We tend to paint history as a series of sharply defined events, as if someone flicks a switch and one era instantly gives way to the next. Sometimes, these neat blocks are viewed as cause and effect: the Progressive Era, for instance, is seen as a reaction to the political and corporate abuses brought by America’s rapid industrialization at the turn of the twentieth century. There is, of course, some logic to this orderly, textbook portrayal of the past; if nothing else, markers help us make sense of things. But in actuality, our collective experience isn’t nearly so tidy. Even as one wave of history continues to crest, the undercurrents often start to run in a different direction.
For working America, the social contract between employer and employee would get stronger throughout the 1950s and ’60s, with good job security and rising pay and expanding health coverage and pensions. The Golden Age would glitter for many years to come. But by 1958, important changes were already stirring deep below the surface: in management’s approach to organized labor; through new technologies being introduced on the factory floor and in the front office; and with the basic profile of the American worker, as ever more people were now being hired to use their heads and not just their hands. As much as anyone, General Electric’s Ralph Cordiner was at the center of it all—the extension of a generous deal with his workers and, simultaneously, its early fraying at the edges.
Cordiner, who was elected GE’s chairman and chief executive in ’58, having served as the company’s president for the previous eight years, was a model executive for his time: an Organization Man’s Organization Man. He didn’t invent the decentralized company (known among business professors as the M-Form, or multidivisional, structure); credit for that would go to DuPont and General Motors under Alfred Sloan. But Cordiner became one of its most enthusiastic practitioners, pushing responsibility for day-to-day decision making—and accountability for results—beyond a small circle of top executives and down to hundreds upon hundreds of third- and fourth-level supervisors spread across scores of operating departments. In so doing, Cordiner helped to introduce “the vast new arena of middle management,” as one GE financial analyst put it. Indeed, by 1956, the United States had taken a striking turn: the number of white-collar employees (defined as those in managerial, technical, and clerical jobs) for the first time surpassed the number of blue-collar laborers. This shift away from manufacturing toward “knowledge work,” as Peter Drucker was to first call it in 1959, would over time have far-reaching effects on the country’s economy and society, transforming the fundamental makeup and character of the American workplace and altering the corporate social contract.
Those entering the ranks of management in the 1950s were in a position to weigh the relationship between employer and employee from two sides: as supervisors overseeing people who reported to them, and as individuals with their own careers to chase. Yet whether they were directing others or being directed, Cordiner’s men—and they were practically all men—were expected to stick to the same script: to step up and make good decisions on behalf of the entire enterprise, and to inspire others to do the same. GE had become too large and too complex, Cordiner was convinced, for a top-down system to work any longer. This new alignment, based on encouraging autonomy up and down the chain, was meant to jolt GE out of the state of “security, complacency, and mediocrity” toward which he saw the company drifting. “The manager’s work is to lead others by drawing out their ideas, their special knowledge, and their efforts,” Cordiner declared, adding that “self-discipline rather than boss-discipline is the hallmark of a decentralized organization.” He wanted those at GE to “lead by persuasion rather than command” and characterized what he was promoting as “a philosophy of freedom.” “Decentralization,” said Cordiner, “is a creative response to the challenges of our time, a way of preserving and enhancing the competitive enterprise system as it evolves into the new form that has been so aptly named ‘the people’s capitalism.’”
From most outward appearances, Cordiner was an odd spokesman for “the people’s” anything. Colleagues and students of GE have described him as having “as much charisma as a cold fish,” with an “aloof personality, Napoleonic in appearance and demeanor.” But while he may not have been approachable, Cordiner’s beliefs were, in fact, steeped in working-class values, an appreciation for a hard day’s effort, and true respect for others. Born in 1900 on a wheat ranch twenty miles outside of Walla Walla, Washington, Ralph Jarron Cordiner—his family called him R.J.—went to work in the fields when he was eleven. His mother, he told his four daughters in a private memoir written in 1958, had imparted “the wisdom of never speaking disapprovingly or unkindly about anyone, which she would not tolerate in her presence. Her contention was that every individual had many good traits, and it was our responsibility to discover these good traits and not be critical of self-evident shortcomings.” Over the years, Cordiner picked up a broad range of experience: in addition to being a farm hand, he worked as a janitor for a church, a potato peeler and vegetable preparer at a hotel, a window washer and sidewalk sweeper at a general store, a bookkeeper and salesman for a storage-battery company, and a promoter of college dances. “He never forgot he was from Walla Walla,” said Cordiner’s son-in-law, Frederick Lione Jr. “He understood the working man.”
After graduating from Whitman College in 1922, Cordiner was hired as a commercial manager by a division of Pacific Power and Light, and in less than a year he left to join the Edison General Electric Appliance Company, a GE affiliate. He came to count Gerard Swope and Owen Young, GE’s progressive leaders of the Depression Era, as mentors and was promoted rapidly, becoming manager of the company’s appliance and merchandise department in 1938. The following year, Cordiner left GE to become president of Schick, the electric shaver company. He lasted three years but was never too happy there. The money was good, but the work wasn’t otherwise fulfilling. “I found myself very restive in that there was no challenge in the assignment,” Cordiner said, “and my golf handicap was entirely too low because I was bored and did not have enough to do.” It was a valuable lesson: “I learned from that experience that one should never work exclusively for financial reward.” Cordiner headed to Washington, DC, in 1942 for a stint as a top official of the War Production Board, and in 1943 he rejoined GE as assistant to the president. It was in that role that he began to study the concept of decentralization, and in 1951 he launched his plan for carrying the company into the future.
To make clear exactly what Cordiner was aiming for, GE in 1954 published a hardbound, four-volume series titled Professional Management in General Electric. Known as the Blue Books because of their midnight-blue covers, the 1,000-plus pages in these texts sought to spell out how GE’s managers should act so as to ensure the company’s growth and prosperity, while helping to “fashion an environment where new opportunities for human happiness are abundant.” Detailing GE’s history and the way it was to be organized, as well as “the work of a professional manager” and “the work of a functional individual contributor,” this was serious stuff—easily on par with the most demanding curriculum from the nation’s best business schools. The principal author of the Blue Books would have tolerated no less.
Harold Smiddy was a brilliant management thinker who graduated from MIT in 1920, barely a week after his twentieth birthday. He eventually took a job with the consulting firm Booz, Allen, and Hamilton, and in the late 1940s was recruited to GE. He quickly became, in the words of one executive, “the indefatigable formulator and spokesman for the underlying concepts of management that would be necessary to the conversion of the monolithic corporate structure.” In Smiddy’s eyes, education was a big piece of making decentralization successful. “No longer is it true, in our reasoned judgment, that experience alone can teach the work of managing adequately and in time,” Smiddy asserted. “Management is no longer merely an art. It is unlikely ever to be an exact science either. Yet it is fast acquiring the character of a profession. And this means that its principles can be increasingly discovered, stated, verified, and taught systematically.” Or, as Smiddy commented in more down-to-earth terms: “No company, no industry, can afford to let managers just happen.” To mold them, Smiddy and his internal team of consultants offered business courses at local GE facilities and drew up individual study plans for managers, serving up selections from a reading list that included Chester Barnard’s The Functions of the Executive, William Given’s Bottom-Up Management, and dozens of other tomes.
