Kodak was particularly dogged. In 1919, Eastman appealed directly to his workers when labor organizers came to Rochester. “Right now there are those who are trying to poison the minds of the people of this community and of this company with a line of so-called argument that reeks of incendiarism—are circulating propaganda that, if followed to its full conclusion, can bring us only to the pitiable condition of prostrate, starving Russia,” he told them. “Such propaganda and propagandists can not easily be reached by the management. But you men at the bench, you know! And you have the remedy in your own hands.… Your comfort and prosperity and the growth and prosperity of the company are interdependent.” Unionization went nowhere.
Nine years later, organizers were still trying to make inroads at Kodak Park, the company’s main factory complex. “As individuals we are helpless,” The Kodak Worker, an openly Communist publication, opined in May 1928. “We must learn the lesson of class solidarity. We must learn to appreciate the value of organization. We must resolve… to take the offense against our bosses, demand higher wages, shorten work days, and put an end to the oppressive conditions within the plant.” But for all the paper’s swagger about ensuring that “the master class trembles in its boots,” Kodak employees still weren’t buying it.
By the 1930s, many companies could no longer hold back unions, be it with carrot or with stick, as the Depression exposed fundamental weaknesses of American business and New Deal era laws greatly strengthened labor’s standing. But Kodak kept on as it had, buying the loyalty of its 22,000 workers with fat paychecks, regular wage dividends, ample benefits, and a complaint system known as “the Open Door”—all of it trumpeted on the pages of Kodakery, the employee newspaper started during World War II. At the same time, Kodak managers kept tabs on what unionized companies in Rochester were about to offer their workers and made sure they at least matched it. “As long as there’s somebody else has got it a little bit better,” Folsom explained, “the industrial relations people say we have to go along.”
In the late 1940s, Kodak faced perhaps its toughest test yet on the labor front: a drive by the United Electrical, Radio, and Machine Workers to organize the company’s Camera Works. But, again, management triumphed, as Kodak president Thomas Hargrave pressed his employees on whether “these outsiders” from the union “had anything to do with bringing… into existence” the many benefit programs they were receiving from the company. “I know, and I am sure you know, that they did not,” he said. The UE campaign ended soon thereafter.
Unionists may have thought “industrial paternalism” was a more accurate choice of words than “welfare capitalism,” but Kodak’s employees didn’t seem to care. And the brass was bent on keeping it that way. “When Eastman died in 1932, he left behind two generations of inbred managers, men who… shared his commitment to welfare capitalism as well his views that unions were anathema and an affront to private property,” the historian Sanford Jacoby has written. “It was well understood by Kodak managers… that a sacred tradition would be broken if a union came into the company on their watch.” When all was said and done, none ever would.
Through the 1920s and ’30s, Coca-Cola’s recipe for capturing its employees’ allegiance consisted of three main ingredients: charisma, culture, and cash.
Two figures, in particular, possessed the charisma: Robert Woodruff and Harrison Jones, who had grown up just blocks apart in Atlanta and then found themselves leading the company—Woodruff as Mr. Inside, Jones as Mr. Outside. “Since we were knee-pants boys together in grammar school,” Woodruff said, “our paths and our lives have been interlocked, and during our mature years the common bond and cement has been the dedication of both our lives and careers to Coca-Cola.” For all that joined them, though, Woodruff and Jones were a study in contrasts.
Jones, a lawyer by training, had the dynamism of a Chautauqua tent preacher: the booming voice emanating from his 6-foot, 220-pound frame; the gesticulating hands; the flowing river of words. Perhaps the only thing separating him from a man of the pulpit was that nearly all of his sentences were pockmarked by “goddamn this” and “goddamn that”—as well as vernacular far more vulgar. “Every observation by Harrison,” Coca-Cola’s Ralph Hayes once commented, “begins with a spate of profanity, followed by an explosive negative in heated denial of whatever has just previously been said.” Ralph McGill, the editor of the Atlanta Constitution, called Jones “a steam engine in pants.”
