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This Day In Labor History: April 27, 1944

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On April 27, 1944, Attorney General Francis Biddle arrived in Chicago to order Montgomery Ward head Sewell Avery to either extend his workers’ contract so they would not strike during the war or have his company seized and run by the American government. When Avery refused, Biddle had the military physically remove Avery from Montgomery Ward offices and the process began that led to the government seizing the workplace. This remarkable incident shines a light on a number of major issues concerning organized labor, corporations, and government during World War II.

Many corporate heads originally embraced the New Deal, in particular the National Recovery Administration, because it offered a government-led solution to the problem of overcompetition without really forcing them to give up most control over their daily decisions. So the Blue Eagle, at least under the pro-corporate NRA chief General Hugh Johnson, was amenable to many corporations. But not all. The corporate fundamentalist ideology was that any government interference was a massive violation of liberty. A minority of corporate leaders held to this position no matter how fall the economy had fallen. Even more outrageous to these people was the idea that organized labor had a role to play in the economy. For men like Henry Ford or Montgomery Ward leader Sewell Avery, unions were organizations that sought to crush human liberty.

So Avery was at the forefront of anti-New Dealers from the moment FDR took the presidency in 1933. He was a major financier of the anti-Roosevelt forces, attempting to steer the nation back to Hooverism. This of course failed miserably in the 1936 elections, but that didn’t soften Avery’s opposition.

In 1942, Roosevelt created the National War Labor Board. The NWLB sought to build on government economic planning during World War I to, among other things, create smooth labor relations for the war’s duration so that workers could get out the materiel needed to fight the war. This was a tough challenge for the NWLB. Much of the problem came from workers who had steady, good-paying work for the first time in more than a decade. The NWLB had to keep wages and prices fairly stable but prices did rise faster than wages. Workers wanted a bigger piece of the pie. The NWLB had 12 members–four representatives of business, four of organized labor, and four named by the federal government. This theoretically even playing field brought unions into central economic planning. It also gave them incentive to keep their workers from striking. The agreement that labor and corporations had to come to was that for the duration of the war, unions would not strike if corporations would agree to mandatory NWLB arbitration of all labor disputes and abide by those decisions. Wildcat strikes however remained a consistent problem through the war, as workers desperately wanted to make good money, be consumers, and win the war at the same time.

But while most corporations went along with the NWLB, some resisted. Of course Sewell Avery led this opposition. He maintained a company union as long as possible, but those were ruled unconstitutional in 1937 when the Supreme Court upheld the National Labor Relations Act. The Retail, Wholesale, and Department Store Union won the right to a union election under NWLB supervision in 1942. Avery refused to negotiate with the union. He hated all unions, but the Mail Order union was affiliated with CIO, which Avery thought was a communist organization seeking to undermine America. This election, which the union supporters won by a 3-1 margin, brought Montgomery Ward’s 7000 Chicago employees into the house of labor. He was most furious that labor won a maintenance of membership clause, which meant that union members couldn’t withdraw from the union for the duration of the contract, i.e., the closed shop. Avery refused to sign the contract, but gave in reluctantly when Roosevelt personally intervened to order him to do so.

In 1944, the contract expired. Avery wanted the union out. He argued that the union did not represent the majority of the employees and that the NWLB had no authority over non-defense plants. This argument made little sense. First, Montgomery Ward was a huge supplier to farmers, who absolutely were critical for American war efforts. Second, the company also supplied the federal government with a lot of goods. The NWLB asked the NLRB to hold another election but also ordered Avery to sign the contract extension in the meantime, which continued the maintenance of membership clause. He said he wouldn’t sign it, “come Hell or high water.” So the workers went on strike on April 12. During the war, this was a big no-no, but not in this case. The Teamsters started a secondary strike, refusing to make deliveries or pick-ups to Montgomery Ward stores around the nation. Even the U.S. Postal Service pulled out their 30 employees dealing with the mass of mail to the company because they had no work to do.

Given Avery’s intransigence, Roosevelt intervened directly. He had Commerce Secretary Jesse Jones plan to seize the company. He dispatched a federal marshal and several government officials to ask Avery to leave his desk. He basically laughed at them. So Roosevelt ordered Attorney General Francis Biddle to personally fly to Chicago to handle it. When Avery showed up to work on the morning of April 27, 1944, he found Biddle there with a group of soldiers. Biddle tried to reason with him and told him he was hurting the war effort. Avery responded by saying “To hell with the government.” So Biddle ordered the soldiers to pick Avery up and carry him out of the building. Avery hurled the worst insult he could think of at Biddle, yelling, “You, you New Dealer!”