GE’s efforts were part and parcel of a larger push by corporate America to amply prepare its fast-growing crop of managers. “I don’t have to tell you that in recent years, training has become one of the most important activities for all major businesses,” Coca-Cola president William Robinson told a group of higher-ups in the company’s bottler network in 1958. Surveys indicate that right after World War II, only about 5 percent of companies had management-training programs in place; by ’58, more than three-quarters did. Kodak, for its part, covered a wide range of topics for new supervisors over twenty-five sessions. Among them: “Getting Ideas Across,” “Understanding People,” and “The Nature of Fear and Worry.” General Motors managers could sign up for a special “Dale Carnegie Course in Effective Leadership,” which bore the imprimatur of the self-improvement guru and famed author of How to Win Friends and Influence People. “In judging a man’s appearance,” the GM students were taught, “posture is one of the first things that is noticed.” They then learned three exercises to help them stand more erect. They also learned about “acquiring ease and confidence,” “thinking on your feet,” and “eliminating ‘word whiskers’”—those “irritating ‘ers’ and ‘uhs’ and ‘mmms’” that could mar a manager’s message to the rank-and-file.
But no company went further in educating its managers than did GE, which under Cordiner poured $40 million annually into this area, nearly 10 percent of its pretax profit. The center of GE’s training universe was America’s first corporate university, which the company opened in 1956 in Croton-on-Hudson, New York, after adding two new buildings to the fifteen-acre campus. Crotonville, as the place was called, was no ordinary estate. Along with the physical property, situated about an hour’s drive from midtown Manhattan, came intellectual property—specifically, the 7,000-volume management library of the site’s former owner, the late Harry Hopf, a leading scholar in the field and a good friend of Smiddy’s.
During Crotonville’s first five years of operation, some 1,500 GE up-and-comers would go through the advanced-management course held there, staying from nine to thirteen weeks at a time, in groups of fifty to eighty. (The backlog of those nominated to get into Crotonville stretched to two years.) Every participant had the same thing drummed into him—POIM, the company’s acronym for four management essentials: planning, organizing, integrating, and measuring work. They also heard from outside experts, including Peter Drucker, consumer-research pioneer Mason Haire, organizational-development theorist Chris Argyris, and others. And though Hopf himself wasn’t there, having died in 1949, his spirit certainly was. “Practically every act of management requires for its consummation that cooperative relationships be maintained between two or more persons,” Hopf wrote in 1937. “The acid test of the existence of true cooperation is the presence of a two-fold relationship of loyalty—loyalty to his superior on the part of the subordinate and loyalty to the subordinate on the part of the superior.”
At its best, Cordiner’s decentralized company worked just this way, with managers getting the most out of their people, while giving the most of themselves. When Gerhard Neumann served as general manager of GE Aircraft Engines in the 1950s, he’d hold annual sessions, which he dubbed “Father Neumann’s tent revival meetings.” He’d erect a circus tent, cram a few thousand employees inside—right down to the floor sweeper—and give them a full report on “what, if everyone does their job, we can accomplish.” Managers themselves felt empowered to be bold. One department head, for instance, wanted to manufacture electric toothbrushes. “Everybody he talked to said he was out of his cotton-pickin’ mind,” remembered Gerald Phillippe, GE’s chief financial officer through the fifties, who was among the doubters. “Anybody too lazy to brush his teeth, by gosh, hadn’t ought to be alive anyway.” But under decentralization, the manager was able to forge ahead—and GE sold more than 1 million units in the first two years alone.
Such triumphs were surely gratifying, and in that way they reflected a general sense of satisfaction among American managers about their jobs. Large surveys of workers in the 1950s found that about three-quarters in managerial positions felt “good” or “very good” about their companies, compared with about 50 percent of hourly employees. An even higher percentage of managers said they liked the kind of work they did. Being in a stable climate had to help. While blue-collar workers were routinely laid off, at least temporarily, when things got tough—a big reason behind Walter Reuther’s campaign for a guaranteed annual wage—middle managers across America were typically spared such disruptions. Not that it was uncommon for executives to jump from one company to another during the 1950s to take a better job; many made such moves multiple times. But all in all, managers “were treated as permanent members of permanent enterprises,” Charles Heckscher, the director of Rutgers University’s Center for Workplace Transformation, has written. Nearly 100 percent of managers in the 1950s believed that their employers provided good job security.
In GE’s case, retention wasn’t great at first. When Cordiner’s plan was first implemented and some of the old guard realized they weren’t comfortable accepting the responsibilities that decentralization demanded, the company became plagued with high turnover among managers. Many of these men had worked their way up from the shop floor. Cordiner—and his peers throughout corporate America—wanted a new breed with more years of proper schooling. Increasingly through the twentieth century, “education was the ticket to obtaining a white-collar position,” Harvard economists Claudia Goldin and Lawrence Katz have explained. Office workers now needed a high-school diploma; managers, a college degree.
After Cordiner’s restructuring had taken effect and things had settled down at GE, the company still had a reputation for being more hard-charging than other corporations that held lifetime employment to be sacrosanct, such as Hewlett-Packard and IBM. “We felt we had lifetime employment with GE—as long as we performed,” said Jerry Suran, who joined the company in 1952 and occupied several management positions during his thirty-year career there. Yet even in Cordiner’s GE, it was difficult to be fired outright once you were on the supervisory track. You might not advance as far as you hoped. You might be shoved to another part of the company where, it was perceived, you could do less harm. But you had to mess up pretty badly to get tossed out completely. “While there may be promotion of the fittest, there can be survival of all,” William Whyte wrote of GE in his 1956 classic about corporate life, The Organization Man. “There are exceptions, but one must be a very odd ball to be one.”
Despite all of this, being a middle manager had its own particular anxieties. At GE, you still had to fight through piles of paperwork to get anything done. Decentralization might have sounded, on its face, like an assault on the bureaucracy. But the maze of standardized systems and processes set up under Cordiner, along with reams of forms and inch-thick manuals produced, could have put the Politburo to shame. “Our philosophy gives the feel for joy in living, for joy in working, for spontaneity,” Melvin Hurni, a senior operations researcher at GE, told Smiddy. “Somehow in practice this gets repressed in dogma, in procedures, in hierarchy.”
There was also relentless pressure to produce. Cordiner put in place a new system, called Session C, in which managers met face to face with their supervisor to compare a self-assessment of how well they’d met their annual goals with their boss’s evaluation. Such a dialogue was supposed to spur a conversation about each manager’s long-term interests and development needs. The intent was less to judge from on high, like a traditional job appraisal, than it was to get individual managers to engage in “self-motivation, self-direction, self-adjustment.” Nonetheless, each manager was ultimately rated on a six-point scale from “high potential” to “unsatisfactory” as part of an “individual career forecast.” “It was a competitive environment,” Suran said.