Jones’s prime responsibility was dealing with Coca-Cola’s bottlers, a web of mostly independent businesses that converted the parent company’s syrup into soda and then packaged and sold the final product—all backed by the marketing, advertising, and branding juggernaut that has always been Coca-Cola. Interactions between the mother ship and its franchisees were often fractious, and Jones took it upon himself to smooth things over, while pushing the troops to sell, sell, sell. “Did it ever occur to you that Coca-Cola, the finished beverage, is a child of a marriage between the Coca-Cola Company and the bottler?” Jones thundered to a group of executives from throughout the Coca-Cola system. “It comes from the womb of one and the loins of another. Oh, there is mutuality in this deal. But the only thing that counts to any worthwhile parents, and the only thing that counts here, is offspring, and Coca-Cola is the child, the offspring, of that marriage.… The millions of people in the world don’t give a hoot who the parents of this child are. They know the child. They believe in the offspring. That is our life; that’s our blood, and it’s that we must perpetuate. And we must adopt the motto that the one spring that springs eternal is offspring. So, we must have unity. We must have cooperation.”
Back at headquarters in Atlanta, Jones would assume the same role, sitting in the company cafeteria and listening to employees’ gripes—all while expounding on the need for unity and cooperation. “People would try to talk, but before it was over they’d be spellbound,” said his grandson, Harrison Jones II. “He’d sit there, and people would just be amazed that he would spend so much time with them. He’d spend forty-five minutes with an employee with a problem.” Evidently mollified, the workers of Coca-Cola proper never unionized, though plenty of the bottling plants were organized, mostly under the auspices of the Teamsters.
Woodruff, known as “The Boss,” had a much different personality. For starters, he wouldn’t have been caught dead in the employee cafeteria. An adroit behind-the-scenes operator, Woodruff preferred to eat with a few handpicked executives and friends in his private dining room, just off his office, which he reached by private elevator. He was a natural tycoon, right down to the ever-present cigar in his mouth—usually a Cuesta-Rey, though on occasion a Havana encircled by a special Coca-Cola band. But Woodruff was a tycoon with a southern twist. His pride and joy was Ichauway Plantation, a 30,000-acre paradise in rural Georgia, where politicians, athletes, and entertainers joined him to ride horses, fish, hunt quail, and drink bourbon. “One of the high points,” one visitor related, “is when the colored chorus comes up to the ‘big house’… to sing Negro spirituals.”
Woodruff could be gruff at certain times and aloof at others—something never true of Jones—but he radiated his own commanding presence. Just six feet tall, he still dominated a room. “You knew when The Boss had arrived, even if you were facing the other way,” said one associate. “You could feel it.”
The blend—Jones, rousing and riotous; Woodruff, refined and respected—worked beautifully. Each in his own way made sure a common message was conveyed constantly to everyone in the Coca-Cola universe, from top manager to floor sweeper, from bottler to advertiser: being part of this company was truly something special. In a certain respect, it was a funny refrain. Other products, arguably, had far more import than did a bottle of soda. General Electric, for one, could claim that it was at the very center of what Henry Ford called “the Age of Edison”—the early twentieth-century period of electrification that sparked America’s new industrial future. General Motors played a key part in making Americans mobile, forever changing the basic structure of community and society. But Coca-Cola had a singular grip on the American imagination, giving the nearly 7,000 people that the company employed in the mid-1940s an unusual sense of pride in their work.
As legend has it, it was 1886 when Atlanta pharmacist John Stith Pemberton hunched over a three-legged brass pot in his backyard and cooked up the first batch of the syrup that would build an empire. He poured his concoction into a jug and carried it down the street to Jacobs’ Pharmacy, where it was sold at the soda fountain for five cents a glass. Soon, whether by design or by accident, it was mixed with carbonated water. People loved it.
During World War II, the company shipped its billionth gallon of syrup, and through the 1940s it outsold its rival Pepsi by roughly five to one. But even more striking than the company’s market share was its mind share. Coca-Cola, wrote newspaperman William Allen White, “is a sublimated essence of all that America stands for—a decent thing, honestly made, universally distributed, conscientiously improved with the years.” During the war, American factories clamored for Coke to keep their workers contented, leaving Woodruff’s men feeling immensely gratified. Such demand, Ralph Hayes told The Boss, spoke to “the unique position of this beverage as a part and symbol of a way of life for which a war is being waged.” It was heady stuff for a soft drink.
Aware perhaps of the psychic value that the company offered, Coca-Cola paid its factory workers relatively well but stinted somewhat on executive salaries. When manager Harold Sharp joined the legal department in the early 1920s, “I was making about three times as much money” elsewhere, he recalled. Yet he signed on anyway, “interested in becoming connected with a clean, commercial enterprise, regardless of the compensation.” And, sure enough, Sharp found real purpose in his work. “We have the product, and we are aiming at a definite objective of bringing refreshment, pure and wholesome, to the millions of people who inhabit the earth,” he said.
