1952 steel strike
The 1952 steel strike was a strike by the United Steelworkers of America against U.S. Steel and nine other steelmakers. The strike was scheduled to begin on April 9, 1952, but US President Harry Truman nationalized the American steel industry hours before the workers walked out. The steel companies sued to regain control of their facilities. On June 2, 1952, in a landmark decision, the US Supreme Court ruled in Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, that the President lacked the authority to seize the steel mills. The strike involved 560,000 workers.
The Steelworkers struck to win a wage increase. The strike lasted 53 days and ended on July 24, 1952, on essentially the same terms that the union had proposed four months earlier.
Wage control policy during the Korean War
On February 9, 1950, Senator Joseph McCarthy denounced the Truman administration for permitting known communists to remain in the employment of the federal government. The incident sparked a four-year period of anticommunist policies and attitudes, which came to be known as McCarthyism. The accusations by McCarthy and others put the administration on the political defensive and led him to seek ways in which he might prove he was not "soft on communism."On June 25, 1950, North Korea invaded South Korea, touching off the Korean War. American wartime mobilization agencies, including the recently formed National Security Resources Board, were dormant. Truman attempted to use the NSRB as the nation's military mobilization agency. He quadrupled the defense budget to $50 billion, and the NSRB placed controls on prices, wages, and raw materials. Inflation soared and shortages in food, consumer goods, and housing appeared.
On September 8, 1950, the US Congress enacted the Defense Production Act. Title II permitted the President to requisition any facilities, property, equipment, supplies, and component parts of raw materials that were needed for the national defense. Title IV gave the President the authority to impose wage and price controls in progressive steps.
On September 9, Truman issued Executive Order 10161, which established the Economic Stabilization Agency to coordinate and supervise wage and price controls. Using the wage and price control model developed in World War II, the Truman administration created two subagencies in ESA. The Office of Price Stabilization was given the power to regulate prices, and the Wage Stabilization Board oversaw the creation of wage stabilization rules. The division of labor was specifically designed to unlink wages from prices. If prices rose automatically with wages, the inflationary spiral would continue unabated. Placing the onus solely on workers to keep wages low risked the wrath of labor, a lesson that the administration had learned from the World War II experience. Delinking wages and prices leveled the playing field. Both workers and employers would now be forced to justify, independently, the wages and prices that they demanded.
By October 1950, inflation had abated, and shortages were easing. Although Truman had named Alan Valentine as ESA administrator and Cyrus S. Ching chairman of the WSB, the ESA and its subagencies were largely inactive, and the President hesitated to name a director for the Office of Price Stabilization.
China entered the war on behalf of North Korea on October 19 and made contact with American troops on October 25. The intervention of China in the Korean War unraveled the administration's mobilization effort. A panicked public began hoarding and the administration accelerated its rearmament plans, and the economy went into an upward inflationary spiral. By December, public support for the war had fallen significantly, and Truman and his intelligence experts expected World War III to break out by spring.
Confronted with the failure of the NSRB and a mobilization effort that was faltering and unable to meet the needs of accelerated production plans, Truman declared a national emergency on December 16, 1950. The declaration of an emergency was, in part, motivated by the McCarthyite attacks on the administration and Truman's desire to appear strong in the prosecution of the war. Using the powers granted to him by the Defense Production Act, which had been enacted only in September 1950, Truman created the Office of Defense Mobilization. Truman moved the ESA under ODM and nominated Michael DiSalle as the director of OPS.
Organized labor's conflict with WSB
Unions felt that during World War II, the National War Labor Board had unfairly held wages below the level of inflation but done little to rein in corporate profits. The American Federation of Labor and the Congress of Industrial Organizations as well as independent labor unions were determined to avoid a similar outcome under the new Wage Stabilization Board. On December 20, 1950, a United Labor Policy Committee, composed of representatives of the AFL, CIO, the Railway Labor Executives' Association, and the International Association of Machinists, was formed to influence the WSB's deliberations on wage stabilization policy. The group demanded a yearly cost-of-living adjustment for all contracts, productivity pay increases linked to company profit margins, and price controls, but the WSB's public and corporate representatives were in agreement that the board should focus only wages and strictly control them to keep inflation in check.On January 26, 1951, the ESA imposed nationwide wage and price controls. Labor representatives, who opposed wholesale wage controls, were outvoted nine to three.