Not all goals were created equal. GE told its managers that it cared about eight result areas: profitability, market position, productivity, product leadership, the nurturing of personnel, employee attitudes, public responsibility, and the balance between short-range and long-range objectives. But many felt that, in the end, one category was consistently thrust above the other seven. “When the chips are down and their bosses are actually making a determination affecting their compensation,” said Donald Webb, a GE manager, “there will be only one measure that counts, and it will be the figure at the bottom of their profit-and-loss statement.”
In 1960, GE would face one of the darkest episodes in its long history: the company would plead guilty to colluding with its competitors, including Westinghouse and dozens of other companies, to fix prices through clandestine meetings—the secret roster for which was known as “the Christmas card list” and the gatherings themselves as “choir practice.” Fortune would call it “The Incredible Electrical Conspiracy.” GE was fined $437,500. Fifteen managers from the company were also slapped with financial penalties, and three were sent to jail. Cordiner fired the employees who’d been convicted and punished others involved, saying that they had exhibited “flagrant disregard” for company policy. He criticized their actions as “a lazy, indolent way to do business.” But many were to lay fault for the affair at the feet of the CEO himself, particularly his emphasis that his men must “make their numbers.”
Fair or not, there was no doubt that finance as a distinct corporate function had grown in stature under Cordiner. It was the beginning of a bigger trend that was underway at other companies, too, and that would have vast implications for the dynamic between employer and employee decades down the line. At General Motors, for instance, 1958 was a watershed year. Frederic Donner, who had been executive vice president for finance, was picked to replace Harlow Curtice at the top of the company. He kept his office in New York—close to Wall Street; his predecessors had been based in Detroit. They “were auto men, not finance men,” Business Week noted. Said Fortune of Donner: “He has never built an automobile, but he is the companywide expert on cost controls and product pricing.”
America’s managers carried other burdens, especially as they climbed higher in the corporation. “To me, the job was everything, my whole life,” said Arthur Stern, a Hungarian-born survivor of the Bergen-Belsen concentration camp in Germany, who immigrated to the United States in 1951 and shortly thereafter joined GE’s electronics laboratory in Syracuse, New York. Three years later, Stern was promoted to be manager of the lab’s advanced-circuits group. “I neglected my wife and kids,” he said. “I loved my wife and kids—but I hardly ever saw them.” Workaholism wasn’t unique to GE. In Sloan Wilson’s 1955 novel, The Man in the Gray Flannel Suit, one of the defining works of the time, the protagonist, Tom Rath, is wary of being sucked into the managerial maw as he considers a new job at a giant broadcasting company. As he tells his wife, Betsy:
“This sounds like a silly way to put it, but I don’t think you can get to be a top administrator without working every weekend for half your life, and I’d just as soon spend my weekends with you and the kids.”
“Some good administrators don’t work all the time.”
“A few—damn few.… Why do you think Hopkins is great? Mainly, it’s because he never thinks about anything but his work.… All geniuses are like that—there’s no mystery about it. The great painters, the great composers, the great scientists, and the great businessmen—they all have the same capacity for total absorption in their work.”
Speaking before the American Management Association in 1956, Ralph Collins, a consulting psychiatrist for Kodak, ticked off the headlines of recent articles about executives: “Slow Up or Blow Up,” “Your Next Promotion May Kill You,” “Executive Crackups.” “Too often,” Collins said, “the executive finds himself pushed—either by forces from without or from within—into too much work around the clock and around the week. He loses his sense of balance, of proportion, between work, hobby, family, recreation, and religion.”
Joseph Jones, who served as Robert Woodruff’s executive secretary at Coca-Cola, told The Boss that he was constantly “undertaking to do what you expected and excluding completely family and personal considerations.” Woodruff did not believe, as Jones recounted it, “in the concept of a ‘vacation’ as desirable or necessary.” And so Jones took almost none. He had a one-week holiday in 1948 and two weeks in 1956. But he claimed not so much as a day of vacation in 1946, 1947, 1950, 1951, 1952, 1953, 1955, 1957, and 1959, and he’d take all of three weeks off from 1960 through 1975. Beyond that, his only vacation was four weeks in 1949 and three weeks in 1954—and those came on doctor’s orders. Woodruff “did not approve” of the first leave, Jones said, and Jones felt compelled to cut the second one short; his doctor had recommended a six-week hiatus. The only other times Jones got away from work was when he was hospitalized, eight times over a thirty-year stretch. Seven of those hospital stays were work-related. “After each confinement, especially when surgery was involved, I was told to stay away from work for a period of two to four weeks,” Jones reminded Woodruff. “In each instance, I returned almost immediately, usually the third or fourth day, and you were sending me things to do before I left the hospital. Looking back, I cannot recall a day when I did not have an ache in my head or in my back or in my legs.”
Not all managers worked so hard. Many perched on the middle rungs earning very nice livings without really knocking themselves out. “If the organization is good and big,” said Whyte, “there will be success without tears.” Yet for managers at all levels, there was another price to be paid: a decided loss of individuality. Whyte wrote:
The younger men are sanguine. They are well aware that organization work demands a measure of conformity—as a matter of fact, half their energies are devoted to finding out the right pattern to conform to. But the younger executive likes to explain that conforming is a kind of phase, a purgatory that he must suffer before he emerges into the area where he can do as he damn well pleases.…
Older executives learned better long ago. At a reunion dinner for business-school graduates a vice president of a large steel company brought up the matter of conformity and, eyeing his table companions, asked if they felt as he did: he was, he said, becoming more a conformist. There was almost an explosion of table thumping and head noddings. In the mass confessional that followed everyone present tried to top the others in describing the extent of his conformity.
“A help-wanted ad we ran recently,” one executive said, “asked for engineers who would ‘conform to our work patterns.’ Someone slipped up on that one. He actually came out and said what’s really wanted in our organization.” And it gets worse rather than better, others agreed, as one goes up the ladder. “The further up you go,” as one executive put it, “the less you can afford to stick out in any one place.” More and more, the executive must act according to the role that he is cast for—the calm eye that never strays from the other’s gaze, the easy, controlled laughter, the whole demeanor that tells onlookers that here certainly is a man without neurosis and inner rumblings.
Kodak hired with this kind of submissiveness in mind. “They actually had a farm system set up with these Midwestern universities—Ohio State and Illinois Tech and so forth—and they’d get their chemists and engineers and some accountants and number-crunchers from there,” said Lane Riland, who joined Kodak as an industrial psychologist in 1957. But the company wasn’t keen on taking students from more free-thinking institutions, such as Reed College or New York University. “They wanted no boat-rockers,” Riland said.
Kodak got what it paid for. During his early years at the company, Riland administered a battery of intelligence and personality tests, including one known as the Edwards Personal Preference Schedule, to about 2,000 Kodakers. He found that the vast majority of managers and professional employees had a very high achievement drive. They were also very orderly—not surprising for scientists and engineers. “They were what would later be called Type As,” Riland said. At the same time, they scored exceedingly high in another area: the need to defer to others before making a decision. And their penchant for being independent also ranked below the college average. Riland came up with a phrase to describe these compliant characters populating the company: Midwestern Gothic.
