U.S. Steel Recognizes the Steel Workers Organizing Committee as an Official Bargaining Agent

United States 1937

Synopsis

On 2 March 1937 the United States Steel Corporation, throughout its history a fierce opponent of organized labor, signed a preliminary agreement recognizing the Steel Workers Organizing Committee (SWOC) as a legitimate bargaining agent for employees who were members of that organization. The two parties signed a formal contract on 17 March. These agreements were the culmination of secret talks between Congress of Industrial Organizations (CIO) president John L. Lewis and U.S. Steel chairman Myron Taylor. The agreement was the first victory for SWOC in its efforts to represent the entire steel industry. That violence was not used to prevent unionization made the victory even more surprising. The agreement with U.S. Steel led directly to many other steel firms recognizing SWOC, even though the so-called Little Steel firms, large competitors of U.S. Steel, continued to resist unionization until after World War II began.

Timeline

• 1922: Publication of James Joyce's novel Ulysses and T. S. Eliot's poem The Waste Land—works that will transform literature and inaugurate the era of modernism.
• 1927: American inventor Philo T. Farnsworth demonstrates a working model of the television, and Belgian astronomer Georges Lemaî tre proposes the Big Bang Theory.
• 1932: In German elections, Nazis gain a 37 percent plurality of Reichstag seats, raising tensions between the far right and the far left. On a "bloody Sunday" in July, Communists in Hamburg attack Nazis with guns, and a fierce battle ensues.
• 1937: Italy signs the Anti-Comintern Pact, signed by Germany and Japan the preceding year. Like the two others before it, Italy now withdraws from the League of Nations.
• 1937: Japan attacks China and annexes most of that nation's coastal areas.
• 1937: Stalin uses carefully staged show trials in Moscow to eliminate all rivals for leadership. These party purges, however, are only a small part of the death toll now being exacted in a country undergoing forced industrialization, much of it by means of slave labor.
• 1937: In the middle of an around-the-world flight, Amelia Earhart and her plane disappear somewhere in the Pacific.
• 1937: Crash of the Hindenburg in Lakehurst, New Jersey, kills 36 and ends the brief era when rigid airships promised to be the ocean liners of the skies.
• 1937: Pablo Picasso paints his famous Guernica mural dramatizing the Nationalist bombing of a town in Spain. Thanks to artists and intellectuals such as Picasso and Ernest Hemingway, the Loyalists are winning the battle of hearts and minds, even if they are weaker militarily, and idealistic young men flock from America to join the "Abraham Lincoln Brigade." Yet as George Orwell later reveals in Homage to Catalonia, the lines between good and evil are not clear: with its Soviet backing, the Loyalist cause serves as proxy for a totalitarianism every bit as frightening as that of the Nationalists and their German and Italian supporters.
• 1942: Axis conquests reach their height in the middle of this year. The Nazis control a vast region from Normandy to the suburbs of Stalingrad, and from the Arctic Circle to the edges of the Sahara. To the east, the Japanese "Co-Prosperity Sphere" encompasses territories from China to Burma to the East Indies, stretching deep into the western Pacific.
• 1947: Establishment of the Marshall Plan to assist European nations in recovering from the war.
• 1952: Among the cultural landmarks of the year are the film High Noon and the book The Invisible Man by Ralph Ellison.

Event and Its Context

The talks that culminated in the March accord began after a chance encounter between Taylor and Lewis in the dining room of the Mayflower Hotel in Washington, D.C., on 9 January 1937. Taylor, worried about the future of the industry, had been thinking about the wording of a possible compromise between U.S. Steel and the CIO since the previous summer. Therefore, when Lewis quietly suggested a meeting, Taylor offered to see him the next day. This led to a lengthy series of conferences that eventually resulted in a contract. Even though Lewis was making front-page news every day because of the sit-down strike in Flint, Michigan, the media did not know about these talks until after the initial agreement became public. However, the leaders of U.S. Steel's competitors did; they had been told about the talks early in the negotiation process. They did not like this development but could do little about it. Lewis told almost nobody about his talks with Taylor. His presence at U.S. Steel's New York headquarters would not have been surprising because he had been elected a collective bargaining representative for some of their "captive mines" (those wholly owned by a steel company) in 1933. Nevertheless, to preserve their secrecy, most of the negotiations between the two men occurred at Taylor's New York townhouse.