Despite the occasional grumbling about tight pay, Woodruff was able to get a lot out of his employees. One way he did this was by always giving executives a second chance. “I hate to see a fellow fail when, with just a little more thinking and a little more work, he could succeed,” Woodruff said. Among The Boss’s best traits, Hayes averred, was his fierce “loyalty to his enterprise, fidelity to his associates, constancy toward his friends.” Along with the constancy came cash—well-timed cash bonuses, to be exact.
These payments were very different from Kodak’s wage dividend, which was strictly objective and egalitarian. A windfall from Woodruff, by contrast, was highly subjective and personal—the type of benevolent gesture, one imagined, to which the help at Ichauway Plantation had also grown accustomed. “This company has sure been good to a lot of us country boys,” Sharp said in 1939, having just been handed his bonus for the year. Holland Judkins, another recipient of Woodruff’s good graces, told The Boss: “Thank God for you and Santa Claus in the order named.” Some offered a quid quo pro upon the receipt of their bonus. “To show my appreciation,” said W. J. Brogunier, who worked in Coca-Cola’s Baltimore office, “I will do all that I can to help make next year better.”
At times, Woodruff would adjust people’s base salaries—a move that also engendered warm expressions of loyalty. Upon learning that “my rate had been hijacked, my feeling of utter surprise was followed by other feelings of quiet, confusion, gratitude, and determination,” said Hayes. By “determination,” he added, he meant that he didn’t want to let Woodruff down by not doing everything he could to help the company. It’s the determination “to avoid giving anyone cause to say that your judgment or confidence was too badly misplaced,” Hayes wrote. “I don’t mind you losing bets on horses, cards or dice, but I don’t want to be a party to your losing one on a person, particularly if I’m the person.” He closed his letter this way: “Bob, what I started to say was, ‘Thank you,’ and that I do—proudly and humbly and faithfully.”
Gerard Swope earned a degree in electrical engineering from the Massachusetts Institute of Technology, but his real education—the one that would turn his tenure as the president of General Electric into something strange and extraordinary—came from a very different place: Hull House, the settlement agency that provided a range of services for immigrants (mostly Italians, Czechs, and Russian Jews) and sought to close the divide between rich and poor.
Swope, the son of a St. Louis manufacturer of watchcases, had made his way to Chicago after graduating from MIT in 1895 and landing a machine-shop job with the Western Electric Company. Soon thereafter, he began teaching algebra and electricity classes at night at Hull House, which Jane Addams and Ellen Gates Starr had opened on the city’s Near West Side in 1889. Their converted mansion would expand over the years into a thirteen-building complex, stretching for nearly a block, with a gymnasium, theater, art gallery, music school, boys’ club, auditorium, cafeteria, cooperative residence for working women, kindergarten, nursery, libraries, post office, and meeting rooms—often used by labor organizers.
But Addams’s real contribution had less to do with bricks and mortar and more to do with flesh and blood—the way she attracted wealthy women and men to Hull House to serve those who were less fortunate. They came as volunteers “to help out with the house’s many activities in art, drama, music, recreation, education, and charity,” Jane Addams’s biographer, Louise Knight, has written. “While they often arrived with a sense of moral superiority, if they stayed long enough and their minds were open, their class condescension evaporated and was replaced by democratic beliefs: outrage at the unjust conditions working people strove to overcome and eagerness to be their political allies in those struggles.”
For Swope, such ideals were a potent magnet, and always had been. While at MIT, he had studied business law with Louis Brandeis, who would go on to join the US Supreme Court and memorably sum up his own philosophy on income distribution this way: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” Swope was wicked smart, intense, and exacting—“a spring under tension always, never spent and never relaxed,” as one friend painted him. But he was no stuffed shirt. While in college, he took a job at the 1893 Chicago World’s Fair, working at the General Electric exhibition for a dollar a day. Tearing down transformers and other gear in need of repair, he immersed himself in oil, grease, and dirt. Swope would eventually become a full-time resident of Hull House. There he met his wife, Mary Hill, who was a social worker. Addams herself officiated at their wedding. Moving back to St. Louis at one point for Western Electric, the Swopes even opened their own settlement house, right next door to their home, where Mary taught immigrant women to sew.
