Secondly, the growing divisions between liberals and labor over how to react to the civil rights movement's demands for integration of neighborhoods, schools, and workplaces made the union movement vulnerable to a renewed corporate attack. As the disruption generated by activists in the black community (and then the anti-war movement) continued to escalate after 1965, it soon became apparent that the liberal trade unions could not organize a large voting coalition in favor of the government programs they favored. Even in the case of the most progressive industrial union, the UAW, its leaders' hopes for an enlarged welfare state on the basis of a black-white worker's coalition in both the North and the South, with the segregationist Southern Democrats finally displaced, were "little more than ashes" by 1968. The UAW simply did not have the ability "to maintain a cross-class, biracial coalition committed to continued reform." Instead, it lost the support of its major allies and the confidence of many of its white members: "For very different reasons, African-Americans, white workers, liberals, and the New Left all came to see the UAW, as they saw the Johnson Administration, as a prop for the status quo," historian Kevin Boyle concludes in a concise summary of his study of the UAW between 1945 and 1968. Far from any notion that labor had sold out or betrayed its promise, its story was one "of struggles fought -- and lost" (Boyle 1998, pp. 230-231 for the information and quotations in this paragraph).
Union decline began in the 1960s for two separate reasons. First, corporate resistance to unions stiffened as manufacturing companies faced stronger competition from abroad and a need to automate their production processes. Corporate leaders were not willing to have their "right to manage" challenged under any circumstances, but they thought the issue was especially critical in the new competitive environment they had created for themselves through their strong lobbying for tariff reductions. From the point of view of liberal union leaders, though, it still seemed possible that the corporate leaders might accept the need for government insurance programs to socialize the growing costs of expensive corporate benefit programs. However, the corporate community did not want to risk government gaining any more legitimacy and power than it already had, and in any event the Southern Democrats would have fought such plans with great intensity in order to preserve the low-wage economy and racialized way of life in the South. The union leaders in the liberal bloc proved to be very wrong, perhaps because they thought the primary issue for corporate leaders was profits, not power.
After further discussion, the two groups reached general agreement on the subcommittee proposal and they formally approved it the following day. President Roosevelt accepted the agreement immediately and the next day announced the formation of a National Labor Board to arbitrate strikes and seek voluntary consent to section 7(a). Corporate moderates had forged a compromise with labor leaders in the way that their general approach to most problems and the earlier efforts of the National Civic Federation on labor issues would lead us expect. In the process they developed a new government structure (another example of state building) and thereby gave renewed legitimacy to collective bargaining and government mediation of labor disputes. In all, the written record provides practically a minute-by-minute account of how the corporate community and organized labor created a new government agency with little or no involvement of the White House, but most of the social scientists that write about the New Deal ignore the work by historian Kim McQuaid (1976; 1979) almost as much as they do that by Gitelman (1988). In any case, the passage of the act is a classic example of how a new law, in this case the National Industrial Recovery Act, can lead to outcomes that no group anticipated or desired, but it is also a demonstration of the importance of government in shaping -- and even supporting -- class conflict.
Although the upheavals in the South and West proved to be sporadic and manageable for the big agricultural interests, the unexpected labor upheaval in Northern industrial cities six weeks after passage of the NRA was so great that major business figures felt it necessary to contemplate a compromise with organized labor. The BAC members on the Industrial Advisory Board of the NRA therefore hosted a private meeting with the Labor Advisory Board of the NRA on August 3 1933, which included Lewis of the mine workers, Hillman of the garment workers, and Green of the AFL as its key members. BAC minutes reveal that Teagle opened the meeting by suggesting a "truce" (this war-derived metaphor suggests that Teagle believed that there was a class struggle going on) until the NRA could establish the numerous codes that would set price, hours, and wages in a wide variety of industries. According to notes from the meeting, he emphasized that he had no complaint with labor's efforts. "It was only natural," he said, "for labor to try to use this opportunity to organize and for employers to resist" (McQuaid 1979, p. 688). But some degree of harmony was needed, he continued, so that the recovery process could begin. Teagle therefore proposed that the two boards create an agency to arbitrate the problems that were being caused by differing interpretations of section 7(a).