The 2 March agreement covered workers in U.S. Steel's Carnegie-Illinois Steel subsidiary only, although the parties signed nearly identical agreements covering other subsidiaries in the weeks following the 3 March announcement. The initial agreement had five sections. The first section stated that the Carnegie-Illinois Steel Corporation recognized SWOC as the collective bargaining agent for its employees who belonged to the Amalgamated Association of Iron, Steel, and Tin Workers (the union SWOC had effectively taken over at its formation in 1936). Management also recognized and agreed not to interfere with the right of employees to join the union. In return, SWOC agreed not to intimidate or coerce employees. Section Two of the agreement increased wages by 10 cents an hour for all Carnegie-Illinois employees. Section Three formally established an 8-hour workday and a 40-hour workweek. It also mandated time-and-a-half pay for all hours worked over that total. Section Four laid out a procedure for establishing a working committee to negotiate issues like working conditions and dispute arbitration. The last section set the length of the contract. It ran for about a year, until 28 February 1938.

As far as U.S. Steel was concerned, the wording of Section One made the agreement palatable. SWOC's willingness to limit its bargaining rights to those employees who had joined the organization meant that, in principle, the new agreement might not alter labor policy at all. Interested employees could theoretically continue to bargain with U.S. Steel through the company union. This group of organizations in 1933 had been established to satisfy government-imposed collective bargaining requirements in the National Industrial Recovery Act (NIRA) and, later, in the National Labor Relations Act (NLRA). In management circles, they were known as employee representation plans (ERPs). U.S. Steel believed it could maintain its own ERPs to counter the power of the union. It voluntarily recognized SWOC in order to maintain the principle of choice between an inside and an outside union, even though it could have probably fought the union and won. Management was more concerned about defending the principle of allowing workers not to choose SWOC than it was about keeping its works completely union-free.

The Taylor-Lewis agreement shocked the business world. The press, the public, and industry observers had been expecting an all-out war between U.S. Steel and SWOC. Instead, the agreement not only assured the survival of trade unions in a critical industry, it also served as a catalyst to the organization of other industries. Although the decision of General Motors to recognize the United Auto Workers a week earlier is remembered because of the dramatic sit-down strikes that preceded it, the U.S. Steel agreement is impressive because it was achieved without violence and with minimal government coercion.

Reaction in the mills to the Taylor-Lewis agreement also surprised everyone, even the union. So many employees joined SWOC in the weeks following the agreement that its membership almost doubled and, in practice, the open shop ceased to exist. Even so, SWOC did not have complete control over U.S. Steel's employees. As late as September 1937, only 44 percent of its workers were SWOC members. Nevertheless, the union did have enough members to become the only viable union in the shops.

With management's encouragement, some former employee representatives tried to create alternatives to SWOC. In January 1937 employees in the Chicago area created the Steel Employees Independent Labor Organization. By that summer, dues made this organization self-supporting. It even had offices, a lodge hall, a full-time president, and an attorney. Nevertheless, the group eventually disappeared because it never won a contract. A group in the Pittsburgh area created the American Union of Steel Workers in the days following the preliminary accord between SWOC and U.S. Steel. This organization attracted considerable media attention when it sent a letter to William Green, president of the American Federation of Labor (AFL), asking for his assistance. Nothing came of this effort either.

The final blow to these company unions came after the U.S. Supreme Court upheld the constitutionality of the NLRA in April 1937. The NLRA included the first permanent language that recognized the right of workers to join unions of their own choosing and provisions against company-dominated labor organizations. In response to the decision, U.S. Steel withdrew all financial support for the ERP and stopped providing facilities for elections and other company union activities. At that point, SWOC had no rivals for the loyalty of U.S. Steel's employees. This guaranteed it a strong base of support for its campaign to organize the rest of the steel industry.