By the time, then, that he was named president of General Electric in 1922, having spent the previous couple of years organizing the company’s foreign operations, Gerard Swope had a head full of well-thought-out ideas about how the laboring class should be treated. “There are three factors in our economic system today that must be taken into consideration in our work: the shareholders, the employees, the community,” Swope told GE’s foremen on his first cross-country tour of the company’s factories. As for the shareholders, he said, “happily, there is little to worry over in regard to the financial end of our business.
“My greatest concern,” he went on, “is in the other two phases of our responsibility, that towards the employee and to the community at large. As to the employees, I infer every man here realizes that he is dealing with men and not with material or machinery. In our human relations between employees and employers there must be justice and sympathy. We spend so much of our time, so much of our life, in industry that we can get a very much greater satisfaction out of life if we have the conditions which surround our work pleasant and congenial.”
Much like Kodak, GE was already a pioneer in this arena. Under Charles Coffin, who became GE’s first president after merging his Thomson-Houston Company with Thomas Edison’s businesses in 1892, a number of steps were taken to cushion the workforce. The company instituted a pension plan in 1912 and in 1913 formed a mutual benefit association to succor employees and their families in case of sickness, hospitalization, or death. A profit-sharing system kicked in in 1916, a life-insurance plan in 1920 (partly a response to the flu pandemic two years earlier), and a savings plan in 1922.
Swope then improved these benefits and added a bevy of new ones: hospital coverage, loan funds, housing assistance, and recreational activities for employees. Along the way, Swope had the consummate partner: Owen Young, who had shown himself to be an exemplary problem solver as GE’s general counsel before rising to be chairman. Like Swope, Young, who’d grown up as a poor farm boy in upstate New York, knew what it was like to get his hands dirty. Like Swope, Young had been exposed to the thinking of those who questioned the excesses of capitalism and put the worker first—in Young’s case, the muckraking journalists Lincoln Steffens and Ida Tarbell, who lauded Young for “a labor policy… in harmony with liberal notions.” And like Swope, Young believed that it was possible to bind together the interests of employer and employee.
In the past, “capital was the employer, buying labor as a commodity in the cheapest market and entitled to all the profits of the undertaking,” Young told an audience at the Harvard School of Business in 1927. “Managers were considered the paid attorneys of capital to devise ways and means to squeeze out of labor its last ounce of effort and last penny of compensation. Is it any wonder that in this land of political freedom men resented the notion of being servant to a master?… Fortunately, we are making great progress in America in these difficult relationships. We are trying to think in terms of human beings—one group of human beings who put their capital in, and another group who put their lives and labor in a common enterprise for mutual advantage.”
To promote that spirit, Swope and Young kept GE’s pay rates as high as possible—an essential element, they were convinced, to help those on the line feel valued and, in turn, inspired to help management meet its objectives. “Slowly we are learning that low wages for labor do not necessarily mean high profits for capital,” Young said.
Beyond their own brand of welfare capitalism, Swope and Young utilized two other methods to try to motivate their employees. The first was “scientific management,” the principles that Frederick Taylor had popularized a few years before World War I (and a cousin of Fordism, which standardized mass production). Under Taylorism, the time required for each element of a job was to be measured so as to ascertain the best way for tackling every task. The aim was to boost productivity. Although many would come to regard time-and-motion studies as instruments of management repression—an image that Charlie Chaplin helped to make indelible in his 1936 film Modern Times—Taylor himself had a completely different goal. “The principal object of scientific management,” he wrote, “should be to secure the maximum prosperity for the employer coupled with the maximum prosperity for the employee.”
Lillian Gilbreth, a Taylor protégé, taught GE how to apply this methodology in the mid-1920s, and by and large, the workforce seemed to like it—or at least they learned to like it, bending the system so as to raise their incentive pay while reducing the most tyrannical aspects of being monitored by a stopwatch. Often, groups of employees would work together, calibrating things so that they cranked out neither too much product (an offense known as “rate-busting”) nor too little (“chiseling”).