Labor representatives on the WSB charged that they were being frozen out of policy deliberations, and they threatened to resign unless they were given more influence over the process. Ching resigned on February 9 to head off a mass resignation, and ESA Administrator Johnston appointed the president of the Brotherhood of Railway and Steamship Clerks as his special assistant a day later, but the United Labor Policy Committee members were not placated.
Labor representatives believed that wage controls were particularly unfair to some workers. Some workers had received very high wage increases in 1950, before the imposition of wage controls, but others had yet to negotiate contracts or receive wage increases. Labor representatives demanded a 12 percent wage increase for workers who had not yet negotiated contracts under the wage stabilization policy, but the public and corporate members of the board held to a 10 percent increase.
On February 16, the Wage Stabilization Board issued Wage Regulation 6, which permitted a 10% increase in wages for workers who had not negotiated a wage increase in the last six months. The regulation was based on the "Little Steel formula" of World War II. Labor representatives of the board resigned in protest. The mass resignations set off a crisis within the administration. Unwilling to alienate labor by imposing wage controls involuntarily, Truman appointed a National Advisory Board on Mobilization Policy to come up with recommendations to win labor's support for wage and price controls. On April 17, the National Advisory Board suggested re-establishing the WSB with a greatly-enlarged membership. The National Advisory Board also recommended giving the WSB the power to intervene in labor disputes. The WSB should have the power, the report said, to make economic and noneconomic recommendations in labor disputes as well as to submit disputes directly to the president.
President Truman re-established the WSB on April 21, 1951. In Executive Order 10233, Truman gave the new board the recommended expanded powers. Dr. George W. Taylor, professor of industrial relations at the University of Pennsylvania, was tapped to be the WSB chairman. Taylor agreed to serve only until September 1, 1951, however, and he was succeeded by Nathan Feinsinger, a professor of law at the University of Wisconsin.
The expanded powers of the WSB created some controversy, however. It was not clear what statutory authority gave Truman the power to provide the board with its expanded powers. Congressional hearings over the reconstituted WSB's powers occurred since Congress also debated renewing the Defense Production Act. In July 1951, under pressure from numerous industries for price control relief, Congress enacted the Capehart Amendment to the DPA, which authorized companies to win price increases for costs incurred between June 1950 and July 26, 1951. Although opposed to the way in which the Capehart Amendment significantly weakened the administration's wage and price control program, Truman signed the legislation on July 31, 1951.
Buildup to steel mill seizure
The Capehart Amendment put intense pressure on the Truman administration's inflation program. On August 8, the federal government imposed stricter economic controls on the economy. In the steel industry, production quotas and procurement orders were extended to all civilian steelmakers, not only large manufacturers. Steel companies had reported record and near-record profits in the summer, but by mid-fall, net revenues were down as defense needs consumed more and more and finished steel, and steelmakers were unable to sell steel to the higher-margin civilian market. On September 4, DPA again increased the amount of steel needed for defense use by sharply scaling down allotments for the civilian economy. When steelmakers balked at expanding plant and equipment to meet new defense quotas, ODM officials ordered the chief executives of the nation's largest steel manufacturers to attend a meeting in Washington at which they were threatened with additional government regulation and oversight. The steelmakers quickly acceded to the government's demands.Stabilization officials were so upset by the Capehart Amendment that many resigned, leaving the agency almost leaderless at critical times. ESA Administrator Johnston announced his retirement on September 2 and quit on November 30. The job remained open until Truman persuaded Roger Putnam, a Massachusetts businessman and former Democratic mayor of Springfield, to accept the position on November 27.
Tensions also ruptured labor's united front on the Wage Stabilization Board. The ULPC dissolved on August 14 when the AFL pulled out of the joint committee. AFL officials appeared to be upset that the ULPC had not led to additional unity talks between the two labor groups and that CIO officials were obtaining more than their fair share of federal appointments. By October, organized labor's influence throughout the defense mobilization bureaucracy had significantly waned.