“They were quite willing to take orders,” Riland said. “Their autonomy needs weren’t that strong to start with. And their primary needs were being filled—their cups runneth over: We had the wage dividend. You got your teeth X-rayed every year, free of charge. There was a swimming pool on the third floor of the recreation center at Kodak Park. Lunch was highly subsidized; every plant had its own cafeteria. Kodak was essentially a monopoly, and these guys were fat and happy. Loyalty was bought and paid for. If you recruit the right people, they’re susceptible to that.”
GE, which counseled its managers to “never say anything controversial,” also used personality testing—one of an estimated 60 percent of big companies that participated in “these curious inquisitions into the psyche,” as Whyte called them. Among those sent to have his noggin checked was Arthur Stern. Up to that point, he had been considered an absolute star. He had been involved in the development of GE’s first color television, and had spearheaded the design of GE’s first transistor radio. In time, Stern was sent to Crotonville to attend the advanced-management course. His prospects seemed unlimited. “I was extremely lucky, and I was treated very well,” Stern said.
At one point, however, he committed a sin: in 1956, he turned down a couple of promotions. One was to run a nuclear-related venture in California; Stern thought the business was too risky. The other was to head up a new computer division in Phoenix. But Stern’s wife fainted in the desert heat during a visit, and they decided they didn’t want to live there. The problem was, no sane Organization Man said no to two big jobs in a row. And so Stern’s boss sent him to New York to see the folks at Psychol. Corporation. “They made me fill out a lot of forms—what would you do in this situation?” Stern recalled. When the results came back, Stern’s boss called him in. “They say you’re not nuts,” he told Stern. “You’ll stay in the book.” And with that, he pulled out a little black notebook. Stern asked him what it was. “This is the list of comers,” he replied. True to his word, Stern’s boss offered him another promotion in 1957, to manage GE’s Electronic Devices and Applications Laboratory. This time, he accepted.
To be a manager in 1950s America was, in many ways, to be something of a robot. All the while, real robots were beginning to make their presence felt as well.
In 1958, America found itself in the midst of its worst economic slump since the Great Depression. There had been other recessions, from 1948 to 1949 and from 1953 to 1954, but they were less severe. The latest downturn, which began in the summer of 1957, turned serious by winter. In January 1958, Life magazine visited Peoria, Illinois, and found the mood there to be gloomy. Caterpillar, the heavy equipment maker and the big provider of jobs in town, had already laid off 6,000 workers and cut back to a 4-day week. “Trouble is already here for some people,” said one Caterpillar worker. “But it’s under the surface for everybody.”
In Peoria and across the nation, things got steadily worse. “With relatives and neighbors out of work… confidence in the economy’s health was still ebbing, and the ebb brought an increasing reluctance to buy and invest,” Time reported in late February. By July, the national unemployment rate hit 7.5 percent. Some manufacturing industries, including primary metals and transportation equipment, were saddled with jobless rates of 13 or 14 percent. General Electric alone had sent home some 25,000 production workers by the summer of ’58; General Motors, 28,000. Studebaker (now Studebaker-Packard) was already in terrible shape when the economy began to contract. The situation then got so bad for the automaker, once proudly led by the CED’s Paul Hoffman, that it made a shocking announcement: it would no longer honor its pension obligations for more than 3,000 workers, handing an “I told you so” moment to those who’d been warning about the fragility of retirement promises.
As painful as the recession was, to many it was all part of the natural business cycle: a chance for manufacturers to pare down inventories that had become bloated earlier in the decade, to pull back on investments that had gotten overbuilt, and to adapt to a shrinking export market. The CED called it “one of the long series in the wave-like movement that has been characteristic of our economic growth.” Kenneth McFarland, a consultant for General Motors, agreed. “What we have now is normalcy,” he said. “The law of supply and demand—the free enterprise system—is working now as it was supposed to work.” But some suspected that something else was going on, something structural and not just cyclical. The Nation termed it an “Automation Depression.”
“We are stumbling blindly into the automation era with no concept or plan to reconcile the need of workers for income and the need of business for cost-cutting and worker-displacing innovations,” the magazine said in November 1958. “A part of the current unemployment… is due to the automation component of the capital-goods’ boom which preceded the recession. The boom gave work while it lasted, but the improved machinery requires fewer man-hours per unit of output.” This conundrum, moreover, would outlast present conditions and become even more apparent in an economy that was supposed to accommodate 1 million new job seekers every year. “The problem we shall have to face some time,” The Nation concluded, “is that the working force is expansive, while latter-day industrial technology is contractive of man-hours.”
Questions about what automation would mean for employment were not new. Economists started to explore the issue in the early 1800s, during the Industrial Revolution. Most classical theorists of the time—including J. B. Say, David Ricardo, and John Ramsey McCulloch—held that introducing new machines would, save perhaps for a brief period of adjustment, produce more jobs than they’d destroy. By the end of the century, concern had faded nearly altogether. “Because the general upward trends in investment, production, employment, and living standards were supported by evidence that could not be denied,” the economic historian Gregory Woirol has written, “technological change ceased to be seen as a relevant problem.”
But fears reappeared in the mid-to-late 1920s, as America experienced two mild recessions and newly published productivity data indicated that machines were perhaps eating more jobs than was first believed. “This country has upon its hands a problem of chronic unemployment, likely to grow worse rather than better,” the Journal of Commerce, a trade and shipping industry publication, opined in 1928. “Business prosperity, far from curing it, may tend to aggravate it by stimulating invention and encouraging all sorts of industrial rationalization schemes.”
The key word was “may.” Economists continued to investigate the matter, but reliable statistics were scarce, and no firm conclusion was reached. “The real issue is not whether technological displacement causes workers to lose their jobs,” a 1931 Senate report stated. “It undoubtedly does. The real issue is whether over a period of years the continual introduction of new and improved machines and processes is causing a total net increase or decrease in mass employment.… On this issue there are two opposing points of view, each held by large numbers of earnest people.” By this time, the Depression was in full swing, and many greeted anything that might be keeping people on the unemployment line as an abomination.
“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment,” John Maynard Keynes wrote in a 1930 essay called “Economic Possibilities for Our Grandchildren.” By the midthirties, groups such as the National Organization for the Taxation of Labor-Saving Devices were lobbying to impose a levy on any equipment that was thought to cost jobs. Artist Paul Herzel, who had once worked as a machinist at the American Brake Company in St. Louis, captured the resentment that many were feeling in his 1935 print depicting a throng of men huddled around a construction site, watching a single massive earthmover polish off the whole job. Its title: “The Machine and Unemployment.” Still, popular ire aside, numerous studies into the long-run relationship between automation and jobs remained inconclusive. Through the late 1930s, scholarly opinions about technology’s net effect on employment were as divergent as ever.
World War II then put the entire debate on hold. But by the 1950s, it was revived again with the stakes seemingly higher than ever, thanks to all the technological advances that had been made by the military and industry during the conflict. Of particular note was ENIAC, or the “electronic numerical integrator and computer.” With its 18,000 vacuum tubes and several miles’ worth of wiring, it could solve mathematical problems 1,000 times faster than ever before. “Leaders who saw the device in action for the first time heralded it as a tool with which to begin to rebuild scientific affairs on new foundations,” the New York Times marveled in revealing “one of the war’s top secrets” in a front-page story in February 1946. “Such instruments, it was said, could revolutionize industrial engineering, bring on a new epoch of industrial design, and eventually eliminate much slow and costly trial-and-error development work now deemed necessary in the fashioning of intricate machines.”