The other tactic that GE used to win over its workers was to cultivate “company unions”—an appellation every bit as oxymoronic as “Jews for Jesus.” Real unions despised these management-sanctioned groups, which could be found not only at GE but also at Goodyear, Dennison Manufacturing, AT&T, and more than 1,000 other companies across America. Samuel Gompers, the labor leader, called them a “pretense admirably calculated to deceive.” But many workers weren’t so condemning, at least not at GE. The bosses treated the leaders of GE’s company unions as junior partners, not as opponents, and they were even given access to corporate financial data. The upshot: management was able to “educate and secure sympathy and support from a large body of employees,” the manager of GE’s plant in Lynn, Massachusetts, reported. Esprit de corps ran high; turnover was low.
Then the Depression hit. Swope responded by thinking big—really big. In 1931, he put forth a proposal to shore up all of industry and cure the nation’s unemployment crisis. “A job for every man!” became his watchword. After President Hoover rejected “the Swope Plan”—an intricate scheme involving the adoption of a large-scale social insurance system, funded by employer and employee, and the formation of corporate cartels—GE moved on its own, extending unemployment benefits to those who’d been laid off from the company.
Over time, however, GE was forced to cut back on many benefits, while reducing average pay by nearly 30 percent. Its payroll shrank by more than half, from 88,000 employees in 1929 to fewer than 42,000 in 1933. The company restored wages and benefits as rapidly as it could, but in the meantime, the lean years had given an unprecedented opening to a faction that had never really made much headway at GE before: outside labor organizers. Among this band was James Carey, who in 1936 became president of the new United Electrical and Radio Workers of America.
Swope and Young’s reaction to the UE stood in stark contrast to that of their peers at a company like Kodak. Rather than stiff-arm organized labor, as Eastman had done and his successors would continue to do with a kind of religious fervor, the two GE executives openly embraced the national union movement. Their impulse wasn’t new. As early as 1926, Swope and Young had met secretly with William Green, the head of the American Federation of Labor, to invite him to organize their company’s factories. They even suggested that the AFL could parlay the dues it collected at GE into a war chest that would help the union infiltrate other electric companies. Their main demand was that GE’s workers be organized into a single, broad industrial union, which they believed would be easier to negotiate with than a series of competing craft unions. The overture to Green fizzled, but it signaled that Swope and Young were, even among the “industrial statesmen” of the 1920s, well ahead of their time.
In 1935, President Roosevelt signed into law the National Labor Relations Act, the landmark measure that established the rights of workers to organize unions and bargain collectively. The law, known as the Wagner Act (for its chief sponsor, Sen. Robert Wagner, a Democrat from New York), also created the National Labor Relations Board and the legal infrastructure through which union-related disputes would be settled. Many companies fought the law bitterly—so much so that Business Week magazine was undoubtedly speaking for the mainstream of its readership when it called the Wagner Act “a piece of despotism” that corporate America would “unitedly resist.” But not Young and Swope, who had been among a handful of corporate executives to make constructive suggestions on the drafting of the bill. To them, it was inescapable that labor was going to organize itself, and so it made good business sense to get out in front. But more than pragmatism was at play. Working with unions, instead of wrangling with them, was an extension of Young and Swope’s credo that employees should sit atop the corporate pecking order, ahead even of shareholders. “In the long run,” Swope said, “the people who should be management’s chief concern are those who give their lives to the business, the workers, and not primarily those who buy in and out because a company pays good dividends.”
Not every GE executive felt so comfortable about the UE’s ascent. When Carey, newly elected to head the union, asked Swope for a meeting in February 1937, Swope’s lieutenants advised him to spurn the request. After all, it wasn’t a normal part of the corporate president’s job to sit down with a labor representative, and they feared that a face-to-face session with GE’s top man would give Carey too much cachet. What’s more, GE’s managers liked the plant-by-plant bargaining that took place under the company-union system—an arrangement endangered by the UE’s pursuit of a single, national contract. But Swope ignored his men, and he and Carey had “a fine intimate talk,” as Swope would remember it—the sixty-four-year-old corporate lion peppering the twenty-five-year-old “boy wonder” of labor with questions about his background and beliefs. It was the only time that the two met directly, but Swope came away persuaded that Carey could be trusted, and vice versa. “If you can’t get along with these fellows and settle matters,” Swope told the vice president handling labor relations, “there’s something wrong with you.” By the spring of 1938, GE’s old company unions had been swept aside and the UE had won its first national contract without any real resistance from management.
The amity would be short-lived, however. Swope and Young retired in 1944, and the executives who followed them—including Charlie Wilson—had a decidedly different view of unions. The new guard were still moderates in some ways, as evidenced by their active involvement in the CED. But in dealing with organized labor, they took a sharp turn to the right, a turn that was all the more pronounced because for so long GE had stood so far to the left.
