Thus, the nature of the economic system means that there is going to be at least some degree of conflict over a wide range of issues between owners/managers and employees/workers. These conflicts are therefore best described as because the two sides have many conflicting objectives even though they have to cooperate to keep the company going. The conflicts that these disagreements generate can manifest themselves in many different ways in a step-by-step escalation: workplace protests, strikes, industry wide boycotts, massive demonstrations in cities, pressure on Congress, and voting preferences. All this soon leads to more general disagreements over the rate and progressivity of taxation, the usefulness of labor unions, and the degree to which business should be regulated by government. Employees want businesses to pay higher taxes to government, and they often want government to regulate businesses in ways that help employees. Most businesses reject these policy objectives -- they are for low taxes on businesses, minimum regulation of their businesses, and no government help for unions.
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While the Flint drama was unfolding, the chairman of U.S. Steel decided for several reasons that it was time to make a deal with the unions, starting with the fact that New Deal Democrats controlled Pennsylvania, where the company had many of its mills (Bernstein 1969, pp. 466-473; Gordon 1994, p 229). Furthermore, the CIO's Steel Workers Organizing Committee was in any case winning over many members of the company's employee representation plan. In effect, union organizers were building an industrial union at U.S. Steel, and elsewhere, through the employee representation plans (Jacoby 1997, pp. 158-159; Zieger 1995, pp. 54-59). As a result, the steel company's chairman began secret meetings with Lewis that led to a signed agreement shortly after the United Auto Workers' victory over General Motors. The agreement saved Lewis from expending resources on what could have been a very long and tough battle, kept the many Communist organizers from rising to important positions in what was basically a top-down union, and provided a visible symbolic victory because U.S. Steel was still the largest industrial company in the United States. Change came easily and more completely at General Electric, where Gerard Swope and Owen Young, a director of Industrial Relations Counselors since the 1920s, were still in charge. When the workers voted to unionize, Young and Swope recognized the union immediately and began bargaining. The fact that the union was the largest of the Communist-dominated unions in the CIO made the bargaining all the more notable, but the fact that the leaders were Communists made no difference in terms of the company's willingness to deal with the union. As a result of these and other victories, the percentage of the nonagricultural workforce in unions rose from 6.9% in 1933 to 19.2% in 1939 (e.g., Cohen 2009, p. 304).
With New Deal Democrats in key positions of power, the newly hired organizers employed by the CIO targeted an automobile assembly plant in Flint, Michigan, in early January 1937, for a sit-down strike that would serve as an ideal starting point and a signal of what was to come. The automobile factory was chosen because it belonged to General Motors and was a critical link in the company's network of factories. Success would bring much of General Motors' production to a halt. Moreover, a victory over the third-largest corporation in the country was likely to bring hope to industrial workers everywhere because its profits had rebounded in 1935 and 1936, leading to $10 million in salaries and bonuses for 350 officers and directors in 1936, while its workers averaged $900 a year, well below the $1,600 that was considered to be the minimum necessary for a family of four (Zilg 1974, p. 330). Led in good part by Communist and Socialist factions in the fledgling United Auto Workers, the sit-downers held the factory for six weeks despite attacks by police, legal threats from local authorities, and demands by the owners that the liberal governor put an end to this illegal takeover of private property (Fine 1969, for a detailed account). However, neither the governor nor Roosevelt would accede to the corporation's demands, forcing its leaders to negotiate with the union and thereby providing a major triumph for the CIO.
Instead, two different studies, using campaign contributions as an indicator of political preferences in an election in which virtually no business executives gave to both parties, found that Roosevelt had support from only 17-20% of the 35% of corporate executives who gave $100 or more to either party. The first study used the directors of the 270 largest corporations of that era (Allen 1991). The second used a large random sample of 960 executives and directors listed in (Webber 2000, p. 13). Four factors, all of which are consistent with findings by those scholars that study voting patterns, were the best predictors of business support for Roosevelt: region (Southerners in most business sectors gave more to Democrats than Republicans); religion (Catholics and Jews in the capital-intensive and mass-consumption sectors were much more likely to give to Democrats than Protestants were); the size of the business (smaller businesses tended to support Roosevelt); and, as already mentioned, involvement in the manufacture or sale of alcoholic beverages. Nor did Roosevelt lose any of his 1932 business backers, except the du Pont family and their key employees and close associates, contrary to many past claims (Webber 2000, for detailed evidence for all these points).
Contrary to claims that Roosevelt had major backing in the corporate community, he did not have significant support in any business sector except one, the alcoholic beverages industry, which paid "its debt of gratitude to the Democratic Party" for Roosevelt's successful efforts to end prohibition by providing 5.7% of the party's donations of $1,000 or more (Overacker 1937, p. 487). There was no support from an alleged "capital-intensive international segment of the capitalist class," as one political fantasist insists without bothering to go beyond gossip or take a look at the systematic donation records (Ferguson 1995). Nor did Roosevelt receive disproportionate support from purported "proto-Keynesians" in mass-consumption industries (e.g., department stores, chain stores, manufacturers of household electrical equipment), as one historian partial to economic reductionism believes to be the case (Fraser 1989; Fraser 1991).
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Whatever the reasons for the resistance to industrial unions by most craft unions, Lewis and Hillman, as the main leaders in favor of a new CIO, argued that large corporations could only be organized if workers with varying levels and types of skills were part of one industrial union, pointing to the failure of most union drives in heavy industry in 1933 and 1934 and the success of their own unionization efforts. They also claimed that workers in industries such as steel, rubber, and automobiles wanted to be in one industrial union (Bernstein 1969, Chapters 8 and 9).
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Moreover, several problems soon arose that slowed the CIO's progress. With the help of the state police in Ohio, Indiana, and Illinois, along with sudden lay-offs for thousands of workers due to the economic downturn triggered by Roosevelt's decision to balance the budget, the ultraconservatives in Little Steel were able to defeat unionization efforts in the second half of 1937. A similar drive in the heterogeneous textile industry was stalled later in the year for a similar combination of reasons. At the same time, Southern Democrats were deeply upset by the sit-downs in the North and by attempts by the CIO to organize in the South, starting in early 1937 with the textile industry, which was by then the largest industry in the South due to the rapid movement of northern mills into the region. The fact that the CIO organizing drives were interracial in both the North and South only added fuel to the fire. Led by Senator James Byrnes of South Carolina, one of Roosevelt's closest allies in previous years, the Southern Democrats began a series of actions within Congress that created problems for the CIO and the National Labor Relations Board, ranging from passage of a "sense of the Senate" resolution that sit-downs were illegal to attacks on the labor board's budget (Gross 1981; Patterson 1967, pp. 135-137). The Southerners were capitalizing on the growing animosity in Congress over Roosevelt's unexpected court-packing scheme, introduced as a complete surprise on February 5, 1937, which stirred their fears of an attack on the Jim Crow system. More generally, the effort to hamstring the National Labor Relations Board helped to revive the conservative voting coalition that had dominated Congress since the Compromise of 1877 (Patterson 1967). (In 1939, the Supreme Court ruled that sit-down strikes were illegal, thereby officially depriving union organizers of a potent tactic that makes it impossible to bring in replacement workers. The National Labor Relations Board, it should be noted, had disapproved of sit-downs, too, but had not been able to do anything about them.)
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