Sunday, June 1, 2008


by the Sandwichman

Brenda Rosser asked me to elaborate on the concerted campaign lurking behind the textbook lore of lumpoflabor. This will be a bit messy because it relies on secondary sources and some conjecture. There is, however, one recent and scrupulously documented historical study that corroborates the overall thesis, if not the specific conjecture.

The story commences at the beginning of the 20th century as major strikes by machinists and anthracite coal miners alarmed business owners about the growing power of unions.

Local and national business organizations, such as the National Metal Trades Association, the Dayton, Ohio, Employers Association, Minneapolis Citizens' Alliance and the Associated Employers of Indianapolis launched aggressive anti-union "open shop" campaigns. Then in 1903, the National Association of Manufacturers, under its new president, David M. Parry, launched its own violent strike-breaking drive and sought to co-ordinate local groups through closely affiliated Citizens' Industrial Association of America and, later, National Committee for Industrial Defense.

Trivia question: who was the first president of the NAM and who is his great-grandson? (Actually, it turns out that the frequently reported "fact" that it was Samuel P. Bush is erroneous. The first president of the NAM was Thomas Dolan.)

The story of the anti-union open shop movement is ably told in William Millikan's A Union Against Unions. Millikan's study focuses on Minneapolis with some reference to national events. The open shop drive was analyzed in the 1940s by Robert A. Brady in his Business as a System of Power. There's also a brief account of the "Organized Revolt of Employers" in the first chapter of Sidney Fine's Without Blare of Trumpets.

The NAM became extremely "influential" in the years before World War I, to the extent that it was known as the "invisible government" after a scandal came to light in 1913 about their methods and the extent of their political influence. One of the key strategies of the various employers' organizations was conducting propaganda campaigns. These campaigns were comprehensive. They included comic strips, movies, lectures, magazines, newspaper editorials, pamphlets, orchestrated letter and telegram campaigns, etc..

And textbooks. The case for the NAM and its allies direct involvement in censuring some economics textbooks and promoting others is largely circumstantial and partly conjecture at this point. There is one celebrated case of a NAM campaign against a high school social studies textbook by Harold Rugg. There is also the documented incident of the Illinois and Missouri committees on Public Utilities Information in the 1920s conducting sweeping textbook reviews and exerting pressure on educational authorities, publishers and authors. Those activities were investigated by the Federal Trade Commission in 1928 and reported in The Propaganda Menace by Frederick Lumley.

The NAM published material clearly aimed at the college market, such as the Open Shop Encyclopedia. It maintained an Open Shop Department, subsequently renamed Industrial Relations Department, headed by a former economics professor, Noel Sargent. The express purpose of that department was "educating the public". It is hard to imagine why or how they could have refrained from blessing some economics textbooks (say by guaranteeing advance purchases) and condemning others.

It is not as if such interventions would have encountered a hostile or even indifferent reception. American universities in the early decades of the 20th century were notoriously reactionary and elitist institutions. See Thorstein Veblen's The Higher Learning in America and Upton Sinclair's The Goose Step for a sense of the general climate. The great majority of university trustees were businessmen or allied professionals. Students generally came from the upper middle classes and went on to become businessmen or professionals. College men were often recruited to work as strikebreakers and did so with enthusiasm. Strikebreaking was not something the collegians did out of desperation for the money -- it was a cause they believed in.

And let's not forget textbook companies themselves -- some of which were active members of anti-union employers' organization. For example, McGraw-Hill was a leading member of the NAM's public relations committee during its anti-New Deal "American Way" campaign and published NAM propaganda (e.g., The American individual enterprise system: its nature, evolution, and future)

So the case of NAM influence on college economics textbooks is a bit of a bear-shits-in-the-woods story. It would be difficult to imagine otherwise. As for the content influenced, I have to fall back on the observation that the shorter workday philosophy was the backbone of American Federation of Labor unionism and its expansion in the last two decades of the 19th century and the first two decades of the 20th. Discrediting the unions' case for a shorter working day would have been a strategic priority. Furthermore, since union arguments were out of step with the prevailing academic economic dogma of the day (which was still inherently classicist Say's Law, laissez-faire fundamentalism), it wouldn't have been such a hard sell. In fact, the Steward/Gunton argument for the shorter working day was probably not all that well understood by union members and spokesmen, either. In some respects, it embodied a kind of ahead-of-itself Keynesianism for which there didn't yet exist a comprehensive theoretical argument. So it took some leaps of imagination. I happen to think those leaps were and are fairly plausible and, at any rate, totally unrelated to any "fixed amount of work" or anti-technology assumption.