The world was in the throes of what MIT mathematician Norbert Wiener called “the second industrial revolution.” And to many, the outlook for employment was suddenly forbidding. “With automatic machines taking over so many jobs,” the wife of an unemployed textile worker in Roanoke, Virginia, told a reporter, “it looks like the men may have finally outsmarted themselves.” Said The Nation: “Automation… is a ghost which frightens every worker in every plant, the more so because he sees no immediate chance of exorcising it.” Science Service, a nonprofit institution, remarked: “With the advent of the thinking machine, people are beginning to understand how horses felt when Ford invented the Model T.” Wiener himself anticipated that “we are in for an industrial revolution of unmitigated cruelty.”
Corporate executives largely dismissed these worries, maintaining through the 1950s and ’60s that for every worker cast aside by a machine, more jobs were being generated. Sometimes, whole new enterprises sprang to life. “The automatic-control industry is young and incredibly vigorous,” John Diebold, dubbed “the prophet of information technology,” told business leaders in 1954. Mostly, the argument went, job gains were being realized at the very same companies where new technology was being deployed, as huge increases in output led to the need for more workers overall—office personnel, engineers, maintenance staff, factory hands—to keep up with rising consumer demand. General Motors, for example, added more than 287,000 people to its payroll between 1940 and the mid-1950s. “There is widespread fear that technological progress… is a Grim Reaper of jobs,” GM vice president Louis Seaton told lawmakers. “Our experience and record completely refutes this view.” Those at Kodak made a similar case. “As far as I know, we have not yet laid off anyone who has been with the company five years or more because of improvements made in manufacturing processes,” said Ivar Hultman, who oversaw Kodak Park. “Increased productivity has enabled our business to grow, and the growth of the business has allowed us to give more jobs to more people in the community.”
No company, however, pressed this point harder than did GE, which was at the fore of automating both its factories and offices: in 1952, it installed an IBM 701 to make engineering calculations at its Evendale, Ohio, jet engine operation. And in 1954 GE became the first company to use an electronic computer for regular data processing, when it bought a UNIVAC I to handle accounting, manufacturing control, and planning at its appliance division in Louisville, Kentucky. “Machines that can read, write, do arithmetic, measure, feel, remember, now make it possible to take the load off men’s minds, just as machines have eased the burden on our backs,” GE said in one ad. “But these fantastic machines still depend on people to design and build and guide and use them. What they replace is drudgery—not people.”
By the late 1950s, GE was offering another justification for its rush to automate: its overseas rivals, having pulled themselves out of the rubble of World War II, were on the rise. Global competition was another trend that wouldn’t become wholly ingrained in the national consciousness for another fifteen or twenty years. For now, even most of organized labor discounted the danger of imports, backing free trade as a way to shore up United States access to raw materials from the developing world, advance American exports, and ward off communism across the globe. “The mistaken peddlers of protectionism are selling a poison pill, coated with the saccharin of patriotism,” said Guy Nunn, a United Auto Workers official.
Still, the first glimmers of what a resurgent Asia and Europe might mean for American business were starting to emerge. “We have strong competition from highly automated foreign plants paying wages that are only a fraction of ours,” said Charlie Scheer, the manager of GE’s lamp-equipment unit. “It’s a case here of automate or die on the competitive vine.” To illustrate the peril, GE showed a film called Toshiba to its factory workers in New Jersey, highlighting the Japanese company’s inroads into the lamp market. The move backfired, however, when the International Union of Electrical Workers discovered that GE had been investing in Toshiba since 1953, amassing a nearly 6 percent stake in the company. “The purpose of this film is obviously to brainwash you into believing that low-wage competition… is a threat to your job security,” the IUE told employees. “What GE failed to tell you is that it likes to play both sides of the street at the same time.” The union labeled GE’s warnings “phony propaganda.”
GE wouldn’t back down, however. “Automation is urgently needed,” Ralph Cordiner soon testified to Congress, “to help individual companies, and the nation as a whole, try to be able to meet the new competition from abroad.” More generally, he added, the claim that automation strangled job growth was patently false. “The installation of labor-saving machinery may—and should—reduce the number of persons required to produce a given amount of goods and services,” Cordiner said, “but this increase in efficiency is precisely what creates both the attractive values and additional ability to support expanded output, new industries, and new services for an ever more diverse economy.” In the broadest sense, he was right. A study by University of Chicago economist Yale Brozen would find that while 13 million jobs had been destroyed during the 1950s, the adoption of new technology was among the ingredients that led to the creation of more than 20 million other positions. “Instead of being alarmed about growing automation, we ought to be cheering it on,” he wrote. “The catastrophe that doom criers constantly threaten us with has retreated into such a dim future that we simply cannot take their pronouncements seriously.”
But Brozen was too blithe. While automation may have added jobs in the aggregate, certain sectors were hit hard, playing havoc with untold numbers of individual lives. Technological upheaval caused both steelmakers and rail companies, for instance, to suffer drops in employment in the late 1950s. “In converting to more automated processes, many industries found it less costly to build a new plant in another area rather than converting their older factories, thus leaving whole communities of employees stranded,” the Labor Department said in one study of the period. In the mid-1960s, the federal Commission on Technology, Automation, and Economic Progress would recognize technological change as “a major factor in the displacement and temporary unemployment of particular workers.” The panel pointed out that “employment has been rising most rapidly in those occupations generally considered to be the most skilled and to require the most education,” possibly leaving those without adequate training “no future opportunities” for work.
Labor leaders like Walter Reuther and James Carey, cognizant that they couldn’t afford to be seen as Luddites, went out of their way to praise the manifold benefits brought by machines. “You can’t stop technological progress, and it would be silly to try it if you could,” Reuther said. The UAW had already conceded the point in 1950 when, as part of the Treaty of Detroit, it had formally agreed to take a “cooperative attitude” regarding the forward march of technology. Carey likewise said that automation, along with atomic energy, “can do more than anything in mankind’s long history to end poverty, to abolish hunger and deprivation. More than any other creation of man’s hand and brain, this combination can create a near-paradise on earth, a world of plenty and equal opportunity, a world in which the pursuit of happiness has become reality rather than a hope and a dream.”
Then, in their very next breaths, both Reuther and Carey would condemn business for not doing enough to temper automation’s ill effects. “More and more,” said Reuther, “we are witnessing the often frightening results of the widespread introduction of increasingly efficient methods of production without the leavening influence of moral or social responsibility.” With industry having failed, according to Reuther and Carey, it was up to Washington to become much more active in assisting workers idled by machines. They called, among other things, for federal officials to develop more effective retraining programs and relocation services for displaced workers, beef up unemployment insurance and establish early retirement funds, and create an information clearinghouse on technological change to help steer national policy.