The legal case against the company quickly went into the courts, but the workers also immediately stopped the strike and voted in the new contract. So on May 9, Jones returned Montgomery Ward to private management. But Avery then rejected the contract and refused to go along with its provisions. Workers went on strike in the late fall. On December 27, Roosevelt once again ordered the government to take over Montgomery Ward, both its Chicago office and its major regional centers. Avery was allowed to stay in his office this time but was banned from any running of the company’s affairs, while the military set up in an office nearby. The govenrment continued running the company until October 18, 1945. With the war over, they gave it back to Avery, who then purged any managers who had worked with the government. His hatred of labor, which continued unabated, including refusing to offer a pension, combined with Avery’s poor business decisions to start the once dominant company on its long decline.

This is the 176th post in this series. Previous posts are archived here.

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  • rea

    Notice how these ideologues always end up running their companies into the ground?

    • Brett

      Not surprising that someone extremely resistant to making any concessions or surrendering any control would run into problems eventually. Henry Ford was the same way, and it would have tanked Ford Motors if it weren’t for Edsel Ford.

  • Murc

    combined with Avery’s poor business decisions to start the once dominant company on its long decline.

    It’s hard to overstate just how dumb Avery was.

    This was a man who believed postwar America would immediately fall into another Depression, because leftist economics couldn’t help but fail, right? In fact he kept believing that for years. He wanted Montgomery Ward to cease trying to expand and acquire market share and instead bank cash, so when the collapse came it could buy up all the competition.

    That’s right. Sewell Avery was the corporate equivalent of a guy with a bunker in the woods and a hoard of gold who natters incessantly about how the gubmint is gonna collapse any day now.

    The net result of this was that Sears, Dillards, etc. managed to snap up all the prime retail space in the new shopping centers springing up to service suburbia, and Montgomery Ward didn’t open a single new store for almost two decades. It didn’t even maintain its existing stores well.

    You know that feeling you get when you walk into a K-Mart? Like how you’re inside a dead store that just hasn’t stopped moving yet? Montgomery Ward stores gave that same feeling in the early fifties, that is, during one the biggest and most sustained booms in American history. That’s how shitty Sewell Avery was at his job.

    Think about how behind the eight-ball you have to be in order to be outmaneuvered by those models of agile, flexible business practices that are Sears and JC Penney. Think about that.

    • jim, some guy in iowa

      in the 50s Sears and Penneys *were* making agile business decisions though

      • Murc

        I’m not sure “Let’s open stores where white folks with moneys are!” really qualifies as an agile business decision.

        • kped

          Yeah, let’s not give too much credit for doing the obvious. I mean, they were agile in comparison to this clown, but that’s a low bar to hurdle.

          Thanks for the history lesson to Eric and Murc. Love these columns and the comments add a lot! I’m far too young to remember Montgomery Ward, so this was new to me. Wonder if Mr Burns was partially based off him. C Montgomery Burns.

          **edit: Monty Burns modeled after Jacob Rothschild. So no, not after this guy.

        • jim, some guy in iowa

          well, it is compared to hoarding cash and waiting for a crash that never came. I’m not sure agility counts for as much in retail as providing a steady supply of good quality items at a good price with good service anyway. It actually sounds like a buzzword Eddie Lampert uses as he bleeds another pint of blood out of the dying Sears in order to save it

          • Murc

            Most buzzwords have actual and useful meaning, they’ve just been brutally worked over by ignoramuses.

            Like, all being “agile” means in the context of business is “your bureaucracy is smart enough to see opportunities and take advantage of them when they’re still opportunities, rather than chasing success.” That’s an important trait to have.

            Likewise, “synergy” really does mean something. So does “paradigm shift.” It was a paradigm shift that Netflix took advantage of and what killed Blockbuster. So does “disruptive.” The mass-produced automobile was a market disruptor. So was the PC.

            But then they go into the brains of MBA morons and emerge from their mouths as gobbledygook. “These words mean good! I use good words! Believe I are good because I use good words that mean good!”

        • Chuchundra

          A lot of companies went out of business using that exact same strategy. It was by no means a slam dunk, even in the 50’s.

          • The Dark Avenger

            He didn’t open a new store until 1957. By, then, it was probably too late, given the lead that his competitors had on him by then, to start opening new stores.

  • Fighting Words

    I was reading this article, and I thought, “Montgomery Ward? My mother used to bring me along while she was shopping there when I was younger (about 30 years ago). I haven’t been to one of those stores in ages. I wonder what happened?”

    Funnily enough, I was reading Cracked.com (a site known mainly for dick jokes, but they occasionally have a great article), and for one of today’s articles, they interviewed a former Blockbuster employee and a former K-Mart employee who worked at their respective shops right before they went out of business. The key takeaway was that management of these stores kept making bad business decision, after bad business decision, after really bad business decision, but it was always someone else’s fault. (See: http://www.cracked.com/personal-experiences-2112-5-post-apocalyptic-realities-working-dying-retailer.html ).