Explanations of why U.S. Steel settled with SWOC are several. First and foremost, historians focus on successful efforts by trade union sympathizers to take ovur U.S. Steel's company unions. These organizations had some success in limiting reform early in their history because management used them as a vehicle for making small changes to improve workers' lives. Nevertheless, many U.S. Steel employees wanted greater changes than those management offered through the ERPs.

The first moves toward complete independence among U.S. Steel's ERPs appeared shortly after the passage of the NLRA. Seeing the law as legal cover for collective action, employee representatives worked to make their company unions more independent. In August 1935 workers at U.S. Steel's South Works in Chicago voted to organize themselves. Soon after, it had a dues-paying membership of between 1,300 and 1,500 people. (It eventually grew to some 3,000 members before affiliating with SWOC in July 1936.) In September 1935 the employee representatives in U.S. Steel's multiplant American Sheet and Tin Plate subsidiary held a convention in New Castle, Pennsylvania. At first, management tried to stop the gathering, but when it became apparent that the convention would be held anyway, U.S. Steel paid for the whole meeting, including the travel expenses of the delegates. On the first day, delegates heard speeches from company executives. Then the representatives voted to exclude management from the two remaining days of the meeting. During these meetings, the delegates passed resolutions asking for a 15 percent wage increase, an increase in the minimum monthly pension, and vacations with pay.

On 26 January 1936, 80 delegates from the nine original Carnegie Steel plants, meeting at the Fort Pitt Hotel in Pittsburgh, Pennsylvania, voted to establish a permanent central committee of employee representatives from throughout U.S. Steel's plants in the Pittsburgh area. Representatives from five plants showed up at the Central Committee's first March meeting to demand both its recognition as the collective bargaining unit for the Pittsburgh area and compulsory arbitration. Around the same time, the company unions at Gary, Indiana; Duquesne and McKeesport, Pennsylvania; and the Edgar Thomson Works in Braddock, Pennsylvania, made similar demands on management.

After it formed on 3 June 1936, SWOC encouraged union sympathizers to join the ERPs so they could accelerate this existing movement for reform. For example, SWOC assistance helped bring about a 10 percent wage increase before U.S. Steel had even recognized the union. On 25 August 1936 employee representatives from both the Chicago and Pittsburgh districts of U.S. Steel's Carnegie-Illinois met in Pittsburgh. They drew up a list of demands for management that included a 25 percent wage increase. Despite the discontent that this action suggests, only a few of the employee representatives wanted to affiliate with SWOC at that time. On 6 November 1936, after months of continued agitation by employee representatives who sympathized with SWOC, U.S. Steel finally agreed to grant its workers an across-the-board 10 percent wage increase. This concession backfired when SWOC took credit for pressuring management into making this decision. Whether or not this claim was true, there is no doubt that SWOC's long-running campaign for higher wages at U.S. Steel gave it enormous legitimacy when management finally gave in on this issue.

Furthermore, the wage concession did not stop employee representatives from participating in interplant conferences and demanding further concessions. On 22 November 1936 employee representatives from the Cleveland-Youngstown, Ohio, area held their first joint conference. Their demands included a $5 per day minimum and a further $1.24 per day increase for some employees. On 20 December, 244 employee representatives from 42 firms throughout the eastern United States met in Pittsburgh and joined SWOC at the same time. At this point, these haphazard gatherings of employee representatives merged to become the CIO Representative Council. More defections by workers and employee representatives came in the weeks following this meeting, until the Taylor-Lewis agreement eliminated the risk of joining and created a flood of applicants for the new union.

Despite SWOC's success at steering company unions to its side, the importance of this effort to Myron Taylor's actions are probably overrated. U.S. Steel's employee representatives, although an important and influential constituency, could not make up for the absence of SWOC members among the rest of the workers in the mills. To believe that winning over an employee representative was like organizing rank-and-file steel-workers is the equivalent of believing that representatives in the company unions actually represented the constituencies that elected them. At the time of the Taylor-Lewis agreement, only 18 percent of U.S. Steel employees had joined the union. Nevertheless, SWOC took credit for the actions of independent-minded employee representatives whether or not participants had joined the union. In this way, SWOC created an impression of strength that did not really exist.