For all of the union men’s denunciation of corporate America, many companies did try to help workers whose jobs were taken out by technology. The integrity of the social contract demanded as much. Kodak, for instance, left millions of dollars on the table in the late 1950s by holding off on installing more efficient film emulsion–coating machines; by waiting five or so years to make the complete upgrade, the most senior workers who would have been forced out were allowed to reach retirement age. “In this case,” Kodak reported, “substantial dollar savings were delayed in order to cushion the effect of mechanization on some of the company’s most skilled, experienced, and loyal technicians.” Other corporations focused on improving their workers’ skills. Some 30,000 General Motors employees were enrolled in various training programs in the late fifties, for example. At General Electric, veteran workers laid off because of automation were guaranteed during a retraining period at least 95 percent of their pay for as many weeks as they had years of service. “This was an effort to stabilize income while the employee prepared for the next job,” said GE’s Earl Willis. “Maximizing employment security is a prime company goal.”
Still, given the pace of change, it didn’t take a lot to imagine a day when it wouldn’t really matter what companies did to soften the blow of automation. This would become all the more so in the aftermath of the greatest invention of 1958 (and one of the most significant of all time): the computer chip. Then again, having a vivid imagination didn’t hurt, either. Kurt Vonnegut tapped his to write his first novel, Player Piano, published in 1952. In it, he renders a future society that is run by machines; there is no more need for human labor. Early on in the book, the main character, an engineer named Paul Proteus, is chatting with his secretary, Katharine:
“Do you suppose there’ll be a Third Industrial Revolution?”
Paul paused in his office doorway. “A third one? What would that be like?”
“I don’t know exactly. The first and second ones must have been sort of inconceivable at one time.”
“To the people who were going to be replaced by machines, maybe. A third one, eh? In a way, I guess the third one’s been going on for some time, if you mean thinking machines. That would be the third revolution, I guess—machines that devaluate human thinking. Some of the big companies like EPICAC do that all right, in specialized fields.”
“Uh-huh,” said Katharine thoughtfully. She rattled a pencil between her teeth. “First the muscle work, then the routine work, then, maybe, the real brainwork.”
“I hope I’m not around long enough to see that final step.”
Vonnegut, who worked at GE in public relations from 1947 through 1950, had found his muse in building 49 at the company’s Schenectady Works. There one day he saw a milling machine for cutting the rotors on jet engines. Usually, this was a task performed by a master machinist. But now, a computer-guided contraption was doing the work. The men at the plant “were foreseeing all sorts of machines being run by little boxes and punched cards,” Vonnegut said later. “The idea of doing that, you know, made sense, perfect sense. To have a little clicking box make all the decisions wasn’t a vicious thing to do. But it was too bad for the human beings who got their dignity from their jobs.”
In May 1958, the president of the US Chamber of Commerce, William McDonnell, left no doubt as to the cause of the nation’s economic woes: the never-ending demand by unions for higher pay. “The surest way to cure a recession,” he told a sympathetic business group in Connecticut, “is to get prices down, and you cannot get prices down by raising wages.” McDonnell asked management and labor “to work toward halting the wage-price spiral, which has been discouraging consumer buying” and was now poised to “break the country and destroy the free-enterprise system.”
A month later, Jim Carey of the Electrical Workers stood before a lectern at Washington’s Statler Hotel, addressing his own version of the faithful: an audience of union supporters attending a special IUE Employment Security Conference. There has been “a desperate and despicable attempt to shift the blame for this recession to labor,” Carey said, citing McDonnell’s speech, as well as recent finger pointing along the same lines by other corporate spokesmen, including General Electric’s Lem Boulware. “These profit-obsessed tycoons have not admitted and cannot admit any responsibility—even the tiniest responsibility—for the current recession.… Is labor to blame for consumer goods having been priced out of the market? Is labor to blame for industrial overproduction?”
Aspersions aside, Carey was on to something: the industrial peace embodied by the Treaty of Detroit was starting to break apart, and this was very much as corporate America wanted it. In its dealings with organized labor, business had assumed (as many would soon call it) a new “hard line.” “Union leaders see management as pressing the labor-saving results of automation to the hilt, over and above management’s need to economize on labor costs,” said Jack Barbash, an economist at the University of Wisconsin. “They point out that management’s demands for work rule changes, notably in steel and railroads, are indeed quite radical and strike hard at the heart of the unions’ primary function—protection of their members.” What’s more, “they point to high-powered public-relations campaigns, which hammer away at wage inflation, ‘featherbedding,’ and the pressures of foreign competition, as evidence of a freezing of management positions prior to negotiations.”
In some ways, unions had weakened themselves. Even Joe Scanlon, the old Steelworkers official who had done so much to improve relations between employers and employees, worried that as labor had become an increasing part of the institutional establishment in America, its core values of fighting for the little guy had somehow been compromised. “Is there a chance to reestablish some of those basic ideals that were involved in the beginnings of this great union of ours?” Scanlon asked an old Steelworkers colleague. “I’m afraid we have lost our way.” Others would share these misgivings. “A labor movement can get soft and flabby spiritually,” said Walter Reuther. “It can make progress materially, and the soul of the union can die in the process.”
In 1957, a Senate Select Committee, led by Arkansas Democrat John McClellan, began to investigate labor racketeering. For more than two years, the panel aggressively publicized all manner of union corruption, particularly among the Teamsters. Although it was unfair to assume that most labor officials behaved this way, in the public’s mind unions “came to be synonymous with arrogance and bossism, hand-tailored silk suits, mansions, costly automobiles, violent suppression of workers’ rights, and theft of members’ money and pensions,” James Gross has observed. These stories of graft also helped harden a general perception that, even though the Taft-Hartley Act had to some degree restored the appropriate balance between management and labor, unions still held too much sway. Even the Committee for Economic Development by 1958 was questioning whether unions “have a degree of economic power which is not in the public interest”—a charge that sounded more like it came from the National Association of Manufacturers than the customarily moderate and measured CED.
The NAM, however, wasn’t going to be upstaged in terms of vilifying organized labor. “Unions now occupy a dominant position in the economic life of the United States and are reaching out for political dominance as well,” said Leo Wolman, chairman of the NAM’s so-called Study Group on Monopoly Power Exercised by Labor Unions. “It is the duty, therefore, of every citizen to review—without malice, without prejudice, but with an objective eye—the present status of organized labor and the power exercised by union leadership, and to reflect where this growing accumulation of power will take us if it continues on its present course.” Although he was now flying the flag for the NAM, Wolman was not your usual corporate shill. An economics professor at Columbia University, Wolman’s path was similar to that of Gerard Reilly, the old New Dealer whose politics moved steadily rightward and who, as a main architect of Taft-Hartley, eventually became a leading force behind limiting the reach of unions. Wolman had spent the 1920s as research director for the Amalgamated Clothing Workers, and in 1933 President Roosevelt named him to the National Labor Board. There he served alongside John L. Lewis of the United Mine Workers; William Green of the AFL; Gerard Swope, GE’s liberal corporate chief; and Sen. Robert Wagner, author of the milestone legislation giving workers the right to organize and bargain collectively. Now, some twenty-five years later, Wolman had surrounded himself with souls of a very different sort.