In the spring of 1938, Sales Management magazine sent a squad of researchers to Muncie, Indiana—the prototypical American “Middletown”—where at every twentieth home they asked questions about ninety big corporations. One of them was, “Which companies, in your opinion, treat their employees fairly?” The three that topped the list were General Motors, Coca-Cola, and General Electric. For those actually working at these behemoths, however, reality was more cloudy and complicated. This was especially so at GM.
Like GE, GM was an early adopter of an assortment of employee benefits. A bonus system for salaried personnel was started in 1918, a savings and investment plan for all workers in 1919, a training institute providing continuing technical education in 1926, disability and life insurance that same year, and sickness and accident insurance in 1928. In 1932, as the Depression deepened, GM tried to keep as many people as possible employed through the use of job sharing. In 1939, the company would begin offering no-interest loans in the event a worker with five or more years of seniority faced a sudden reduction in hours or was laid off. And in 1940, it would implement a retirement plan. Wages were good.
Most of these pluses for employees came while Alfred Sloan ran GM. Born into an upper-middle-class Connecticut family, Sloan was a classmate of Gerard Swope’s at MIT. Following graduation, he joined the fledgling Hyatt Roller Bearing Company, which after several years—and with the help of his father—he bought from the original owner. Over the next two decades, Sloan greatly expanded the business by supplying two companies at the fore of the fast-growing auto industry: Ford and General Motors, which had been founded in 1908 by William Crapo Durant. Sloan was well on his way to being a rich man.
Billy Durant would make him even richer. In 1916, he approached Sloan and offered to acquire Hyatt, part of a strategy in which the ever-scheming Durant would buy up and put under one roof various components manufacturers. Although Sloan and his father each walked away from the deal with $5 million—an amount equal to more than $100 million today—Sloan wasn’t the type to retire and be idle, especially at age forty-one. So, Sloan went to work for Durant, where he learned all he needed to know about how not to manage a company. By 1920, the freewheeling Durant had pushed General Motors to the financial brink. He “was a great man with a great weakness—he could create but not administer,” Sloan would say. The chemical company DuPont, which had become a major investor in GM, forced Durant out in November of that year. Beginning in 1921, Sloan worked closely with a coterie of DuPont executives to get GM back on track. They did, and in May 1923, Sloan was made president of GM.
He was an organizational genius. The management writer Peter Drucker, who knew Sloan well, would credit him with being “the first to work out systematic organization in a big company, planning and strategy, measurements, the principle of decentralization,” and more. Sloan’s role “as the designer and architect of management,” Drucker added, “surely was a foundation for America’s economic leadership in the forty years following World War II.” Sloan’s no-nonsense manner could make him seem impersonal and cold. But Drucker insisted that this was an unfair portrait. He had “tremendous personal warmth and was unbelievably generous—with his time as well as with his money,” Drucker wrote. “Wherever I went in GM… I was told, often by fairly junior people, how Sloan had come to their rescue, usually unasked—how, for instance, he had given up an entire Christmas vacation to find the hospital where the badly burnt child of a plant manager could get the best medical care, and he had never even met the plant manager. I always asked, ‘To whom would you go if you were in a serious jam?’ Most people immediately answered, ‘Alfred Sloan, of course.’”
Rather than make a fuss about his own openhandedness, Sloan preferred to crow about GM’s open-mindedness. “The ability to get people to work together is of the greatest importance,” he said. “General Motors, by its method, gets the fullest possible benefit of every ounce of brainpower in the whole organization. It also, in this way, gets the fullest possible contribution of every man, because everybody has been won over by open, aboveboard discussion to every policy adopted.”
Well, almost every one. Even Sloan couldn’t possibly have said with a straight face that GM was open and aboveboard in its policy toward organized labor. Fearful of the ascendant United Auto Workers, GM hired Pinkerton and other detective services to spy on its employees from early 1934 through mid-1936. In all, the automaker spent nearly $1 million—about $17 million in today’s terms—on its espionage activities, though their full extent will never be known. That’s because executives purged their files when they caught wind that a special US Senate committee, under the direction of Wisconsin Progressive Robert La Follette Jr., was about to investigate the matter as part of a sweeping probe into how some of America’s largest companies were routinely violating the civil liberties of workers attempting to organize. The timing of the purge was impeccable, with GM’s records cleaned out just before La Follette’s staff could serve subpoenas. “I was astonished at the amount I could get rid of,” Louis Seaton, a GM manager in charge of labor relations, acknowledged to La Follette.