    • JustRuss

      I’ll read the article, but honestly, Blockbuster’s business model evaporated, there’s not much they could do to save their stores. And all the big retailers are getting eaten by Walmart.

      • Chuchundra

        Blockbuster has the opportunity to buy NetFlix early on and they basically laughed them out of the office. Just an object lesson on how hard it is for businesses to evolve to suit changing conditions, even fairly new ones like Blockbuster, and how hard they fight change to hold on to their existing revenue streams.

        Big retailers are getting eaten by Walmart on one side and Amazon on the other. It’s going to be tough to survive as a brick and mortar store over the next couple decades. Since I signed up for Amazon Prime I buy all kinds of random shit from them that I would normally go to Target or Home Depot for.

      • wengler

        People keep saying that about video rental chains, but here in the boonies where the internet sucks a chain called Family Video popped up to replace the empty Blockbusters.

    • CP

      The key takeaway was that management of these stores kept making bad business decision, after bad business decision, after really bad business decision, but it was always someone else’s fault.

      I wonder how much of this comes from living in a culture saturated with the narratives that, whenever something goes wrong, it always is someone else’s fault. The government’s fault for taxes and regulations, the unions’ fault for being so unreasonable, the education system’s fault for not creating people with the proper skills, the people’s fault for their lack of work ethic and moral fiber. Etc. All while we’re told that CEOs and other one percenters, of course, are the best and most admirable and hardworking and smart people in the world and we’re just lucky to have them.

      Call me crazy, but I suspect that does a lot to encourage corporate cultures where anytime something goes wrong, the knee-jerk reaction from the people in charge isn’t to ask “what did we do wrong and how do we fix it,” but “what left-wing union thug big government commu-Nazi stabbed us in the back this time?” – and therefore, are incapable of learning from their mistakes. (Probably doesn’t hurt that most people prefer to believe something is someone else’s fault than their own, but when you add the entire cultural context of post-Reagan America…)

      • BigHank53

        A good dissection of Target’s failure in Canada.

        • BubbaDave

          As soon as I saw “SAP” I facepalmed. That’s not even Chekov’s gun, that’s Chekov’s nuclear boomerang. I’m sure there are successful SAP implementations somewhere, but I’ve never seen one.

          • Ahuitzotl

            thats been my experience of SAP too

  • phalamir

    Avery responded by saying “To hell with the government.”

    In wartime, isn’t that pretty much demanding to be hung from the nearest lamp-post?

    • rea

      He was a rich white guy, so, no.

  • c u n d gulag

    I don’t know whether it’s comforting to know that today’s conservative insanity isn’t an anomaly, but rather generational/inherited conservative insanity.

    I suppose that loon, Tom Cotton, hopes it’s generational, since he’s likely to be the Wingnut’s object of manly-man crushes in either 2020 or 2024, and the older bigots and “MORANS!” are dying off.

  • NewishLawyer

    What is interesting is to see how long people like Avery have existed in American life and how they continue to be a string and adamant minority.

    The libertarians that I know seem obsessed with ideas about coercion and negative Liberty. They seem to think that negative Liberty is the only one that matters. Getting them to think about positive Liberty and Liberty via economic security is a fool’s errand.

    So they can get outraged over the individual mandate and Obamacare because it is coercion and forcing people to buy something that they might not want. The fact that it gives access to insurance to millions who might have wanted it and were denied it does not matter. One person being coerced is a trillion times worse than millions getting something they want.

    There is a high degree of leave me alone crankiness in American life. Possibly more so than other countries. There are also seemingly large numbers of people who define freedom in strictly economic terms.

    • Ahuitzotl

      Getting them to think about positive Liberty and Liberty via economic security is a fool’s errand.

  • Brett

    I’ll give this to Avery – a lot of conservatives talk about “going Galt” and resisting government, but he actually practiced it after 1942. I mean, they actually had to carry him out of the goddamn building. That’s hilarious.

    • Murc

      Also salutary to point out when people say “plutocrats aren’t inherently conservative, they just like money.” If Sewell has only cared about money, he’d have cooperated. The money mattered less to him than his ideology. In a way I respect that.

  • partisan

    “He maintained a company union as long as possible, but those were ruled unconstitutional in 1937 when the Supreme Court upheld the National Labor Relations Act.”

    Surely you mean they were ruled illegal. The Wagner Act can’t make something unconstitutional.

  • JG

    Imagine the outcry if Obama did this?

  • wengler

    I imagine this guy is to capitalists what Rosa Parks is to decent people.

    • Ahuitzotl

      nah, he’s a scrub, he failed. Capialists only like winners

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