Lem Boulware, who was GE’s representative to the twelve-member NAM study group, was as hard-nosed as anybody in arguing that it was time to rein in organized labor. “Union officials… long ago erased any inequities in bargaining power between employees and employers,” Boulware told a conference of electric industry executives in the spring of 1958. “What’s important now is what they’ve done and are doing to take advantage of their constantly mounting power. I believe it is clear that this unregulated power to persuade and to force is being used and abused in many ways contrary to the interests of those they represent and those others in the whole public they profess to help.” Boulware then bashed “the Reuthers… and Careys” for a host of alleged sins: fueling inflation though escalator clauses in contracts, favoring wasteful make-work rules over technological changes that would increase productivity, and agitating for “big central government.” Nothing, though, got under Boulware’s skin more than “compulsory unionism”—the condition under which every worker at a particular place of employment had to become part of a union whether he wanted to or not. “Union insistence on the right to force unwilling employees to join and support them,” Boulware said, is “the most obvious example of the abandonment of concern with individual rights.”
With its provision allowing states to adopt right-to-work statutes, under which no employee could be forced to join or pay initiation fees or dues to a labor organization, Taft-Hartley had provided a potent weapon to fight compulsory unionism. More than ever, Boulware and other businessmen were resolved to use it. Eighteen states—nearly all of them in the South and West—had passed right-to-work laws by 1958. Six other states were now considering doing the same, and GE put itself in the thick of the fight, speaking out in California, Ohio, Washington, and elsewhere. “In this controversy,” Ralph Cordiner told the Dallas Citizens’ Council, “the businessman is no disinterested bystander.… When an employer says to a workman, ‘You can’t work here unless you join this union,’ he has asked the workman to give up one of those fundamental rights which guard American freedoms.” Cordiner’s comments may have seemed a little highfalutin, but they were entirely consistent with the way GE talked about the issue. “Compulsory unionism is morally wrong,” Clarence Walker, a GE vice president, proclaimed. At Crotonville, Boulware came upon a framed quotation from Thomas Jefferson: “I have sworn upon the altar of god eternal hostility against every form of tyranny over the mind of man.” “This,” Boulware told his staff, “should fit right into right-to-work arguments and other discussions of compulsion.”
The unions had their own case to make, pointing out that right-to-work states had notoriously lousy records on child-labor standards, unemployment insurance, workmen’s compensation, and the minimum wage. “Right-to-work laws are designed to exploit workers, to make it possible to keep workers at the lowest point on the economic scale, to prevent them from improving their way of life,” said the AFL-CIO’s American Federationist. The Electrical Workers said the laws that GE and other right-to-work advocates were trying to get passed promised a “return to the sweatshop days.” Labor leaders also contended that their position was a matter of fairness: if workers were benefiting from a union’s activities, it was only just that they join or at least pay dues, lest they become “free riders.”
Throughout 1958, labor groups and right-wing organizations such as the National Right to Work Committee traded shots and sank loads of money into mailers and advertising, coalition building, and grassroots organizing. By one count, the unions outspent their adversaries five to one: $10 million versus $2 million. In Ohio—perhaps the most fiercely contested of the six states considering a “right-to-work” law—“the campaign was bitter and vindictive with charges and countercharges the order of the day,” according to one analysis of the scene. “Both opponents and proponents of the amendment frequently resorted to highly emotional appeals; dispassionate, factual presentations were exceptional.” At the end of it all, labor claimed victory in five states; only Kansas passed a right-to-work measure.
“Our grandchildren may well read in their history books something of this nature: ‘The national forces which sought to destroy trade unions in the mid-twentieth century ultimately met their downfall in Ohio,’” the public relations agency that had helped the unions hone their communications strategy said after all the votes were in. But that kind of gloating was not only premature; it missed the cracks slowly forming beneath the surface. If anyone could discern them, it was Boulware. “Some observers seem to be trying to convince the public and its representatives that the right-to-work movement suffered a devastating defeat in the recent election,” he said. “My own feeling is that just the opposite is true since another state voted for a right-to-work law, and in the five other states the old ratio of something like 4-to-1 [against] came down to something less than the order of 2 to 1. This seems to me to be remarkable progress in so unequal a contest where the opponents of right-to-work laws have had a clear field for several decades and where the rapidly rising number of citizens who favor right-to-work laws have only begun to learn to present their story in the face of deep-seated misunderstanding and emotion.”
Besides, companies such as GE weren’t simply waiting for more right-to-work states to come to them; they were increasingly putting their factories where, as GE phrased it, “the general attitude of the community toward the business” was favorable. By the mid-1950s, GE had located eleven plants in the South and others in the West, and work began moving away from the company’s traditional—and heavily unionized—northeastern base. The allure was understandable. During a 1950 train tour of the South arranged by Coca-Cola’s Bob Woodruff, himself a General Electric director, GE’s board admired the blossoming dogwood, feasted on barbecue, and soaked in the raw economic advantages the South had to offer. Among them, Georgia governor Herman Talmadge told the GE contingent, was “free enterprise,” a thinly veiled reference to the region’s positive attitude toward right-to-work laws and the local business community’s success (aided by the bald racist attacks of segregationists) in thwarting unionization drives by both the American Federation of Labor and the Congress of Industrial Organizations after World War II. “We hope to continue as a section where capital ventured will be assured a fair return as a profit,” the governor said. It was hard to argue with the numbers. In the mid-1950s, a GE carpenter in Newark, New Jersey, made $2.06 an hour; his counterpart in Memphis, Tennessee, made $1.72. An electrician in Schenectady took home $2.14 an hour; his peer in Bloomington, Indiana (which became a right-to-work state in 1957), made $1.78. A crane operator in Pittsfield, Massachusetts, earned $1.86 an hour; in Rome, Georgia, somebody doing the same job pulled in $1.45.
For old-line companies transferring work to low-wage, nonunion states—and this would come to include those in the auto, steel, chemical, paper, tire, and food industries—there was no mad rush to the Sunbelt; it was more of a slow leak. In 1955, GE still had more than 80 percent of its plants and 90 percent of its employees clustered north of the Ohio River and east of the Mississippi. By the late 1950s, GE had created 100,000 new jobs in the Northeast compared with the number of positions that had been there twenty years before. “At a time when charges of ‘runaway industry’ are loosely made,” Cordiner said, “General Electric’s department managers have been trying to make their capital investments with a genuine respect for the social and moral factors that bear on these economic decisions. With such investments in the older locations, the company is doing its best to keep them competitive with other communities.”
Despite these soothing words, however, the company’s long-term intentions were also plain. At a meeting of GE planners in 1954, the company acknowledged that it had only just begun to spread its operations across the country, threatening tens of thousands of jobs in its oldest and most expensive locations—Schenectady, Syracuse, Pittsfield, and four other towns. “As far as decentralization of people,” Arthur Vinson, GE’s vice president in charge of manufacturing, said, “we have merely scratched the surface.” When the Electrical Workers got hold of notes from the meeting, the union protested loudly. “GE is planning a depression” in seven plant cities, the IUE alleged. GE strenuously denied the charge and even announced big new investments in its old facilities to prove it. But the union wasn’t wrong in its dire warnings; it was merely early. In the coming decades, the manufacturing centers of the Northeast would hemorrhage jobs, as ever-stiffer global competition prompted companies like GE to look for lower-cost alternatives, whether they were in the American South or overseas. “The situation is getting worse rather than better,” Boulware said a couple of years after the “planning a depression” brouhaha, “with the inevitable result that more and more of the other operations must be taken out of such a high-cost atmosphere.”