The picture that did come together, while incomplete, was damning enough. In order to feed a steady stream of reports to GM about the UAW and its plans, Pinkerton had placed informants inside a number of union locals, and the agency had even lured an organizer from the UAW’s international office into its pocket. It set up a dummy office inside the Hoffman Building in downtown Detroit, where the union had its headquarters, to keep a close eye on who came and went. According to one of its former agents, Pinkerton tapped the phone of the UAW’s president, Homer Martin. Operatives also maintained surveillance of union leaders, including Martin and the man who would succeed him as head of the UAW, Walter Reuther. GM wasn’t as apt to turn to violence as was Ford Motor—with its infamous service department, populated by gun-wielding thugs—but its behavior was just as creepy.
During the summer of 1936, with congressional investigators beginning to piece things together, GM dismantled its spying apparatus. Six months later, in February 1937, the company’s executives were called to appear before La Follette’s committee. In between, without any more Pinkertons snooping around and making things difficult, the UAW made significant strides in organizing the workers at GM.
It all began on December 30, 1936, when union activists sprang into action at the Fisher No. 1 factory in Flint, Michigan, which supplied car bodies to Chevrolet and Buick. Rather than picket outside the plant, which would give the company an opportunity to send in scabs, workers loyal to the union camped inside, effectively seizing control of the facility and shutting down production. In the coming days and weeks, the sit-down strike spread across the area—to a Cadillac assembly plant, and then to a Fleetwood factory, and then to Fisher No. 2. There, on January 11, 1937, the police tried to take back the facility by firing rounds of tear gas at the strikers, only to be rebuffed by a barrage of stones, bottles, and steel door hinges. The cops turned and bolted—a retreat that led laborites to call the confrontation the Battle of the Running Bulls. But the bulls didn’t stay away long. The police returned and opened fire with pistols and riot guns, wounding thirteen people. The clash strengthened the resolve of the strikers, who pressed on. On February 1, under the leadership of Walter Reuther, the union occupied Chevy Engine Plant No. 4—a linchpin of the GM factory system.
From the outset, GM contended that the strikers were breaking the law, having commandeered private property. The company also did its best to make the case that it was a fair employer. “Wages are higher today, by far, than the corporation ever paid before,” Sloan told his workers. “No one can honestly say otherwise.” Yet, while that was true, employees did have their frustrations—mostly about the ever-increasing speedup of the assembly line. The old “drive system,” which had governed much of the American workplace from about 1880 to 1915, was still in full throttle at GM. “Everywhere workers indicated that they were being forced to work harder and harder,” read a 1934 National Recovery Administration report on the auto industry. “They are vigorous in denouncing management as slave drivers, and worse.” It was said that William Knudsen, a GM executive who would become corporate president in May 1937, could yell, “Hurry up!” in fifteen languages. As a rejoinder, the strikers in Flint sang:
twiddle your thumbs.
When you want them to know
They’d better go slow,
Sit down! Sit down!
On February 11—with pressure mounting from US labor secretary Frances Perkins; Michigan governor Frank Murphy; and John L. Lewis, the president of the Committee for Industrial Organization, the umbrella group to which the UAW belonged—GM finally gave in. It didn’t have much choice. The company had pumped out 50,000 automobiles in the month before the start of the strike. Now, output was at a virtual standstill, with just 125 cars rolling off the line in a week.
The four-page agreement that GM signed with the UAW was groundbreaking, for it recognized the union as the exclusive bargaining agent for the company’s workers. The pact was also monumental for the labor movement as a whole, marking the beginning of a thirty-year period in which industrial unionism would serve as a countervailing force against corporate power in America.
As a clutch of GM labor officials made their way to room 357 of the Senate office building in Washington, just four days after the Flint sit-down strike had been settled, it was clearly too soon for anyone to grasp the historic weight of the accord. The executives were simply trying to explain how they’d ended up overseeing “the most colossal supersystem of spies yet devised in any American corporation,” as La Follette’s committee termed it.