PS -- following up on my earlier comment and YouNotSneaky's incredulity about the absence of "price-fixing" in the lump-of-labor textbooks of the 1920s, 30s and 40s: the Public Utilities Information committees specifically targeted "books favoring municipal ownership, mentioning the lack of competition with monopolies, or political corruption of corporations". Is the Pope Catholic?


Bruce Webb said...

I know! I know! But since I gave you the trivia point to start with it wouldn't be quite fair. Let's just say the fruit doesn't fall far from the tree.

They gave me posting privileges at Angry Bear for a series of Soc Sec posts. Tomorrow (Monday) I intend to venture into Sandwichman territory with a post exploring the relation between the forces of Reaction in nineteenth century Europe/England, its interaction with democracy/trade union organization/socialism and how the Reactionary conflation of these related but different movements resulted in the hostility to the New Deal and so to Social Security, otherwise sort of under motivated given current financials. I may even get over my head in explaining all of this in relation to the development of classical liberal economics (in the old sense). I am sure the whole thing would benefit from a critical assessment from someone who actually, you know, read the Ur-Texts of Political Economy. As opposed to me who got most of what I know from 'Worldly Philosophers' and 'To the Finland Station' both good books but obviously not a substitute for reading the literature. Any critiques/corrections will be gratefully accepted.

Myrtle Blackwood said...

Thankyou Sandwichman. It's very clear that whilst big business in America enjoyed cartels, monopolies and their own union they engaged in union bashing and strike breaking against ordinary people with the support of the federal government. Like today these robber barons - the modern day version are the 'neoliberals'- inculcated a narrow 'market' perspective whilst enjoying extraordinary privileges from exchange relationships that could not possibly be described as free or fair. That is not the only coincidence. As we can see there was a strong push for business to 'reconstruct profits' by forcing 'markets' to develop around the globe.

Here's some historical context that I've collected. (I wonder what other readers of Econospeak have?)

1870 – 1919 - John Maynard Keynes (‘Economic Consequences of the Peace’, written in 1919):
Before 1870 Europe as a whole was substantially self-sufficient. After 1870 the pressure of population on food emerged but as numbers increased the larger proportional returns from an increasing scale of production meant food actually became easier to secure. Up to about 1900 a unit of labour applied to industry yielded year by year a purchasing power over an increasing quantity of food. . . About the year 1900 this process began to be reversed and a diminishing yield was beginning to reassert itself. However this rise in costs was balanced by other improvements. The resources of tropical Africa, for the first time, came into large employ. Utopia (Keynes elaborates). That age came to an end in 1914.

The bulk of the world re-organised by the great powers as a result of a prolonged inability to reconstruct profit and growth rates within the world market as it existed from 1870 – 1900. They reacted by extending a still underdeveloped world market in capital into the whole of the world and in the process opened a phase of military conflict both between themselves and the countries which fell under their sway.

1870 – 1919 – The ‘Belle Epoque’ or ‘Third Kondratieff’ and the New Imperialism or ‘High Imperialism’.

End of 19th Century – the Great Depression. US corporations got together and formed cartels or trusts. Food commodities became brands, like Nabisco and Quaker Oats and their prices rose dramatically. The branding was, under neoclassical economic theory, regarded as an ‘increase in productivity’. The world economy at the time was experiencing rapid globalisation and commodity trade was booming as transport costs dropped significantly. Overall, in the global economy, there was some economic catching up. Particularly in the poor contries at the European periphery. This convergence stopped between 1914 and 1950 because of de-globalisation and implosion into autarky.

1898 – Averell Harriman’s father, EH Harriman gained control of the Union Pacific Railroad with credit arranged by William Rockefeller (owner of Citibank precursor) and also by Kuhn Loeb & Co’s British bankers.

1901 – 1909 – President Theodore Roosevelt’s term of office. Bush Sr compared to Teddy Roosevelt. Theodore Roosevelt’s elevation represented a personal union between the New York-Boston patrician financiers with the secessionist slaveholders. First and foremost Teddy Roosevelt was a political steward of the Morgan interests.