If you lived in the United States in 1958, you would have had to be unusually farseeing to sense that the labor movement was endangered. Nearly 34 percent of private-sector workers in the United States belonged to a union that year—just a shade under the all-time high. The political landscape also looked promising for labor interests in ’58, with Democrats enjoying a landslide in the midterm congressional elections. But even with this, management’s “hard line” was no fleeting fad. Though largely imperceptible, a slow but steady dismantling of unions in America was underway. Historian Mike Davis would call the period about to transpire “the management offensive” of 1958–1963. Losers abounded. The United Auto Workers came away in 1958 with its weakest set of contract wins in the postwar period. Protracted strikes against the nation’s steelmakers in 1959 and at General Electric in 1960 would yield no real gains for the unions. In 1960, labor won less than 60 percent of representation elections compared with about 75 percent in 1950. On the shop floor, companies were winning more grievance cases and muscling through higher production standards. “There has been a noticeable shift in the balance of power in labor-management relations,” George Strauss, a professor of industrial relations at the University of Buffalo, would write in 1962. “Unions are getting weaker and management is growing stronger.”
As the recession of 1958 deepened, the Eisenhower administration undertook a series of actions to stimulate the economy: it quickened the rate of procurement by the Defense Department, stepped up the pace of urban-renewal projects on the books, cut loose hundreds of millions of dollars of funds for the Army Corps of Engineers to build roads and other infrastructure, and ordered Fannie Mae to add extra grease to the housing market. The Federal Reserve did its part, too, cutting interest rates four times from November 1957 to April 1958. Some wanted the government to do even more; the Committee for Economic Development, for instance, called for a temporary 20 percent cut in personal income taxes. But President Eisenhower was reluctant to go that far. Instead, he publicly endorsed efforts by business to jumpstart things on its own. “What we need now,” the president quoted a Cadillac dealer in Cleveland as saying, “is more and better salesmanship and more and better advertising of our goods.”
Many apparently agreed. In Grosse Ile, Michigan, a supermarket owner offered any customer who spent five bucks or more in his store a chance to win a sack of 500 silver dollars. In Hampton, Iowa, seven firms gave their employees surprise bonuses on the condition that they spend the money on nonessential items. Some sought to shake up consumer psychology. A Cleveland realtor hoped to revitalize home sales by accentuating the positive on new signage: “Thanks to you our business is terrific.” In Kankakee, Illinois, local businessmen tried to turn residents from economic pessimists to optimists by staging a mock hanging of “Mr. Gloom.” The epitaph on his tombstone read: “Here Lies Mr. Gloom Killed By the Boom.”
No company, though, did more to try to change the national mindset than General Electric. “A swift and sure recovery cannot be attained by sitting back and relying on government stimulants, deficit spending, meaningless tax cuts, deliberate inflation, or any other economic sleight of hand,” Ralph Cordiner told GE shareholders at the company’s annual meeting in April 1958. “The solutions to the present difficulties will be found in a common effort by all citizens to work more purposefully, buy and sell more confidently, and build up a higher level of solid, useful economic activity. There is a tremendous business base on which to build.” GE called its slay-the-recession initiative Operation Upturn, and the idea was to get every company in America to focus harder than ever on providing its customers with just what they were looking for. “I am not speaking only of sales campaigns or promotional stunts, although they will be important ingredients in the whole picture,” Cordiner said. “Nor do I mean a transparent attempt to persuade people to buy things they don’t want simply because it is supposed to be the ‘patriotic’ thing to do so. I am proposing a total effort, by every man and woman who has a job, to concentrate on giving customers the best service and the best reasons to buy they ever had.
“King Consumer needs some constructive attention,” Cordiner continued. “He is willing to do his part, if he is convinced that this is the best time to buy. Let’s convince him by showing him the best values and giving him the best service he could ask for. This may seem like an old-fashioned prescription to those who are shouting for massive government make-work programs and meaningless tax cuts, but—speaking for myself and the executive officers of the company—we in General Electric are convinced that what happens to the economy in the remainder of the year will be largely determined by what business does to help its customers and itself. This is a do-it-yourself country.”
At GE, Cordiner worked to turn the pep talk into policy. He called upon his managers to “eliminate every element of waste that adds to the cost of producing and marketing goods… so that the company’s customers can be offered the best values possible.” The company held down prices and extended new terms of credit in order to help consumers who’d been laid off from their jobs. And GE’s marketers kicked into overdrive. “They are reviving the old-fashioned shoe-leather selling that creates business where it does not now exist,” Cordiner said. “They are pointing out extra value and features in our products. They are selling hard.”
GE also maintained its level of research spending, according to Cordiner, “so that the new products, new industries, and new jobs of the 1960s will not be delayed.” It continued to put tens of millions of dollars into recruiting and training scientists and engineers. “This national and company asset must not be allowed to wither during a temporary drought in business,” Cordiner said. The company pushed ahead as well with $135 million in capital investments—new machinery and upgrades to plants—in 1958. What’s more, said Cordiner, GE was attempting to plan carefully so as to keep production as steady as possible and minimize unemployment.
It’s impossible to know just how big a difference was made by GE’s Operation Upturn and the other efforts by business to resuscitate the economy, but this much is undeniable: the recession of 1957–1958 didn’t last long. The decline was sharper than the recessions of 1948–1949 and 1953–1954, but so was the rebound. The downturn was officially over in just eight months, compared with ten months and eleven months for the other two postwar contractions. The stock market also soared in 1958—proof, said Time magazine, that “the US was blessed with a new kind of economy, different from any ever seen on the face of the earth.” It was one that “could take a hard knock and come bouncing quickly back,” where businessmen could face the “inevitable williwaws of economic life but continue to plan and expand for the long term,” while workers found “overall employment more stable.” Recession or not, this was still the Golden Age in America, a time where many people could count on finding comfort and safety inside their corporate cocoon. “An enlightened corporation has provided… for us in the best way management knows how—by creating a private welfare state,” Alan Harrington wrote in Life in the Crystal Palace, his late fifties account of being a PR man at a large enterprise.
One could excuse Harrington—or almost anyone, really—for not sensing the stresses that were starting to destabilize America’s private welfare state: the historic transition from manufacturing to knowledge work and services; the growing importance of finance; the exponential impact of technology and automation; rising competition from foreign companies; business leaders’ increasing revulsion toward organized labor; the shipping of jobs to the South and other low-wage locations. In 1958, it was easy to see when the business cycle turned positive, to cheer about it, and to feel untouchable. “There arrives a day when the corporate sanctuary becomes our whole world,” Harrington wrote. “We can’t imagine existing outside of it.” The larger structural changes that threatened to undermine the social contract between employer and employee would remain mostly in the shadows, hidden from view, for at least a decade more. The Golden Age had stumbled, but it would march on.