For the most part, the National Labor Board consisted of men that had been present for the meeting during which it was proposed. The labor representatives on the new board were Lewis, Green, and Leo Wolman, who was an adviser to Hillman and a professor of economics at Columbia University. The three business members were Teagle, Swope, and Louis Kirstein, a vice-president of William Filene & Sons, the Boston department store. Like Teagle and Swope, Kirstein was a member of the NRA's Industrial Advisory Board and had been present at the August 3 meeting with the labor leaders. The Filene family for whom he worked, one of whose members was on the BAC, had been proponents of liberal business policies for several decades. They also had a role in the formation of the U.S. Chamber of Commerce in 1912 (Eakins 1966, p. 226).
The appearance of a reasonably cohesive group of corporate moderates just as the twentieth century began was due to two loosely related developments in the last three decades of the nineteenth century, a 30-year span that included major technological and transportation advances as well as the rise of a factory system that transformed the economic landscape. First, there were the several intensely violent conflicts between workers and employees that were discussed in the previous section. Second, there was a gradual adoption of the corporate form of ownership by business owners, which was originally intended to raise more capital, limit liability for owners, and allow businesses to continue after the death of their founding owners (Roy 1997).
It was at this point that a more integrated set of financial, rail, coal, and industrial companies began to develop. Between 1897 and 1904 alone, $6 billion worth of corporations were organized, six times the worth of all incorporations in the previous 18 years, leading to a situation in which the top 4% of companies produced 57% of the industrial output: "By any standard of measurement," concludes historian James Weinstein (1968, p. 63), "large corporations had come to dominate the American economy by 1904" (cf. Roy 1997). The result was the emergence of a corporate community that is defined by overlapping ownership patterns, interlocking boards of directors, a shared concern to limit the power of employees, and a common desire to keep the role of government at a necessary minimum (see Bunting 1983; Bunting 1987; Roy 1983. for network analyses of the emerging corporate community).
In the aftermath of these dramatic defeats, however, the AFL did make some headway outside the manufacturing sector, where disruptive efforts could succeed because the "replacement costs" for bringing in strikebreakers (discussed in the introduction to this document) for some kinds of jobs were prohibitive. For example, the newspaper industry had to accede to the unionization demands of printers, typographers and pressmen's unions because of the unique skills these workers had, and then came to appreciate the union's businesslike attitude toward contract negotiations. Similarly, the building trade unions (e.g., carpenters, bricklayers, plasterers, and painters) grew from 67,000 in 1897 to 391,600 in 1904 because these skilled construction workers could capitalize on their disruptive capacities due to the decentralized nature of the construction industry and also their connections to the urban political machines (Brody 1980, p. 24; Zieger and Gall 2002, p. 22). It was in this context that an Era of Good Feelings began in the late 1890s, encouraging some AFL leaders to accept overtures from a new group of corporate moderates that are discussed in the next section.
Due to the combination of a more integrated corporate community, continuing labor strife, and the return of prosperity after three years of depression, an "Era of Good Feelings" between employers and workers began to emerge. As a result, moderate conservatives in some of the new corporations began to differentiate themselves from their ultraconservative colleagues. They did so by indicating to union leaders that they might be willing to make bargains with them as a possible way to reduce industrial conflict. Then, too, some smaller businesses, especially in bituminous coal mining, thought that unions that could insist on a minimum wage might be one way to limit the vicious wage competition that plagued their industries (Gordon 1994; Ramirez 1978). Moreover, companies were urged by some of the expert advisers of the day to organize themselves into employer associations. These associations would make it possible for companies to enter into the multi-employer collective bargaining agreements that were thought to be essential if unions were going to be useful in helping to stabilize a highly competitive industry (Swenson 2002).
The most visible organization to develop in this changed atmosphere was the National Civic Federation (hereafter usually called the NCF). Formed in 1900 and composed of leaders from both big corporations and major trade unions, it also included well-known leaders from the worlds of finance, academia, and government. Building on this cross-section of leaders, it was the first national level policy-discussion group formed by the newly emerging corporate community. It therefore has been studied extensively from several different angles (e.g, Cyphers 2002; Green 1956; Jensen 1956; Weinstein 1968). The explicit goal of the NCF was to develop means to harmonize capital-labor relations, and its chosen instrument for this task was the trade union agreement (now called collective bargaining). The hope for the NCF rested on the fact that some of its corporate leaders stated publicly that the right kind of trade unions could play a constructive part in reducing labor strife and in helping American business sell its products overseas.