They did their best, reminding the panel that unions could play rough, too, like the time in 1933 when organizers dynamited a power station at one of the plants in Flint, causing several hundred thousand dollars in damage. They also took care to make a distinction between their own laborers and labor unions—“outside organizations” that promoted “a great deal of radicalism,” as Alfred Marshall, director of personnel at GM’s Chevy operation, put it.
“I have hired upward of 250,000 men in my day,” Marshall said. “I personally hired every man that went into the Chevrolet division for five years at Flint. I personally headed up the welfare.” He went on to tell the committee that three principles guided him: “Hire a man; keep him busy.” “Pay him well for what he does.” “And treat the man as you would be treated yourself.”
Sen. Elbert Thomas, a Democrat from Utah, was skeptical. “Just carry that logic through with regard to spying and see where you are,” he told Marshall.
“We try to be very fair with regard to spying,” Marshall replied.
As mockable as Marshall’s rationalization may have been, he wasn’t being insincere: many GM executives really did feel as if their domain had been invaded by a group of outsiders, threatening the company’s independence to the point that they could justify spying (at least to themselves). “Will a labor organization run the plants of General Motors Corporation or will management continue to do so?” asked Sloan, who was so opposed to the New Deal and its supportive posture toward unions that he helped fund the American Liberty League, a fanatical group that stooped to racism and anti-Semitism in its frenzy to bring down President Roosevelt.
Some inside GM’s executive suite weren’t so dogmatic, however. At least a few of Sloan’s top men thought the use of spies a bad practice. The chief heretic was Charles Wilson—“Engine Charlie,” as he would come to be known, to distinguish him from GE’s “Electric Charlie” Wilson. He had joined GM from Westinghouse in 1919 as an engineer and nine years later was made a corporate vice president. In 1941, he would replace Knudsen as president of GM, having taken an especially close interest in labor relations.
Given Wilsons’s roots, this focus wasn’t surprising. His father had organized a toolmakers’ local in Pittsburgh, and Wilson himself had been business agent for a Pattern Makers union as a young man. He liked to tell people that when Socialist labor leader Eugene Debs ran for the White House in 1912, he’d voted for him. Wilson even kept a framed copy of his union card on his desk at GM.
To be sure, Wilson was no pushover, and he and his underlings—some of the same men who had orchestrated the spying in the 1930s—would fight the UAW hammer and tongs over all sorts of contract provisions and corporate policies throughout the forties. But as less of a hard-liner than Sloan, Wilson was open to collaborating with the union, making lasting peace where possible. “The test of labor relations isn’t rhetoric,” he once said. “The test is results.”
It was striking that GM had room for both men—a staunch conservative like Sloan, who would remain GM’s chairman until 1956, and a more free-thinking executive such as Wilson—and it highlights an often-overlooked facet of the way that corporations have always dealt with their workers and, more generally, defined the social contract: with terrible inconsistency. And so Charles Kettering could sit on the founding board of the CED, while GM vice chairman Donaldson Brown lent considerable intellect and energy to the National Association of Manufacturers and its assault on the Full Employment Act. The very concept of “full employment,” Brown told Sloan, was the kind of “abstract economic theory” that could result in government planners “laying down a dictum” as to how much industry must produce. Some scholars like to put a thick line between the two groups: the CED has become shorthand for those companies at the center-left of American big business in the 1940s; the NAM has become code for those much further to the right. What often gets missed, however, is that many corporations—not only GM, but also GE, Kodak, and Coca-Cola—had at the very same time executives who were involved with both organizations, a display of corporate schizophrenia that would make it difficult to shove any of these enterprises into a single political box.
The Germans surrendered, just as the CED knew they would, in May 1945, and the Japanese followed suit in August. More than 400,000 American soldiers, sailors, airmen, and marines had died in what would be called the Good War.
As millions more veterans made their way home, the bread lines that many had foreseen never materialized. In January 1946, Time magazine reported that the nation’s economy was going full tilt, leaving it to the CED’s Paul Hoffman to tote up “the cheery figures”: some 52 million workers were already employed in civilian jobs, household earnings were rising steadily, and private production was also surging.
Whether this excellent fortune was due to the advance planning of the CED and all the corporations it had enlisted in its cause, or whether it was the result of other factors—pent-up demand, government policy, demographic change—who could say for sure? And who really cared? “The problem,” said Time, “is no longer how to achieve full employment. The question now is: how can it be maintained?” For America’s workers, their long-elusive quest for security finally seemed within reach.