If SWOC was trying to deceive U.S. Steel about the extent of its strength, the ruse failed. U.S. Steel had been keeping close watch on SWOC's progress since 1936, and it never saw the union as a serious threat. Corporate spies told management that the union's membership figures were inflated and that the employee representation plans were checking further growth. Even acknowledging gains in late 1936-1937, SWOC membership was not keeping up with the growth of the workforce brought about by increased employment to meet the demands of a rebounding market for steel. Therefore, the SWOC campaign alone could not have forced U.S. Steel to the bargaining table.

Had U.S. Steel decided to fight SWOC, it probably would have won. However, Taylor's style was to compromise rather than fight. He was part of a new generation of steel executives. He had not started out in the steel business, and his attitude toward unions was not colored by old prejudices. In his only public statement on the settlement, Taylor said he wanted to avoid a costly strike at a time when business was beginning to enter a sustained recovery. Rather than absorb the cost of fighting the union, Taylor wanted to pass on that cost to his competitors. His predecessor at the helm of U.S. Steel, Elbert Gary, would have fought the union, no holds barred, no matter the consequences.

An unheralded reason that might have influenced Taylor to settle with the union was the possibility of government intervention. The NLRA of 1935 had created a set of rules for collective bargaining that companies in every industry had to follow. The act also created the National Labor Relations Board(NLRB) to enforce the rules. Most antiunion corporate executives refused to comply with the act until the U.S. Supreme Court declared it constitutional. These executives assumed the Court would invalidate the act, but they were wrong. Taylor, on the other hand, bucked conventional wisdom in predicting the NLRA would survive the Court's scrutiny. Because SWOC had filed a complaint against U.S. Steel under the NLRA in November 1936, Taylor feared the NLRB might force him to recognize SWOC as the exclusive bargaining agent for U.S. Steel employees. Under Section One of his agreement with Lewis, management recognized SWOC as the bargaining agent for its members only. In theory, this meant U.S. Steel's company union could compete with SWOC for membership. Before the agreement was signed, this would have seemed advantageous to management. However, SWOC's popularity among rank-andfile employees made the distinction irrelevant as soon as the Taylor-Lewis agreement became public.

The Taylor-Lewis agreement marked the beginning of the end of the steel industry's nonunion era. The industry had effectively fended off trade unions since the Homestead Lockout in 1892. Now, having established a foothold in U.S. Steel, the unions would never let go. Large independent companies continued to resist SWOC, notably during the Little Steel Strike of 1937, but SWOC's legal maneuvers to protect the rights guaranteed its members by the NLRA eventually forced most of these companies to recognize outside unions. Only when the industry itself began to collapse in the 1970s did the union presence in the steel industry begin to recede.

Key Players

Lewis, John L. (1880-1969): President of the United Mine Workers and the Congress of Industrial Organizations. His secret talks with Myron Taylor led to the surprise announcement that U.S. Steel would recognize SWOC without a fight.

Murray, Philip (1886-1952): Head of the Congress of Industrial Organizations. Murray ran the organizing campaign against U.S. Steel that helped bring it into talks for a compromise.

Taylor, Myron (1874-1959): Chairman of the United StatesSteel Corporation. Unlike the earlier generation of steel executives, Taylor was willing to recognize outside trade unions because he believed such action would be best for business.

See also: Congress of Industrial Organizations; GM Recognizes UAW; National Industrial Recovery Act; Wagner Act.

Bibliography

Books

Clark, Paul, Peter Gottlieb, and Donald Kennedy, eds. Forging a Union of Steel. Ithaca, NY: ILR Press, 1987.

Galenson, Walter. The CIO Challenge to the AFL. Cambridge: Harvard University Press, 1960.

Stolberg, Benjamin. The Story of the CIO. New York: Viking, 1938.

—Jonathan Rees