“..In the Panic of 1907, J.P. Morgan, the man, eventually restored order to troubled markets by stepping in with his own capital and those of other banks to buy up undervalued assets and shore up institutions that still had value. Today's crisis resembles that era in the way that murky asset-backed securities have come acropper without much capital cushion. If the banks are stepping up to provide that capital, and more transparency, that's a plus. But the 1907 lesson, still relevant today, is that Morgan relieved the panic by stepping in as a buyer on his own nickel, reassuring the market that there were things worth buying. He also forced write-downs when there was nothing left to save. If Mr. Paulson wants to be a modern J.P. Morgan, he'd better make sure the banks aren't using him to delay their day of reckoning…”

Further Developments on the SIV Rescue Front. Tuesday, October 16, 2007

1910 – Nelson Aldrich and executives representing the banks of JP Morgan, Rockefeller, Kuhn, Loeb & Co (Paul Warburg), National City Bank of New York (Frank Vanderlip), First National Bank of New York and Colonel Edward House who was the founder of Council of Foreign Relations secluded themselves in secret at Jekyll Island, Georgia for 10 days. Paul Warburg directed the proceedings and wrote the primary features of the Federal Reserve Act. The Government and the public became aware of these secret proceedings 3 years after the Federal Reserve Act was passed (1916).

"... there are higher uses for surplus wealth than adding petty sums to the earnings of the masses. Trifling sums given to each every week or month -- and the sums would be trifling indeed -- would be frittered away, nine times out of 10, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither to rich or poor."

[Carnegie, Andrew. 1895. "The Best Use of Wealth." in Miscellaneous Writings of Andrew Carnegie, 2 vols. Burton J. Hendrick, ed. (Garden City, NY: Doubleday, Doran & Company, 1933): pp. 203-18.]

"wealth has been produced as if by magic, and fallen largely to the captains of industry, greatly to their own surprise .... The community created the millionaire's wealth. While he slept it grew as fast as when he was awake."

Carnegie, Andrew. 1906. "Wealth." in Problems of To-day: Wealth, Labor, Socialism (Garden City, NY: Doubleday, Doran, 1933): pp. 1-39.

Myrtle Blackwood said...

I had an interesting find today. One of my favourite books (one I've had now for about 30 years) is written by Herbert Heaton. Today i went on the Net to find out more about him. Here's what I discovered:

1914 – June. Herbert Heaton had a post as a lecturer in history and economics at the University of Tasmania. Within the university Heaton developed the study of economics and encouraged research into Australian economic history. However his extramural lectures for the Workers’ Educational Association (WEA), particularly his objective comments on the war, provoked the censure of conservative sections of the Tasmanian press and public. He left for Adelaide where he was appointed director of tutorial classes and lecturer in history and economics at Adelaide University.

1917 – The University of Adelaide refused to establish a degree in economics, and by implication a chair, while Herbert Heaton led the discipline because of his left-liberal position on the war the peace.
..In 1917 [Herbert Heaton] was appointed director of tutorial classes and lecturer in history and economics at the University of Adelaide. There he expanded the infant discipline of economics and developed the diploma of commerce. His W.E.A. lectures were published in his Modern Economic History with Special Reference to Australia (Adelaide, 1921). Again his forthright comments on contemporary issues sparked continual controversy. Adelaide businessmen regarded his left-liberal position on the war and the peace, and his expositions of socialist theory, as evidence of the danger of teaching economics. Heaton argued that 'all the evils and aches of individual and corporate life [had] their ultimate cause in capitalism' which, he predicted, would 'give place naturally to socialism'. Consequently, the university refused to establish a degree in economics, and by implication a chair, while Heaton led the discipline. Appreciating the forces against his advancement in Australia, Heaton accepted a chair of economic and political science at Queen's University, Kingston, Ontario, Canada.."

American History Review, 78 (1973), p 1171; Mercury (Hobart), 16 Sept 1915; Register (Adelaide), 17

June 1925; Advertiser (Adelaide), 10 Aug 1925; Heaton papers (University of Minnesota Archives);

files of University of Adelaide 1917-25, and Board of Commercial Studies, University of Adelaide


Author: Helen Bourke

Print Publication Details: Helen Bourke, 'Heaton, Herbert (1890 - 1973)', Australian Dictionary of

Biography, Volume 9, Melbourne University Press, 1983, pp 250-251.